Version in force , Modified +110 −51§
Amended by Regulation (EU) 2024/1623 32024R1623 on EUR-Lex (external, EUR-Lex) · Regulation (EU) 2024/2987 32024R2987 on EUR-Lex (external, EUR-Lex) · Regulation (EU) 2024/2795 32024R2795 on EUR-Lex (external, EUR-Lex)
Explanation, written by a model and checked against the cited text
In point (a) of paragraph 1, the wording describing what the institution must demonstrate about its reason for using the Standardised Approach was changed from stating that the use is not proposed in order to reduce the own funds requirement of the institution, to stating that it is not made with a view to engaging in regulatory arbitrage, including by unduly reducing the own funds requirements of the institution.
The remaining text of point (a), and paragraphs 2 and 3, are unchanged between the two versions.
Cited: Art. 149, v1 (external, EUR-Lex) · Art. 149, v2 (external, EUR-Lex)
v1 is the previous version, v2 this one.
Text from EUR-Lex, before and after
Previous version, in force 9 July 2024 02013R0575-20240709 → this version, in force 1 January 2025 02013R0575-20250101
Article 149
Conditions to revert to the use of less sophisticated approaches
1. An institution that uses the IRB Approach for a particular exposure class or type of exposure shall not stop using that approach and use instead the Standardised Approach for the calculation of risk-weighted exposure amounts unless the following conditions are met:
(a) the institution has demonstrated to the satisfaction of the competent authority that the use of the Standardised Approach is not proposed made with a view to engaging in order to reduce regulatory arbitrage, including by unduly reducing the own funds requirement requirements of the institution, is necessary on the basis of the nature and complexity of the institution's institution’s total exposures of this that type and would not have a material adverse impact on the solvency of the institution or its ability to manage risk effectively;
(b) the institution has received the prior permission of the competent authority.
2. Institutions which have obtained permission under Article 151(9) to use own estimates of LGDs and conversion factors, shall not revert to the use of LGD values and conversion factors referred to in Article 151(8) unless the following conditions are met:
(a) the institution has demonstrated to the satisfaction of the competent authority that the use of LGDs and conversion factors laid down in Article 151(8) for a certain exposure class or type of exposure is not proposed in order to reduce the own funds requirement of the institution, is necessary on the basis of nature and complexity of the institution's total exposures of this type and would not have a material adverse impact on the solvency of the institution or its ability to manage risk effectively;
(b) the institution has received the prior permission of the competent authority.
3. The application of paragraphs 1 and 2 is subject to the conditions for rolling out the IRB Approach determined by the competent authorities in accordance with Article 148 and the permission for permanent partial use referred to in Article 150.