EBA欧洲银行-BSG-Response-to-EBA-CP-on-exposures-associated-with-high-risk-28EBA-CP-2018-0329_17-Jul-2018_2页_182kb

BSG Summary on EBA Consultation Paper CP/2018/03

Core Content

The Banking Stakeholder Group (BSG) has provided general comments on the EBA Consultation Paper CP/2018/03, which outlines guidelines regarding the classification of high risk exposures. The BSG acknowledges the importance of the consultation and the need to refine the risk-weighted assets (RWA) calculation methods, especially in the context of evolving regulatory frameworks.

Main Views

• Transitional Nature of Guidelines: The BSG emphasizes that the current guidelines on high risk exposures are transitional and will likely be revised as the CRR2 trilogue progresses. This trilogue is expected to significantly alter the scope of Article 128, which governs risk weights. Similarly, the implementation of the new Basel III (finalisation) framework will also impact these guidelines.

• Notification Process Concerns: The introduction of a notification process under paragraph 6 is seen as adding unnecessary regulatory burden during a period of significant regulatory change. The BSG suggests that such a process may not provide substantial added value in the short term.

• Alignment with Basel III: The BSG recommends aligning the definitions of high risk exposures with those of the Basel III standardised approach for credit risk. Specifically, they highlight the need to harmonise the treatment of speculative exposures not listed and other subordinated debt, capital, and equity.

• Exclusion of Strategic Investments: The BSG advises that investments intended to develop a strategic business relationship with a company should not be classified as private capital under these guidelines. This is to ensure that such investments are not unfairly subjected to higher risk weights.

• Real Estate Development Exemptions: The BSG proposes that the high exposures criterion should not apply to real estate development cases where future promises of sale are based on irrevocable commitments. This would help in more accurately reflecting the risk profile of such projects.

• Need for Clarification on Real Estate: The BSG recognises the EBA's effort to thoroughly review RWA methodologies, particularly the Internal Ratings-Based (IR) approach. However, they point out that the current CRR definition of speculative immovable property is overly broad. It encompasses almost all real estate financing, which may not be appropriate. The BSG calls for further guidance to distinguish between speculative and non-speculative real estate projects.

Key Information

• Consultation Context: The guidelines are part of a broader regulatory discussion, including the CRR2 trilogue and the finalisation of Basel III.
• Regulatory Burden: The BSG is concerned about the additional regulatory burden imposed by the notification process.
• Definition Alignment: There is a clear call for alignment with Basel III definitions to ensure consistency and clarity.
• Strategic Exclusions: Certain strategic investments should be excluded from the private capital category.
• Real Estate Clarification: The BSG advocates for more specific guidance to differentiate between speculative and non-speculative real estate projects under the current regulatory framework.