EAPB Paper on CAD

31 January 2003

In its position paper the European Association of Public Banks (EAPB) welcomes the Commissions approach to include investment firms into the Directive. With a view to equal conditions of competition and according to the principle that the same risks should be subject to the same regulations, the EAPB also wants these provisions to be incorporated into the Basle accord.

The EAPB also welcomes the extension of a transitional “partial use” in the internal ratings-based approach and the possibility to exempt bank and sovereign exposures permanently from the application of the IRB approach. However, the association considers further recognition of partial use to be necessary. Institutions should have the discretion to exempt specific fields to be clearly defined permanently from the application of the IRB/AMA approaches.

A partial use should also be possible within the IRB with respect to the foundation approach or the advanced approach. In particular, it should be clarified that the permanent exemption of bank and sovereign exposures should apply irrespective of the size of the credit institution and the material nature of the exposures.

Furthermore, the EAPB rejects the introduction of additional minimum requirements for real estate lending in the standardised approach, since a deterioration could result from this compared to the Basle proposals.

Full Position Paper

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