- Question ID
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2015_1928
- Legal act
- Directive 2014/59/EU (BRRD)
- Topic
- Resolution financing arrangements
- Article
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103
- Paragraph
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2
- COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
- Delegated Regulation (EU) 2015/63 - DR on ex ante contributions to resolution financing arrangements
- Article/Paragraph
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Article 20
- Type of submitter
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Competent authority
- Subject matter
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Annual Contribution of institutions - Rescaling of the risk weight
- Question
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How to proceed with rescaling of weights of indicators that are not available, as stipulated in Article 20 of the Commission Delegated Regulation (EU) 2015/63?
- Background on the question
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The provisions of Article 20 of the Commission Delegated Regulation (EU) 2015/63 provide for proportional rescaling of weights of available indicators so that the sum of their weights totals to 1.
Two situations requiring the weights to be rescaled may occur:In case the whole Pillar / category of indicators as referred to in Annex I of the Commission Delegated Regulation (EU) 2015/63 is not available, the weight of such category shall be fully distributed to all available Pillars according to their weights.
In case a Pillar / category of indicators as referred to in Annex I of the Commission Delegated Regulation (EU) 2015/63 is available, however, and one or more particular indicators of the Pillar are not, the weight of such missing indicators shall be distributed to the indicators of the same group proportionally to their weights. The total weight of the Pillar (as well as of the other Pillars) remains unchanged.
We would be of the opinion, that the weights shall be first rescaled within one Pillar / category (e.g. the Risk exposure). That approach keeps the overall distribution of weights among the Pillars unchanged (as some Pillars are obviously more important than others, which is supposedly in line with the Delegated Act 19s intention.
From a practical point of view, such an approach is also more feasible, contrary to the rescaling of all (sub)weights of all Pillars (and indicators) triggered by a missing indicator. Only in the case that the whole Pillar / category is missing, the weight of the group should be distributed among the weights of available Pillars.
- Submission date
- Final publishing date
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- Final answer
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When one or more, but not all, risk indicators within one risk pillar are missing, only the weights of the remaining risk indicators within that pillar, as defined in Articles 7(2), (3) and (4) of Directive 2014/59/EU (BRRD), should be rescaled, while the weights of risk pillars as defined in Article 7(1) should remain constant.
When all risk indicators within one risk pillar are missing, the weights of the remaining risk pillars should be rescaled proportionally to their weight as defined in Article 7(1).Disclaimer:
This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General Financial Stability, Financial Services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.
- Status
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Final Q&A
- Answer prepared by
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Answer prepared by the European Commission because it is a matter of interpretation of Union law.
- Note to Q&A
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Update 26.03.2021: This Q&A has been reviewed in the light of the changes introduced to Directive 2014/59/EU (BRRD) and continues to be relevant.
Disclaimer
The Q&A refers to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.