+TITLE I SUBJECT MATTER, SCOPE AND DEFINITIONS
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---+Article 2 Supervisory powers
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---+Article 3 Application of stricter requirements by institutions
---+Article 4 Definitions
------+Article 4 1.
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---+Article 5 Definitions specific to capital requirements for credit risk
---+Article 5a Definitions specific to crypto-assets

TITLE I SUBJECT MATTER, SCOPE AND DEFINITIONS

TITLE I SUBJECT MATTER, SCOPE AND DEFINITIONS

1. Overview

,
Article 1 Scope

Article 1

Scope

This Regulation lays down uniform rules concerning general prudential requirements that institutions, financial holding companies and mixed financial holding companies supervised under Directive 2013/36/EU shall comply with in relation to the following items:

(a) 

own funds requirements relating to entirely quantifiable, uniform and standardised elements of credit risk, market risk, operational risk, settlement risk and leverage;

(b) 

requirements limiting large exposures;

(c) 

liquidity requirements relating to entirely quantifiable, uniform and standardised elements of liquidity risk;

(d) 

reporting requirements related to points (a), (b) and (c);

(e) 

public disclosure requirements.

This Regulation lays down uniform rules concerning the own funds and eligible liabilities requirements that resolution entities that are global systemically important institutions (G-SIIs) or part of G-SIIs and material subsidiaries of non-EU G-SIIs shall comply with.

This Regulation does not govern publication requirements for competent authorities in the field of prudential regulation and supervision of institutions as set out in Directive 2013/36/EU.
Article 2 Supervisory powers
Article 3 Application of stricter requirements by institutions

Article 3

Application of stricter requirements by institutions

This Regulation shall not prevent institutions from holding own funds and their components in excess of, or applying measures that are stricter than those required by this Regulation.
Article 4 Definitions
Article 5 Definitions specific to capital requirements for credit risk

Article 5

Definitions specific to capital requirements for credit risk

For the purposes of Part Three, Title II, the following definitions shall apply:

(1) 

‘exposure’ means an asset or off-balance sheet item;

(2) 

‘loss’ means economic loss, including material discount effects, and material direct and indirect costs associated with collecting on the instrument;

▼M17

(3) 

‘expected loss’ or ‘EL’ means the ratio, related to a single facility, of the amount expected to be lost on an exposure from any of the following:

(a) 

a potential default of an obligor over a one-year period to the amount outstanding at default;

(b) 

a potential dilution event over a one-year period to the amount outstanding at the date of occurrence of the dilution event;

▼M17

(4) 

‘credit obligation’ means any obligation arising from a credit contract, including principal, accrued interest and fees, owed by an obligor;

(5) 

‘credit exposure’ means any on- or off -balance-sheet item, that results, or may result, in a credit obligation;

(6) 

‘facility’ or ‘credit facility’ means a credit exposure arising from a contract or a set of contracts between an obligor and an institution;

(7) 

‘margin of conservatism’ means an add-on incorporated in risk parameter estimates to account for the expected range of estimation errors stemming from identified deficiencies in data, methods, models, and changes to underwriting standards, risk appetite, collection and recovery policies and any other source of additional uncertainty, as well as from general estimation error;

(8) 

‘appropriate adjustment’ means the impact on risk parameter estimates resulting from the application of methodologies within the estimation of risk parameters to correct the identified deficiencies in data and in estimation methods, and to account for changes to underwriting standards, risk appetite, collection and recovery policies and any other source of additional uncertainty, to the extent possible in order to avoid biases in risk parameter estimates;

(9) 

‘small and medium-sized enterprise’ or ‘SME’ means a company, enterprise or undertaking which, according to its most recent consolidated accounts, has an annual turnover not exceeding EUR 50 000 000 ;

(10) 

‘commitment’ means any contractual arrangement that an institution offers to a client, and is accepted by that client, to extend credit, purchase assets or issue credit substitutes; and any such arrangement that can be unconditionally cancelled by an institution at any time without prior notice to an obligor or any arrangement that can be cancelled by an institution where an obligor fails to meet the conditions set out in the facility documentation, including conditions that are required to be met by the obligor prior to any initial or subsequent drawdown under the arrangement, unless contractual arrangements meet all of the following conditions:

(a) 

contractual arrangements where the institution receives no fees or commissions to establish or maintain those contractual arrangements;

(b) 

contractual arrangements where the client is required to apply to the institution for the initial and each subsequent drawdown under those contractual arrangements;

(c) 

contractual arrangements where the institution has full authority, regardless of the fulfilment by the client of the conditions set out in the contractual arrangement documentation, over the execution of each drawdown;

(d) 

the contractual arrangements allow the institution to assess the creditworthiness of the client immediately prior to deciding on the execution of each drawdown and the institution has implemented and applies internal procedures that ensure that such an assessment is being made before the execution of each drawdown;

(e) 

contractual arrangements that are offered to a corporate entity, including an SME, that is closely monitored on an ongoing basis;

(11) 

‘unconditionally cancellable commitment’ means any commitment the terms of which permit the institution to cancel that commitment to the full extent allowable under consumer protection and related legal acts, where applicable, at any time without prior notice to the obligor or that effectively provide for automatic cancellation due to a deterioration in a borrower’s creditworthiness.
Article 5a Definitions specific to crypto-assets

Article 5a

Definitions specific to crypto-assets

For the purposes of this Regulation, the following definitions apply:

(1) 

‘crypto-asset’ means a crypto-asset as defined in Article 3(1), point (5), of Regulation (EU) 2023/1114 of the European Parliament and of the Council ( 20 ) that is not a central bank digital currency;

(2) 

‘electronic money token’ or ‘e-money token’ means an electronic money token or e-money token as defined in Article 3(1), point (7), of Regulation (EU) 2023/1114;

(3) 

‘crypto-asset exposure’ means an asset or an off-balance-sheet item related to a crypto-asset that gives rise to credit risk, counterparty credit risk, market risk, operational risk or liquidity risk;

(4) 

‘traditional asset’ means any asset other than a crypto-asset, including:

(a) 

financial instruments as defined in Article 4(1), point (50), of this Regulation;

(b) 

funds as defined in Article 4, point (25), of Directive (EU) 2015/2366;

(c) 

deposits as defined in Article 2(1), point (3), of Directive 2014/49/EU of the European Parliament and of the Council ( 21 ), including structured deposits;

(d) 

securitisation positions in the context of a securitisation as defined in Article 2, point (1), of Regulation (EU) 2017/2402;

(e) 

non-life or life insurance products falling within the classes of insurance listed in Annexes I and II to Directive 2009/138/EC or reinsurance and retrocession contracts referred to in that Directive;

(f) 

pension products that, under national law, are recognised as having the primary purpose of providing the investor with an income in retirement and that entitle the investor to certain benefits;

(g) 

officially recognised occupational pension schemes within the scope of Directive (EU) 2016/2341 of the European Parliament and of the Council ( 22 ) or Directive 2009/138/EC;

(h) 

individual pension products for which a financial contribution from the employer is required by national law and where the employer or the employee has no choice as to the pension product or provider;

(i) 

a pan-European Personal Pension Product as defined in Article 2, point (2), of Regulation (EU) 2019/1238 of the European Parliament and of the Council ( 23 );

(j) 

social security schemes covered by Regulation (EC) No 883/2004 of the European Parliament and of the Council ( 24 ) and Regulation (EC) No 987/2009 of the European Parliament and of the Council ( 25 );

(5) 

‘tokenised traditional asset’ means a type of crypto-asset that represents a traditional asset, including an e-money token;

(6) 

‘asset-referenced token’ means an asset-referenced token as defined in Article 3(1), point (6), of Regulation (EU) 2023/1114;

(7) 

‘crypto-asset service’ means a crypto-asset service as defined in Article 3(1), point (16), of Regulation (EU) 2023/1114.

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

Requirements

3. Related Standards

Standards