Question ID:
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Credit risk
153, 162
4, 4
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Disclose name of institution / entity:
Name of institution / submitter:
Association of German Public Banks
Country of incorporation / residence:
Type of submitter:
Industry association
Subject Matter:
Use of bona fide estimates for the determination of the size of a corporation

Is it allowed to use bona fide estimates for the determination of the size of a corporation for the purposes of Articles 153(4) or 162(4) CRR (identification of SMEs) analogous to Article 4(3) of the Annex Commission Recommendation 2003/361/EC? 

Background on the question:

According to Article 153(4) or 162(4) CRR the correlation coefficient or, respectively, the maturity, as input parameters for the determination of the risk weight, can be modified dependent on the consolidated annual sales or the consolidated assets of the group to which the corporation belongs.

Newly established enterprises, however, regularly have neither drawn up annual accounts nor can they show their annual sales. To exclude newly established corporations from the application would be contrary to the intention of the legislator.

Recital 44 of the CRR clearly emphasizes the fundamental importance of small and medium sized enterprises for economic development. Thereof, the aim of increasing loans to SME by reducing the capital charges for loans to these corporations is derived. Newly established corporates, on the one hand, typically fall into the SME category. On the other hand, they cannot prove this because no annual accounts or annual sales exist. For the application of the “SME supporting factor” Article 501(2)(b) CRR explicitly refers to the Commission Recommendation 2003/361/EC. Other references for the determination of annual sales or total assets are missing.

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

Article 153(4) of Regulation (EU) No. 575/2013 (CRR) provides by means of a correlation formula a relief in capital requirements for exposures to companies where the total annual sales for the consolidated group of which the firm is a part is less than EUR 50 million. Institutions shall substitute total assets of the consolidated group for total annual sales when total annual sales are not a meaningful indicator of firm size and total assets are a more meaningful indicator than total annual sales.

Article 162(4) CRR allows for exposures to corporates situated in the Union and having consolidated sales and consolidated assets of less than EUR 500 million to consistently set the a maturity value (M) as set out in Article 162(1) CRR instead of applying Article 162(2) CRR. Institutions may replace EUR 500 million total assets with EUR 1 000 million total assets for corporates which primarily own and let non-speculative residential property.

Since both Article 153(4) and Article 162(4) CRR derogate from the requirements, which are otherwise applicable under the IRB-Approach for exposures assigned to the corporate exposure class, it needs to be ensured that this privilege is not extended inappropriately. An institution therefore needs to have adequate current information available  which is sufficient to estimate the size of an entity in a reliable manner. When requested, institutions should be able to adequately demonstrate the fulfilment of this requirement to its competent authorities.

Under these conditions institutions may use a best effort based assessment of the size of a newly established corporation for the purposes of Articles 153(4) or 162(4) CRR if they can provide adequate assurance, based on the information they have collated and scrutinised, that the size of a corporation has been accurately determined.

Final Q&A
Answer prepared by:
Answer prepared by the EBA.
Note to Q&A:

Update 26.03.2021: This Q&A has been reviewed in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR) and continues to be relevant.