On 26 November 2018, there was published in the Official Journal of the EU, Regulation (EU) 2018/1845 of the European Central Bank (ECB) of 21 November 2018 on the exercise of the discretion under Article 178(2)(d) of the Capital Requirements Regulation in relation to the threshold for assessing the materiality of credit obligations past due. The ECB Regulation enters into force on 16 December 2018. It is directly applicable in Member States.
The ECB Regulation was approved by the ECB’s Governing Council following a public consultation, including a public hearing. The ECB believes that by setting a single materiality threshold, the ECB Regulation will foster a harmonised definition of default within the Single Supervisory Mechanism, thereby improving the comparability of risk-weighted assets and defaulted exposures across significant institutions. In conjunction with the European Banking Authority’s guidelines on the application of the definition of default, the ECB Regulation constitutes a major milestone in establishing a level playing field for the detection and treatment of obligors in financial difficulties.