24 October 2016

EBA calls for a simplified and more harmonised large exposures regime

In particular, in the first section, the European Banking Authority (EBA) analyses the impact of aligning certain aspects of the EU large exposures regime with the standards on large exposures produced by the Basel Committee on Banking Supervision (BCBS).  In this respect, the EBA considers appropriate to strengthen the large exposures capital base by including only Tier 1 capital instead of allowing also a proportion of Tier 2 capital, as it is currently the case.

The second section deals with the five exemptions identified in the call for advice, which might be currently used by institutions subject to the discretion of competent authorities or Member States. The EBA recommends removing three of the five exemptions and, more generally, highlights the importance of reducing exemptions and discretions, where appropriate, so as to further enhance the alignment with the BCBS standards and to achieve consistency across jurisdictions.

In the third section, the EBA considers other aspects that could be aligned to the BCBS standards or other issues that require further work and quantifies the impact, where possible. For example, it quantifies the impact of no longer allowing institutions to reduce the exposure values by the value of immovable property used as collateral.

Finally, the report draws attention to the Q&As submitted by stakeholders through the EBA Q&A tool, which have identified possible errors, inconsistencies and material issues in the current Capital Requirements Regulation (CRR) large exposure text and recommends they are taken into account in the review of the large exposures regime.

Press release

Report on the review of the large exposures regime

Call for Advice on Large exposures

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