Question ID
2019_4889
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Credit risk
Article
116
Paragraph
1-5
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
Not applicable
Type of submitter
Credit institution
Subject matter
USA public sector entities risk weight
Question

USA is listed by the EBA as applying supervisory and regulatory arrangements at least equivalent to those applied in the Union. However the competent authorities of this country does not require the use of ECAI ratings to assess risk weights of exposures to public sector entities. Should we nevertheless consider that this competent authority treat exposures to public sector entities in accordance with paragraph 1 or 2 of article 116, and so should we risk weight these exposures in accordance to paragraph 1 or 2?

Background on the question

USA competent authorities do not use ECAI ratings. Nevertheless, we think that they treat these exposures in accordance to paragraph 1 or 2 because they preconize a 20 percent risk weight should be applied to general obligations of states and other political subdivisions of OECD countries. And exposures that rely on repayment from specific projects (for example, revenue bonds) are assigned a risk weight of 50 percent (source https://www.federalreserve.gov/aboutthefed/boardmeetings/standardized_ap...).

Submission date
Rejected publishing date
Rationale for rejection

Please note that as part of adjustments to the Single Rulebook Q&A process, agreed by the EBA and the European Commission, it has been decided to reject outstanding questions submitted before 1 January 2020, when the Q&A process was updated as part of the last ESAs Review. In particular, the question that you have submitted has now regrettably been rejected and will not be addressed.

If you believe your question would still benefit from clarification, you are invited to resubmit your question, adapting it to reflect any legislative, regulatory or other relevant developments that may have occurred since the initial date of submission. The EBA will aim to address resubmitted questions as a matter of priority. When considering to resubmit, you are kindly requested to observe the updated admissibility criteria agreed in the context of the adjustment of the Q&A process, available in the Additional background and guidance for asking questions. We hope for your understanding.

For further information please refer to the press release and the updated Q&A page.

Status
Rejected question