EBA · 2025_7434 Rejected question

Can a receivable be identified as IPRE if a mortgage exists, but the securing property is not recognised as collateral?

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
124, para. 1
Topic
Credit risk
Submitted by
Consultancy firm
Submitted
2025-05-05
Browse ECB SSM Register → More Q&As on this regulation →

Question

Art. 124 para. 1 stipulates that banks receive a risk weight of 150% for IPRE receivables that do not fulfil all the conditions set out in para. 3. The question is what constellation of conditions must be met for this case to realistically materialise. An institution should normally be able to fulfil subsections a to d in para. 3. Paragraph 3 contains a reference to Article 208 and paragraph 1 of Article 229 in sub-item e. Article 229 paragraph 1 describes the property valuation and will not generally present institutions with insurmountable problems either. Article 208 begins with the statement that a property is only recognised as collateral if the following paragraphs 2 to 5 are fulfilled. One hurdle could possibly be the monitoring of the property value in accordance with paragraph 3. However, it is also conceivable that an institution will generally refrain from recognising real estate collateral due to an insignificant share in the portfolio. Can a receivable that is effectively secured by a mortgage be identified as an IRPE risk position without recognised real estate collateral, resulting in an RW of 150% under Art. 124 para. 1? Or does non-recognition also mean that the exposure is not to be regarded as collateralised (by a property) for the calculation of own funds and consequently receives the risk weight of an unsecured exposure?

Background

According to article 125 para. 2 and art. 126 para. in countries that fulfill certrain criteria IPRE exposures are treated like non-IPRE. This also applies to the exposure amount exceeding the threshold of 55 % ETV, being treated as unsecured. However if art. 124 para. 1 prevents an IPRE exposure from being considered unsecured, because a mortgage exists, but the collateral is not recognised, the risk weight of such a claim would be 150 % (rather than unsecured e.g. 75 % or 100 %).
No answer published yet.

Original source: European Banking Authority, Q&A ID 2025_7434

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 of the collateral value of immovable property considering minimum level of over-collateralisation ratio

Answered 2021-12-17

Recognition of real estate as commercial property

Answered 2014-11-21

Eligibility of mortgage mandates under Belgian law

Answered 2020-11-13

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

Risk weighting under standardised approach of an exposure secured by mortgage on residential property being constructed by the borrower (self-build) during the period of construction

Answered 2017-02-03

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.