EBA · 2026_7809 Rejected question

Application of the current market value as a cap for immovable property collateral

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
229, para. 1
Topic
Credit risk
Submitted by
Other
Submitted
2026-04-02
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Question

Should the most recent market value constitute the maximum permissible (“cap”) for prudential purposes, even when the revaluation mechanisms under Article 229 would otherwise yield a higher value?

Background

Under the CRR3 framework, Article 229(1)(d) establishes that the value applied by institutions may not exceed the property’s current market value. At the same time, Article 229 introduces a more structured approach to determining the property value, requiring institutions to compute an average based on a series of equidistant valuation points over a defined historical period.  In practice, these two requirements may conflict in situations where the most recent market valuation is lower than both the origination value and the average value derived from the Article 229 methodology. Such cases raise an important question:  should the prudential cap in Article 229(1)(d) override the averaged value, thereby limiting the property value to the latest market valuation, even when the historical averaging process would otherwise produce a higher figure?
No answer published yet.

Original source: European Banking Authority, Q&A ID 2026_7809

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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