EBA · 2019_4672 Rejected question

Specialised Lending - Interpretation of contractual arrangements that give the lender a substantial degree of control

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
147, para. 8
Topic
Credit risk
Submitted by
Credit institution
Submitted
2019-04-15
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Question

How shall Article 147 (8)(b) CRR be interpreted when identifying ‘contractual arrangements that give the lender a substantial degree of control over the assets and the income that they generate’ in the context of real estate financing?

Background

Art. 147 (8) CRR outlines the conditions for the separate identification of corporate exposures as specialised lending exposures. While condition (a) and (c) of Art. 147 (8) CRR are generally uncontroversial, there is a perceived inconsistency in the interpretation of point (b) of Art. 147 (8) CRR across jurisdictions and among competent authorities. Questions arise about what can be considered contractual arrangements that give the lender a substantial degree of control and to what extent the degree of control can be considered substantial where the exposure as such is not classified as being in default.
No answer published yet.

Original source: European Banking Authority, Q&A ID 2019_4672

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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