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22 October 2012

EBA: Report on the assessment of SME proposals for CRD IV/CRR


The report analyses the appropriateness of the Risk Weights for Retail SME lending proposed in the CRD IV/CRR framework. It assesses the possible effects of a reduction by 1/3 in relation to the current regulation, and the effect of an increase to €5 million on the regulatory thresholds for SMEs.

Based on Supervisory Authorities’ data and Balance Sheet Central Banks data, the EBA’s assessment concludes that great caution should be exercised in altering the RWs or the threshold for SME Retail exposures to avoid any risk of jeopardising financial stability. However, the EBA, while understanding the SME financing constraints in Europe, would advise to consider alternative measures to provide the same capital alleviation, such as the introduction of a supporting discount, which would not act on RWs, but would be applied at the end of the process of capital calculation. These measures should be applied only to SME  exposures and not to the whole Retail exposure class.

The EBA’s assessment report includes:

  • an illustration of the financial constraints of SMEs, which have triggered several calls for action, also in the area of banking regulation (section 1).
  • an overview of the proposals included the CRD IV/CRR framework regarding SMEs, comparing them with the current regime (section 2) and providing its evaluation (sections 3 to 6)
  • further aspects of the proposals: its impact, consequences on financial stability and the effectiveness of the measures (sections 7 to 9).
  • finally, it touches upon some other regulatory measures, which could be more promising and effective for SMEs’ access to finance (section 10).

The EU Commission’s CRD IV/CRR legislative proposal foresees an overall increase in capital requirements and also a higher quality of own funds, with the view of strengthening the regulation of the banking sector and ultimately of creating a sounder and safer financial system.

The introduction of the so-called capital conservation buffer (2.5 per cent of risk-weighted assets, in addition to the current 8 per cent requirement) could potentially impact on SME lending. This measure, which will be phased in from 2016 to 2019, has raised the concerns of the SMEs sector, which argued that this requirement should be neutralised for SME exposures.

The report also includes proposals for alternative measures to be taken to create the right incentives to SME lending.

Full information

Full report



© EBA


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