BDE Circular on Significance Threshold of Overdue Credit Obligations
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
Previous Article
SRB Consults on Expectations from Banks to Demonstrate ResolvabilityRelated Articles
EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
BIS Hub Updates Work Program for 2022, Announces New Projects
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
EIOPA Consults on Review of Securitization Framework in Solvency II
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.
UK Authorities Issue Regulatory and Reporting Updates for Banks
The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.
BaFin Consults on Resolvability Requirements for Resolution Planning
The Federal Financial Supervisory Authority of Germany (BaFin) proposed to amend the “Capital Investment Conduct And Organization Ordinance” and issued a draft circular on the minimum resolvability requirements for resolution planning.
EBA Consults on Certain Standards and Guidelines Under CRR and BRRD
The European Banking Authority (EBA) proposed guidelines, for the resolution authorities, on the publication of the write-down and conversion and bail-in exchange mechanic, with the comment period ending on September 07, 2022.
OJK Publishes Regulatory Updates for Financial Sector Entities
The Financial Services Authority of Indonesia (OJK) is strengthening cooperation with the Australian Prudential Regulation Authority (APRA) and the Japanese Financial Services Agency (JFSA)
EU Publishes Rules on DLT and Data Governance
The European Parliament and the Council published Regulation 2022/868 on European data governance (Data Governance Act).
EBA Publishes Phase 2 of Reporting Framework 3.2
The European Banking Authority (EBA) published phase 2 of its reporting framework 3.2. The technical package supports the implementation of the updated reporting framework by providing standard specifications
