EBA · 2019_4489 Final Q&A

Materiality threshold and calculation method for materiality ratio for the purpose of application of Article 150(1)(c) for types of exposures that are immaterial in terms of size and perceived risk profile

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
150, para. 1
Topic
Credit risk
Submitted by
Credit institution
Submitted
2019-01-28
Answered
2021-05-21
Answer provided by
ESAs (EBA, ESMA, EIOPA)
Browse ECB SSM Register → More Q&As on this regulation →

Question

A) Can you please clarify whether the 10%/5% threshold to define materiality for “exposure classes” are valid also as for “types of exposures”? In case not, can you please specify which thresholds should be considered for the abovementioned purpose? B) As for the materiality ratio to be compared against the thresholds can you please clarify how it should be computed with reference to the following points: 1. Should the numerator include only the exposures for which the application for PPU is being sought under Article 150 (1) (c) by excluding exposures for which PPU has already been granted pursuant other points of Art 150 (1) and exposures not to be included in the calculation of RWA for equity exposure pursuant to Art. 155 (1) (i.e. Equity exposures risk weighted at 250% in accordance with Art. 48 (4) of Reg. EU 575/2013 and those deducted from CET1 in accordance with Part Two of Reg. EU 575/2013)? 2. Should the ratio be computed only at solo level or both at solo and consolidated level, in case an application is limited to only one Legal Entity (LE) of a Large Group?

Background

Pursuant to Article 150(1)(c) a materiality test is required both for “exposure classes” and “types of exposures”. However, Art. 150(2) defines the materiality test only with reference to “exposure classes”. While an interpretation of Article 150(2) in terms of “types of exposure” is missing.

Answer

Regulation (EU) No 575/2013 (CRR) does not specify any quantitative thresholds for determining the materiality of exposures under Article 150(1)(c). The thresholds defined in Article 150(2) CRR are only applicable to equity exposures at the exposure class level. The CRR does not specify any threshold at the lower level of type of exposures, or for any other exposure class. For the calculation of the threshold according to Article 150(2) CRR, see Q&A 4390 .

Original source: European Banking Authority, Q&A ID 2019_4489

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

Calculation method for materiality ratio to be compared against the 10%/5% threshold for the purpose of application of Article 150(1)(c) for equity exposure class (Permanent Partial Use)

Answered 2021-05-21

Application level of materiality threshold for assessing the materiality of extensions and changes to the IMA

Answered 2017-01-20

Mandatory substitution approach according to Article 403 CRR when applying either the Financial Collateral Comprehensive Method (FCCM) or, in the case of securities financing transactions (SFTs) the Internal Model Method (IMM) or master netting agreements to calculate the exposure value.

Answered 2022-01-21

Reporting Templates

Answered 2023-10-19

Absolute materiality threshold for Retail based on the new RTS

Answered 2020-10-09

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.