New European Rules on Default

Starting from 1 January 2021, the Cassa Centrale Group shall apply the new European rules on the classification of defaulted clients.

Introduced by the European Banking Authority to harmonise the practices of credit institutions in EU countries, the new rules establish more restrictive standards and methods for the classification of default compared to the ones used so far.

Consequences of the new rules

Under the new rules, effective 1 January 2021, even just overdrafts, exceeding the new thresholds set for natural persons, SMEs, and businesses, can cause all exposures to the CCB Group to be classified as defaulted and could make it harder to access credit and obtain new financing.

 

Your Manager and/or Branch are at your complete disposal to fully support you at this time of major change, provide clarification on the new rules, and find the solutions that best suit your needs.

MAIN CHANGES

LEGAL BACKGROUND

Starting from 1 January 2021, the Cassa Centrale Banca Group apply the new European rules on the classification of a client defaulting on a credit facility provided by the bank (so-called “default”), laid down by the European Banking Authority (EBA) in the following regulations and transposed into Italian law by the Bank of Italy:

  • European Union Regulation of 26 June 2013 – no. 575 – art. 178 – introduces specific provisions on the default of an obligor
  • European Union Delegated Regulation no. 171 of 19 October 2017 – establishes the standards that supervisory authorities shall use for the materiality threshold
  • European Commission Recommendation 2003/361/EC of 6 May 2003 – definition of Small and Medium-Sized Enterprise
  • EBA/GL/2016/07 – EBA Guidelines on the application of the definition of default under Article 178 of Regulation (EU) no. 575/2013

The new rules, known as “New Definition of Default”, establish more restrictive standards and methods compared to the ones in use today with the goal of harmonising rules across the European Union.