The European Banking Authority issued a report this week on the regulatory consistency of risk-weighted assets in the EU banking sector, which identified some discrepancies requiring further analysis.
The EBA’s second interim report covered RWA consistency in low-default portfolios (LDP), consisting of central governments, credit institutions, and large corporates, all of which typically have low default rates. The goal was to identify differences in RWA outcomes and analyze whether new regulation is needed in the area. The study was based on a Hypothetical Portfolio Exercise involving 35 banks in 13 European countries, conducted in the second half of 2012, along with data on real exposures from the banks.
