Question ID
2022_6368
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Credit risk
Article
166
Paragraph
8
Subparagraph
d
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
Not applicable
Type of submitter
Credit institution
Subject matter
Own estimation of conversion factors for off-balance sheet exposures for binding mortgage/loan offers
Question

Is the own estimation of credit conversion factors considered relevant for binding mortgage/loan offers, with a maturity of less than one year?. Should the total amount of a binding mortgage/loan offer be considered as "currently undrawn amount of a commitment that could be drawn" or not?

Background on the question

The estimation of the credit conversion factor as described in article 4(56) of the CRR requires the "currently undrawn amount of a commitment that could be drawn".

It is also to be considered that a client in financial difficulties cannot directly draw amounts from a mortgage/loan offer as he or she could in case of a granted credit facility. 

Q&As 1263, 3366 and 3376 do not directly address the specific case of binding mortgage offers.

For the purpose of RWA calculation the treatment of these exposures as medium/low risk items or as exposures with a own estimated conversion factor close to 1 has a significant quantitative RWA impact for banks with large RRE mortgage exposures. If banks apply different treatments of this closed norm this could have an adverse impact on the level playing field.

Submission date
Rejected publishing date
Rationale for rejection

This question has been rejected because the matter it refers to has been answered in Q&A 3376 and the question is not sufficiently clear.

The Single Rule Book Q&A tool has been established to provide explanations and non-binding interpretations on questions relating to the practical application or implementation of the provisions of legislative acts referred to in Article 1(2) of the EBA’s founding Regulation, as well as associated delegated and implementing acts, and guidelines and recommendations, adopted under these legislative acts.

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Status
Rejected question