Classification of Churches and Religious Communities

Question

Will the exposures of churches and religious communities that do not fall under Articles 115 (3), 127, and 128 be classified as Corporates (Article 122) or Retail (Article 123)? Additionally, can these be classified as SMEs?

European Banking Authority · Accepted Answer

For a classification as Retail exposures according to Article 123 of the CRR all the requirements mentioned in letters (a) to (c) of the first subparagraph of Article 123 have to be met, which includes the requirement that the exposure "shall be one of a significant number of exposures with similar characteristics such that the risks associated with such lending are substantially reduced". Where exposures to churches and religious communities that do not fall under Articles 115(3), 127, and 128 of Regulation (EU) No 575/2013 (CRR) cannot be assigned to any other exposure class, they should, for the purposes of the calculation of risk-weighted exposure amounts, be risk weighted under the Standardised Approach according to Article 113(5) of the CRR. Notwithstanding the risk weighting, these exposures should, for the purposes of complying with Article 112, be assigned to exposures to corporates under point (g). To the extent that the requirements of Article 501 are met, the SME discount factor should be applied.

Classification of Churches and Religious Communities

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