Large exposures and structural measures

The core aim of the large exposures regime is to act as a backstop to prevent an institution from incurring disproportionately large losses as a result of the failure of an individual client or group of connected clients due to the occurrence of unforeseen events. The objective of ensuring that risks arising from large exposures to individual clients or groups of connected clients are kept to an acceptable level is part of the overarching principles of prudential supervision, which are to ensure continued financial stability, maintain confidence in financial institutions and protect consumers, in particular depositors. The EBA has done extensive work regarding the review of the large exposures regime and continues to work to ensure a harmonised application across the EU.
An EU legal framework for structural measures is under development after the publication of the report of the high-level group on possible reforms to the structure of the EU banking sector (aka "Liikanen report") and the European Commission proposal on banking structural reform published on 29 January 2014. However, structural measures adopted at a national level can already have an impact on the large exposures regime when trading entities are ring-fenced within a banking group. In that context, the EBA shall provide an Opinion on such structural measures adopted at national level.

Technical Standards, Guidelines & Recommendations

  • Guidelines on Connected Clients

    These draft Guidelines review and update the ‘Guidelines on the implementation of the revised large exposures regime’ issued by the Committee of European Banking Supervisors (CEBS) on 11 December 2009. Their focus is exclusively on the issue of connected clients as defined in the Capital Requirements Regulation (CRR) and they reflect the developments in the area of shadow banking and large exposures both at EU and international level.

    Status: Final (awaiting translation into the EU official languages)

  • Guidelines on limits on exposures to shadow banking

    These Guidelines propose the criteria to set limits on EU institutions’ exposures to shadow banking entities. It lays out a qualitative approach for institutions to develop their internal policies for monitoring and setting appropriate limits, both at individual and aggregate levels. These Guidelines will also help inform the Commission’s work in relation to its report on the appropriateness and impact of imposing limits on exposures to shadow banking entities under Article 395(2) of the Capital Requirements Regulation (CRR).

    Status: Final and translated into the EU official languages

  • Implementing Technical Standards on Supervisory Reporting

    These Implementing Technical Standards (ITS) aim at implementing uniform reporting requirements which are necessary to ensure fair conditions of competition between comparable groups of credit institutions and investment firms. Uniform requirements will ultimately make institutions more efficient and result in a greater convergence of supervisory practices. These ITS will cover reporting of own-funds and capital requirements (currently under the COREP Guidelines), reporting of financial information (currently under the FINREP Guidelines),reporting on large exposures (currently under the COREP Large Exposures Guidelines), reporting on leverage and reporting on liquidity and stable funding. They will be complemented by other specific reporting templates introduced by the Capital Requirements Regulation (asset encumbrance, forbearance and non-performing exposures).

    Status: Adopted and published in the Official Journal

  • Regulatory Technical Standards on the determination of the overall exposure to a client or a group of connected clients in respect of transactions with underlying assets

    These Regulatory Technical Standards (RTS) aim at defining the conditions and methodologies used to determine the overall exposure to a client or group of connected clients resulting from a transaction with underlying assets and the risks inherent in the structure of the transaction itself.

    Status: Adopted and published in the Official Journal

  • Implementation Guidelines on large exposures exemptions for money transmission, correspondent banking, clearing and settlement and custody services

    These Guidelines provide further clarification on the criteria to be met to qualify money transmission, correspondent banking, clearing and settlement and custody services for an exemption from the large exposures rules. The Guidelines elaborate in particular on “types of services”, the definition of client activity and “life-span” of exposures. They are structured in two main parts, covering respectively Article 106(2) (c) and (d) of the Capital Requirements Directive.

    Status: Final and translated into the EU official languages

  • Guidelines on the revised large exposures regime

    These Guidelines aim at ensuring an harmonised application of the revised large exposures regime regarding the definition of "connected clients", in particular with reference to the concepts of "control" and "economic interconnection".

  • Guidelines on common reporting of large exposures

    These Guidelines include common reporting templates and guidance in relation to large exposures reporting. They are included in the COREP framework so as to ensure a unified European reporting system. Thereafter, large exposures reporting will be based on the same standards (i.e. frequency, remittance dates, formats and platform) as the other COREP data. The development of the templates was undertaken on the same basis as the COREP framework, i.e. to identify the items to be reported on a “need-to-know”-basis.

    Status: Repealed

Opinions, Reports and other Publications