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Q&As refer 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.

Please note that the Q&As related to the supervisory benchmarking exercises have been moved to the dedicated handbook page. You can submit Q&As on this topic here.

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List of Q&A's

Prudential backstop (Regulation 2019/630) and interaction with RWA calculation

Is the prudential backstop deficit under Article 151(1) taken into consideration for the calculation of risk-weighted assets on exposures treated under the advanced IRB approach?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2019_4938
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Definition of 'explicit guarantee arrangements' for the purpose of classification of non-commercial undertakings as public sector entities

What conditions should be met by a given agreement in order to qualify as an 'explicit guarantee arrangement'?Shall the ‘explicit guarantee arrangements’ for the purpose of definition of public sector entities also be ‘guarantees’ eligible as unfunded credit protection or not?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2018_3694
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Classification of direct reductions in the accounting value as credit risk adjustments

For the calculation of the exposure value in accordance to Article 166(1) CRR, shall the accounting value of credit exposures on the banking book (measured at FVTPL in accordance with IFRS 9) be increased by the amount of fair value adjustments?For the purposes of the treatment of expected loss amounts in accordance to Article 159 CRR, shall the credit risk related adjustments embedded in the fair value of the banking book exposures be considered as credit risk adjustments or other own funds reductions related to these exposures? How does this interact with the calculation of exposure value in accordance with Article 166(1) CRR?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 183/2014 - RTS for the calculation of specific and general credit risk adjustments
  • ID: 2018_3662
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Interpretation of the term “commercial immovable property” especially “other commercial premises” for the application of the preferential risk weights for the risk weight assets purposes according to the Article 126 of the CRR.

What is the definition of “other commercial premises” as commercial immovable property in Article 126 CRR for the purposes of application of preferential risk weights for the risk weight assets purposes, if all other conditions stipulated in the CRR are met?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3615
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Treatment of claims secured on residential property collateral

As claims secured on residential property collateral are excluded from the calculation of the total amount owed, can the deduction factor be applied to these claims secured on residential property collateral even though the remaining total amount owed by the obligor (group) exceeds the EUR 1,5 million? Or does it mean that once the remaining amount owed exceeds the limit all claims by the same obligor (group) are not eligible for the deduction?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3404
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Criteria for sufficiently diversified private equity portfolios under the simple risk weight approach

What rules should be applied in assessing whether a private equity exposure is in a sufficiently diversified portfolio of portfolio companies as mentioned in Article 155(2)?In case of exposure to several private equity funds, may the portfolio companies of these private equity funds be considered as one portfolio before assessing whether the portfolio is sufficiently diversified?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3371
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

’Appropriate prudential requirements’ with regard to ancillary services undertakings for the assessment of the condition in Article 113(6)(a) CRR.

Clarification is sought on the term “appropriate prudential requirements” with regard to ancillary service undertakings for the assessment of Article 113 (6) (a) Regulation (EU) No 575/2013 (CRR).

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3365
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Definition of subordinated exposures

What is the definition for subordinated exposures within the context of article 161?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3296
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Application of a Permanent Partial Use exemption under Article 150(1)(d) to the European Commission

Does the permanent partial use exemption under Article 150(1)(d) of CRR encompass European organisations such as the European Commission? Does the permanent partial use exemption under Article 150(1)(d) of CRR encompass European organisations such as the European Commission?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3256
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Appropriate Risk Weight for purchased defaulted assets

Does the entering into force of the Regulation (EU) 2019/630 of the European Parliament and of the Council of 17 April 2019 (the “Prudential Backstop Regulation”) affect the determination of which risk weight that should be applied according to Article 127 CRR when an entity subject to CRR purchases non-performing loans booked at purchase price (net book value, “NBV”), which is significantly below the loans’ gross book value (“GBV”)?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2019_4909
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

USA public sector entities risk weight

USA is listed by the EBA as applying supervisory and regulatory arrangements at least equivalent to those applied in the Union. However the competent authorities of this country does not require the use of ECAI ratings to assess risk weights of exposures to public sector entities. Should we nevertheless consider that this competent authority treat exposures to public sector entities in accordance with paragraph 1 or 2 of article 116, and so should we risk weight these exposures in accordance to paragraph 1 or 2?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2019_4889
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Interpretation of the term "all observed defaults" in Article 500 of Regulation (EU) No 575/2013 as amended

Both Article 181(1)(a) and Article 500(1)(c) of Regulation (EU) No 575/2013 as amended contain the expression “all observed defaults”. Is that expression meant to be interpreted in the same way in the context of both articles to include both completed and incomplete recovery processes? It is our understanding of Article 181(1)(a) that no observed defaults should be excluded. This understanding is further supported by paragraph 163 of EBA/GL/2017/16, which states that for the purpose of LGD quantification, “institutions should not exclude any defaults in the historical observation period that fall within the scope of application of the LGD model”. Should this view also be extended to the calculation of the threshold under Article 500(1)(c) of Regulation (EU) No 575/2013 as amended, and can it be in particular be deduced that neither completed nor incomplete recovery processes can be excluded?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2019_4820
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Interaction of voluntary capital deduction (CRR art 3) with required coverage of non-performing exposures (art 47c), exposure value for credit risk (art 111) and treatment of expected loss amounts (art 159)

Can voluntary CET1 reductions taken following CRR article 3 qualify as 'other own funds reductions' referred to in articles 47c, 111 and 159?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2019_4801
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Definition of private equity exposures in articles 155(2) and 155(3)

Do “private equity exposures in sufficiently diversified portfolios” eligible to a Risk Weight (RW) of 190% in simple risk weight approach in article 155(2) and a PD of 65% in the PD/LGD approach in article 155(3) refer to any non-listed equity instrument and/or shares in a CIU or units in a CIU for which the underlying exposures are non-listed equity instruments, provided that they are part of a sufficiently diversified portfolio?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2019_4774
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Clarification about the definition of default for retail exposures

It is unclear how to determine what should be considered as retail exposures for the purpose of the definition of default for retail exposures.What kind of exposures should be considered to determine default under Article 178 CRR?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: EBA/GL/2016/07 - Guidelines on the application of the definition of default under Article 178 CRR
  • ID: 2019_4757
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Recognition criteria for off-balance sheet items for exposure value calculation

If based on the applicable accounting framework (IFRS-EU) it is concluded that there is no contingent liability that should be disclosed for accounting purposes, is it then still possible that an off-balance sheet item exists, which should be recognised for exposure value calculation per Articles 111 CRR or 166 CRR?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2019_4751
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Specialised Lending - Interpretation of contractual arrangements that give the lender a substantial degree of control

How shall Article 147 (8)(b) CRR be interpreted when identifying ‘contractual arrangements that give the lender a substantial degree of control over the assets and the income that they generate’ in the context of real estate financing?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2019_4672
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022