Article 178 of the Capital Requirements Regulation (CRR) provides that EU institutions have to access the materiality of credit obligations past due in order to define the default of an obligor. The CRR defines a default as the situation when an obligor is past due more than 90 or 180 days on any material credit obligation and requires an EU competent authority to set a materiality threshold that should reflect a reasonable level of risk. The CRR also requires the EBA to specify the conditions according to which an EU competent authority shall set the threshold.

The European Banking Authority (EBA) has published a consultation paper containing draft Regulatory Technical Standards (RTS) on materiality threshold of past due credit obligations. The proposed draft RTS is based on a common structure of a threshold and requires that the single threshold be applied to all institutions in a certain jurisdiction, as set out in the CRR. The EBA expects that the harmonisation of practices should reduce the burden for cross-border institutions to comply with different requirements in different Member States.

The deadline for comments on the consultation paper is 31 January 2015.

View EBA consults on materiality threshold of credit obligation past due, 31 October 2014