Question ID:
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Credit risk
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Regulation (EU) 2018/171 - RTS on the materiality threshold for credit obligations past due
Article 1(2)
Disclose name of institution / entity:
Type of submitter:
Credit institution
Subject Matter:
Calculation of the relative threshold in case specific cases.

How should be calculated the relative threshold for a client who has fees or quotes in default arising from off balance sheet exposures?

Background on the question:

The Commission Delegated Regulation 2018/171 set that the relative component shall be expressed as a percentage reflecting the amount of the credit obligation past due in relation to the total amount of all on-balance sheet exposures to that obligor of the institution, the parent undertaking of that institution or any of its subsidiaries, excluding equity exposures.

There are some exposures and circumstances where there is no possible to calculate this relative component or it is not very clear how to calculate. For example in the case of a debtor, who has only off balance sheet exposures and the fees linked to these off balance sheet exposures are in default, the numerator of the relative component would be the amount of the fee but there is no denominator except for the same fee in default, as far in the denominator only could be the on-balance sheet exposures. So the relative component will achieve the 100% always even the fee is for a very low amount.  So, how can we calculate the relative component in this case?

Furthermore, in the case that a debtor has other credit exposures then in the numerator would be included the defaulted fees but in the denominator would not be the exposure that gave rise to that fee.

Date of submission:
Published as Rejected Q&A
Rationale for rejection:

This question has been rejected because the issue it deals with is already explained or addressed in Article 1(2) of the RTS  on the materiality threshold.

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Rejected question