Article 8 | Delegated Regulation 2022/439

Article 8 - Conditions for permanent partial use

Article 8

Conditions for permanent partial use

1. When assessing the institution’s compliance with the conditions for permanent partial use of the Standardised Approach in relation to the exposures referred to in points (a) and (b) of Article 150(1) of Regulation (EU) No 575/2013, competent authorities shall verify that:

(a)	the availability of external data for representative counterparties is assessed and taken into account by the institution;

(b)	the cost to the institution of developing a rating system for the counterparties in the relevant exposure class is assessed taking into account the size of the institution and the nature and scale of its activities;

(c)	the operational capability of the institution to develop and implement a rating system is assessed taking into account the nature and scale of the institution’s activity.

2. When assessing the institution’s compliance with the conditions for permanent partial use of the Standardised Approach in relation to the exposures referred to in point (c) of Article 150(1) of Regulation (EU) No 575/2013, competent authorities shall verify that the institution has verified and taken into account at least one of the following:

(a)	that the exposures, including the number of separately managed portfolios and business lines are not homogenous enough to allow the development of a robust and reliable rating system;

(b)	that the risk-weighted exposure amount calculated in accordance with the Standardised Approach is significantly higher than the expected risk-weighted exposure amount calculated in accordance with the IRB Approach;

(c)	that the exposures relate to a business unit or business line of the institution which is planned to be discontinued;

(d)	that the exposures include portfolios subject to proportional consolidation of partly-owned subsidiaries, in accordance with Article 18 of Regulation (EU) No 575/2013.

3. When assessing the institution’s compliance with the conditions for permanent partial use of the Standardised Approach, competent authorities shall verify that the institution monitors compliance with the requirements of Article 150 of Regulation (EU) No 575/2013 on a regular basis.

Recitals

CHAPTER 1 - GENERAL PROVISIONS ON THE ASSESSMENT METHODOLOGY (Article 1-5)

CHAPTER 2 - ASSESSMENT METHODOLOGY FOR SEQUENTIAL IMPLEMENTATION PLANS AND PERMANENT PARTIAL USE OF THE STANDARDISED APPROACH (Article 6-8)Article 6 - General Article 7 - Sequential implementation of the IRB Approach Article 8 - Conditions for permanent partial use

CHAPTER 3 - ASSESSMENT METHODOLOGY FOR THE FUNCTION OF VALIDATION OF INTERNAL ESTIMATES AND OF THE INTERNAL GOVERNANCE AND OVERSIGHT OF AN INSTITUTION (Article 9-17)

CHAPTER 4 - ASSESSMENT METHODOLOGY FOR USE TEST AND EXPERIENCE TEST (Article 18-22)

CHAPTER 5 - ASSESSMENT METHODOLOGY FOR ASSIGNMENT OF EXPOSURES TO GRADES OR POOLS (Article 23-25)

CHAPTER 6 - ASSESSMENT METHODOLOGY FOR IDENTIFICATION OF DEFAULTS (Article 26-29)

CHAPTER 7 - ASSESSMENT METHODOLOGY FOR RATING SYSTEMS DESIGN, OPERATIONAL DETAILS AND DOCUMENTATION (Article 30-40)

CHAPTER 8 - ASSESSMENT METHODOLOGY FOR RISK QUANTIFICATION (Article 41-58)

CHAPTER 9 - ASSESSMENT METHODOLOGY FOR ASSIGNMENT OF EXPOSURES TO EXPOSURE CLASSES (Article 59-62)

CHAPTER 10 - ASSESSMENT METHODOLOGY FOR STRESS TEST USED IN ASSESSMENT OF CAPITAL ADEQUACY (Article 63-66)

CHAPTER 11 - ASSESSMENT METHODOLOGY FOR THE CALCULATION OF OWN FUNDS REQUIREMENTS (Article 67-71)

CHAPTER 12 - ASSESSMENT METHODOLOGY FOR DATA MAINTENANCE (Article 72-75)

CHAPTER 13 - ASSESSMENT METHODOLOGY OF INTERNAL MODELS FOR EQUITY EXPOSURES (Article 76-82)

CHAPTER 14 - ASSESSMENT METHODOLOGY FOR MANAGEMENT OF CHANGES TO RATING SYSTEMS (Article 83-84)

CHAPTER 15 - FINAL PROVISION (Article 85)

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Article 8 - Conditions for permanent partial use

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