Question ID:
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Credit risk
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Disclose name of institution / entity:
Name of institution / submitter:
European Mortgage Federation
Country of incorporation / residence:
Type of submitter:
Industry association
Subject Matter:
Definition of default in terms of days

Is it correct that the 180 day definition is only available for other purposes linked to the referenced defaulted loans under the standardised approach – but not for the 100% risk weight? Could this represent a discrimination of SA banks against IRB banks which might be allowed to apply a 180 day definition for the risk weight of defaulted residential/SME commercial/public sector loans under their internal rating systems?

Background on the question:

Article 127 (under Part Three Capital Requirements; Title II Capital requirements for credit risk; Chapter 2 Standardised approach; Section 2 Risk weights) - when defining the default of an obligor - refers to Article 178 (under Part Three Capital Requirements; Title II Capital requirements for credit risk; Chapter 3 Internal Rating Based approach; Section 6 Requirements for the IRB approach; Sub-section 2 Risk quantification). Article 178, paragraph 1 point b) defines the default event in 90 days and allows competent authorities to “replace the 90 days with 180 days for exposures secured by residential or SME commercial real estate in the retail exposure class, as well as exposures to public sector entities”. This point also states that “the 180 days shall not apply for the purposes of Article 127”. This latter statement has been added to the final text at a later stage of the first level legislative process.

Date of submission:
Published as Final Q&A:
Final Answer:

The 180 days shall not apply for the purposes of Article 127 of Regulation (EU) No 575/2013 (CRR) according to Article 178(1)(b) of CRR. When assessing the regulatory capital implications of this provision, please note that the legal implications of classifying exposures as defaulted differ between the Standardised and the IRB approach.



This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate–General of the Commission (Directorate General for Internal Market and Services) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.

Final Q&A
Answer prepared by:
Answer prepared by the European Commission because it is a matter of interpretation of Union law.
Note to Q&A:

Update 26.03.2021: This Q&A has not yet been reviewed by the European Commission in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR).