Question ID
2025_7405
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Credit risk
Article
229
Paragraph
1
Subparagraph
(e)
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
N/A
Type of submitter
Credit institution
Subject matter
Application of real estate valuation principles to AIRB
Question

Are the valuation principles per CRR 229.1(e) (capping to 6/8-year averages) applicable when using own estimates of LGD (AIRB)?

Background on the question

(Part Three, Title II of CRR) Per article 108.1 institutions may apply credit risk mitigation per Chapter 4 when using either the Standardised approach or IRB approach without own estimates of LGD (FIRB). Article 229.1(e) applies as a part of Chapter 4. Requirements for own-LGD estimates per article 181.1(f) require that when taking collateral into account in own LGD estimates, institutions’ internal requirements must be generally consistent with those set out in Chapter 4, Section 3, Sub-section 1. Chapter 229 is part of Section 4 and as such is not referred to by article 181. This suggests that the valuation principles of article 229.1(e) are not applicable when using own estimates of LGD.

Submission date
Rejected publishing date
Rationale for rejection

This question has been rejected because the issue it raises is beyond the remit of the Q&A process and as such it cannot be addressed via a Q&A. 

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Status
Rejected question