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Directive 2006/48/EC of the European Parliament and of the council (repealed)Show full title

Directive 2006/48/EC of the European Parliament and of the council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) (Text with EEA relevance) (repealed)

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Article 86

1.Each exposure shall be assigned to one of the following exposure classes:

(a)

claims or contingent claims on central governments and central banks;

(b)

claims or contingent claims on institutions;

(c)

claims or contingent claims on corporates;

(d)

retail claims or contingent retail claims;

(e)

equity claims;

(f)

securitisation positions; or

(g)

other non credit-obligation assets.

2.The following exposures shall be treated as exposures to central governments and central banks:

(a)

exposures to regional governments, local authorities or public sector entities which are treated as exposures to central governments under Subsection 1; and

(b)

exposures to Multilateral Development Banks and International Organisations which attract a risk weight of 0 % under Subsection 1.

3.The following exposures shall be treated as exposures to institutions:

(a)

exposures to regional governments and local authorities which are not treated as exposures to central governments under Subsection 1;

(b)

exposures to Public Sector Entities which are treated as exposures to institutions under the Subsection 1; and

(c)

exposures to Multilateral Development Banks which do not attract a 0 % risk weight under Subsection 1.

4.To be eligible for the retail exposure class referred to in point (d) of paragraph 1, exposures shall meet the following criteria:

(a)

they shall be either to an individual person or persons, or to a small or medium sized entity, provided in the latter case that the total amount owed to the credit institution and parent undertakings and its subsidiaries, including any past due exposure, by the obligor client or group of connected clients, but excluding claims or contingent claims secured on residential real estate collateral, shall not, to the knowledge of the credit institution, which shall have taken reasonable steps to confirm the situation, exceed EUR 1 million;

(b)

they are treated by the credit institution in its risk management consistently over time and in a similar manner;

(c)

they are not managed just as individually as exposures in the corporate exposure class; and

(d)

they each represent one of a significant number of similarly managed exposures.

The present value of retail minimum lease payments is eligible for the retail exposure class.

5.The following exposures shall be classed as equity exposures:

(a)

non-debt exposures conveying a subordinated, residual claim on the assets or income of the issuer; and

(b)

debt exposures the economic substance of which is similar to the exposures specified in point (a).

6.Within the corporate exposure class, credit institutions shall separately identify as specialised lending exposures, exposures which possess the following characteristics:

(a)

the exposure is to an entity which was created specifically to finance and/or operate physical assets;

(b)

the contractual arrangements give the lender a substantial degree of control over the assets and the income that they generate; and

(c)

the primary source of repayment of the obligation is the income generated by the assets being financed, rather than the independent capacity of a broader commercial enterprise.

7.Any credit obligation not assigned to the exposure classes referred to in points (a), (b) and (d) to (f) of paragraph 1 shall be assigned to the exposure class referred to in point (c) of that paragraph.

8.The exposure class referred to in point (g) of paragraph 1 shall include the residual value of leased properties if not included in the lease exposure as defined in Annex VII, Part 3, paragraph 4.

9.The methodology used by the credit institution for assigning exposures to different exposure classes shall be appropriate and consistent over time.

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