What changed between the plenary report and the adopted text

Removed:(a) exposures assigned to Grade A, B or C which meet any of the following conditions shall be assigned a risk weight for short-term exposures in accordance with Table 5:

Removed:(i) the exposure has an original maturity of three months or less;

Removed:(ii) the exposure has an original maturity of six months or less and arises from the movement of goods across national borders.

Removed:(b) exposures assigned to Grade A which are not short-term shall be assigned a risk weight of 30 % where all of the following conditions are met:

Removed:(i) the exposure does not meet any of the conditions laid down in point (a);

Removed:(ii) the institution’s Common Equity Tier 1 capital ratio is equal to or higher than 14 %;

Removed:(iii) the institution’s leverage ratio is higher than 5 %.

Removed:(c) exposures assigned to Grade A, B or C that do not meet the conditions in point (a) or (b) shall be assigned a risk weight in accordance with the Table 5.

Removed:Where an exposure to an institution is not denominated in the domestic currency of the jurisdiction of incorporation of that institution, or where that institution has booked the credit obligation in a branch in a different jurisdiction and the exposure is not in the domestic currency of the jurisdiction in which the branch operates, the risk weight assigned in accordance with points (a), (b) or (c), as applicable, to exposures other than those with a maturity of one year or less stemming from self-liquidating, trade-related contingent items that arise from the movement of goods across national borders shall not be lower than the risk weight of an exposure to the central government of the country where the institution is incorporated.

Removed:Table 5

Removed:’;

Removed:(40) Article 122 is amended as follows:

Removed:(a) in paragraph 1, Table 6 is replaced by the following:

Removed:‘Table 6

Removed:’;

Removed:(b) paragraph 2 is replaced by the following:

Removed:‘Exposures for which such a credit assessment is not available shall be assigned a risk weight of 100 %.’;

Removed:(41) the following Article 122a is inserted:

Removed:‘Article 122a Specialised lending exposures

Removed:1. Within the corporate exposure class laid down in Article 112, point (g), institutions shall separately identify as specialised lending exposures, exposures with all the following characteristics:

Removed:(a) the exposure is to an entity which was created specifically to finance or operate physical assets or is an exposure that is economically comparable to such an exposure;

Removed:(b) the exposure is not ▌related to the financing of real estate and is within the definitions of object finance, project finance or commodities finance exposures laid down in paragraph 3;

Removed:(c) the contractual arrangements governing the obligation related to the exposure give the institution a substantial degree of control over the assets and the income that they generate;

Removed:(d) the primary source of repayment of the obligation related to the exposure is the income generated by the assets being financed, rather than the independent capacity of a broader commercial enterprise.

Removed:2. Specialised lending exposures for which a directly applicable credit assessment by a nominated ECAI is available shall be assigned a risk weight in accordance with Table 6aa:

Removed:Table 6aa

Removed:3. Specialised lending exposures for which a directly applicable credit assessment is not available shall be risk weighted as follows:

Removed:(a) where the purpose of a specialised lending exposure is to finance the acquisition of physical assets, including ships, aircraft, satellites, railcars, and fleets, and the income to be generated by those assets comes in the form of cash flows generated by the specific physical assets that have been financed and pledged or assigned to the lender ▌(‘object finance exposures’), institutions shall apply the following risk weights:

Removed:(i) 80 % where the exposure is deemed to be high quality when taking into account all of the following criteria:

Removed:– the obligor can meet its financial obligations even under severely stressed conditions due to the presence of all of the following features:

Removed: adequate exposure-to-value of the exposure;

Removed: conservative repayment profile of the exposure;

Removed: commensurate remaining lifetime of the assets upon full pay-out of the exposure or alternatively recourse to a protection provider with high creditworthiness;

Removed: low refinancing risk of the exposure by the obligor or that risk is adequately mitigated by a commensurate residual asset value or recourse to a protection provider with high creditworthiness;

Removed: the obligor has contractual restrictions over its activity and funding structure;

Removed: the obligor uses derivatives only for risk-mitigation purposes;

Removed: material operating risks are properly managed;

Removed:– the contractual arrangements on the assets provide lenders with a high degree of protection including the following features:

Removed: the lenders have a legally enforceable first-ranking right over the assets financed, and, where applicable, over the income that they generate;

Removed: there are contractual restrictions on the ability of the obligor to change anything to the asset which would have a negative impact on its value;

Removed: where the asset is under construction, the lenders have a legally enforceable first-ranking right over the assets and the underlying construction contracts;

Removed:– the assets being financed meet all of the following standards to operate in a sound and effective manner:

Removed: the technology and design of the asset are tested;

Removed: all necessary permits and authorisations for the operation of the assets have been obtained;

Removed: where the asset is under construction, the obligor has adequate safeguards on the agreed specifications, budget and completion date of the asset, including strong completion guarantees or the involvement of an experienced constructor and adequate contract provisions for liquidated damages;

Removed:(ii) 100 % where the exposure is not deemed to be high quality as referred to in point (i);

Removed:(b) where the purpose of a specialised lending exposure is to provide for short-term financing of reserves, inventories or receivables of exchange-traded commodities, including crude oil, metals, or crops, and the income to be generated by those reserves, inventories or receivables is to be the proceeds from the sale of the commodity (‘commodities finance exposures’), institutions shall apply a risk weight of 100 %;

Removed:(c) where the purpose of a specialised lending exposure is to finance a single project, either in the form of construction of a new capital installation or refinancing of an existing installation, with or without improvements for the development or acquisition of large, complex and expensive installations, including power plants, chemical processing plants, mines, transportation infrastructure, environment, and telecommunications infrastructure, in which the lender looks primarily to the revenues generated by the financed project, both as the source of repayment and as security for the loan (‘project finance exposures’), institutions shall apply the following risk weights:

Removed:(i) 130 % where the project to which the exposure is related is in the pre-operational phase;

Removed:(ii) provided that the adjustment to own funds requirements for credit risk referred to in Article 501a is not applied, 80 % where the project to which the exposure is related is in the operational phase and the exposure meets all of the following criteria:

Removed:– there are contractual restrictions on the ability of the obligor to perform activities that may be detrimental to lenders, including the restriction that new debt cannot be issued without the consent of existing debt providers;

Removed:– the obligor has sufficient reserve funds fully funded in cash, or other financial arrangements, with ▌guarantors with an ECAI rating with a credit quality step of at least 3, or, if not externally rated, are assigned with a rating equivalent to a step 3 or higher with the bank validated internal rating model to cover the contingency funding and working capital requirements over the lifetime of the project being financed;

Removed:– the income generated by the financed project is availability-based or subject to a rate-of-return regulation or take-or-pay contract; for this purpose "availability-based" means that, once construction is completed, the obligor is entitled, as long as contract conditions are fulfilled, to payments from its contractual counterparties which cover operating and maintenance costs, debt service costs and equity returns as the obligor operates the project, and these payments are not subject to swings in demand, such as traffic levels, and are adjusted typically only for lack of performance or lack of availability of the asset to the public;

Removed:– where the revenues of the obligor are not funded by payments from a large number of users, the source of repayment of the obligation depends on one main counterparty and that main counterparty is one of the following:

Removed: a central bank, a central government, a regional government or a local authority, provided that they are assigned a risk weight of 0 % in accordance with Articles 114 and 115, or are assigned an ECAI rating with a credit quality step of at least 3;

Removed: a public sector entity, provided that that entity is assigned a risk weight of 20 % or below in accordance with Article 116, or is assigned an ECAI rating with a credit quality step of at least 3, or, if not externally rated, are assigned with a rating equivalent to a step 3 or higher with the bank validated internal rating model;

Removed: a corporate entity which has been assigned an ECAI rating with a credit quality step of at least 3, or, if not externally rated, are assigned with a rating equivalent to a step 3 or higher with the bank validated internal rating model.

Removed:– the contractual provisions governing the exposure to the obligor provide for a high degree of protection for the lending institution in case of a default of the obligor;

Removed:– the main counterparty or other counterparties which meet the eligibility criteria for the main counterparty effectively protect the lending institution against losses resulting from the termination of the project;

Removed:– all assets and contracts necessary to operate the project have been pledged to the lending institution to the extent permitted by applicable law;