Question ID:
2022_6394
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Topic:
Credit risk
Article:
120 and others
Paragraph:
N/A
Subparagraph:
N/A
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Article/Paragraph:
N/A
Disclose name of institution / entity:
Yes
Name of institution / submitter:
Kurt Lund Accountancy
Country of incorporation / residence:
Sweden
Type of submitter:
Accounting firm
Subject Matter:
Risk weight for asset class of non-preferred senior debt
Question:

What risk weight should be applied to non-preferred senior (NPS) debt, under the standardised approach for credit risk? 

Background on the question:

Non-preferred senior debt was a new asset class in 2018 when this question was submitted the first time. We refer to non-preferred senior debt as the new asset class that many European institutions has issued in order to fulfill their MREL requirements. The question is what risk weight should be applied according to the standardised approach for credit risk when institutions are buying these instruments.

Theoretically this new asset class could be risk weighted in four different ways:

1) as exposures to institutions according to CRR Articles 120-121

2) as equity exposures according to CRR Article 133

3) as items associated with particular high risk according to CRR Article 128

4) fully deductible similar to the rules set out in CRR Article 66(c) and CRR Article 70

Date of submission:
11/03/2022
Published as Rejected Q&A
20/06/2022
Rationale for rejection:

This question has been rejected because the objective of the Q&A tool is not to answer questions that require a modification of the legal framework to address the question.

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.

For further information on the purpose of this tool and on how to submit questions, please see “Additional background and guidance for asking questions”.

Status:
Rejected question
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