Amendments to the Bank of Latvia Regulations No. 265 "Credit Risk Management Regulations"

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Bank of Latvia Regulations No. 423

Riga, August 3, 2026

Amendments to the Bank of Latvia Regulations No. 265 dated December 18, 2023 "Credit Risk Management Regulations"

Issued in accordance with Part Four of Article 34.2 and Article 55 of the Law on Credit Institutions

Make the following amendments to the Bank of Latvia Regulations No. 265 dated December 18, 2023 "Credit Risk Management Regulations" (Latvijas Vēstnesis, 2023, No. 248):

1. Express sub-point 2.1 in the following wording:

"2.1. accounting standards - international accounting standards introduced by Commission Regulation (EU) No 2023/1803 of August 13, 2023, adopting several international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council;".

2. Supplement the regulations with sub-point 2.9 in the following wording:

"2.9. moratorium - a temporary measure provided for by law or a normative act issued on its basis, which the institution applies and modifies the payment schedule stipulated in the credit agreement for a certain period, suspending, deferring or reducing payments.".

3. Supplement the regulations with point 2.1 in the following wording:

"2.1 The terms 'credit for housing purchase' and 'consumer credit' used in these Regulations correspond to the usage of these terms in the Bank of Latvia regulations that determine and regulate the operation of the Credit Registry.".

4. Express point 3 in the following wording:

"3. A credit institution registered in another Member State, which is entitled to provide financial services in the Republic of Latvia, in accordance with Part Three of Article 6 of the Law on Credit Institutions, applies the requirements for instruments aimed at borrowers established in point 43 and subsections 5.2.2 and 5.2.3 of these Regulations to credits granted in the Republic of Latvia.".

5. Express point 6 in the following wording:

"6. The institution does not apply the requirements for instruments aimed at borrowers established in point 43 and subsections 5.2.2 and 5.2.3 of these Regulations to credits it grants in another Member State.".

6. Delete the words and parentheses "acceptable credit risk level (risk tolerance) and" in the first sentence of point 11 and replace the word "acceptable" in the third sentence with the word "desired".

7. Replace the word "acceptable" in sub-point 13.2 with the word "desired".

8. Replace the word "credit risk" in sub-point 13.7 with the words "credit risk and its".

9. Replace the words "internal control" in point 16 with the word "governance".

10. Express point 22 in the following wording:

"22. The institution combines two or more clients into a group of interconnected clients, as well as develops the procedure mentioned in point 60 of these Regulations for identifying groups of interconnected clients in accordance with the delegated regulation (EU) 2024/1728 of the Commission of December 6, 2023, supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards specifying under what circumstances the conditions for identifying groups of interconnected clients are met, and Section 5, Section 8 and Annex of the European Banking Authority Guidelines No EBA/GL/2017/15-rev1 dated April 29, 2026 'Guidelines on interconnected clients in accordance with Article 4(1)(39) of Regulation (EU) No 575/2013' requirements.".

11. Replace the word "acceptable" in sub-point 28.1 with the word "desired".

12. Delete sub-point 28.7.

13. Delete the word "scenarios" in sub-point 29.4.

14. Supplement point 34 after the word "sources" with parentheses and words "(including those related to environmental, social and governance factors)".

15. Replace the words "internal control" in the second sentence of point 38 with the word "governance".

16. Express point 43 in the following wording:

"43. The maximum repayment term for a credit granted to a natural person for housing purchase is 30 years from the date the contract enters into force, while the maximum repayment term for a consumer credit (including financial leasing transactions) is seven years from the date the contract enters into force. If the institution conducts a repeated assessment of the borrower's creditworthiness within the framework of an existing credit for housing purchase agreement or consumer credit (including financial leasing) agreement or grants a new credit within the framework of a mortgage refinancing process, the terms mentioned in this point may be determined from the date the amended or new credit contract enters into force.".

17. Replace the words "internal control" in the first sentence of the introductory part of point 45 with the word "governance".

18. Replace the word "acceptable" in point 51 with the word "desired".

19. Replace the words "risk control" in the second sentence of point 59 with the words "risk management".

20. Express point 70 in the following wording:

"70. Deviations from the restrictions mentioned in points 69 and 71 of these Regulations and the maximum term restrictions mentioned in point 43 of these Regulations, as well as the restrictions mentioned in point 83 of these Regulations, in total in a calendar quarter must not exceed 10 percent of the amount of newly granted credits to natural persons (based on the last available information about the previous calendar quarter). These deviations are permissible if the borrower's creditworthiness assessment indicates that he will be able to repay the credit, even exceeding the restrictions mentioned in this point. The institution documents the type of deviation and is able to explain the risk-mitigating elements in each specific case where the mentioned exception is applied. The institution applies deviations at an individual level if it is not subject to consolidated supervision, or at the level of a prudential consolidation group or sub-consolidated if it is subject to consolidated supervision.".

21. Supplement the parentheses in the first sentence of point 81 with the words "as well as rent or lease payments for contracts where the obligation or option to acquire the subject matter of the contract by the consumer is not defined either in the contract itself or in any other separate contract".

22. Replace the words "risks and transition" in point 102 with the words "and transition environment".

23. Replace the words "risk control" in point 128 with the words "risk management".

24. Supplement the regulations with point 142.1 in the following wording:

"142.1 For environmental risks that the institution has identified as significant, taking into account the provisions of paragraphs 11, 12, 13, 14 and 15 of the European Banking Authority Guidelines No EBA/GL/2025/01 dated January 8, 2025 'Guidelines on Environmental, Social and Governance (ESG) Risk Management', it develops quantitative credit risk assessment indicators in accordance with the provisions of paragraphs 17, 18, 19, 20 and 69 of the mentioned guidelines.".

25. Replace the word "control" in sub-point 164.3 with the word "management".

26. Supplement the regulations with Chapter 7.1 in the following wording:

"7.1 Application of Moratorium

172.1 When modifying the terms of a credit agreement, the institution applies a moratorium if it meets all these conditions:

172.1 1. it is introduced in connection with a specific event or other circumstances defined by law;

172.1 2. it applies to a group of borrowers previously defined by law;

172.1 3. it provides only for the measures stipulated in point 165 of these Regulations;

172.1 4. it is not applied to new credits granted after the start of the relevant event or granted during the occurrence of other circumstances defined by law.

172.2 The institution evaluates each case individually and may not recognize the borrower as being in financial difficulties if the modification of the credit agreement terms is connected only with the application of a moratorium.".

27. Replace the abbreviation "EBIDTA" in point 189 with the abbreviation "EBITDA".

28. Supplement the first sentence of point 222 after the word "institution" with the words "with an increased share of NPL assets in accordance with Chapter 9 of these Regulations".

29. Supplement sub-point 225.1 after the words "individually or" with the word "prudential".

30. Replace the words "risk control" in point 233 with the words "risk management".

31. Replace the words "risk control" in point 250 with the words "risk management".

32. Replace the words "risk control" in point 251 with the words "risk management".

33. Replace the word "half-year" in point 255 with the word "year".

34. Supplement point 256 after the words "institution's board" with the words "or its appointed committee".

35. Supplement point 265 with a second sentence in the following wording:

"When conducting environmental scenario analysis (including stress testing and resilience analysis), the institution applies the requirements established in the European Banking Authority Guidelines No EBA/GL/2025/04 dated November 4, 2025 'Guidelines on Environmental Scenario Analysis'.".

36. Replace the words "internal control" in point 266 with the word "management".

37. In the informative reference to European Union directives and other international documents:

express point 3 in the following wording:

"3) European Banking Authority Guidelines No EBA/GL/2017/15-rev1 dated April 29, 2026 'Guidelines on interconnected clients in accordance with Article 4(1)(39) of Regulation (EU) No 575/2013';

supplement the informative reference with points 7 and 8 in the following wording:

"7) European Banking Authority Guidelines No EBA/GL/2025/01 dated January 8, 2025 'Guidelines on Environmental, Social and Governance (ESG) Risk Management';

8) European Banking Authority Guidelines No EBA/GL/2025/04 dated November 4, 2025 'Guidelines on Environmental Scenario Analysis'.".

Deputy President of the Bank of Latvia M. Kālis

Act Information

Name: Amendments to the Bank of Latvia Regulations No. 265 dated December 18, 2023 "Credit Risk Management ...

Status:

In force

in force

Issuer: Bank of Latvia

Type: regulations

Number: 423 Adopted: 03.08.2026. Enters into force: 07.08.2026. Published: Latvijas Vēstnesis , 149, 06.08.2026.

OP number:

2026/149.4

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