What changed between the plenary report and the adopted text

Removed:2. Equity investments shall not be treated as equity exposures in any of the following cases:

Removed:(a) the equity investments are structured in a way that their economic substance is similar to the economic substance of debt holdings which do not meet the criteria in any of the points in paragraph 1;

Removed:(b) the equity investments constitute securitisation exposures.

Removed:3. Equity exposures, other than those referred to in paragraph 4 to 7, shall be assigned a risk weight of 250 %, unless those exposures are required to be deducted or risk-weighted in accordance with Part Two.

Removed:4. The following equity exposures to unlisted companies shall be assigned a risk weight of 400 %, unless those exposures are required to be deducted or risk-weighted in accordance with Part Two:

Removed:(a) investments for short-term resale purposes;

Removed:(b) investments in venture capital firms or similar investments which are acquired in anticipation of significant short-term capital gains.

Removed:By way of derogation from the first subparagraph, long-term equity investment, including investments in equities of corporate clients with which the institution has or intends to establish a long-term business relationship ▌and debt-equity swaps for corporate restructuring purposes shall be assigned a risk weight in accordance with paragraph 3 or 5, as applicable. For the purposes of this Article, a long-term equity investment is an equity investment that is held for three years or longer or incurred with the intention to be held for three years or longer as approved by the institution’s senior management.

Removed:5. Institutions that have received the prior permission of the competent authorities, may assign a risk weight of 100 % to equity exposures incurred under legislative programmes to promote specified sectors of the economy, up to the part of such equity exposures that in aggregate does not exceed 10 % of the institution’s own funds, that comply with all of the following conditions:

Removed:(a) the legislative programs provide significant subsidies or guarantees, including by multilateral development banks, public development credit institutions as defined in Article 429a(2) or international organisations, for the investment to the institution;

Removed:(b) the legislative programs involve some form of government oversight;

Removed:(ba) legislative programmes or guarantees involve restrictions on the equity investment, such as limitations on the size and types of businesses in which the institution is investing, on allowable amounts of ownership interests, on the geographical location and on other pertinent factors that limit the potential of the investment for the investing institution;

Removed:▌

Removed:6. Equity exposures to central banks shall be assigned a risk weight of 0 %.

Removed:7. Equity exposures that are recorded as a loan but arise from a debt/equity swap made as part of the orderly realisation or restructuring of the debt shall not be assigned a risk weight lower than the risk weight that would apply had the equity holdings remained in the debt portfolio.’;

Removed:(53) Article 134 is amended as follows:

Removed:(a) paragraph 3 is replaced by the following:

Removed:‘3. Cash items in the process of collection shall be assigned a 20 % risk weight. Cash owned and held by the institution or in transit, and equivalent cash items shall be assigned a 0 % risk weight.’;

Removed:(b) the following paragraph 8 is added:

Removed:‘8. The exposure value of any other item for which no risk weight is provided under Chapter 2 shall be assigned a risk weight of 100 %.’;

Removed:(54) in Article 135, the following paragraphs are added:

Removed:‘3. EBA, EIOPA and ESMA shall by [OP please insert the date = 1 year after entry into force] prepare a report on the impediments to the availability of credit assessments by ECAIs, in particular for corporates, and on possible measures to address them taking into account differences across economic sectors and geographical areas. EBA, EIOPA and ESMA shall submit the report to the European Parliament, to the Council and to the Commission.’

Removed:3a. ESMA shall by [OP please insert the date = 1 year after entry into force] prepare a report on whether ESG risks are appropriately reflected in ECAI credit risk rating methodologies. Based on this report and if appropriate, the Commission shall submit a legislative proposal to the European Parliament and the Council by [OP please insert the date = 18 months after entry into force]’

Removed:;

Removed:(55) Article 138 is amended as follow:

Removed:(a) the following point (g) is added:

Removed:‘(g) an institution shall not use an ECAI credit assessment in relation to an institution that incorporates assumptions of implicit government support, unless the respective ECAI credit assessment refers to an institution owned by or ▌sponsored by central governments, regional governments or local authorities.’;

Removed:(b) the following subparagraph is added:

Removed:‘For the purposes of point (g), in case of institutions, other than institutions owned by or ▌sponsored by central governments, regional governments or local authorities, for which only ECAI credit assessment exist which do incorporate assumptions of implicit government support, exposures to such institutions shall be treated as exposures to unrated institutions in accordance with Article 121.

Removed:Implicit government support means that the central government, regional government or local authority is expected to act to prevent creditors of the institution from incurring losses in the event of the institution’s default or distress.’;

Removed:(56) in Article 139(2), points (a) and (b) are replaced by the following:

Removed:‘(a) the credit assessment produces a higher risk weight than would be the case when the exposure is treated as unrated and the exposure concerned:

Removed:(i) is not a specialised lending exposure;

Removed:(ii) ranks pari passu or junior in all respects to the specific issuing program or facility or to senior unsecured exposures of that issuer, as relevant;

Removed:(b) the credit assessment produces a lower risk weight and the exposure concerned:

Removed:(i) is not a specialised lending exposure;

Removed:(ii) ranks pari passu or senior in all respects to the specific issuing programme or facility or to senior unsecured exposures of that issuer, as relevant.’;

Removed:(57) Article 141 is replaced by the following:

Removed:‘Article 141 Domestic and foreign currency items

Removed:1. A credit assessment that refers to an item denominated in the obligor's domestic currency shall not be used to derive a risk weight for an exposure on that same obligor that is denominated in a foreign currency.

Removed:2. By way of derogation from paragraph 1, where an exposure arises through an institution's participation in a loan that has been extended by, or has been guaranteed against convertibility and transfer risk, by a multilateral development bank listed in Article 117(2) the preferred creditor status of which is recognised in the market, the credit assessment on the obligor’s domestic currency item may be used to derive a risk weight for an exposure on that same obligor that is denominated in a foreign currency.

Removed:For the purposes of the first subparagraph, where the exposure denominated in a foreign currency is guaranteed against convertibility and transfer risk, the credit assessment on the obligor’s domestic currency item may only be used for risk weighting purposes on the guaranteed part of that exposure. The part of that exposure that is not guaranteed shall be risk-weighted based on a credit assessment on the obligor that refers to an item denominated in that foreign currency.’;

Removed:(58) Article 142, paragraph 1 is amended as follows:

Removed:(a) the following points (1a) to (1e) are inserted:

Removed:‘(1a) ‘exposure class’ means any of the exposure classes referred to in Article 147(2), points (a), (a1)(i), (a1)(ii), (b), (c)(i), (c)(ii), (c)(iii), (d)(i), (d)(ii), (d)(iii), (d)(iv), (e), (e1), (f) and (g);

Removed:(1b) ‘corporate exposure class’ means any of the exposure classes referred to in Article 147(2), points (c)(i), (c)(ii) and (c)(iii);

Removed:(1c) ‘corporate exposure’ means any exposure assigned to any of the exposure classes referred to in Article 147(2), points (c)(i), (c)(ii) and (c)(iii);

Removed:(1d) ‘retail exposure class’ means any of the exposure classes referred to in Article 147(2), points (d)(i), (d)(ii), (d)(iii) and (d)(iv);

Removed:(1e) ‘retail exposure’ means any exposure assigned to any of the exposure classes referred to in Article 147(2), points (d)(i), (d)(ii), (d)(iii) and (d)(iv);’;

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

Removed:‘(2) ‘type of exposures’ means a group of homogeneously managed exposures▌, which may be limited to a single entity or a single sub-set of entities within a group provided that the same type of exposures is managed differently in other entities of the group;’;

Removed:(c) points (4) and (5) are replaced by the following:

Removed:‘(4) ‘large regulated financial sector entity’ means a financial sector entity which meets all the following conditions:

Removed:(a) the entity’s total assets, or the total assets of its parent company where the entity has a parent company, calculated on an individual or consolidated basis, are greater than or equal to EUR 70 billion , using the most recent audited financial statement or consolidated financial statement in order to determine asset size;

Removed:(b) the entity is subject to prudential requirements, directly on an individual or consolidated basis, or indirectly from the prudential consolidation of its parent undertaking, in accordance with this Regulation, Regulation (EU) 2019/2033, Directive 2009/138/EC, or legal prudential requirements of a third country at least equivalent to those Union acts;

Removed:(5) ‘unregulated financial sector entity’ means a financial sector entity that does not fulfil the condition laid down in point (4)(b);’;

Removed:(d) the following point (5a) is inserted:

Removed:‘(5a) ‘large corporate’ means any corporate undertaking having consolidated annual sales of more than EUR 500 million or belonging to a group where the total annual sales for the consolidated group is more than EUR 500 million.’;’

Removed:(e) the following points (8) to (12) are added:

Removed:‘(8) ‘PD/LGD modelling adjustment approach’ refers to modelling an adjustment of the LGD or modelling an adjustment of both the PD and the LGD of the underlying exposure in accordance with Article 183(1a);