September 6 2016

Position paper on adjustment of the European large exposure rules in the CRD/CRR review

The large exposure rules are currently being revised at European level. Firstly, the large exposures framework published by the Basel Committee on Banking Supervision in April 2014 is to be implemented and, secondly, the European Commission is reviewing in accordance with Article 507 of the CRR whether the exemptions in Article 400 (2) and Article 493 (3) of the CRR applied by the competent authorities or Member States on a discretionary basis should be retained.

The proposals under discussion for adjustment of the European large exposure rules would, as a whole, tighten the current regime considerably. Large exposure limits are likely to at least be reached more quickly and in fact exceeded in a number of cases. Overall, banks’ lending capacity would be curtailed significantly.

It is particularly important to refrain from issuing a single legislative proposal for a CRD IV/CRR review before the end of this year which covers the trading book review, counterparty credit risk, plus the large exposure requirements relating to these areas and the new standardised approach for credit risk. The latter one expected to be finalised by the end of this year.
With this in mind, the German Banking Industry Committee (GBIC) would like to outline its main positions on the future European large exposures regime. The present position paper is divided into two sections:

  1. Remarks on implementation of the Basel large exposure rules
  2. Remarks on exemptions from the definition of ‘exposure’ and exemptions from the application of Article 395 (1) of the CRR (large exposure limit).

We wish to make clear that the order of these positions does not indicate any prioritisation on our part but instead merely reflects the order of the relevant articles in the CRR.

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