Shearman & Sterling LLP | FinReg | European Central Bank Consults on Proposed Guidelines on Materiality Threshold for Credit Obligations Past Due for Small Eurozone Banks
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  • European Central Bank Consults on Proposed Guidelines on Materiality Threshold for Credit Obligations Past Due for Small Eurozone Banks
    01/20/2020
    The European Central Bank has opened a consultation on proposed guidelines on the materiality threshold for credit obligations past due for less significant institutions based in the Eurozone. The EU Capital Requirements Regulation risk quantification provisions set out that a default occurs when an obligor is past due more than 90 days on any material credit obligation to a firm, its parent or any of its subsidiaries. The materiality of the credit obligation is to be assessed against a threshold set by the national regulator according to its view of a reasonable level of risk. The ECB is responsible for direct prudential supervision of certain significant banks based in the Eurozone as part of the Single Supervisory Mechanism and has set the materiality threshold for these firms. The proposed guidelines are addressed to national Eurozone regulators within the SSM responsible for setting the threshold for less significant institutions. The ECB is proposing a single materiality threshold for all less significant institutions, both for retail and non-retail exposures.

    The consultation closes on February 17, 2020.

    View the consultation paper.

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