Art. 142

02013R0575-20240709 → 02013R0575-20250101

Article 142 Definitions 1. For the purposes of this Chapter, the following definitions shall apply: (1) rating system means all of the methods, processes, controls, data collection and IT systems that support the assessment of credit risk, the assignment of exposures to rating grades or pools, and the quantification of default and loss estimates that have been developed for a certain type of exposures; (1a) exposure class means any of the exposure classes referred to in Article 147(2), point (a), point (aa)(i) or (ii), point (b), point (c)(i), (ii) or (iii), point (d)(i), (ii), (iii) or (iv), point (e), (ea), (f) or (g); (1b) corporate exposure means an exposure assigned to any of the exposure classes referred to in Article 147(2), point (c)(i), (ii) or (iii); (1c) retail exposure means an exposure assigned to any of the exposure classes referred to in Article 147(2), point (d)(i), (ii), (iii) or (iv); (1d) regional governments, local authorities and public sector entities exposure means an exposure assigned to any of the exposure classes referred to in Article 147(2), point (aa)(i) or (ii); (2) type of exposures means a group of homogeneously managed exposures which are formed by a certain type of facilities and exposures, which may be limited to a single entity or a single sub-set of entities within a group provided that the same type of exposures is managed differently in other entities of the group; (3) business unit means any separate organisational or legal entities, business lines, geographical locations; (4) large regulated financial sector entity means any a financial sector entity which meets all of the following conditions: (a) its the entity’s total assets, or the total assets of its parent company where the entity has a parent company, calculated on an individual or consolidated basis, are greater than or equal to a EUR 70 billion threshold, billion, using the most recent audited financial statement or consolidated financial statement in order to determine asset size; and (b) it is, or one of its subsidiaries is, the entity is subject to prudential regulation requirements, directly on an individual or consolidated basis, or indirectly from the prudential consolidation of its parent undertaking, in the Union accordance with this Regulation, Regulation (EU) 2019/2033, Directive 2009/138/EC, or to the laws legal prudential requirements of a third country which applies prudential supervisory and regulatory requirements at least equivalent to those applied in the Union; Union acts; (5) unregulated financial sector entity means an entity that is not a regulated financial sector entity but that performs, as its main business, one does not fulfil the condition set out in point (4)(b); (5a) large corporate means any corporate undertaking having consolidated annual sales of more than EUR 500 million or belonging to a group where the total annual sales for the consolidated group is more of the activities listed in Annex I to Directive 2013/36/EU or in Annex I to Directive 2004/39/EC; than EUR 500 million; (6) obligor grade means a risk category within the obligor rating scale of a rating system, to which obligors are assigned on the basis of a specified and distinct set of rating criteria, from which estimates of probability of default (PD) are derived; (7) facility grade means a risk category within a rating system's facility scale, to which exposures are assigned on the basis of a specified and distinct set of rating criteria, from which own estimates of LGD are derived. derived; (8) servicer means an entity that manages a pool of purchased receivables or the underlying credit exposures on a day-to-day basis. (8a) PD/LGD modelling adjustment approach means an adjustment of the LGD or modelling an adjustment of both the PD and the LGD of the underlying exposure; (9) protection-provider-RW-floor means the risk weight applicable to a comparable, direct exposure to the protection provider; (10) for an exposure to which an institution applies the IRB Approach by using its own estimates of LGD under Article 143, recognised unfunded credit protection means an unfunded credit protection whose effect on the calculation of risk-weighted exposure amounts or expected loss amounts of the underlying exposure is taken into account with one of the following methods, in accordance with Article 108(3): (a) PD/LGD modelling adjustment approach; (b) substitution of risk parameters approach under A-IRB as defined in Article 192, point (5); (11) SA-CCF means the percentage applicable under Chapter 2 in accordance with Article 111(2); (12) IRB-CCF means own estimates of credit conversion factor. For the purposes of the first subparagraph, point (5a), in making the assessment for the sales threshold, the amounts shall be reported, as they are, in the audited financial statements of the corporates or, for corporates that are part of consolidated groups, their consolidated groups according to the accounting standard applicable to the ultimate parent undertaking of the consolidated group. The figures shall be based on the average amounts calculated over the prior three years, or on the latest amounts updated every three years by the institution. 2. For the purposes of point (4)(b) of paragraph 1 of this Article, the Commission may adopt, by way of implementing acts, and subject to the examination procedure referred to in Article 464(2), a decision as to whether a third country applies supervisory and regulatory arrangements at least equivalent to those applied in the Union. In the absence of such a decision, until 1 January 2015, institutions may continue to apply the treatment set out in this paragraph to a third country where the relevant competent authorities had approved the third country as eligible for this treatment before 1 January 2014.