BDE published Circular 3/2019 to exercise the power conferred by the Capital Requirements Regulation (CRR) to define the threshold of significance of overdue credit obligations. This circular shall enter into force on the twentieth day following that of its publication in the Official State Gazette. Credit institutions shall apply, as of December 31, 2020, the threshold of significance of past due credit obligations established in this circular and shall notify BDE, before December 31, 2019, about the exact date they will start applying it.
ECB adopted, on November 21, 2018, Regulation (EU) No 2018/1845, on the exercise of the power provided for in Article 178(2)(d) of CRR (Regulation 575/2013) to define the threshold of significance of overdue credit obligations. The provisions of this regulation are applicable exclusively to significant entities under the direct supervision of ECB. There are, however, to date, no provisions regarding the definition of the threshold of significance applicable to the less significant Spanish credit institutions, which are under the direct supervision of BDE. The provisions of Circular 3/2019 shall apply to the entities and groups referred to in sections a) and b) of Standard 2 of the circular, provided they are considered less significant according to Regulation (EU) No 1024/2013.
For the purposes of Article 178(2)(d) of CRR, credit institutions shall assess the significance of past-due credit obligations past due against the following threshold that consists of two components:
- A limit expressed as the sum of all amounts of overdue credit obligations that the debtor maintains against the credit institution, its parent company, or any of its subsidiaries equal to EUR 100 (or equivalent amount in the national currency) for retail exposures and EUR 500 (or equivalent amount in the national currency) for exposures other than retail exposures
- A limit expressed as the amount of the overdue credit obligation in relation to the total amount of exposures to that debtor in the balance of the credit institution, its parent company ,or any of its subsidiaries, excluding equity exposures, equal to 1%
The BDE Circular 3/2019 specifies that a default shall be deemed to have occurred when both the above-mentioned limits are exceeded for 90 consecutive days.
Related Link (in Spanish): Circular 3/2019
Effective Date: Official State Gazette+20 Days
Keywords: Europe, Spain, Banking, CRR, Credit Risk, Credit Obligations, Materiality Threshold, Circular 3/2019, Regulation 2018/1845, ECB, BDE
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