The EBA publishes final draft amending technical standards on factors assessing the appropriateness of real estate risk weights

The European Banking Authority (EBA) today published its final draft amending Regulatory Technical Standards (RTS) on the types of factors to be considered by national authorities in assessing the appropriateness of real estate risk weights. This review is driven by the revised Capital Requirements Regulation (CRR 3), which confers a new mandate onto the EBA regarding the Standardised Approach of credit risk.

Based on the assessment of the CRR3 changes to the treatment of exposures secured by immovable property under the Standardised Approach of credit risk, the only amendment identified to the existing RTS consists in updating the relevant legal references to align with the new banking framework.

The original RTS delivered as well on the sister mandate under the IRB on the appropriateness of the minimum loss given default (LGD) values for retail exposures secured by immovable property. For the sake of simplification and regulatory consistency, the EBA is, therefore, proposing to align the RTS legal references to the IRB with the CRR3.

Legal basis and next steps

These final draft RTS have been developed according to Article 124(11) of Regulation (EU) 2024/1623 (CRR3), which mandates the EBA, in close cooperation with the European Systemic Risk Board, to develop draft RTS to specify the types of factors to be considered for the assessment of the appropriateness of the risk weights referred to in article 124(11).