Article 1 · ECB/2026/19

Contents

Article 1Definitions#

For the purposes of this Decision, the following definitions apply:

(1)‘Internal Ratings Based Approach’ (IRB Approach) means the approach for calculating the risk-weighted exposure amounts for the purposes of Article 92(4), point (a), of Regulation (EU) No 575/2013 provided for in Part Three, Title II, Chapter 3 of that Regulation;

(2)‘material changes or extensions to rating systems’ means the changes to the range of application of a rating system or to a rating system that are considered material in accordance with Article 4 of Delegated Regulation (EU) No 529/2014;

(3)‘decision granting permission for an early implementation of material changes or extensions to rating systems’ means a decision of the ECB whereby the ECB grants prior permission for an early implementation of material changes or extensions to the range of application of a rating system or to a rating system in accordance with Article 143(3) of Regulation (EU) No 575/2013 and Article 2 of Delegated Regulation (EU) No 529/2014;

(4)‘decision granting permission to implement material changes or extensions to rating systems after an investigation’ means a decision of the ECB whereby the ECB grants prior permission to implement material changes or extensions to the range of application of a rating system or to a rating system in accordance with Article 143(3) of Regulation (EU) No 575/2013 and Article 2 of Delegated Regulation (EU) No 529/2014 after a prior investigation is conducted by the ECB;

(5)‘application package’ means the application submitted by the supervised entity to the ECB for permission to implement the proposed material changes or extensions, and the relevant documents supporting the request, including the self-assessment questionnaire and the independent review of the application by the internal validation function or the internal audit function;

(6)‘internal validation function’ means the supervised entity’s function or business area in charge of validating the accuracy and consistency of rating systems, processes, and the estimation of all relevant risk parameters independently from the supervised entity’s function or business area in charge of the development process in order to ensure that rating systems are conceptually sound and adequately capture all material risks;

(7)‘internal audit function’ means the supervised entity’s function or business area which audits and reviews the internal arrangements, processes and mechanisms to ascertain that they are sound and effective, implemented and consistently applied;

(8)‘self-assessment questionnaire’ means a structured document which can be found on the ECB’s website, to be completed by the supervised entity, in which it explains how the proposed material change or extension fulfils the applicable regulatory requirements and addresses the material deficiencies identified in the current version of the rating system;

(9)‘material deficiency leading to a material change in a rating system’ means a flaw in a rating system, as detected by the ECB or by the internal validation function or internal audit function, whose remediation requires the implementation of a subsequent material change to that rating system;

(10)‘risk-weighted exposure amount’ means the amount resulting from applying the risk weights allocated for credit risk for the exposures set out in Part Three, Title II, Chapter 3, Section 2 of Regulation (EU) No 575/2013;

(11)‘obligation’ means an ancillary provision to a supervisory decision that imposes a requirement on the supervised entity in accordance with Article 5;

(12)‘limitation’ means an ancillary provision to a supervisory decision that restricts or modifies the permitted use of a rating system, including by imposing a floor on certain values determined on the basis of the output of the rating system for which permission to implement the material change or extension is requested;

(13)‘condition’ means an ancillary provision to a supervisory decision that suspends the effects of that decision subject to the occurrence of a specific event;

(14)‘delegated decision’ means a delegated decision as defined in Article 3, point (4), of Decision (EU) 2017/933 (ECB/2016/40);

(15)‘heads of work units’ means the heads of work units of the ECB to whom the power to adopt decisions granting permission for an early implementation of material changes or extensions to rating systems and decisions granting permission to implement material changes or extensions to rating systems after an investigation is delegated;

(16)‘non-objection procedure’ means the procedure set out in Article 26(8) of Regulation (EU) No 1024/2013 and further specified in Article 13g of Decision ECB/2004/2;

(17)‘negative decision’ means a decision that does not or does not fully grant the permission as requested by the supervised entity. A decision with ancillary provisions such as conditions, obligations or limitations shall be considered a negative decision unless such ancillary provisions (a) ensure that the supervised entity fulfils the requirements of relevant Union law referred to in Articles 4(1) and 5(1), (b) merely restate one or more of the existing requirements that the supervised entity has to comply with pursuant to Union law or require information on the fulfilment of one or more of such requirements, or (c) have been accepted in advance and in writing by the supervised entity;

(18)‘sensitivity’ means a characteristic or factor that may have a negative impact on the ECB’s reputation and/or on the effective and consistent functioning of the Single Supervisory Mechanism, including but not limited to any of the following: (a) where, with regard to the decisions covered by Article 4, the supervised entity’s internal audit or internal validation functions are considered by the ECB not to be sufficiently comprehensive and effective to ensure compliance with the regulatory requirements, or the pending material deficiencies leading to a material change of a rating system have not been adequately solved; (b) where the relevant supervised entity has previously been, or is currently, subject to severe supervisory measures such as early intervention measures; (c) the draft decision once adopted will set a new precedent that could bind the ECB in the future; (d) the draft decision once adopted may attract negative media or public attention; or (e) a national competent authority that has entered into close cooperation with the ECB communicates its disagreement with the proposed draft decision to the ECB;

(19)‘supervised entity’ means a significant supervised entity as defined in Article 2, point (16), of Regulation (EU) No 468/2014 of the European Central Bank (ECB/2014/17)^note;

(20)‘supervised group’ or ‘group’ means a significant supervised group as defined in Article 2, point (22), of Regulation (EU) No 468/2014 (ECB/2014/17);

(21)‘ECB guide’ means a document, adopted by the Governing Council upon a proposal from the Supervisory Board, which is published on the ECB’s website and which gives guidance on the ECB’s understanding of legal requirements.