New EBA Validation rule (taxonomy 2.6) v4786_m about the comparison between the risk weighted exposure amount and the exposure value for Equity in CR GB IRB

Article 155 of Regulation (EU) No 575/2013 (CRR) provides for three methods to calculate risk weighted exposure amounts for equity exposures under IRB models. The one described in the question is the simple risk weight approach (paragraph 2). This approach systematically leads to an application of risk weights higher than 100%. On the other hand, risk weights lower than 100% can be obtained according to the other two approaches. Whether or not the validation rule v4786_m holds depends on what method(s) is / are applied and which proportion of exposures is treated according to each method. This will be taken into consideration in a revision of the scope of application of v4786_m. In a similar manner, Article 153 (5) CRR envisages the systematic application of risk weights higher than 100% for specialised lending exposures under certain circumstances. This will also be taken into consideration in a revision of v4786_m. However, row 150 of template C 09.02 of Annex I to Regulation (EU) No 680/2014 (ITS on Supervisory Reporting), presenting total exposures, will be kept within the scope of v4786_m.