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Q&As refer 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.

Please note that the Q&As related to the supervisory benchmarking exercises have been moved to the dedicated handbook page. You can submit Q&As on this topic here.

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List of Q&A's

Excess General Credit Risk Adjustments - Standardised Approach (SA)

Can institutions use the excess of SA general credit risk adjustments over the 1.25% cap to reduce SA exposure value under own funds requirements, or reductions to SA original exposure value are just limited to specific credit risk adjustments? If so, where should the excess of general provisions, not considered as Tier 2 due to the 1.25% cap, be deducted (i.e. Retail class)?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 183/2014 - RTS for the calculation of specific and general credit risk adjustments
  • ID: 2014_1199
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 12/12/2014

Reglamento 575/2013 exposiciones garantizadas hipotecas sobre bienes inmuebles/ Exposures secured by mortgages on immovable property

La parte de la exposición que supere el valor hipotecario dice que le será asignada la ponderación de riesgo aplicable a las exposiciones no garantizadas de la contraparte implicada. Si la contraparte es minorista, cómo puede ser que la parte de la exposición que supere el valor hipotecario vaya ponderada al 75% y la parte que va entre el 80% y el 100% del valor hipotecario vaya ponderada al 100%? ENGLISH TRANSLATION: In Article 124 of Regulation (EU) No 575/2013 (CRR) it says that the part of the exposure which exceeds the mortgage value shall be assigned the risk weight applicable to the unsecured exposures of the counterparty involved. If the counterparty is retail, can you explain how the part of the exposure which exceeds the mortgage value shall have a weight of 75% and the part which goes from 80% through 100% of the mortgage value shall have a weight of 100%?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_936
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 12/12/2014

Calculation of volatility adjustments where liquidation period not given in CRR tables

Where there is a situation where a volatility adjustment is required that does not have a liquidation period given in the tables under Article 224 of Regulation (EU) No 575/2013 (CRR), how should the volatility adjustment be calculated - by use of the formula per Article 225, using the values from one of the liquidation periods in the tables in Article 224 as a basis to calculate other values? This situation can occur due to the requirements of Article 285 of the CRR.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1545
  • Topic: Market risk
  • Date of submission:
  • Published as final Q&A: 28/11/2014

Financial Difficulties

A clearer definition of the phrase 'Financial Difficulties' is required.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Draft ITS on Supervisory Reporting of Institutions
  • ID: 2014_1493
  • Topic: Supervisory reporting - FINREP (incl. FB&NPE)
  • Date of submission:
  • Published as final Q&A: 28/11/2014

Deviations between the definition of SA exposure value for securitisation exposures and for other exposure classes

The exposure value for all other exposure classes corresponds to the accounting value after SCRA, Prudent Valuation and other own funds reductions that relate to the asset item (Article 111(1) Regulation (EU) No 575/2013). The exposure value for securitisation exposures corresponds to the accounting value after SCRA based on article 110 CRR, without taking into account Prudent Valuation or other own funds reductions related to the asset item. Is this deviation intended?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2013_230
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 28/11/2014

Additional outflow due to a material deterioration in the credit quality of the institution

Article 423(2) stipulates that institutions shall notify to the competent authorities conracts containing conditions which lead, within 30 days following the material deterioration of the credit quality of the institution, to liquidity outflows or additional collateral needs. Article furthermore specifies that the competent authorites shall require an additional outflow if those contract are material but this additional outflow is required only for the additional collateral needs. The row 1150 in C 52.00 also provides only additional outflow for additional collateral needs. Some institutions may have entered into contracts containing conditions which lead to additional outflow in the form of the repayment of the debt outstanding or to a rise of interest rate within 30 days following the material deterioration of the credit quality of the institution (and not additional collateral needs). Does this mean that the additional outflow due to the material deterioration of the credit quality of the institution which is not in the form of additional collateral needs is not considered and not reported as an outflow?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
  • ID: 2013_655
  • Topic: Supervisory reporting - Liquidity (LCR, NSFR, AMM)
  • Date of submission:
  • Published as final Q&A: 28/11/2014

Use of an insitution's own estimates of conversion factors

In applying Article 166(10) of Regulation (EU) No 575/2013 (CRR), may competent authorities grant permission to institutions to use their own estimates of conversion factors (as is permitted for certain exposures under Articles 151(7) and (9)) for off-balance sheet exposures which are not listed under Article 166(8)?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1263
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 21/11/2014

Recognition of real estate as commercial property

1. What kind of assets are to be included in the “Residential” and “Commercial” categories within “Mortgage Loans” for the purposes of supervisory reporting? For instance where should institutions assign garages, plots of land, storage rooms and rustic property etc. which are used as collateral? Are there more specific criteria to be used in assigning these assets? 2. Can we recognize as Commercial Real Estate the following types of property: Land for development, factories, plots of land for commercial purposes, slotted houses, schools and quarries etc.?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1214
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 21/11/2014

What is meant with 'mainly' in the definition of 'financial holding company'?

A 'financial holding company' is defined as a financial institution, the subsidiaries of which are exclusively or mainly institutions or financial institutions, at least one of such subsidiaries being an institution, and which is not a mixed financial holding company. Could you please provide more guidance on what is meant with 'mainly'?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_796
  • Topic: Other issues
  • Date of submission:
  • Published as final Q&A: 21/11/2014

Maturity under Article 162 of Regularion (EU) No 575/2013

Under the provisions of Article 162(2)(a) of Regulation (EU) No 575/2013 (CRR), how should an instrument with a scheduled cash flow, where the institution may opt for prolonging the contract for another period, be treated?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2013_687
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 21/11/2014

Maturity (M) for short-term credit line contracts which are continuously rolled over.

This query regards the setting of the maturity parameter (M) for corporate exposures when applying the IRB approach. In this respect, we are referring to facilities subject to Article 162(2)(f) of Regulation (EU) No 575/2013 (CRR): “(f) for any other instrument than those mentioned in this paragraph or when an institution is not in a position to calculate M as set out in (a), M shall be the maximum remaining time (in years) that the obligor is permitted to take to fully discharge its contractual obligations, where M shall be at least 1 year;” Consider exposures where the credit contract stipulates a short-term contractual maturity (say 1 year). If an institution typically rolls over such facilities, possibly after rigorous, annual credit processes so that the de-facto maturity is greater than the contractual, should the institution then be allowed to apply the contract length as maturity?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2013_686
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 21/11/2014

Requisito minimo Basilea 1 / Basel 1 minimum requirement

L'art. 500, comma 1 b) del regolamento 575/2013 richiede che i Fondi Propri (Common Equity Tier 1 + Additional Tier1 + Tier 2) siano sempre pari o superiori all'80% del Requisiti Patrimoniali Minimi Basilea 1 (REQBIS1). Inoltre, l'art 500 comma 4, richiede che i Fondi Propri siano integralmente corretti in modo da riflettere il differente trattamento delle perdite attese ed inattese ( Shortfall IRB , Excess IRB) , ma non indica una modalità di calcolo. Si richiede se l'approccio seguente sia corretto: 80% * REQBIS1 >= (Common Equity Tier 1 + Additional Tier1 + Tier2) + |Shortfall IRB| - |Excess IRB|. EN TRANSLATION Article 500(1)(b) of Regulation (EU) No 575/2013 requires that own funds (Common Equity Tier 1 + Additional Tier 1 + Tier 2) are at all times more than or equal to 80% of the minimum capital requirements of Basel I (REQBIS1). In addition, Article 500(4) requires that own funds shall be fully adjusted to reflect the separate treatments of expected loss and unexpected loss (Shortfall IRB, Excess IRB), but does not indicate a method of calculation. Is the following approach correct? 80% * REQBIS1 <= (Common Equity Tier 1 + Additional Tier1 + Tier2) + |Shortfall IRB| - |Excess IRB|.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1030
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 14/11/2014

Definition of unregulated financial sector entities

In applying the 1.25 co-efficient specified under Article 153(2) of Regulation (EU) No 575/2013, what is that definition of "unregulated financial sector entities"?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2013_516
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 14/11/2014

Non-performing exposures - Cash balances at central banks, Non-current assets held for sale

Does template F18.00 DEBT INSTRUMENTS AT AMORTISED COST (rows 010 to 180) include Cash and cash balances at central banks portfolio? Does template F18.00 DEBT INSTRUMENTS AT FAIR VALUE other than HFT (rows 190 to 320) include Non-current assets and disposal groups classified as held for sale?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
  • ID: 2014_1106
  • Topic: Supervisory reporting - FINREP (incl. FB&NPE)
  • Date of submission:
  • Published as final Q&A: 14/11/2014

Minority interests

Article 81(1) of Regulation (EU) No 575/2013 (CRR) defines minority interests which are part of CET-1 instruments where the sum of share premium accounts related to those instruments, retained earnings and other reserves are noted. On the other hand the other comprehensive income defined in Article 26(1)(d) of CRR is not noted in Article 81(1). Further, Article 84(1)(a) refers to the CET-1 capital of the respective subsidiary which means for us the other comprehensive income is part of the calculation. How does other comprehensive income have to be treated in case of calculation of the minority interests?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2013_487
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 07/11/2014

LE2: Credit insurance allowed as CRM technique?

Our primary business is Factoring. Therefore our balance credit figures are mainly invoices / accounts receivables, which we have bought from our clients. As security / protection against credit losses we have established a credit insurance with a credit insurance company. Can we use the credit insurance ("Warenkreditversicherung") as CRM technique? Is column 290 "other commitments" in template LE2 the correct position to fill in the credit amount covered by our credit insurance contract? To our understanding "credit insurance" could be regarded as a position under item (1) k) or (2) b) iv) of CRR-Appendix I .

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
  • ID: 2014_768
  • Topic: Supervisory reporting - Large Exposures
  • Date of submission:
  • Published as final Q&A: 07/11/2014

reporting of defaulted and past due items in maturity buckets

LE4, LE5: Where should an institution (in which bucket) report defaulted (or past due) parts of the exposure?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
  • ID: 2014_754
  • Topic: Supervisory reporting - Large Exposures
  • Date of submission:
  • Published as final Q&A: 07/11/2014

Total inflows excluded due do cap

Instructions concerning reporting on inflows, specify that total monies due which are excluded due to an inflow cap which is set at 75% of liquidity outflows shall be reported in row 990 of C 53.00. This will require to be checked by reference to total outflows as calculated from the outflow template. How is this supposed to be done, when the outflow template C 52.00 contains no row for total outflows (no reference to total outflows) and inflow template C 53.00 contains no row for total inflows before cap (no reference to total inflows before cap)?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
  • ID: 2013_631
  • Topic: Supervisory reporting - Liquidity (LCR, NSFR, AMM)
  • Date of submission:
  • Published as final Q&A: 07/11/2014

In the case of a repurchase of CET 1 instruments, AT 1 instruments, or T 2 instruments for market making purposes, competent authorities may give their permission in advance to reducing own funds for a certain predetermined amount.

Would such a frame given in advance to reduce own funds for a certain predetermined amount for market making purposes result in a deduction from own funds at the time when permission is given or would a deduction from own funds be made at the time when the actual repurchase of capital instruments takes place? It should be noted that the question being posed is linked to the situation where a permission is given in advance to repurchase own capital instrument for market making purposes. The question being posed is not linked to a situation where a permission is given in advance to repurchase own capital instrument in order to reduce own funds on a permanently basis.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions
  • ID: 2014_1352
  • Topic: Own funds
  • Date of submission:
  • Published as final Q&A: 31/10/2014

Classification of invoice discount facilities as full risk items

1. Should invoice discount facilities always be classified as full risk items or may such facilities be classified as medium/low or low risk if they may be cancelled with immediate effect when the assumptions used for setting the limit change? 2. Should the nominal value of an invoice discount facility as an off-balance sheet item be calculated as the difference between the contractual limits of the total credit volumes of clients and the amounts that have been paid to clients for the discounted invoices not yet due for payment from customers?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1324
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 31/10/2014