The European Banking Authority (EBA) has published a Consultation Paper on draft regulatory technical standards (RTS) on the treatment of equity exposures under the internal ratings-based (IRB) approach under article 495(3) of the Capital Requirements Regulation (CRR).
Article 495(3) CRR allows competent authorities temporarily to exempt from IRB treatment, certain equity exposures held by institutions as at 31 December 2007. This provision was previously included in the Capital Requirements Directive I (CRD I) but the CRR seeks to impose specific conditions on competent authorities that must be met for the exemption to be granted. The purpose of the RTS is to set out these conditions.
In the Consultation Paper, the EBA proposes only one condition for the purpose of granting the exemption. Essentially, the EBA proposes that competent authorities are allowed to grant the exemption if it was being applied on the last day of application of the CRD I.
The deadline for comments on the Consultation Paper is 7 July 2014. A public hearing will take place at the EBA’s premises on 27 May 2014.