2014_810 Non Credit Obligation Assets | European Banking Authority

Question ID:

2014_810

Legal Act:

Regulation (EU) No 575/2013 (CRR)

Topic:

Credit risk

Article:

148

Paragraph:

COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:

Not applicable

Article/Paragraph:

Not applicable

Disclose name of institution / entity:

Yes

Name of institution / submitter:

Co-operative Bank

Country of incorporation / residence:

United Kingdom

Type of submitter:

Credit institution

Subject Matter:

Non Credit Obligation Assets

Question:

Paragraph 5 of article 148 of CRR, states "An institution that is permitted to use the IRB Approach for any exposure class shall use the IRB Approach for the equity exposure class laid down in point (e) of Article 147(2), except where that institution is permitted to apply the Standardised Approach for equity exposures pursuant to Article 150 and for the other non credit-obligation assets exposure class laid down in point (g) of Article 147(2)." It is not clear whether an institution with an IRB Approach permission should treat "non customer assets" e.g. fixed assets, cash etc under the IRB approach (reported as Non Credit Obligation) or under the standardised approach (reported as Other Assets)

Background on the question:

The wording in paragraph 5 of article 148 of CRR could be read as reported under the IRB approach, but can also be read as reported under the standardised approach, as there potentially is a missing comma.

Date of submission:

04/02/2014

Published as Final Q&A:

12/09/2014

Final Answer:

An institution that is permitted to use the IRB Approach for any exposure class shall use the IRB Approach for the other non-credit-obligation assets exposure class laid down in point (g) of Article 147(2) of Regulation (EU) No 575/2013 (CRR).

DISCLAIMER:

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.

Status:

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).