AI Summary of Article 110 Treatment of credit risk adjustment
This article outlines the treatment of general credit risk adjustments for institutions using either the Standardised Approach or the Internal Ratings-Based (IRB) Approach. Specifically, it establishes that general credit risk adjustments are to be treated differently based on the approach applied, with references to Articles 62 and 159 for guidance.
Furthermore, it details how institutions employing both approaches must allocate general credit risk adjustments on a pro rata basis, depending on the proportion of risk-weighted exposures. The EBA is tasked with developing regulatory technical standards to further clarify these calculations, with a deadline for submission to the Commission set for 28 July 2013.
Article 110 Treatment of credit risk adjustment
1. Institutions applying the Standardised Approach shall treat general credit risk adjustments in accordance with Article 62(c).
2. Institutions applying the IRB Approach shall treat general credit risk adjustments in accordance with Article 159, Article 62(d) and Article 36(1)(d).
For the purposes of this Article and Chapters 2 and 3, general and specific credit risk adjustments shall exclude funds for general banking risk.
3. Institutions using the IRB Approach that apply the Standardised Approach for a part of their exposures on consolidated or individual basis, in accordance with Articles 148 and 150 shall determine the part of general credit risk adjustment that shall be assigned to the treatment of general credit risk adjustment under the Standardised Approach and to the treatment of general credit risk adjustment under the IRB Approach as follows: