Response to discussion on the simplification and assessment of the credit risk framework
Q17. Do you agree with the approach proposed by EBA? Do you see further measures as necessary?
ASSILEA agrees with the analytical framework proposed by the EBA to assess trade‑offs between simplicity and risk sensitivity.
As a further measure, ASSILEA encourages the EBA to explicitly consider specialised business models, such as leasing, as test cases for proportional and risk‑based simplification, in line with forthcoming mandates under CRR Article 495c.
ASSILEA considers that the refinements to the prudential treatment of leasing exposures mandated under Article 495c of the CRR fully meet all assessment criteria set out on page 25 of the EBA Discussion Paper. This conclusion is supported by consistent and mutually reinforcing quantitative evidence at national, European and academic level, demonstrating both the economic relevance and the low‑risk profile of leasing.
Criticality of exposures
Leasing exposures are highly critical from a qualitative and economic perspective.
At European level, leasing represents a key financing channel for the real economy, with €454 billion of new leasing volumes granted annually and more than €1 trillion in outstanding exposures (Leaseurope, 2024). Around 50% of EU SMEs consider leasing a relevant source of finance, alongside traditional bank lending (SAFE Survey 2024).
At national level, ASSILEA and Cerved data confirm that leasing predominantly supports micro, small and medium‑sized enterprises, with 67% of lessees classified as SMEs. Leasing directly affects investment capacity in capital goods, digitalisation and the green transition, as also recognised by EU industrial and sustainability policies.
For specialised leasing institutions, leasing is the core and often non‑substitutable business model, meaning that prudential miscalibration directly impacts pricing and availability of finance. These elements demonstrate a high degree of qualitative criticality, fully in line with the EBA criteria.
Materiality of miscalibration
Empirical evidence clearly shows that the current prudential treatment of leasing exposures under the Standardised Approach materially overstates their actual credit risk.
- Kpmg’s analyses on ASSILEA’s data for Italy show that, over the period 2017–2024, loss rates on leasing exposures were approximately 16% lower than those observed on comparable bank loans.
- ASSILEA–Cerved Rating Agency analysis focused on 2024-2025 finds that firms using leasing display a systematically lower probability of default than the rest of the rated corporate population:
- PD of 4.3% for the Assilea sample versus 5.5% for non‑leasing firms in 2025;
- the same pattern holds in earlier years (5.4% vs 6.5% in 2023; 4.8% vs 6.0% in 2024), confirming structural, not cyclical, differences.
- The academic study by Alfani (2026), based on a 15‑year dataset (2011–2025) covering almost the entire Italian leasing market (around 1 million contracts per month), shows that:
- default rates on leasing contracts are statistically lower or equal to those on bank loans (p < 0.001);
- leasing defaults react less strongly to macro‑financial shocks, including monetary policy tightening.
- Earlier pan‑European evidence from the University of Cologne (2019) demonstrates that regulatory capital requirements for leasing are multiple times higher than simulated unexpected losses, even under downturn scenarios.
Taken together, this evidence demonstrates a material and persistent gap between regulatory parameters and observed risk, satisfying the EBA’s materiality criterion.
Simplicity of the rules
The refinements envisaged under Article 495c CRR do not increase complexity; rather, they correct an overly crude simplification that currently assimilates leasing to unsecured lending.
Leasing transactions are:
- highly standardised in contractual terms;
- supported by tangible, repossessable assets.
- characterised by efficient recovery mechanisms, including re‑leasing and asset resale.
Both empirical and theoretical evidence (Alfani, 2026) shows that ownership and repossession rights significantly reduce moral hazard and default risk, increasing pledgeable income and reducing credit rationing.
Aligning the prudential treatment with these features can be achieved through calibrated adjustments within the Standardised Approach, without introducing new modelling layers or operational burdens, thereby improving overall simplicity.
We ask for a 50% risk weight for retail leasing exposures and a 65% risk weight for corporate leasing exposure in the SA. These are the risk weights for the total portfolio analysed by the University of Cologne. These risk weights are sufficiently conservative in the sense that they lead to regulatory capital requirements far above unexpected losses. In addition, these risk weights ensure that on average the capital requirements under the SA are at least 5% above the capital requirements under the A-IRB approach. These leasing risk weights are derived from a leasing factor calculated as a multiplier that equalises capital requirements under the SA to capital requirements under the A-IRB approach.
Similarly, in the SA, real estate leasing is treated as a mortgage on commercial immovable property and, therefore, even in this case, the ownership of the asset by the leasing companies is not adequately recognized in the prudential framework. In our Question ID 2024_7226 we kindly requested the EBA to clarify whether ADC does not apply to exposures to entities for financing the acquisition of land and/or the construction of real estate which is intended for own use, where the repayment of the loan does not materially depend on the cashflow generated by the property either by sale or rent to third unrelated entities.
The leased real estate asset, both “under construction phase” and in the subsequent phase once it is built, is instrumental to the exercise of an economic activity and is a production factor (like movable instrumental assets): the credit payment depends only on the financial condition of the lessee. In the two phases the credit contractual status does not change unlike other technical forms that, by distinguishing and separating the two phases (“under construction” and construction), configure "unsold" risk (an IPRE riskiness).
A 150% RW of leasing exposure on non-residential buildings under construction would penalize those SMEs which ask for new finance to enlarge their activity and production to adequately compete in the national and international market.
Transition costs
Transition costs associated with the refinements under Article 495c CRR are expected to be limited.
Most leasing companies apply the Standardised Approach and manage homogeneous, asset‑based portfolios. The envisaged changes:
- do not require redevelopment of IRB models;
- rely on data already available to institutions and supervisors.
Any implementation costs would therefore be one‑off and proportionate, while the benefits—more efficient capital allocation and better pricing of investment finance—would be structural and recurring.
Intrinsic consistency
Refining the prudential treatment of leasing enhances the internal consistency of the credit risk framework.
Empirical data consistently show that leasing exposures exhibit lower default rates, lower LGDs and lower volatility than unsecured lending. Subjecting these exposures to similar or identical capital requirements introduces an internal inconsistency, whereby less risky exposures are not adequately distinguished from riskier ones.
The adjustments foreseen under Article 495c CRR restore coherence between underlying risk and own‑funds requirements, fully respecting the principle that higher risk exposures should attract higher capital charges.
Extrinsic consistency
The proposed refinements are consistent with international standards and justified by European specificities.
International literature confirms the risk‑mitigating role of asset ownership and enforceable repossession rights. The EU leasing market is characterised by strong legal protection of ownership, deep secondary markets for assets and a central role in SME financing. The mandate in Article 495c CRR explicitly recognises these features and provides a clear legal basis for a proportionate, evidence‑based adjustment, without undermining global prudential principles.
Conclusion
The quantitative evidence provided by ASSILEA, Cerved Rating Agency, Leaseurope and independent academic research demonstrates that the refinements to the prudential treatment of leasing exposures under Article 495c CRR:
- concern exposures of high economic relevance;
- address a material and empirically documented miscalibration;
- improve risk sensitivity without increasing complexity;
- entail limited and proportionate transition costs;
- enhance both intrinsic and extrinsic consistency of the framework.
They therefore fully satisfy the assessment criteria set out on page 25 of the Discussion Paper and represent a concrete, well‑substantiated example of proportionate and evidence‑based simplification of the EU credit risk framework.