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    EBA Updates Lists of Entities for Use in Capital Calculations under SA

    April 08, 2021

    EBA updated the list of regional governments and local authorities (RGLAs) that may be treated as central governments for the calculation of capital requirements. Also updated was the list of public-sector entities (PSEs) that may be treated as central government, regional government, or local authorities. These lists are intended to supplement the requirements set out in Articles 115 and 116(4) of the Capital Requirements Regulation or CRR, which specifies the treatment of exposures to central government, regional governments, or local authorities across EU as part of the standardized approach—also known as SA—for credit risk.

    The list of RGLAs includes the regional governments and local authorities that are treated as central governments under the standardized approach due to their reduced risk level. As a result of this treatment, exposures to the regional governments and local authorities included in the list will qualify for the same risk-weight as their respective central government. Compared to the previous version, the updated list includes amendments to the regional governments and local authorities in Austria, Finland, the Netherlands, and Sweden. Additionally, the list of PSEs includes the PSEs that are treated as regional governments, local authorities, or central governments under the standardized approach due to their reduced risk level. As a result of this treatment, exposures to the PSEs included in the list will qualify for the same risk-weight as their respective regional government, local authority, or central government. Compared to the previous version, the updated list includes amendments to the PSEs in Greece, Germany, Luxembourg, Malta, Portugal, Slovenia, and Slovakia and updates to the names of PSEs in Denmark and Spain. Both the lists are compiled using information provided by the competent authorities and are based on the classification used in each country. The approaches and eligibility criteria for PSEs and regional governments and local authorities, therefore, differ from country to country in many cases.

     

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    Keywords: Europe, EU, Banking, CRR, Basel, Credit Risk, Regulatory Capital, Standardized Approach, Public Sector Entities, EBA

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