EBA has published an interim report on the outcomes of the first phase of its investigation into the consistency of risk-weighted assets (RWAs) used by banks when calculating the capital requirements for assets held in their banking book. The report finds that half of the differences in banks’ calculation of RWAs stem from the choice of regulatory approach for measuring risks (Standardised versus Internal Risk Based (IRB)) and from the composition of each bank’s loan portfolio. The remaining gap in banking book RWAs is due to differences in the application of parameters under the IRB approach, especially in the corporate and retail portfolios. EBA says that more data is necessary to understand whether this gap is justifiable. By the end of 2013 it will have completed reviews of exposures to low-default assets, SMEs and residential mortgages. EBA’s work on RWAs' consistency will also include reviewing Pillar 3 disclosure of RWAs and assessing trading book exposures. (Source: Interim Results of the EBA Review of the Consistency of Risk-weighted Assets)