Featured Product

    EC Issues Regulation on Materiality Threshold for Credit Obligations

    February 06, 2018

    EC published the final Commission Delegated Regulation (EU) 2018/171 on regulatory technical standards for the materiality threshold for credit obligations past due; this regulation supplements the Capital Requirements Regulation or CRR (EU Regulation No 575/2013). Regulation 2018/171 shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. It shall apply from May 07, 2018.

    Regulation 2018/171 specifies the conditions for setting the materiality threshold for retail and "other than retail" exposures. A competent authority shall set, for all institutions in its jurisdiction, a single materiality threshold for these exposures. This single threshold for the assessment of materiality of a credit obligation will be set, as referred to in Article 178(1)(b) of CRR. Such a materiality threshold, that should remain consistent over time, brings the added benefit of increased comparability of capital requirements among institutions in the same jurisdiction. The materiality threshold can have a significant impact on the calculation of capital requirements and expected losses for all institutions in the relevant jurisdiction, irrespective of the method used for such calculation. Therefore, when defining the materiality threshold, the competent authorities should take into account a variety of factors, including the specific risk characteristics of retail exposures. The specific risk characteristics for retail exposures and exposures other than retail exposures should be considered separately.

    A competent authority shall notify EBA of the materiality thresholds set in its jurisdiction. A component authority setting the relative component of the materiality threshold at a higher or lower percentage than 1% shall substantiate that choice to EBA. A competent authority should not change the materiality threshold, unless it is inadequate due to changed market or economic conditions, leading to significant distortions in the default identification processes. A competent authority shall set a date for the application of the materiality threshold that may vary for different categories of institutions, but shall be no later than December 31, 2020 for institutions using the Standardized Approach laid down in Part Three, Title II, Chapter 2 of CRR.

     

    Related Links 

    Effective Date: February 26, 2018

    Keywords: Europe, EU, Banking, CRR, Materiality Threshold, Credit Obligations, EBA, EC

    Related Articles
    News

    APRA Publishes Submission on Fintech and Regtech

    APRA published its submission, to the Senate Select Committee, on financial technology and regulatory technology.

    January 21, 2020 WebPage Regulatory News
    News

    ECB Consults on Guideline on Threshold for Credit Obligations Past Due

    ECB published a draft guideline, along with the frequently asked questions (FAQs), on the definition of the materiality threshold for credit obligations past due for less significant institutions.

    January 20, 2020 WebPage Regulatory News
    News

    BIS Discusses Role of Central Banks in Addressing Climate Change Risks

    BIS published a book that reviews ways of addressing the climate change risks within the financial stability mandate of central banks.

    January 19, 2020 WebPage Regulatory News
    News

    FSB Report Examines Global Nonbank Financial Intermediation Activity

    FSB published the ninth annual report examining the global non-bank financial intermediation activity.

    January 19, 2020 WebPage Regulatory News
    News

    OSFI Publishes Instruction Guide on Solvency Information Return

    OSFI published an instruction guide to assist administrators of pension plans in completing the Solvency Information Return that is required to be filed with OSFI.

    January 17, 2020 WebPage Regulatory News
    News

    EU Amends IFRS 9 Rule, Changes Concern Interest Rate Benchmark Reforms

    EU published Regulation 2020/34 regarding the International Accounting Standard (IAS) 39 and International Financial Reporting Standards (IFRS) 7 and 9.

    January 16, 2020 WebPage Regulatory News
    News

    FDIC and OCC Issue Statement on Heightened Cyber Security Risk

    In response to the heightened cyber-security risk facing the financial services industry and other critical business sectors, FDIC and OCC issued an interagency statement on heightened cyber-security risk.

    January 16, 2020 WebPage Regulatory News
    News

    BCRA Updates Regulation on Capital Requirements and Information Regime

    BCRA updated the rules on minimum capital requirements for financial entities and on certain aspects of the information transparency regime for quarterly and annual supervision.

    January 16, 2020 WebPage Regulatory News
    News

    BoE and FCA Outline Next Steps for LIBOR Transition in 2020

    BoE, FCA, and the Working Group on Sterling Risk-Free Reference Rates (RFRWG) have published a set of documents that outline the LIBOR transition priorities and milestones for 2020.

    January 16, 2020 WebPage Regulatory News
    News

    BIS to Expand Central Bank Membership

    BIS is to expand its central bank membership base and to increase collaboration in its work as a forum for international cooperation and as a hub for central banks and other financial authorities.

    January 14, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4511