The European Banking Authority (EBA) has launched a consultation on draft amendments to its guidelines on the definition of default under the Capital Requirements Regulation (CRR).
The EBA is proposing to retain the current 1% threshold for net present value (NPV) loss in debt restructuring, aiming to balance flexibility for banks with robust risk management. The consultation will remain open until 15 October 2025.
The decision to keep the 1% threshold is based on maintaining a flexible and risk-sensitive framework, ensuring consistency with prudential standards, and supporting accurate credit risk modelling under IRB and IFRS 9.
The EBA is also considering shortening the probation period for some forborne exposures from one year to three months to encourage debt restructuring. However, this has not been included in the draft guidelines to avoid widening the gap between non-performing exposure and default definitions.
In addition, the EBA is proposing to extend the exceptional treatment of days past due at invoice level from 30 to 90 days for non-recourse factoring arrangements to better reflect the nature of purchased receivables.
Interested parties can submit comments via the EBA’s consultation page before 15 October 2025. A public hearing will take place on 3 September 2025 via conference call, with registration open until 29 August 2025.
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