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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

Treatment of joint credit obligations

Do the requirements established in the Guidelines on the application of the definition of default under Article 178 of Regulation (EU) No 575/2013 regarding joint credit obligations, and in particular the requirements 95, 96, 97, 98, 99, 103, 104 and 105, relate or affect exclusively to retail exposures? In that case, could the treatment of joint credit obligations in which the obligors are classified as Non – Retail differ from the treatment of joint credit obligations in which the obligors are classified as Retail? In addition, and, as per this purpose, what should be the treatment of joint credit obligations shared by retail and non-retail obligors?

  • 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: 2018_4431
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 07/08/2020

10 % LGD floor for retail exposures secured by residential property

How should an institution, which uses the IRB approach calculate the 10 % LGD floor mentioned in Article 164(4) CRR in the case where a part of the individual exposures are guaranteed by a guarantor (institution) which is treated under the Standardised Approach?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3554
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 07/08/2020

Retail exposures of subsidiary / branch of an EU credit institution established outside the EU

Could the subsidiary / branch of an EU credit institution established outside the EU use local criteria (i.e. criteria widely used by credit entities and public bodies in the relevant foreign jurisdiction) to classify an undertaker as a small or medium-sized enterprise in order assign to its exposures a risk weight of 75% according to Article 123?Could the subsidiary / branch of an EU credit institution established outside the EU use local criteria (i.e. criteria widely used by credit entities and public bodies in the relevant foreign jurisdiction) to classify an undertaker as a small or medium-sized enterprise in order assign to its exposures a risk weight of 75% according to Article 123?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2019_4590
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 31/07/2020

Scope of conversion factor estimation and application

Are positions with drawn amount without an underlying credit line (i.e. overdraft without credit line) within the scope of credit conversion factor estimation as per Article 166(8) CRR?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3650
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 24/07/2020

Use of Maturity Mismatch for Exposures arising under Master Netting Agreements

Do the requirements to adjust the value of collateral for maturity mismatch (Article 239) apply when using the supervisory volatility adjustments approach for Master Netting Agreements under Article 220?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3375
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 24/07/2020

Effective LGD

Could effective LGD (LGD*) be used both in AIRB and FIRB if the operation has an eligible financial collateral under Financial Collateral Comprehensive method?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3304
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 24/07/2020

Immovable property collateral under the Standardised approach & Credit risk mitigation principles

Do the Article 193 ‘Principles for recognising the effect of credit risk mitigation techniques’ and Article 194 ‘Principles governing the eligibility of credit risk mitigation techniques’ apply to immovable property collateral under the Standardised approach?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2018_4300
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 15/11/2019

Treatment of failed SRT under Traditional Securitisation

In case the significant credit risk cannot be considered to have been transferred according to 244 of Regulation (EU) No 575/2013 as amended by Regulation (EU) 2017/2401, but the exposures had been already derecognised from the bank's balance sheet, shall the bank continue to calculate the RWA for the securitised exposures as if they were never securitised? Does it mean that no RWA will be calculated for the securitisation position?  Additionally, if the exposures have been securitised against cash, and the cash invested in new loan, would RWA be calculated for these new loans

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2018_4207
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 26/07/2019

Timely payment requirement for unfunded credit protection provided under credit risk insurance policies

Does unfunded credit protection - which a bank has purchased in order to hedge a loan exposure and which provides the protection-seller with the contractual right to compensate credit losses according to the original scheduled payment dates of the hedged loan - fulfil the timely payment requirement for unfunded credit protection in a situation where the loan becomes due and payable prior to the original scheduled payment dates?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3576
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 26/07/2019

Proposals for mortgage credit extension described in Article 14 of the Directive 2014/17/EU as off-balance sheet exposures

Are the binding proposals for mortgage credit extension described in Article 14 of the Directive 2014/17/EU off-balance sheet exposures according to Annex I CRR?Should FINREP,COREP reporting include such binding proposals for mortgage credit extension?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
  • ID: 2017_3376
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 26/07/2019

Asset denominated in one currency and funded in a different currency subject to a FX Swap exchanging those two currencies

For the purpose of the credit risk standard risk-weight attribution, can we consider that 1) an asset denominated in one currency and funded in a different currency subject to a FX Swap exchanging those two currencies is equivalent to 2) an asset denominated and funded in the same currency?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2018_3832
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 19/07/2019

Exposures in the form of covered bonds

Would the preferential treatment set out in Articles 129(4) and (5) and in Article 161(1)(d) be applicable to derivative instruments entered into in relation to covered bonds exposures, provided that the counterparty’s claims are secured by the same pool of assets as the covered bonds’ and rank pari passu with the claims of the covered bonds holders?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2018_4328
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 29/03/2019

Exposures to unrated institutions

How should exposures to unrated institutions be treated under Article 121 CRR in the cases where these institutions are located in a Member State or in a third country that does apply supervisory and regulatory arrangements at least equivalent to those applied in the Union and the exposures to the central government and central bank denominated and funded in domestic currency are assigned a risk weight according to Articles 114(4) to (7)?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2018_3765
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 01/03/2019

Exposures to regional governments, local authorities or public sector entities which are treated as exposures to central governments under Articles 115 and 116 CRR

Please clarify how Article 115(2) CRR shall be applied in case regional governments and local authorities are treated under the SA by application of Article 150 CRR and central governments are treated under the IRB Approach. 

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3517
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 01/03/2019

Material exposure in connection with term "days past-due" in the definition of non-performing exposure

What is the reading of the term "material" exposure in connection with "days past-due" for the purpose of definition of non-performing exposure?Can the "materiality threshold" be applied in a way that the counting of days past due starts when the past-due amount of the whole exposure of the obligor exceeds pre-defined materiality threshold?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
  • ID: 2014_1297
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 11/01/2019

Credit Risk on Gold Bullion

Under Article 134(4) CRR, what would the risk weight be if gold bullion is held on our behalf by other institutions and where such investment is not backed by gold bullion liabilities?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3649
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 21/12/2018

Application of the definition of ‘speculative immovable property financing’ under the Standardised Approach

In case the borrower is the developer of a real estate project for which future contract agreements with future owners have been signed about the properties under development, would this exposure fall within the scope of the speculative immovable property financing?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3173
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 21/09/2018