funds requirements

EBA Final Draft RTS on Assessment Methodology for Internal Ratings-Based Approach

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The European Banking Authority (EBA) has published final draft regulatory technical standards (RTS) on the specification of the assessment methodology for competent authorities regarding compliance of an institution with the requirements to use the internal ratings-based (IRB) approach in accordance with Articles 144(2), 173(3) and 180(3)(b) of the Capital Requirements Regulation (Regulation 575/2013) (CRR).

The final draft RTS provide a mapping of the minimum IRB requirements as laid down in Chapter 3, Title II, Part Three of the CRR, into fourteen chapters. Each chapter starts with a brief description of the assessment criteria to be used by competent authorities relating to verification requests and of the methods to be used by competent authorities in this context.  Under the IRB approach, institutions determine their own funds requirements for credit risk, taking into account their own estimates of risk parameters.  Competent authorities may, under the CRR, permit institutions to use the IRB approach, provided that the relevant conditions set out in the CRR are met.

The draft RTS are available here and will now be submitted to the European Commission for endorsement.

Council of EU Grants Exemptions for Commodity Dealers under CRR

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On March 23, 2016, the Council of the EU published an approved final compromise text of a proposed Regulation extending the Capital Requirements Regulation (Regulation 575/2013) (CRR) to extend certain exemptions for commodity dealers.

Under the CRR commodity dealers are exempt from large exposure and own funds requirements until December 31, 2017, the Council has agreed to extend these exemptions until December 31, 2020. The measure is designed to protect commodity dealers from an unstable regulatory environment in the short term. The Council considered that the application of large exposure and own funds requirements to commodity dealers should come as the result of a thoroughly reasoned decision rather than as a result of a lapsed exemption.

The proposed regulation now requires approval from the European Parliament and adoption by the Council. The Council Presidency confirmed with member states that they will support the extension, which was approved by the Parliament’s Committee on Economic and Monetary Affairs (ECON) on March 7, 2016. Press release.