EBA · 2015_1908 Final Q&A

Eligibility of religious communities or churches

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
201, para. 1
Topic
Credit risk
Submitted by
Consultancy firm
Submitted
2015-03-20
Answered
2015-12-11
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

Are churches or religious communities eligible protection providers under all approaches and thus included in the list of providers of Article 201 with reference to paragraph 1(b)?

Background

Article 115(3) of the CRR states that churches or religious communities should be treated as regional government or local authorities when applying the standard risk weight, specifically for "... churches or religious communities constituted in the form of a legal person under public law shall, in so far as they raise taxes in accordance with legislation conferring on them the right to do so …" but it doesn't assign to churches or religious communities any specific exposure class.

Answer

Exposures to churches or religious communities may under certain conditions be treated as exposures to regional governments or local authorities according to Article 115 (3) of Regulation (EU) No 575/2013 (CRR). However, Article 201 (1) of CRR explicitly sets out a list of parties that are eligible providers of unfunded credit protection which includes regional governments and local authorities (Article 201 (1) (b) of CRR), but does not extend this eligibility to entities that may be treated on an equivalent basis with eligible protection providers for the purposes of calculating risk weighted exposure amounts. Therefore, churches or religious communities that may be risk weighted according Article 115 (3) of CRR may not be treated as eligible providers of unfunded credit protection according to Article 201 (1) (b) of CRR.

Original source: European Banking Authority, Q&A ID 2015_1908

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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