On 5 August 2014, the European Banking Authority (EBA) published final draft regulatory technical standards (RTS) specifying the treatment of equity exposures under the internal ratings-based (IRB) approach. These draft RTS have been established in accordance with Article 495(3) of Regulation (EU) 575/2013 (Capital Requirements Regulation – CRR).
The RTS establish that competent authorities are allowed to grant institutions a temporary exemption from the IRB treatment for certain equity exposures provided such exemption was being applied on the last day of application of the Capital Requirements Directive I (CRD I) (31 December 2007).
This exemption, which was already introduced in the CRD I to partly relieve institutions' capital requirements for equity exposures under the IRB approach, will end on 31 December 2017 and is deemed to have immaterial impact on most institutions.
The EBA has submitted the RTS to the European Commission for their adoption as EU Regulations that will be directly applicable throughout the EU.