Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (Text with EEA relevance)

Changes to legislation:

Regulation (EU) No 575/2013 of the European Parliament and of the Council, Article 164 is up to date with all changes known to be in force on or before 16 June 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.

Changes to Legislation

Revised legislation carried on this site may not be fully up to date. Changes and effects are recorded by our editorial team in lists which can be found in the ‘Changes to Legislation’ area. Where those effects have yet to be applied to the text of the legislation by the editorial team they are also listed alongside the legislation in the affected provisions. Use the ‘more’ link to open the changes and effects relevant to the provision you are viewing.

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Changes and effects yet to be applied to Article 164:

Art. 164(5) words omitted by S.I. 2018/1401 reg. 133(a) (This amendment not applied to legislation.gov.uk. Reg. 133 omitted immediately before IP completion day by virtue of S.I. 2020/1385, regs. 1(4), 48(3)(c))
Art. 164(6) word substituted by S.I. 2018/1401 reg. 225(1)(2)reg. 225(3)(e) (This amendment not applied to legisaltion.gov.uk. The words to be substituted are not present in Art. 164(6))
Art. 164(6) words omitted by S.I. 2018/1401 reg. 222(1)(b) Table 1 (This amendment not applied to legislation.gov.uk. Art. 164 substituted by Regulation (EU) 2019/876 of the European Parliament and of the Council of 20 May 2019 amending Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements, and Regulation (EU) No 648/2012 (Text with EEA relevance).)
Art. 164(6) words substituted by S.I. 2018/1401 reg. 222(1)(a)(2) Table 1 (This amendment not applied to legislation.gov.uk. Words in Art. 164(6) to be substituted are not present following the substitution by Regulation (EU) 2019/876 of the European Parliament and of the Council of 20 May 2019 amending Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements, and Regulation (EU) No 648/2012 (Text with EEA relevance).)
Art. 164(7) omitted by S.I. 2018/1401 reg. 133(b) (This amendment not applied to legislation.gov.uk. Reg. 133 omitted immediately before IP completion day by virtue of S.I. 2020/1385, regs. 1(4), 48(3)(c))
Art. 164(8) words omitted by S.I. 2019/1232 reg. 38(2)(b) (This amendment not applied to legislation.gov.uk. Reg. 38 omitted immediately before IP completion day by virtue of S.I. 2020/1385, regs. 1(4), 65(2)(d))
Art. 164(8) words substituted by S.I. 2019/1232 reg. 38(2)(a) (This amendment not applied to legislation.gov.uk. Reg. 38 omitted immediately before IP completion day by virtue of S.I. 2020/1385, regs. 1(4), 65(2)(d))
Art. 164(9) omitted by S.I. 2019/1232 reg. 38(3) (This amendment not applied to legislation.gov.uk. Reg. 38 omitted immediately before IP completion day by virtue of S.I. 2020/1385, regs. 1(4), 65(2)(d))

Changes and effects yet to be applied to the whole legislation item and associated provisions

Pt. 3 Title 1 Ch. 1 SECTION 2 A 95 repeal by EUR 2019/2033 Regulation (This amendment by the EU not applied to legislation.gov.uk because it is brought into force after IP completion day.)
Pt. 3 Title 1 Ch. 1 SECTION 2 repeal by EUR 2019/2033 Regulation (This amendment by the EU not applied to legislation.gov.uk because it is brought into force after IP completion day.)
Pt. 3 Title 1 Ch. 1 SECTION 2 A 98 repeal by EUR 2019/2033 Regulation (This amendment by the EU not applied to legislation.gov.uk because it is brought into force after IP completion day.)
Pt. 3 Title 1 Ch. 1 SECTION 2 A 96 repeal by EUR 2019/2033 Regulation (This amendment by the EU not applied to legislation.gov.uk because it is brought into force after IP completion day.)
Pt. 3 Title 1 Ch. 1 SECTION 2 A 97 repeal by EUR 2019/2033 Regulation (This amendment by the EU not applied to legislation.gov.uk because it is brought into force after IP completion day.)
Art. 4.1(7) words omitted by S.I. 2018/1401 reg. 64(7)(b) (This amendment not applied to legislation.gov.uk. Reg. 64(7) omitted (6.9.2019) by virtue of S.I. 2019/1232, regs. 1(2), 3(3)(c)(i))
Art. 4.1(7) words substituted by S.I. 2018/1401 reg. 64(7)(a) (This amendment not applied to legislation.gov.uk. Reg. 64(7) omitted (6.9.2019) by virtue of S.I. 2019/1232, regs. 1(2), 3(3)(c)(i))
Art. 4.1(7) words substituted by S.I. 2018/1401 reg. 64(7)(c) (This amendment not applied to legislation.gov.uk. Reg. 64(7) omitted (6.9.2019) by virtue of S.I. 2019/1232, regs. 1(2), 3(3)(c)(i))
Art. 4.1(13) words substituted by S.I. 2024/705 Sch. 2 para. 19(a)
Art. 4.1(14) words substituted by S.I. 2024/705 Sch. 2 para. 19(b)
Art. 4.1(14a) words substituted by S.I. 2024/705 Sch. 2 para. 19(c)
Art. 4.1(26) words inserted by S.I. 2018/1401 reg. 64(20)(a) (This amendment not applied to legislation.gov.uk. Reg. 64(20) omitted (6.9.2019) by virtue of S.I. 2019/1232, regs. 1(2), 3(3)(c)(ii))
Art. 4.1(26) words substituted by S.I. 2018/1401 reg. 64(20)(d) (This amendment not applied to legislation.gov.uk. Reg. 64(20) omitted (6.9.2019) by virtue of S.I. 2019/1232, regs. 1(2), 3(3)(c)(ii))
Art. 4.1(28) words substituted by S.I. 2018/1401 reg. 64(23)(a) (This amendment not applied to legislation.gov.uk. Reg. 64(23) omitted (6.9.2019) by virtue of S.I. 2019/1232, regs. 1(2), 3(3)(c)(iii))
Art. 4.1(28) words substituted by S.I. 2018/1401 reg. 64(23)(b) (This amendment not applied to legislation.gov.uk. Reg. 64(23) omitted (6.9.2019) by virtue of S.I. 2019/1232, regs. 1(2), 3(3)(c)(iii))
Art. 4.1(28) words substituted by S.I. 2018/1401 reg. 64(23)(c) (This amendment not applied to legislation.gov.uk. Reg. 64(23) omitted (6.9.2019) by virtue of S.I. 2019/1232, regs. 1(2), 3(3)(c)(iii))
Art. 4.1(61) words substituted by S.I. 2024/705 Sch. 2 para. 19(d)
Art. 4.1(62) words substituted by S.I. 2024/705 Sch. 2 para. 19(e)
Art. 4.1(63) words substituted by S.I. 2024/705 Sch. 2 para. 19(f)
Art. 4.1(66) words substituted by S.I. 2024/705 Sch. 2 para. 19(g)
Art. 4.1(67) words substituted by S.I. 2024/705 Sch. 2 para. 19(h)
Art. 4.1(128) word substituted by S.I. 2018/1401 reg. 64(51) (This amendment not applied to legislation.gov.uk. Reg. 64(51) omitted (6.9.2019) by virtue of S.I. 2019/1232, regs. 1(2), 3(3)(c)(iv))
Art. 4.1(129) words substituted by S.I. 2024/705 Sch. 2 para. 19(i)
Art. 11(6)(a) words substituted by S.I. 2021/1078 reg. 4(5)(c) (This amendment not applied to legislation.gov.uk. Amending provision substituted by S.I. 2021/1376)
Art. 18(8)(a) words substituted by S.I. 2020/1385 reg. 74(3)(c) (This amendment not applied to legisaltion.gov.uk. Art. 18(8) substituted (31.12.2020) by S.I. 2019/264, regs. 1, 5(3).)
Art. 31(1)(b) words substituted by S.I. 2018/1401 reg. 86(a) (This amendment not applied to legislation.gov.uk. Reg. 86(a) omitted immediately before IP completion day by virtue of S.I. 2020/1470, reg. 1(4), Sch. 2 para. 17)
Art. 31(1)(b) words substituted in earlier amending provision S.I. 2018/1401, reg. 86(a) by S.I. 2020/1301 reg. 3 Sch. para. 11(g) (This amendment not applied to legislation.gov.uk. Reg. 86(a) omitted immediately before IP completion day by virtue of S.I. 2020/1470, reg. 1(4), Sch. 2 para. 17)
Art. 31(1)(c) words inserted by S.I. 2018/1401 reg. 86(b) (This amendment not applied to legislation.gov.uk. Reg. 86(b) omitted immediately before IP completion day by virtue of S.I. 2020/1470, reg. 1(4), Sch. 2 para. 17)
Art. 78(1)(b) words substituted by S.I. 2018/1401 reg. 94(2)(a) (This amendment not applied to legislation.gov.uk. Reg. 94(2) omitted (6.9.2019) by virtue of S.I. 2019/1232, regs. 1(2), 3(3)(h))
Art. 78(1)(b) words substituted by S.I. 2018/1401 reg. 94(2)(b) (This amendment not applied to legislation.gov.uk. Reg. 94(2) omitted (6.9.2019) by virtue of S.I. 2019/1232, regs. 1(2), 3(3)(h))
Art. 124(4)(b) word substituted by S.I. 2018/1401 reg. 225(1)(2)reg. 225(3)(b) (This amendment not applied to legislation.gov.uk. The words to be substituted in Art. 124(4) are not present following the substitution of Art 124 by Corrigendum to Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).)
Art. 242(10)(c) and word inserted by S.I. 2024/705 Sch. 2 para. 22(b)(ii)
Art. 244(4)(c) words substituted by S.I. 2024/705 Sch. 2 para. 23
art. 270a(1A) inserted by S.I. 2024/705 Sch. 2 para. 25(b)
Art. 325(3)(a) word omitted by S.I. 2018/1401 reg. 157 (This amendment not applied to elgislation.gov.uk. The words to be omitted are not present in Art. 325(3)(a))
Art. 450(1)(d) words substituted by 2021 c. 22 Sch. 1 para. 41 (This amendment not applied to legislation.gov.uk. Pt. 8 omitted (1.1.2022) by virtue of S.I. 2021/1078, regs. 1(1), 10 (as substituted by S.I. 2021/1376, regs. 1(2), 32(4)))
Art. 456(1)(h)(i) omitted by S.I. 2021/1078 reg. 11(2)(a)(iv) (This amendment not applied to legislation.gov.uk. Amending provision substituted by S.I. 2021/1376)
Art. 459(b) omitted by S.I. 2021/1078 reg. 11(5)(a) (This amendment not applied to legislation.gov.uk. Amending provision substituted by S.I. 2021/1376)
Art. 459(c) words substituted by S.I. 2021/1078 reg. 11(5)(b) (This amendment not applied to legislation.gov.uk. Amending provision substituted by S.I. 2021/1376)

[X1[F1 Article 164U.K. Loss Given Default (LGD)

1.Institutions shall provide own estimates of LGDs subject to the requirements specified in Section 6 of this Chapter and permission of the competent authorities granted in accordance with Article 143. For dilution risk of purchased receivables, an LGD value of 75 % shall be used. If an institution can decompose its EL estimates for dilution risk of purchased receivables into PDs and LGDs in a reliable manner, the institution may use its own LGD estimate.

2.Unfunded credit protection may be recognised as eligible by adjusting PD or LGD estimates subject to requirements as specified in Article 183(1), (2) and (3) and the permission of the competent authorities either in support of an individual exposure or a pool of exposures. An institution shall not assign guaranteed exposures an adjusted PD or LGD such that the adjusted risk weight would be lower than that of a comparable, direct exposure to the guarantor.

3.For the purposes of Article 154(2), the LGD of a comparable direct exposure to the protection provider referred to in Article 153(3) shall either be the LGD associated with an unhedged facility to the guarantor or the unhedged facility of the obligor, depending upon whether, in the event both the guarantor and obligor default during the life of the hedged transaction, available evidence and the structure of the guarantee indicate that the amount recovered would depend on the financial condition of the guarantor or obligor, respectively.

4.The exposure-weighted average LGD for all retail exposures secured by residential property and not benefiting from guarantees from central governments shall not be lower than 10 %.

The exposure-weighted average LGD for all retail exposures secured by commercial immovable property and not benefiting from guarantees from central governments shall not be lower than 15 %.

5.F2...

[F3The PRA shall ensure that the Financial Policy Committee is duly informed of the PRA’s intention to make use of this Article, and is appropriately involved in the assessment of financial stability concerns in the United Kingdom in accordance with paragraph 6.]

F4...

6.Based on the data collected under Article 430a [F5of Chapter 4 of the Reporting (CRR) Part of the PRA Rulebook] and on any other relevant indicators, and taking into account forward-looking immovable property market developments the [F6PRA] shall periodically, and at least annually, assess whether the minimum LGD values referred to in paragraph 4 of this Article, are appropriate for exposures secured by mortgages on residential property or commercial immovable property located in [F7the United Kingdom].

Where, on the basis of the assessment referred to in the first subparagraph of this paragraph, the [F8PRA] concludes that the minimum LGD values referred to in paragraph 4 are not adequate, and if it considers that the inadequacy of LGD values could adversely affect current or future financial stability in [F9the United Kingdom], it may set higher minimum LGD values for those exposures located in [F10the United Kingdom]. Those higher minimum values may also be applied at the level of one or more property segments of such exposures.

F11...

7.Where the [F12PRA] sets higher minimum LGD values pursuant to paragraph 6, institutions shall have a six-month transitional period to apply them.

8.[F13The [F14PRA may] make] technical standards to specify the conditions that the [F15PRA] shall take into account when assessing the appropriateness of LGD values as part of the assessment referred to in paragraph 6.