Revisions to Regulations and guidelines 25/2013 “Capital requirements calculation and large exposures” enter into force 1 January 2021

The Financial Supervisory Authority has revised its Regulations and guidelines “Capital requirements calculation and large exposures” (25/2013). The revisions enter into force on 1 January 2021.

On 18 January 2017, the European Banking Authority (EBA) published “Guidelines on the application of the definition of default”, under the authority given to it by Article 178(7) of Regulation (EU) No 575/2013 (Capital Requirements Regulation, CRR). The guidelines are addressed to competent authorities and to financial institutions as defined in Article 4(1) of Regulation (EU) No 1093/2010. The guidelines are implemented in Finland by adding to chapters 5 and 6 of Regulations and guidelines 25/2013 a recommendation on compliance with the EBA Guidelines.

The EBA Guidelines harmonise the definition of default and therefore promote consistent capital requirements calculation in banks as well as comparability of capital requirements. The guidelines clarify in detail the definition of default and the application of the definition.

The Financial Supervisory Authority recommends that supervised entities take the EBA Guidelines into account in developing the proprietary credit rating systems that they intend to apply in IRBA capital requirements calculations as of 1 January 2021. It should be noted, in particular, that the aforementioned systems must be authorised by a competent authority before 1 January 2021.

For further information, please contact:

Tommi Orpana, Senior Risk Expert, tommi.orpana(at)finanssivalvonta.fi, tel. +358 9 183 5262.

Appendix

Regulations and guidelines 25/2013 Capital requirements calculation and large exposures