EBA consults on Draft Guidelines on the methodology to estimate and apply credit conversion factors under the Capital Requirements Regulation

The European Banking Authority (EBA) today launched a public consultation on its draft Guidelines on the methodology institutions shall apply for their own estimation and application of credit conversion factors (CCF) under the Capital Requirements Regulation (CRR). The consultation runs until 15 October 2025.

These Guidelines are a part of the IRB repair programme, are built on the now-stabilised CRR framework, and aim to provide institutions with clear and consistent expectations for Credit Conversion Factor (CCF) estimation.

By leveraging on existing guidance, particularly through the Guidelines on the Probability of Default (PD) and Loss Given Default (LGD) estimation, the EBA aims to ensure alignment and coherence across key risk parameters in the IRB approach, thus promoting a harmonised and reliable modelling landscape.

Much of the CCF guidance formalises existing expectations already in place for PD and LGD, ensuring consistency for institutions while enhancing clarity for CCF models. Recognising the relatively lower materiality and narrower scope of CCF compared to PD and LGD, the EBA aims to introduce with these new Guidelines simplified approaches where appropriate, to support the efficient implementation of risk sensitive methodologies without compromising prudence.

The Consultation Paper includes a list of detailed questions on the proposed approaches to ensure that the EBA receives relevant feedback in order to provide meaningful guidelines to maintain robust internal models while reducing unnecessary complexity.

Consultation process

Responses to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 15 October 2025.

A public hearing will take place via conference call on 3 September 2025 from 15:00 to 16:00 CET. The deadline for registration is the 29 August 2025, 16:00 CET.

All contributions received will be published after the consultation closes, unless requested otherwise.

Legal basis and next steps

Under Article 182(5) of Regulation (EU) No 575/2013 amended by Regulation (EU) No 2024/1623, the EBA is mandated to provide guidance to specify the methodology institutions shall apply for the own estimation and application of CCFs, i.e. the IRB-CCF GL.