[ParlTrack]

Proposal for a regulation
Recital 11

(11) Most EU corporates, however, do not seek external credit ratings, in particular due to cost considerations. To avoid disruptive impacts on bank lending to unrated corporates and to provide enough time to establish public or private initiatives aimed at increasing the coverage of external credit ratings, it is necessary to provide for a transitional period for such increase in the coverage. During that transitional period, institutions using IRB approaches should be able to apply a favourable treatment when calculating their output floor for investment grade exposures to unrated corporates, whilst initiatives to foster widespread use of credit ratings should be established. ~~That transitional arrangement should be coupled with a report prepared by the European Banking Authority (‘EBA’).~~ After the transition period, institutions should be able to refer to credit assessments by ECAIs to calculate the capital requirements for most of their corporate exposures. To inform any future initiative on the set-up of public or private rating schemes, the European Supervisory Authorities (ESAs) should be requested to prepare a report on the impediments to the availability of external credit ratings by ECAIs, in particular for corporates, and on possible measures to address those impediments. In the meanwhile, the European Commission stands ready to provide technical support to Member States via its Technical Support Instrument in this area, e.g. to formulate strategies on increasing the rating- penetration of their unlisted corporates or to explore best practices on setting up entities capable of providing ratings or providing related guidance to corporates. The transition period should not be prolonged or extended indefinitely.

2022/08/11
Committee: ECON

Paul TANG, René REPASI

Proposal for a regulation
Recital 15

(15) To ensure that the impacts of the output floor on low-risk residential mortgage lending by institutions using IRB approaches are spread over a sufficiently long period and thus avoid disruptions to that type of lending that could be caused by sudden increases in own funds requirements, it is necessary to provide for a specific transitional arrangement. For the duration of the arrangement, when calculating the output floor, IRB institutions should be able to apply a lower risk weight to the part of their residential mortgage exposures that is considered secured by residential property under the revised SA-CR and that fulfil the EU's climate ambitions. To ensure that the transitional arrangement is available only to low-risk mortgage exposures, appropriate eligibility criteria, based on established concepts used under the SA- CR should be set. To determine whether residential property fulfil the EU's climate ambitions, Regulation (EU) 2019/852 and its Delegation Regulation (EU) 2021/2139, specifically chapter 7 of Annex I and chapter 7 of Annex II of that Delegated Regulation, should be usetd. The compliance with those criteria should be verified by competent authorities. Because residential real estate markets may differ from one Member States to another, the decision on whether to activate the transitional arrangement should be left to individual Member States. ~~The use of the transitional arrangement should be monitored by EBA.~~

2022/08/11
Committee: ECON

Paul TANG, René REPASI, Csaba MOLNÁR

Proposal for a regulation
Recital 41

(41) As the transition of the Union economy towards a sustainable economic model is gaining momentum, sustainability risks become more prominent and will potentially require further consideration. It is therefore necessary ~~to bring forward by 2 years EBA’s mandate to assess and report on whether a dedicated prudential treatment of exposures related to~~for banks to apply the large exposure regime as stipulated in Part Four of this Regulation to any financed emissions that are above an institution's target for financed emissions as sets o~~r activities substantially associated with environmental or social objectives would be justif~~ut in its plan to limit transition risks as stipulated by Article 76 of Directive 2013/36/EU. To allow for annual variations in the financed emissions of an institution, a 5% leeway shall be applied.

2022/08/11
Committee: ECON

Paul TANG, René REPASI

Proposal for a regulation
Recital 41 a (new)

(41 a) To ensure that any adjustments for exposures to small and medium-sized enterprises and for infrastructure do not undermine the EU's climate ambitions, departure from the risk-based approach of the banking framework should only take place when such exposures contribute to the EU's climate ambitions as set out in Regulation (EU) 2019/852.

2022/08/11
Committee: ECON

Aurore LALUCQ, Paul TANG

Proposal for a regulation
Article 1 – paragraph 1 – point 1 – point l

Regulation (EU) No 575/2013
Article 4 – paragraph 1 – point 52d

(52d) ‘environmental, social or governance (ESG) risk’ means the risk of ~~losses arising from~~ any negative financial impact on the institution stemming from the current or prospective impacts of environmental, social or governance (ESG) factors on the institution’s counterparties or invested assets;

2022/08/11
Committee: ECON

Aurore LALUCQ, Paul TANG

Proposal for a regulation
Article 1 – paragraph 1 – point 1 – point l

Regulation (EU) No 575/2013
Article 4 – paragraph 1 – point 52e – introductory part

(52e) ‘environmental risk’ means the risk of ~~losses arising from~~ any negative financial impact on the institution stemming from the current or prospective impacts of environmental factors on the institution’s counterparties or invested assets, including factors related to the transition towards the following environmental objectives:

2022/08/11
Committee: ECON

Aurore LALUCQ, Paul TANG

Proposal for a regulation
Article 1 – paragraph 1 – point 1 – point l

Regulation (EU) No 575/2013
Article 4 – paragraph1 – paragraph 52f

(52f) ‘physical risk’, as part of the overall environmental risk, means the risk of ~~losses arising from~~ any negative financial impact on the institution stemming from the current or prospective impacts of the physical effects of environmental factors on the institution’s counterparties or invested assets;

2022/08/11
Committee: ECON

Aurore LALUCQ, Paul TANG

Proposal for a regulation
Article 1 – paragraph 1 – point 1 – point l

Regulation (EU) No 575/2013
Article 4 – paragraph 1 – point 52g

(52g) ‘transition risk’, as part of the overall environmental risk, means the risk of ~~losses arising from~~ any negative financial impact on the institution stemming from the current or prospective impacts of the transition of business activities and sectors to an environmentally sustainable economy on the institution’s counterparties or invested assets;

2022/08/11
Committee: ECON

Aurore LALUCQ, Paul TANG

Proposal for a regulation
Article 1 – paragraph 1 – point 1 – point l

Regulation (EU) No 575/2013
Article 4 – paragraph 1 – point 52h

(52h) ‘social risk’ means the risk of ~~losses arising from~~ any negative financial impact on the institution stemming from the current or prospective impacts of social factors on its counterparties or invested assets;

2022/08/11
Committee: ECON

Aurore LALUCQ, Paul TANG

Proposal for a regulation
Article 1 – paragraph 1 – point 1 – point l

Regulation (EU) No 575/2013
Article 4 – paragraph 1 – point 52i

(52i) ‘governance risk’ means the risk of ~~losses arising from~~ any negative financial impact on the institution stemming from the current or prospective impacts of governance factors on the institution’s counterparties or invested assets;;

2022/08/11
Committee: ECON

Aurore LALUCQ, Paul TANG, Csaba MOLNÁR

Proposal for a regulation
Article 1 – paragraph 1 – point 1 – point y a (new)

Regulation (EU) No 575/2013
Article 4 – paragraph 1 – point 152 a (new)

(152 a)‘fossil fuel sectors’ means sectors of the economy which produce, process, store or use fossil fuels as defined in Article 2(62) of Regulation (EU)2018/1999 of the European Parliament and of the Council.

2022/08/11
Committee: ECON

Aurore LALUCQ, Paul TANG, Csaba MOLNÁR

Proposal for a regulation
Article 1 – paragraph 1 – point 1 – point y b (new)

Regulation (EU) No 575/2013
Article 4 – paragraph 1 – point 152 b (new)

(152 b)‘companies active in the fossil fuel sectors’ means (i) companies that derive any revenues from exploration, mining, extraction, or reining of hard coal and lignite; (ii) companies that derive any revenues from the exploration, extraction, distribution (excluding distribution, transportation, storage and trade) or reining of liquid fossil fuels; and (iii) companies that derive any revenues from exploring and extracting fossil gaseous fuels or from their dedicated distribution(excluding distribution, transportation, storage and trade).

2022/08/11
Committee: ECON

Paul TANG, René REPASI, Csaba MOLNÁR, Eva KAILI

Proposal for a regulation
Article 1 – paragraph 1 – point 11 a (new)

Regulation (EU) No 575/2013
Article 47c – paragraph 4 – point b

(11 a) in Article 47(4), point (b) is amended as follows: (b) 1 for the secured part of the non- performing exposure to be applied as of the first day of the eighth year following its classification as non-performing. , unless the guarantee or insurance has been invoked by the institution and the eligible protection provider has assumed and, in line with article 213(1), fulfills all payment obligations of the obliger towards the institution in full and in accordance with the applicable payment schedule, in which case a factor of 0 for the secured part of the non-performing exposure will apply. " Or. en (Regulation (EU) 575/2013)

2022/08/11
Committee: ECON

Aurore LALUCQ, Paul TANG

Proposal for a regulation
Article 1 – paragraph 1 – point 59 – point a

2. Prior permission to the use the IRB Approach, including own estimates of LGDs and CCFs, shall be required for each exposure class and for each rating system and for each approach to estimating LGDs and CCFs used.; Exposures defined in Article 126b shall not be eligible for the IRB approach.

2022/08/11
Committee: ECON

Aurore LALUCQ, Paul TANG

Proposal for a regulation
Article 1 – paragraph 1 – point 126 a (new)Regulation (EU) No 575/2013

Article 236b (new)

(126 a) the following article is inserted: Article 236b Fossil fuel sector exposures 1. The following shall be considered exposures to existing fossil fuel resources: (i) exposures to projects in fossil fuel sectors (ii) exposures to companies active in fossil fuel sectors, excluding the ones which invest in expansion or exploration and plan to add fossil fuel resources to their production portfolio (iii) exposure to power plants that burn fossil fuels to generate power. Fossil fuel resources and resource fields referred to in this subparagraph must have been explored and known as of 31 December 2021. 2. The following shall be considered exposures to the new fossil fuel resources: (i) exposure to fossil fuel extraction projects, transport facilities and other infrastructure (such as LNG terminals)that drive expanded extraction. This includes all projects which have not received a final investment decision (FID) before 31 December 2021 (ii) exposures to companies active in fossil fuel sectors, which invest in expansion and exploration and plan to add fossil fuel resources to their production portfolio (iii) exposure to power plants that burn fossil fuels to generate power; the FID for the exploration or expansion of such fossil fuels must have been on or after 1 January 2022.Exploration or expansion of fossil fuel resources and resource fields referred to in this must have started on or after 1 January 2022. 3. Exposures related to existing fossil fuel resources, as referred to in paragraph 1 of this Article, shall be assigned a risk weight of 150 % 4. Exposures related to new fossil fuel resources, as referred to in paragraph 2 of this Article, shall be assigned a risk weight of 1250 %

2022/08/18
Committee: ECON

Aurore LALUCQ, Paul TANG

Proposal for a regulation
Article 1 – paragraph 1 – point 176

Regulation (EU) No 575/2013
Article 430 – paragraph 1 – point f a (new)

(f a) progress towards achieving the targets and plans laid down in Article 76(2) and76(4) of the Directive 2013/36/EU.

2022/08/18
Committee: ECON

Aurore LALUCQ, Paul TANG, Csaba MOLNÁR

Proposal for a regulation
Article 1 – paragraph 1 – point 189

Regulation (EU) No 575/2013
Article 449a – paragraph

Institutions shall disclose: (a) information on ESG risks, including physical risks and transition risks. (b) climate targets and transition plans, including absolute carbon emission reduction targets, submitted in accordance with Article 76(2) of the Directive 2013/36/EU, and the progress made towards implementing them (c) how the institution’s business model and strategy take account of ESG risks faced by the undertaking.

2022/08/18
Committee: ECON

Aurore LALUCQ, Paul TANG

Proposal for a regulation
Article 1 – paragraph 1 – point 189

Regulation (EU) No 575/2013
Article 449a – paragraph 3

EBA shall develop draft implementing technical standards specifying uniform disclosure formats for ESG risks, as laid down in Article 434a, ensuring that they are consistent with and uphold the principle of proportionality.’ For small and non-complex institutions, the formats shall not require disclosure of information beyond the information required to be reported to competent authorities in accordance with Article 430(1), points (h) and (i).;

2022/08/18
Committee: ECON

Aurore LALUCQ, Paul TANG

Proposal for a regulation
Article 1 – paragraph 1 – point 189 a (new)

Regulation (EU) No 575/2013
Article 450 – paragraph 1 – point h– point vii a (new)

(189a) in Article 450(1), point h, the following point is added: (vii a) the amounts of variable remuneration linked to achievement of the targets related to management of ESG risks, including climate targets and transition plans referred to in Article76(2) of the Directive 2013/36/EU.

2022/08/18
Committee: ECON

Paul TANG