Version in force , Modified +856 −38§
Amended by Regulation (EU) 2024/1623 32024R1623 on EUR-Lex (external, EUR-Lex)
dates added to the text: 2024-12-31, 2026-12-31 · dates removed: 2022-06-28
Explanation, written by a model and checked against the cited text
The deadline for disposal dates in point (b) of paragraph 1 was moved from 28 June 2022 to 31 December 2024, and the same later date replaces the earlier cutoff for when the adjustment may be carried out in the closing text of paragraph 1.
A new paragraph 3 was added requiring the Commission to assess, by 31 December 2026 and every two years thereafter, factors relating to defaulted exposure levels, asset quality deterioration, and secondary market development, and to review the appropriateness of the paragraph 1 derogation with a possible legislative proposal.
Cited: Art. 500, v1 (external, EUR-Lex) · Art. 500, v2 (external, EUR-Lex)
v1 is the previous version, v2 this one.
Text from EUR-Lex, before and after
Previous version, in force 9 January 2024 02013R0575-20240109 → this version, in force 9 July 2024 02013R0575-20240709
Article 500
Adjustment for massive disposals
1. By way of derogation from point (a) of Article 181(1), an institution may adjust its LGD estimates by partly or fully offsetting the effect of massive disposals of defaulted exposures on realised LGDs up to the difference between the average estimated LGDs for comparable exposures in default that have not been finally liquidated and the average realised LGDs including on the basis of the losses realised due to massive disposals, as soon as all the following conditions are met:
(a) the institution has notified the competent authority of a plan providing the scale, composition and the dates of the disposals of defaulted exposures;
(b) the dates of the disposals of defaulted exposures are after 23 November 2016 but not later than 28 June 2022; 31 December 2024;
(c) the cumulative amount of defaulted exposures disposed of since the date of the first disposal in accordance with the plan referred to in point (a) has surpassed 20 % of the outstanding amount of all defaulted exposures as of the date of the first disposal referred to in points (a) and (b).
The adjustment referred to in the first subparagraph may only be carried out until 28 June 2022 31 December 2024 and its effects may last for as long as the corresponding exposures are included in the institution's institution’s own LGD estimates.
2. Institutions shall notify the competent authority without delay when the condition set out in point (c) of paragraph 1 has been met.3. The Commission shall, by 31 December 2026, and every two years thereafter, assess whether the level of defaulted exposures in the balance sheets of the institutions has increased significantly, whether it expects a significant deterioration in the institutions’ asset quality, and whether the degree of development of secondary markets for defaulted exposures is not adequate to ensure efficient disposals of defaulted exposures by institutions, also taking into consideration the regulatory developments on securitisation.
The Commission shall review the appropriateness of the derogation set out in paragraph 1 and shall, where appropriate, submit a legislative proposal to the European Parliament and to the Council to extend, reintroduce or amend, as needed, the adjustment provided for in this Article.