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Specialised lending is a type of exposure towards an entity specifically created to finance or operate physical assets, where the primary source of income and repayment of the obligation lies directly with the assets being financed.
The proposed RTS define four classes of specialised lending: project finance, real estate, object finance, and commodities finance. For each of these four classes, the draft RTS specify a list of factors that institutions shall take into account and propose two options on how these factors should be combined in order to determine the risk weight assigned to the specialised lending exposure.
The approach followed in these RTS is in line with the Basel framework, which uses the so-called ‘supervisory slotting criteria' approach under which specialised lending exposures are classified into categories depending on the underlying credit risk.
Comments to this consultation can be sent to the EBA by 11 August 2015. A public hearing will take place at the EBA premises on 06 July 2015 from 12:00 to 14:00 UK time.