EBA responds to proposed amendments to technical standards on legal mechanism

The European Banking Authority (EBA) published its opinion in response to the European Commission’s amendments to the draft Regulatory Technical Standards (RTS). These standards specify what constitutes an equivalent legal mechanism to ensure the completion of a residential property under construction within a reasonable timeframe, as outlined in the Capital Requirements Regulation (CRR).

On 9 January 2026, the Commission informed the EBA of its intention to endorse, with amendments, the final draft RTS submitted by the EBA on 5 August 2025.

The EBA identified two substantive amendments proposed by the Commission that are inconsistent with prudential safeguards:

• Increasing the risk weight cap for protection providers from 20% to 30% under the Standardised Approach. The EBA emphasizes maintaining the 20% cap to preserve prudential consistency and ensure the capital treatment aligns with credit quality.
• Removing the requirement that the completion guarantee be mandated by the law of the Member State where the property is being built. The EBA considers this requirement essential for legal certainty and framework robustness.

Through this opinion, the EBA reaffirms its commitment to a harmonized and prudent application of the preferential treatment for residential property exposures.

This opinion is issued under Article 10(1) of Regulation (EU) No 1093/2010, and relates to the conditions and risk-weight parameters for exposures secured by mortgages on immovable property under the CRR, specifically regarding exposures to residential property under construction.

The final draft RTS was submitted by the EBA on 5 August 2025. The Commission notified its intention to endorse these RTS with amendments on 9 January 2026, prompting this formal response from the EBA.