Regulatory Alerts2024-05-30
Regulation on Calculating the Capital Requirement for Credit Risk
Latvijas Banka issued Regulation No 257 on November 27, 2023, establishing procedures for credit institutions, investment firms, and central securities depositories registered in Latvia to calculate capital requirements for credit risk. This regulation specifies the application of Regulation (EU) No 575/2013, detailing the definition of default, including materiality thresholds of 100 or 500 euro and a 1% relative component for obligations past due over 90 consecutive days. It also outlines criteria for technical defaults, specific provisions for public sector exposures and factoring, and various indications of unlikeliness to pay, such as non-accrued status, specific credit risk adjustments, sale of credit obligations, forbearance, and insolvency.