- Question ID
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2016_2711
- Legal act
- Regulation (EU) No 575/2013 (CRR)
- Topic
- Credit risk
- Article
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501
- Paragraph
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2
- Subparagraph
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c
- COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
- Not applicable
- Article/Paragraph
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N/A
- Type of submitter
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Competent authority
- Subject matter
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Classifications of loans to SPVs as to SME
- Question
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How should the repayment of loans to SPV's (classified as SME) be considered for the purpose of Article 501 of Regulation (EU) No 575/2013 (CRR)? Should the original exposure amount be taken into account?
- Background on the question
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A bank's core business is commercial real estate. The obligors are to a large extent SPV's with staff less than 250 and annual revenues below € 50 million so they would fulfil the EU-definition regarding SME. The bank classifies these obligors as SME. However, the original loan size is more than € 1.5 million. By the time the exposure is below the threshold of € 1.5 million the bank applies the SME SF. Is that correct?
- Submission date
- Final publishing date
-
- Final answer
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Article 501(2)(c)(1) of Regulation (EU) No 575/2013 (CRR) refers to the total amount owed to the institution, its subsidiaries, its parent undertakings and other subsidiaries of those parent undertakings, including any exposure in default, but excluding claims or contingent claims secured on residential property collateral by the SME or the group of connected clients of the SME. Provided that the other criteria of the Commission Recommendation concerning the definition of micro, small and medium-sized enterprises (2003/361/EC) are fulfilled, there is no reference in Article 501 CRR to the exposure value at the time when entering the exposure.See alsoQ&A 417which clarifies that the 1.5 million Euro threshold is an 'ongoing condition' and other requirements that an institution must meet in that context.Q&A 414andQ&A 2135 may also be relevant in this context. - Status
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Final Q&A
- Answer prepared by
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Answer prepared by the EBA.
- Note to Q&A
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Update 26.03.2021: This Q&A has not yet been reviewed by the EBA in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR).Update 28.10.2021: This Q&A has been amended in light of the change(s) in Article 501 to Regulation (EU) No 575/2013 (CRR), applicable from 27.06.2020.
Disclaimer
The Q&A refers to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.