EBA · 2014_1020 Final Q&A

Country of incorporation of SMEs and application of the supporting factor

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
501, para. /
Topic
Credit risk
Submitted by
Competent authority
Submitted
2014-03-27
Answered
2015-03-13
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

Does the supporting factor 0,7619 apply only to SMEs that are incorporated within the EU?

Background

Article 501 of Regulation (EU) No 575/2013 does not specify exactly whether the supporting factor can be applied to "non-EU" SMEs as well as SMEs incorporated in the EU. One of the criteria for the use of the supporting factor is that the annual turnover of the SME should not exceed EUR 50 million as it is stated in the Recommendation 2003/361/EC, which applies only for the EU SMEs.

Answer

Regulation (EU) No 575/2013 does not allow any form of discrimination against SMEs not located in the EU. The supporting factor shall be applied to any SME fulfilling the requirements provided for in Article 501 regardless of the country of incorporation of the SME.   DISCLAIMER This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General Financial Stability, Financial Services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.

Original source: European Banking Authority, Q&A ID 2014_1020

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.

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