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The EBA published its opinion on the review of the appropriateness of the definition of ‘eligible capital', in response to a call for advice received from the European Commission in December 2013.
The EBA informed that since the definition of ‘eligible capital' is subject to a transitional regime until the end of 2016, not enough experience is available on the use of this definition or any evidence that the new stricter capital base for the large exposures' regime would have a detrimental impact. The European Commission had sought advice from the EBA in relation to determining whether or not the definition of ‘eligible capital' is appropriate for defining ‘large exposures', setting ‘large exposure' limits, determining the capital requirements applicable to investment firms with limited investment services and finally determining the prudential treatment for qualifying holdings outside the financial sector.
The EBA suggested conducting a comprehensive review of the EU large exposures regime at an appropriate point in time, in order to align it with the Basel Committee on Banking Supervision (BCBS) standards on the supervisory framework for measuring and controlling large exposures. In this context, the EBA also suggested to the Commission postponing any review of the ‘eligible capital' base, until a large exposures review is carried out.