in force 2025-01-01 INSERTED+964 −0§
Amended by Regulation (EU) 2024/1623 32024R1623 · Regulation (EU) 2024/2987 32024R2987 · Regulation (EU) 2024/2795 32024R2795
applies from: unknown (an inserted provision states its own application date only in prose)
A new Article 506c has been added, requiring the EBA to report to the Commission by 31 December 2026 on the consistency between current credit risk measurement and individual credit risk parameters, and on how adjustments are treated for computing IRB shortfall or excess under Article 159, as well as their consistency with exposure value determination under Article 166 and LGD estimation.
The provision also specifies that this report must consider the maximum possible economic loss from a default event and its coverage through Common Equity Tier 1 capital reductions, including accounting-based reductions such as expected credit losses or fair value adjustments and discounts on received exposures, along with their implications for regulatory deductions.
Cited: Art. 506c, v2
text before / after
inserted text (02013R0575-20250101)
Article 506c Credit risk — interaction between Common Equity Tier 1 capital reductions and credit risk parameters By 31 December 2026, EBA shall report to the Commission on the consistency between the current measurement of credit risk and the individual credit risk parameters and on the treatment of any adjustments for the purpose of the computation of the IRB shortfall or IRB excess as referred to in Article 159, and on its consistency with the determination of the exposure value in accordance with Article 166 and with the estimation of LGD. That report shall consider the maximum possible economic loss arising from a default event along with its achieved coverage in terms of Common Equity Tier 1 capital reductions, taking into account any accounting-based Common Equity Tier 1 capital reductions, including from expected credit losses or fair value adjustments, and any discounts on received exposures, and their implications for regulatory deductions.