Article 4
Credit risk at the investor’s portfolio level
1. The description provided to investors of the method to assess credit risk at the investor’s portfolio level as referred to in Article 6(2), point (b) of Regulation (EU) 2020/1503, shall contain an explanation of how, in the process of composing a portfolio, the following elements are taken into account:
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(a) |
the distribution of loans in accordance with their maturity within the same portfolio; |
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(b) |
the interest rate for each loan of the same portfolio; |
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(c) |
the share of loans in a single portfolio granted to the same project owner or to a group of connected project owners; |
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(d) |
the share of loans in a single portfolio granted to project owners established or operating in the same jurisdiction or geographical area; |
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(e) |
the share of loans in a single portfolio granted to project owners operating in the same business sector; |
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(f) |
the share of loans assigned to the same risk category; |
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(g) |
the method used to evaluate the correlation of risks within the same portfolio. |
2. For the purposes of paragraph 1, point (c), a group of connected project owners shall mean any of the following:
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(a) |
two or more natural or legal persons who constitute a single risk because one of them, directly or indirectly, has control over the other or others; |
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(b) |
two or more natural or legal persons are to be regarded as constituting a single risk because they are so interconnected that, if one of them were to experience financial problems, the other or all of the others would also be likely to encounter funding or repayment difficulties. |
3. A crowdfunding service provider that advertises a specific target rate of return on investment for a portfolio shall disclose the procedure employed to select the individual loans to be included in the portfolio.