Version in force , Modified +263 −73§
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
Article 170(1) now extends the listed structural requirements for rating systems to exposures to regional governments, local authorities and public sector entities, in addition to corporates, institutions and central governments and central banks already covered.
Article 170(4)(1)(b) replaces the earlier reference to product or collateral types and same-collateral cases with a longer list of transaction risk characteristics covering product and funded credit protection types, recognised unfunded credit protection, loan-to-value measures, seasoning and seniority, and it now requires institutions to explicitly address cases where several exposures benefit from the same funded or unfunded credit protection rather than the same collateral.
Cited: Art. 170, v2 (external, EUR-Lex) · Art. 170, v1 (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 170
Structure of rating systems
1. The structure of rating systems for exposures to corporates, institutions and institutions, central governments and central banks banks, and regional governments, local authorities and public sector entities shall comply with the following requirements:
(a) a rating system shall take into account obligor and transaction risk characteristics;
(b) a rating system shall have an obligor rating scale which reflects exclusively quantification of the risk of obligor default. The obligor rating … 412 unchanged words … level. For purchased receivables the grouping shall reflect the seller's underwriting practices and the heterogeneity of its customers.
4. Institutions shall consider the following risk drivers when assigning exposures to grades or pools:
(a) obligor risk characteristics;
(b) transaction risk characteristics, including product or collateral types or both. Institutions and funded credit protection types, recognised unfunded credit protection, loan-to-value measures, seasoning and seniority; institutions shall explicitly address cases where several exposures benefit from the same collateral; funded or unfunded credit protection;
(c) delinquency, except where an institution demonstrates to the satisfaction of its competent authority that delinquency is not a material driver of risk for the exposure.