Question ID
2015_2227
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Credit risk
Article
115
Paragraph
3
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
NA
Type of submitter
Competent authority
Subject matter
Classification of Churches and Religious Communities
Question

Will the exposures of churches and religious communities that do not fall under Articles 115 (3), 127, and 128 be classified as Corporates (Article 122) or Retail (Article 123)? Additionally, can these be classified as SMEs?

Background on the question

Article 115(3) CRR states how to treat exposures that can raise taxes in accordance with legislation conferring on them the right to do so. However, it does not indicate how to treat all other exposures.

Submission date
Final publishing date
Final answer

For a classification as Retail exposures according to Article 123 of the CRR all the requirements mentioned in letters (a) to (c) of the first subparagraph of Article 123 have to be met, which includes the requirement that the exposure "shall be one of a significant number of exposures with similar characteristics such that the risks associated with such lending are substantially reduced".

Where exposures to churches and religious communities that do not fall under Articles 115(3), 127, and 128 of Regulation (EU) No 575/2013 (CRR) cannot be assigned to any other exposure class, they should, for the purposes of the calculation of risk-weighted exposure amounts, be risk weighted under the Standardised Approach according to Article 113(5) of the CRR. Notwithstanding the risk weighting, these exposures should, for the purposes of complying with Article 112, be assigned to exposures to corporates under point (g).

To the extent that the requirements of Article 501 are met, the SME discount factor should be applied.

Status
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.

Disclaimer

The Q&A refers to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.