EBA欧洲银行-Final-Report-on-EBA-GL-on-High-Risk_HR_12页_327kb

Summary of EBA/GL/2019/01 Guidelines on Identifying High-Risk Exposures

1. Compliance and Reporting Obligations

• Scope of Guidelines: These guidelines are issued under Article 16(3) of Regulation (EU) No 1093/2010. Supervisory authorities and financial institutions must align their practices with these guidelines.
• Reporting Deadline: Supervisory authorities must inform the EBA by 1 July 2019 whether they have aligned with the guidelines or not, providing reasons for non-compliance. Failure to report will be considered as non-compliance.
• Reporting Format: The report must be submitted via a completed form available on the EBA website to compliance@eba.europa.eu with the subject "EBA/GL/2018/xx".
• Reporting Responsibility: The person with the appropriate authority for reporting on compliance within each supervisory authority must submit the report.
• Status Updates: Any changes in the compliance status must be reported to the EBA.

2. Subject, Scope, and Definitions

• Purpose: The guidelines clarify the types of high-risk exposures, particularly those related to investments in venture capital companies and private equity companies, as defined in Article 128(2)(a) and (c) of Regulation (EU) No 575/2013 (CRR).
• Definitions: The terms "venture capital company" and "private equity company" are defined in line with Article 128(2)(a) and (c) of CRR.
• Applicability: The guidelines apply to supervisory authorities and financial institutions defined in Article 4(2)(i) and (1) of Regulation (EU) No 1093/2010.

3. Implementation

• Effective Date: The guidelines apply from 1 July 2019.
• High-Risk Exposures: Institutions must identify exposures that meet the criteria outlined in Article 128(3) of CRR and apply a risk weight of 150%.
• Investments in Venture Capital and Private Equity:
  • Exposures to venture capital companies include non-secured, non-listed equity and other instruments similar to those in (a) and (c) of Article 128(2) of CRR.
  • Exposures to private equity companies include non-secured, non-listed equity and other instruments with similar economic characteristics, held for the purpose of generating profit through asset sales or other transactions.
• Exclusions: Certain exposures, such as those to central governments or central banks, local authorities, and public sector entities, are excluded from the scope of the guidelines.

4. Reporting Requirements for High-Risk Exposures

• Institutions must report any exposure identified as having a very high risk of loss in accordance with the criteria in Article 128(3) of CRR, except those covered in paragraphs 5 and 6 of the guidelines.
• Reports should include a brief description of the key characteristics of the identified exposures.
• Supervisory authorities are responsible for reporting these exposures to the EBA.

5. Key Aspects of the Guidelines

• Definition of High-Risk Exposures: The guidelines provide a framework to identify high-risk exposures based on risk factors, including the financial capacity of the borrower, the size of the exposure, and the credit quality.
• Exclusions from Guidelines: Speculative real estate financing is excluded from the scope of the guidelines as it is already covered by Article 128(2) of CRR.
• Alignment with Basel III: The guidelines aim to facilitate the transition to the Basel III regulatory framework by aligning with its risk factors and definitions.
• Strategic Investment Exclusions: Investments made for strategic business relationships are not considered private equity for the purposes of these guidelines.

6. Feedback from Public Consultations and Industry Groups

• Public Consultation: EBA conducted a public consultation on the draft guidelines, receiving 13 responses, 11 of which were published.
• Industry Feedback: Some respondents disagreed with the inclusion of private equity and venture capital companies in the guidelines, suggesting that these should be limited to direct investments and exclude collective investment vehicles (CIUs).
• EBA's Response: EBA has adjusted the guidelines to provide a clearer and more comprehensive framework for identifying high-risk exposures, taking into account empirical evidence and industry feedback.
• Alignment with Basel III: The guidelines are aligned with the definitions and risk factors in the Basel III framework, especially for non-listed speculative exposures and other exposures related to debt and capital.

7. Analysis of Costs and Benefits

• Cost-Benefit Analysis: The guidelines aim to standardize the identification of high-risk exposures across institutions and supervisory authorities, improving the comparability of capital requirements.
• Implementation Challenges: The guidelines may impose additional regulatory burdens on banks during the transition period, particularly as they implement CRR2 and prepare for Basel III.
• Benefits: The guidelines enhance the consistency of risk assessment practices and support the transition to Basel III by providing a standardized approach.

8. Conclusion

These guidelines provide a detailed framework for identifying high-risk exposures in line with Article 128(3) of CRR. They aim to improve the consistency and comparability of risk assessment practices across financial institutions and supervisory authorities, align with the Basel III framework, and address industry concerns regarding the scope and definitions of high-risk exposures.