On May 11, 2015, the EBA published a consultation paper comprising draft Regulatory Technical Standards on the assignation of risk weights to specialized lending exposures under the CRR. Specialized lending exposures are exposures to entities created explicitly to finance or operate physical assets. The CRR allows for special treatment of these exposures within the internal model based approach using a set of supervisory risk weights made up of five categories. The proposed RTS aim to determine how banks take into account certain factors, such as financial strength, political and legal environment and transaction characteristics, when assigning risk weight to specialized lending exposures. The draft RTS also specify how banks should combine those factors to determine the final assignment to a certain category. Responses to the consultation are due by August 11, 2015.
The consultation paper is available at: http://www.eba.europa.eu/documents/10180/1068081/EBA-CP-2015-09+CP+on+Assigning+RWs+to+Specialised+Lending+Exposures.pdf.
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