AI Summary of Article 400 Exemptions
This document outlines the exemptions from Article 395(1) for specific exposures, primarily focusing on claims related to public sector entities, central banks, and various financial guarantees. A range of asset items, including regional government claims and exposures secured by cash collateral, are specified for exemption, alongside certain conditions under which competent authorities may grant partial exemptions.
Additionally, conditions for exemption utilisation are set forth, emphasising the need to mitigate risk through specific counterparty relationships and ensuring any remaining concentration risks are effectively addressed. Importantly, multiple exemptions cannot be applied simultaneously to a single exposure, underscoring the need for clarity and precision in regulatory compliance.
Article 400 Exemptions
1. The following exposures shall be exempted from the application of Article 395(1):
(a) asset items constituting claims on central governments, central banks or public sector entities which, unsecured, would be assigned a 0 % risk weight under Part Three, Title II, Chapter 2;
(b) asset items constituting claims on international organisations or multilateral development banks which, unsecured, would be assigned a 0 % risk weight under Part Three, Title II, Chapter 2;
(c) asset items constituting claims carrying the explicit guarantees of central governments, central banks, international organisations, multilateral development banks or public sector entities, where unsecured claims on the entity providing the guarantee would be assigned a 0 % risk weight under Part Three, Title II, Chapter 2;
(d) other exposures attributable to, or guaranteed by, central governments, central banks, international organisations, multilateral development banks or public sector entities, where unsecured claims on the entity to which the exposure is attributable or by which it is guaranteed would be assigned a 0 % risk weight under Part Three, Title II, Chapter 2;