- 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:
- Type of submitter:
- Subject Matter:
- Obligation to carry out analysis and to consult with EBA on planned increase of risk weights before RTS on this matter are finally adopted and published in the Official Journal of the European Union
Is there an obligation to carry out appropriate analysis and to consult with EBA on planned increase of risk weights since RTS on this matter are not finally adopted and published in the Official Journal of the European Union?
- Background on the question:
Polish Financial Supervision Authority in cooperation with Polish Ministry of Finance wants to make use of Article 124 (2) of the CRR since higher risk weights (100%) on exposures denominated in foreign currency had been present in national law prior to introduction of CRDIV/CRR. They prepared proposal of legal act based on Article 124 (2), increasing risk weights in banks in Poland for foreign currency denominated expos.
- Date of submission:
- Published as Final Q&A:
- Final Answer:
The first sub-paragraph of Article 124(2) CRR states that the competent or designated authority
ies shall periodically and at least annually assess whether the risk weight of 35% for exposures to one or more property segments secured by mortgages on residential property referred to in Article 125 located in one or more parts of the territory of the Member State of the relevant authority and the risk weight of 50% for exposures secured by mortgages on commercial immovable property referred to in Article 126 located in one or more parts of the their territory of the Member State of the relevant authority are appropriately based on (a) the loss experience and (b) forward-looking immovable property markets developments. This requirement applies irrespective of the draft regulatory standards being submitted to the Commission.
The same applies to the requirement to
consult notify the EBA and the ESRB on the adjustments to the risk weights and criteria applied, as referred to in the sixth sub-paragraph of Article 124(2) CRR: the competent or designated authority ies should consult the EBA on the changes to the risk weights and criteria applied, irrespective of the draft regulatory standards on this topic being finalised. Compliance to this requirement is necessary in order to ensure consistency in the application of higher risk weights and stricter criteria, and in order to allow the EBA to publish the changes to the risk weights and stricter criteria on its website, such that institutions in all EU Member States can apply these changes to the risk weights as required by Article 124 (5)(6) CRR.
- Final Q&A
- Answer prepared by:
- Answer prepared by the EBA.
- Note to Q&A:
Update 26.03.2021: This Q&A has been updated in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR).