Sub-Section 2

Institutions may use the following parties as eligible providers of unfunded credit protection: central governments and central banks; regional governments or local authorities; multilateral development banks; international organisations exposures to which a 0 % risk weight under Article 117 is assigned; public sector entities, claims on which are treated in accordance with Article 116; institutions, and financial institutions for which exposures to the financial institution are treated as exposures to institutions in accordance with Article 119(5); other corporate entities, including parent, subsidiary and affiliate corporate entities of the institution, where either of the following conditions is met: those other corporate entities have a credit assessment by an ECAI; in the case of institutions calculating risk-weighted exposure amounts and expected loss amounts under the IRB Approach, those other corporate entities do not have a credit assessment by a recognised ECAI and are internally rated by the institution; central counterparties. Where institutions calculate risk-weighted exposure amounts and expected loss amounts under the IRB Approach, to be eligible as a provider of unfunded credit protection a guarantor shall be internally rated by the institution in accordance with the provisions of Section 6 of Chapter 3. Competent authorities shall publish and maintain the list of those financial institutions that are eligible providers of unfunded credit protection under point (f) of paragraph 1, or the guiding criteria for identifying such eligible providers of unfunded credit protection, together with a description of the applicable prudential requirements, and share their list with other competent authorities in accordance with Article 117 of Directive 2013/36/EU. An institution may use institutions, insurance and reinsurance undertakings and export credit agencies as eligible providers of unfunded credit protection which qualify for the treatment set out in Article 153(3) where they meet all the following conditions: they have sufficient expertise in providing unfunded credit protection; they are regulated in a manner equivalent to the rules laid down in this Regulation, or had, at the time the credit protection was provided, a credit assessment by a recognised ECAI which had been determined by EBA to be associated with credit quality step 3, or above, in accordance with the rules for the risk weighting of exposures to corporates set out in Chapter 2; they had, at the time the credit protection was provided, or for any period of time thereafter, an internal rating with a PD equivalent to or lower than that associated with credit quality step 2 or above in accordance with the rules for the risk weighting of exposures to corporates set out in Chapter 2; they have an internal rating with a PD equivalent to or lower than that associated with credit quality step 3 or above in accordance with the rules for the risk weighting of exposures to corporates set out in Chapter 2. For the purpose of this Article, credit protection provided by export credit agencies shall not benefit from any explicit central government counter-guarantee. Institutions may use guarantees as eligible unfunded credit protection.

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Source: EUR-Lex (Cellar) · retrieved 2026-09-25 · Text as adopted (Official Journal); later amendments are not incorporated in this text.