What is the definition of “other commercial premises” as commercial immovable property in Article 126 CRR for the purposes of application of preferential risk weights for the risk weight assets purposes, if all other conditions stipulated in the CRR are met?
From Article 126 CRR and EBA answers to the EBA Q&A 1214 and Q&A 94 is still not clear what types of other commercial premises is covered by the Article 126 of the CRR.
1) In general and according to EBA answer to Q&A 1214 concerning CRR any immovable property not meeting the definition of residential immovable property stated in Article 4 (1) (75) of the CRR may be considered commercial immovable property for CRR purposes.
2) According to EBA answer to Q&A 94: “Unless the residential purpose dominates the purpose of commercial exploitation of the property, agricultural and silvicultural properties should be considered commercial properties.”
3) According to EBA answer to Q&A 1214 and in accordance with Regulation (EU) 680/2014 Annex V, Part 2, point 41 (h) “Mortgage loans [Loans collateralized by immovable property]” include loans formally secured by immovable property collateral independently of their loan/collateral ratio (commonly referred as ‘loan-to-value’). Although these properties enter into the disclosure of financial information, it may not be applicable for the purpose of applying Article 125 or 126 of the CRR for the purpose of assigning a preferential risk weight.
4) According to EBA answer to Q&A 1214: “exposures secured by mortgages on immovable property (Article 124 CRR) are exposures secured by residential property or secured by "offices or other commercial premises" properties. In determining whether an exposure meets the description of "offices or other commercial premises" for the purposes of Article 126(1) of the CRR, consideration should be given to the dominant purpose of the property in question, which should be linked to an economic activity.
However, this does not mean that all commercial immovable property is necessarily recognised for the risk weights for exposures or any part of an exposure fully and completely secured by mortgages on commercial immovable property according to Article 126 of the CRR. Recognition of "commercial immovable property" for the risk weights applicable to exposures or any part of an exposure fully and completely secured by mortgages under Article 126 of the CRR is restricted by the conditions set out in Articles 126(1) and (2) CRR.”
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