in force 2024-07-09 MODIFIED+561 −76§
Amended by Regulation (EU) 2024/1623 32024R1623
applies from: unchanged
Paragraph 1 now adds a new subparagraph specifying that, when calculating the specific credit risk adjustments for an exposure purchased while already in default, institutions must include any positive difference between the amount owed by the obligor and the sum of the additional own funds reduction that would arise from a full write-off plus any existing own funds reductions on that exposure.
Paragraph 2 changes its wording from referring to the secured part of the "past due item" to the secured part of a "defaulted exposure," while still pointing to Chapter 4 for eligibility of collateral and guarantees.
Paragraph 3 changes its scope from exposures fully and completely secured by mortgages on residential property under Article 125 to non-IPRE exposures secured by residential property or commercial immovable property under Articles 125 and 126 respectively.
Cited: Art. 127, v2 · Art. 127, v1
text before / after
02013R0575-20240109 → 02013R0575-20240709
Article 127
Exposures in default
1. The unsecured part of any item where the obligor has defaulted in accordance with Article 178, or in the case of retail exposures, the unsecured part of any credit facility which has defaulted in accordance with Article 178 shall be assigned a risk weight of:
(a) 150 %, where the sum of specific credit risk adjustments and of the amounts deducted in accordance with point (m) Article 36(1) is less than 20 % of the unsecured part of the exposure value if those specific credit risk adjustments and deductions were not applied;
(b) 100 %, where the sum of the specific credit risk adjustments and of the amounts deducted in accordance with point (m) Article 36(1) is no less than 20 % of the unsecured part of the exposure value if those specific credit risk adjustments and deductions were not applied.
For the purpose of calculating the specific credit risk adjustments referred to in the first subparagraph for an exposure that is purchased when already in default, institutions shall include in the calculation any positive difference between the amount owed by the obligor on that exposure and the sum of the additional own funds reduction if that exposure were fully written off and any already existing own funds reductions related to that exposure.
2. For the purpose of determining the secured part of the past due item, eligible a defaulted exposure, collateral and guarantees shall be those eligible for credit risk mitigation purposes under in accordance with Chapter 4.
3. The exposure value remaining after specific credit risk adjustments of non-IPRE exposures fully and completely secured by mortgages on residential property or commercial immovable property in accordance with Article Articles 125 and 126, respectively, shall be assigned a risk weight of 100 % if a default has occurred in accordance with Article 178.
4. The exposure value remaining after specific credit risk adjustments of exposures fully and completely secured by mortgages on commercial immovable property in accordance with Article 126 shall be assigned a risk weight of 100 % if a default has occurred in accordance with Article 178.