EBA responds to Commission’s proposed amendments to technical standards on legal mechanism

The European Banking Authority (EBA) published its opinion in response to the European Commission’s amendments to the draft Regulatory Technical Standards (RTS). These standards specify what constitutes an equivalent legal mechanism to ensure the completion of a residential property under construction within a reasonable timeframe, as outlined 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 not aligned with prudential safeguards:

• Increasing the risk weight cap for protection providers from 20% to 30% under the Standardised Approach. The EBA emphasizes maintaining the 20% threshold to preserve consistency within the prudential framework and ensure appropriate capital treatment.
• Removing the requirement that the completion guarantee be mandated by 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 and maintains legal certainty.

The EBA reaffirms its commitment to a harmonised and prudent application of the preferential treatment for residential property exposures.

This opinion is issued under Article 10(1) of Regulation (EU) No 1093/2010, which mandates the EBA to provide an opinion on draft RTS amendments endorsed by the European Commission. The relevant provisions are outlined in Article 124 of Regulation (EU) No 575/2013 (CRR).

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. This opinion is the EBA’s formal response to those amendments.