EBA · 2025_7296 Rejected question

Mixing approaches (loan-splitting, ETV) for real estate exposures collateralised by multiple immovable properties

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
124/125/126, para. 2
Topic
Credit risk
Submitted by
Other
Submitted
2025-01-08
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Question

Is it allowed to split an exposure/loan into using different riskweighting methods (loan-splitting vs ETV) in case they are collateralised by multiple immovable properties with different characteristics?

Background

Art. 124 (2) CRR as well as Art. 125/126 (2) subpara 2 CRR offer possibilities to treat IPRE-exposures under the so called "loan-splitting" approach instead of the ETV-based riskweighting. However the regulation does not clarify how to exactly handle cases that are secured by multiple properties. It is possible that some of them fulfill the conditions to be treated under loan-splitting and others do not (e.g. residential vs commercial properties, or different countries). A differentiation by mortgage lien is not always possible as there are jurisdictions where one line might refer to multiple properties.  In this context is it allowed to split the secured loan into 2 parts, treating 1 part with the respective properties under loan-splitting and treating the other part with the remaining properties under the ETV approach? If yes, should any specific rules be considered (e.g, requiring a pro-rata split depending on physical asset values - an approach the UK regulator has taken in some instances)
No answer published yet.

Original source: European Banking Authority, Q&A ID 2025_7296

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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