Article 153(4) of Regulation (EU) No. 575/2013 (CRR) provides by means of a correlation formula a relief in capital requirements for exposures to companies where the total annual sales for the consolidated group of which the firm is a part is less than EUR 50 million. Institutions shall substitute total assets of the consolidated group for total annual sales when total annual sales are not a meaningful indicator of firm size and total assets are a more meaningful indicator than total annual sales.

Article 162(4) CRR allows for exposures to corporates situated in the Union and having consolidated sales and consolidated assets of less than EUR 500 million to consistently set the a maturity value (M) as set out in Article 162(1) CRR instead of applying Article 162(2) CRR. Institutions may replace EUR 500 million total assets with EUR 1 000 million total assets for corporates which primarily own and let non-speculative residential property.

Since both Article 153(4) and Article 162(4) CRR derogate from the requirements, which are otherwise applicable under the IRB-Approach for exposures assigned to the corporate exposure class, it needs to be ensured that this privilege is not extended inappropriately. An institution therefore needs to have adequate current information available  which is sufficient to estimate the size of an entity in a reliable manner. When requested, institutions should be able to adequately demonstrate the fulfilment of this requirement to its competent authorities.

Under these conditions institutions may use a best effort based assessment of the size of a newly established corporation for the purposes of Articles 153(4) or 162(4) CRR if they can provide adequate assurance, based on the information they have collated and scrutinised, that the size of a corporation has been accurately determined.