Calculation of minimum lease payments in case of operational lease

Does the EBA acknowledge that the residual value should be discounted, or the interests on this residual value should be filtered out of the calculation of the discounted minimum lease payments, to avoid an increase of the exposure beyond the accounting value?

For an operational lease, while the accounting records only a fixed asset, the prudential exposure is split between the credit exposure (EAD classified in a risk category according to the counterpart) and the residual value (classified as other non-credit obligations under articles 134.7 in STD and 147.2(g) in IRB). QNA 2014_1241 provides that the residual value must be undiscounted. Articles 134.7 (STD) and 166.4 (IRB) provide that the credit exposure consists in the discounted minimum lease payments due by the lessor. However, there is no definition of what should be included in the minimum lease payments. Based on IFRS 16 for financial leases, the minimum lease payments should include the amortization of the asset, and the interests invoiced to the lessor. However, if the interests invoiced to the customer related to the residual value of an operational lease were included in the discounted minimum lease payments, it would result in an exposure higher than the value of the asset recognized in the balance sheet, which is economically not possible (the lessor cannot lose more than the value of the asset).  For instance, considering an operational lease of initial accounting value of EUR 50k, with an initial maturity of 5 years and interest rates of 5%, constant annuity payments and a residual value of EUR 20k. If the interests invoiced to the customer related to the residual value are taken into the discounted minimum lease payment, the initial prudential exposure would be of EUR 54,3k (split between EUR 34,3k of discounted minimum lease payment, of which EUR 4,3k related to the interests invoiced to the customer related to the residual value, and EUR 20k of undiscounted residual value). If the interests invoiced to the customer related to the residual value are excluded from the discounted minimum lease payments, the initial prudential exposure would be of EUR 50k (split between EUR 30k of discounted minimum lease payment and EUR 20k of undiscounted residual value) equal to the value of the asset recognized in the balance sheet.