Date: 2025-07-28Category: Not ApplicableState: Union GovernmentCountry: Europe
Regulation (EU) 2025/1520 of the European Central Bank of 15 July 2025 amending Regulation (EU) 2016/445 on the exercise of options and discretions available in Union law (ECB/2016/4) (ECB/2025/24)
Executive Summary:
This regulation amends Regulation EU 2016/445 to align with changes in Regulation EU No 575/2013 regarding the criteria for considering credit obligations in default and the use of external credit assessments. Specifically, it removes the option to extend the past due date for default consideration and allows for the temporary continued use of ECAI credit assessments incorporating implicit government support under certain conditions until January 1, 2027. This regulation enters into force twenty days after its publication in the Official Journal of the European Union.
Key Points / Main Content:
* **Amendment of Regulation EU 2016/445:**
* Article 4 of Regulation EU 2016/445 is deleted.
* **Transitional Arrangements for ECAI Credit Assessments:**
* Until January 1, 2027, institutions may continue using ECAI credit assessments that incorporate assumptions of implicit government support, even if the institution does not fall within the excepted category of institutions.
* This is a derogation from Article 138, point (g) of Regulation EU No 575/2013.
* **Effective Date:**
* This regulation comes into force twenty days following its publication in the Official Journal of the European Union.
Impact Analysis:
* **Credit Institutions:**
* *Impact:* Credit institutions are affected by the removal of the option to extend the past due date before a credit obligation is considered in default. They are also granted a temporary allowance to continue using certain ECAI credit assessments.
* *Action Required:* Credit institutions must adapt their procedures to the revised default criteria. They should also take note of the January 1, 2027, deadline for the use of ECAI credit assessments incorporating implicit government support.
* **Competent Authorities:**
* *Impact:* Competent authorities are affected by the removal of their option to extend the past due date before a credit obligation is considered in default.
* *Action Required:* Competent authorities must supervise credit institutions in alignment with the revised default criteria and the transitional arrangements for ECAI credit assessments.
* **European Central Bank (ECB):**
* *Impact:* The ECB's supervisory role is modified to reflect the changes in the regulation.
* *Action Required:* The ECB must implement and enforce the amended regulation.
Key Entities Referenced
European Central Bank: The central bank of the Eurozone, responsible for the monetary policy of the European Union member states that have adopted the euro.
Treaty on the Functioning of the European Union: One of the two primary treaties forming the constitutional basis of the European Union.
Regulation (EU) No 1024/2013: Council Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions.
Regulation (EU) 2016/445: Regulation of the European Central Bank on the exercise of options and discretions available in Union law (ECB/2016/4).
Regulation (EU) No 575/2013: Regulation of the European Parliament and of the Council on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012.
Regulation (EU) 2024/1623: Regulation of the European Parliament and of the Council amending Regulation (EU) No 575/2013 as regards requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor
Frankfurt am Main: City in Germany where the regulation was done.
Christine Lagarde: President of the ECB
Official Journal EN
of the European Union L series
2025/1520 28.7.2025
REGULATION(EU) 2025/1520 OF THE EUROPEAN CENTRAL BANK
of 15 July 2025
amending Regulation (EU) 2016/445 on the exercise of options and discretions available in Union
law (ECB/2016/4) (ECB/2025/24)
THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European
Central Bank concerning policies relating to the prudential supervision of credit institutions(1), and in particular
Article 4(3), Article 6, and Article 9(1) and (2) thereof,
Whereas:
(1) Regulation (EU) 2024/1623 of the European Parliament and of the Council(2) deleted the option provided in
Article 178(1), point (b), of Council Regulation (EU) No 575/2013(3)for competent authorities to extend to 180 the
number of days past due before a material credit obligation referred to therein is considered to be in default. In order
to align Regulation (EU) 2016/445 of the European Central Bank (ECB/2016/4)(4) with Regulation (EU)
No 575/2013 in relation to the deleted option, it is therefore necessary to delete the corresponding provision in
Regulation (EU) 2016/445 (ECB/2016/4).
(2) Regulation (EU) 2024/1623 amended Article 138 of Regulation (EU) No 575/2013 by adding a requirement,
applicable from 1 January 2025, that, for the purposes of using the standardised approach for calculating risk-
weighted exposure amounts in relation to exposures to institutions, an institution must not use an external credit
assessment institution (ECAI) credit assessment that incorporates assumptions of implicit government support,
except where it refers to an institution owned by or set up and sponsored by central governments, regional
governments or local authorities. The amended Article 138 provides further that where the only ECAI credit
assessments that exist for an institution not falling within the excepted category of institutions are ECAI credit
assessments that incorporate such assumptions of implicit government support, exposures to such an institution
must be treated as exposures to an unrated institution, in accordance with Article 121 of Regulation (EU)
No 575/2013.
(3) The ECB sees the need to permit the continued use of ECAI credit assessments that incorporate assumptions of
implicit government support where the institution referred to does not fall within the excepted category of
institutions, with the effect that exposures to such an institution need not be treated as exposures to an unrated
institution. Use of such ECAI credit assessments should continue for a limited period following the date of
application of the amendment to Article 138 of Regulation (EU) No 575/2013. Therefore, it is necessary to amend
Regulation (EU) 2016/445 (ECB/2016/4) to enable the exercise, until 1 January 2027, of the option provided in
Article 495e of Regulation (EU) No 575/2013 to allow continued use of such ECAI credit assessments until that date.
(4) Therefore, Regulation (EU) 2016/445 (ECB/2016/4) should be amended accordingly,
(1) OJ L 287, 29.10.2013, p. 63, ELI: http://data.europa.eu/eli/reg/2013/1024/oj.
(2) Regulation (EU) 2024/1623 of the European Parliament and of the Council of 31 May 2024 amending Regulation (EU) No 575/2013
as regards requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor (OJ L,
2024/1623, 19.6.2024, ELI: http://data.europa.eu/eli/reg/2024/1623/oj).
(3) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit
institutions and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1, ELI: http://data.europa.eu/eli/reg/2013/575/oj).
(4) Regulation (EU) 2016/445 of the European Central Bank of 14 March 2016 on the exercise of options and discretions available in
Union law (ECB/2016/4) (OJ L 78, 24.3.2016, p. 60, ELI: http://data.europa.eu/eli/reg/2016/445/oj).
ELI: http://data.europa.eu/eli/reg/2025/1520/oj 1/2EN
OJ L, 28.7.2025
HAS ADOPTED THIS REGULATION:
Article 1
Amendments
Regulation (EU) 2016/445 (ECB/2016/4) is amended as follows:
(1) Article 4 is deleted;
(2) the following Article 24a is inserted:
‘Article 24a
Article 495e of Regulation (EU) No 575/2013: Transitional arrangements for ECAI credit assessments of
institutions
By way of derogation from Article 138, point (g), of Regulation (EU) No 575/2013, institutions may continue using
an ECAI credit assessment in relation to an institution which incorporates assumptions of implicit government
support until 1 January 2027.’.
Article 2
Final provisions
This Regulation shall enter into force on the twentieth day following the date of its publication in the Official Journal of the
European Union.
This Regulation shall be binding in its entirety and directly applicable in the Member States in accordance with the Treaties.
Done at Frankfurt am Main, 15 July 2025.
For the Governing Council of the ECB
The President of the ECB
Christine LAGARDE
2/2 ELI: http://data.europa.eu/eli/reg/2025/1520/oj