EBA publishes final draft amending standards on real estate risk weights assessment

The European Banking Authority (EBA) has published its final draft amending Regulatory Technical Standards (RTS) concerning the factors to be considered by national authorities when assessing the appropriateness of real estate risk weights.

This review is driven by the revised Capital Requirements Regulation (CRR 3), which introduces a new mandate for the EBA regarding the Standardised Approach to credit risk.

The amendment involves updating legal references in the RTS to align with the new banking framework, based on the assessment of CRR3 changes related to exposures secured by immovable property under the Standardised Approach.

The original RTS also addressed the appropriateness of minimum loss given default (LGD) values for retail exposures secured by immovable property. To ensure regulatory consistency, the EBA proposes aligning the legal references to the IRB with CRR3.

These final draft RTS have been developed under Article 124(11) of Regulation (EU) 2024/1623 (CRR3), which mandates the EBA, in cooperation with the European Systemic Risk Board, to specify the factors for assessing risk weight appropriateness.