The European Banking Authority (EBA) issued an opinion on proposed amendments by the European Commission to draft technical standards on an equivalent legal mechanism for residential property completion under the CRR.
The European Banking Authority (EBA) published its opinion in response to the European Commission’s amendments to the draft Regulatory Technical Standards (RTS) concerning an equivalent legal mechanism to ensure the completion of residential properties under construction within a reasonable timeframe, as specified in the Capital Requirements Regulation (CRR).
On 9 January 2026, the Commission informed the EBA of its intention to endorse, with amendments, the final draft RTS submitted by the EBA on 5 August 2025.
The EBA identified two substantive amendments proposed by the Commission that are inconsistent with prudential safeguards for residential property exposures.
First, the Commission proposed increasing the risk weight cap for protection providers from 20% to 30% under the Standardised Approach. The EBA emphasized that maintaining the 20% threshold is crucial to preserve consistency within the prudential framework and ensure that capital treatment aligns with the credit quality of the protection provider.
Second, the Commission proposed removing the requirement that the completion guarantee be mandated by the law of the Member State where the property is being built. The EBA considers this requirement essential for ensuring the mechanism qualifies as a legal mechanism, thereby maintaining legal certainty and framework robustness.
This opinion reaffirms the EBA’s commitment to a harmonised and prudent application of the preferential treatment for residential property exposures.
Legal basis and background: This opinion is issued under Article 10(1) of Regulation (EU) No 1093/2010, which mandates the EBA to provide an opinion when the European Commission intends to endorse draft RTS with amendments. The relevant provisions are set out in Article 124 of Regulation (EU) No 575/2013 (CRR), governing prudential treatment of exposures secured by mortgages on immovable property. The final draft RTS was submitted by the EBA on 5 August 2025, and the Commission notified its intention to endorse it with amendments on 9 January 2026.
