Article 495b
Transitional arrangements for specialised lending exposures
1.
By way of derogation from Article 161(4), the LGD input floors applicable to specialised lending exposures treated under the IRB Approach where own estimates of LGD are used, shall be the applicable LGD input floors provided for in Article 161(4), multiplied by the following factors:
(a)
50 % during the period from 1 January 2025 to 31 December 2027;
(b)
80 % during the period from 1 January 2028 to 31 December 2028;
(c)
100 % during the period from 1 January 2029 to 31 December 2029.
2.
EBA shall prepare a report on the appropriate calibration of risk parameters, including the haircut parameter, applicable to specialised lending exposures under the IRB Approach, and in particular on own estimates of LGD and LGD input floors for each specific category of specialised lending exposures as referred to in Article 147(8). EBA shall in particular include in its report data on average numbers of defaults and realised losses observed in the Union for different samples of institutions with different business and risk profiles. EBA shall recommend specific calibrations of risk parameters, including the haircut parameter, that would reflect the specific and different risk profile for each specific category of specialised lending exposures.
EBA shall submit that report to the European Parliament to the Council and to the Commission by 10 July 2026.
On the basis of that report and taking due account of the related internationally agreed standards developed by the BCBS, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by 31 December 2027.
3.
By way of derogation from Article 122a(3), point (a), specialised lending exposures as referred to in that point for which a directly applicable credit assessment by a nominated ECAI is not available may, until 31 December 2032, be assigned a risk weight of 80 %, where the adjustment to own funds requirements for credit risk referred to in Article 501a is not applied and the exposure is deemed to be of high quality when taking into account all of the following criteria:
(a)
the obligor can meet its financial obligations even under severely stressed conditions due to the presence of all of the following features:
(ii)
conservative repayment profile of the exposure;
(iii)
commensurate remaining lifetime of the assets upon full pay-out of the exposure or alternatively recourse to a protection provider with high creditworthiness;
(iv)
low refinancing risk of the exposure by the obligor or that risk is adequately mitigated by a commensurate residual asset value or recourse to a protection provider with high creditworthiness;
(v)
the obligor has contractual restrictions over its activity and funding structure;
(vi)
the obligor uses derivatives only for risk-mitigation purposes;
(vii)
material operating risks are properly managed;
(b)
the contractual arrangements on the assets provide lenders with a high degree of protection, including the following features:
(i)
the lenders have a legally enforceable first-ranking right over the assets financed and, where applicable, over the income that they generate;
(ii)
there are contractual restrictions on the ability of the obligor to make changes to the asset which would have a negative impact on its value;
(iii)
where the asset is under construction, the lenders have a legally enforceable first-ranking right over the assets and the underlying construction contracts;
(c)
the assets being financed meet all of the following standards to operate in a sound and effective manner:
(i)
the technology and design of the asset are tested;
(ii)
all necessary permits and authorisations for the operation of the assets have been obtained;
(iii)
where the asset is under construction, the obligor has adequate safeguards on the agreed specifications, budget and completion date of the asset, including strong completion guarantees or the involvement of an experienced constructor and adequate contract provisions for liquidated damages.
4.
EBA shall prepare a report, analysing the following:
(a)
the evolution of the trends and conditions in markets for object finance in the Union;
(b)
the effective riskiness of the object finance exposures over a full economic cycle;
(c)
(d)
the appropriateness of the definition of the sub-class of ‘high quality object finance’ and to assign to that sub-class of exposures a different prudential treatment.
EBA shall submit that report to the European Parliament, to the Council and to the Commission by 31 December 2030.
On the basis of that report and taking due account of the related internationally agreed standards developed by the BCBS, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by 31 December 2031.