Treatment of the secured portion of defaulted IPRE exposures under the Standardised Approach

Under the Standardised Approach for credit risk, Article 127(3) CRR states that: "The exposure value remaining after specific credit risk adjustments of non-IPRE exposures secured by residential property or commercial immovable property in accordance with Articles 125 and 126, respectively, shall be assigned a risk weight of 100 % if a default has occurred in accordance with Article 178." Articles 125(2) and 126(2) establish dedicated treatments for income-producing real estate (IPRE) exposures through ETV-based risk-weight buckets. Following the CRR3 amendments, Article 127(3) explicitly refers only to non-IPRE exposures and does not specify the treatment of the secured portion of IPRE exposures after default.  Could the EBA clarify the prudential treatment of a defaulted IPRE exposure that satisfies all requirements of Article 124 and is secured by residential property or commercial immovable property? In particular: Should the secured portion of a defaulted IPRE exposure continue to be risk weighted according to the ETV buckets in Article 125(2) or Article 126(2), as applicable? Alternatively, should the secured portion of a defaulted IPRE exposure be reported in the exposure class "Exposures in default" and be assigned a risk weight of 100%, analogously to the treatment laid down in Article 127(3) for non-IPRE exposures, despite IPRE exposures not being explicitly referred to in that provision   If neither of the above approaches is correct, what is the appropriate risk-weight treatment and COREP reporting treatment for the secured portion of defaulted IPRE exposures under the Standardised Approach?

CRR3 introduced a distinction between non-IPRE and IPRE exposures within the framework for exposures secured by immovable property. Non-IPRE exposures are treated under Article 125(1) and Article 126(1), whereas IPRE exposures are treated under Article 125(2) and Article 126(2). At the same time, the revised wording of Article 127(3) explicitly grants a 100% risk weight only to non-IPRE exposures after default. No equivalent provision appears to exist for IPRE exposures.  As a result, it is unclear whether: defaulted IPRE exposures should retain their Article 125(2)/126(2) treatment after default, defaulted IPRE exposures should instead receive treatment analogous to Article 127(3), or another treatment is intended. Clarification is important for both RWA calculation and COREP reporting of defaulted IPRE exposures under the Standardised Approach.