EBA · 2013_354 Final Q&A

Discounts on balance sheet exposures purchased when not in default

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
159
Topic
Credit risk
Submitted by
Credit institution
Submitted
2013-10-08
Answered
2014-04-11
Answer provided by
ESAs (EBA, ESMA, EIOPA)
Browse ECB SSM Register → More Q&As on this regulation →

Question

In Regulation (EU) No 575/2013 (CRR) Article 159 it states: "......Discounts on balance sheet exposures purchased when in default in accordance with Article 166(1) shall be treated in the same manner as specific credit risk adjustments." In respect of this how should one treat discounts on purchased exposures that were not in default at the time of purchase and discounts that were not calculated on single exposure level, but instead calculated on a whole portfolio of exposures which are not in default.

Background

See above.

Answer

Article 159 of Regulation (EU) 575/2013 (CRR) does not provide for a treatment of discounts on balance sheet exposures purchased when not in default in the same manner as specific credit risk adjustments. Furthermore, according to Article 1 of the RTS on the specification of the calculation of specific and general credit risk adjustments in accordance with Article 110(4) of the CRR, such discounts do not qualify as credit risk adjustments. Hence, such discounts are not allowed to be included in the calculation according to Article 159 of the CRR. However, according to Article 166(1) of the CRR, if the discount on these exposures purchased is reflected in the balance sheet, the discount should also be reflected in the exposure value.

Original source: European Banking Authority, Q&A ID 2013_354

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

Similar Q&As

Computation of discount for purchased assets

Answered 2017-07-21

Appropriate Risk Weight for purchased defaulted assets

Answered 2018-09-21

IFRS 9 Transitional arrangements - Distinction between defaulted and non-defaulted exposures for the calculation provided for in Article 473a(5)

Answered 2018-06-08

Specific credit risk adjustments on exposures in default

Answered 2015-01-16

General and specific credit risk adjustments

Answered 2018-08-03

More Q&As on this topic

Application of the currency mismatch treatment to self-employed individuals (natural persons carrying out an economic activity) under Article 123a CRR.

Answered 2026-07-31

Requirements for the purpose of treating exposures secured by mortgages on immovable property as duly secured from an RWA computation perspective under CRR Article 124(2) of the CRR.

Answered 2026-05-08

Use of credit assessments by ECAIs not in scope of Regulation (EC) No 1060/2009.

Answered 2026-03-13

US Hard test: adequacy of considering US charge-off rates corresponding to loss rates for exposures secured by residential property or commercial immovable property situated within the territory of the US

Answered 2026-02-27

Application of the SME definition in specific cases

Answered 2025-11-28

📋 Track EU financial regulation continuously

Forseti monitors EU financial regulation and delivers personalised alerts anchored to verified official sources.

Start free trial → Learn more

14-day free trial. No credit card required.