Featured Product

    Ireland Proposes Materiality Thresholds for Credit Obligation Past Due

    July 04, 2018

    The Central Bank of Ireland published a consultation on the implementation of the Commission Delegated Regulation (EU) 2018/171 (of October 19, 2017) on materiality thresholds for credit obligations past due. This Delegated Regulation supplements Capital Requirements Regulation or CRR (EU Regulation No 575/2013) with regard to the regulatory technical standards on materiality thresholds for credit obligations past due. The consultation closes on August 15, 2018.

    This consultation paper signals the proposed approach of the Central Bank of Ireland in relation to the setting of the threshold for the materiality of a credit obligation past due. Regulation 2018/171 specifies the conditions for setting the materiality threshold for retail and "other than retail" exposures. When establishing the materiality threshold pursuant to its tasks under the regulatory technical standards, the Central Bank of Ireland proposes to set the absolute and relative components of the materiality threshold as follows:

    • An absolute component—For retail exposures the materiality threshold shall be set at EUR 100. For all other exposures the threshold shall be set at EUR 500
    • A relative component set at a ratio of 1% of the amount of the credit obligation past due in relation to the total amount of all on-balance sheet exposures to that obligor of the institution, the parent undertaking of that institution or any of its subsidiaries, excluding equity exposures
    • Both the absolute and relative threshold will apply from December 31, 2020.

    As per Article 178(2)(d) of the CRR, concerning the Default of an Obligor, the materiality of a credit obligation past due shall be assessed against a threshold, defined by the competent authorities. That threshold must reflect a reasonable level of risk. Under Article 178(6), EBA is required to specify the conditions according to which the competent authority shall set the threshold against which the materiality of a credit obligation past due shall be assessed for the purposes of identifying defaults of obligors or individual credit facilities under Article 178. The materiality threshold is applicable for institutions using both the standardized approach and internal ratings-based (IRB) approach for calculation of own funds requirements for credit risk. As is set forth in the regulatory technical standards, the materiality of past due credit obligations forms part of the definition of default in Article 178 (1) (b). In the case of the implementation of these regulatory standards, the Central Bank of Ireland, as national competent authority, has the responsibility for implementation with regard to the Less Significant Institutions within the European banking regulatory framework.

     

    Related Links

    Comment Due Date: August 15, 2018

    Effective Date: December 31, 2020

    Keywords: Europe, Ireland, Banking, Credit Risk, Credit Obligations, CRR, Materiality Threshold, Central Bank of Ireland

    Related Articles
    News

    EBA Updates List of Validation Rules for Reporting by Banks

    EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.

    September 10, 2020 WebPage Regulatory News
    News

    EBA Responds to EC Call for Advice to Strengthen AML/CFT Framework

    EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).

    September 10, 2020 WebPage Regulatory News
    News

    NGFS Advocates Environmental Risk Analysis for Financial Sector

    NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.

    September 10, 2020 WebPage Regulatory News
    News

    MAS Issues Guidelines to Promote Senior Management Accountability

    MAS published the guidelines on individual accountability and conduct at financial institutions.

    September 10, 2020 WebPage Regulatory News
    News

    APRA Formalizes Capital Treatment and Reporting of COVID-19 Loans

    APRA published final versions of the prudential standard APS 220 on credit quality and the reporting standard ARS 923.2 on repayment deferrals.

    September 09, 2020 WebPage Regulatory News
    News

    SRB Chair Discusses Path to Harmonized Liquidation Regime for Banks

    SRB published two articles, with one article discussing the framework in place to safeguard financial stability amid crisis and the other article outlining the path to a harmonized and predictable liquidation regime.

    September 09, 2020 WebPage Regulatory News
    News

    FSB Workshop Discusses Preliminary Findings of Too-Big-To-Fail Reforms

    FSB hosted a virtual workshop as part of the consultation process for its evaluation of the too-big-to-fail reforms.

    September 09, 2020 WebPage Regulatory News
    News

    ECB Updates List of Supervised Entities in EU in September 2020

    ECB updated the list of supervised entities in EU, with the number of significant supervised entities being 115.

    September 08, 2020 WebPage Regulatory News
    News

    OSFI Identifies Focus Areas to Strengthen Third-Party Risk Management

    OSFI published the key findings of a study on third-party risk management.

    September 08, 2020 WebPage Regulatory News
    News

    FSB Extends Implementation Timeline for Framework on SFTs

    FSB is extending the implementation timeline, by one year, for the minimum haircut standards for non-centrally cleared securities financing transactions or SFTs.

    September 07, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5796