EBA Reforms Slotting for Specialised Lending: What IRB Institutions Must Do Now

Anyone managing a portfolio of offshore wind farms, aircraft financings or commercial real estate should have 7 May 2026 marked in the calendar. On that day, the European Banking Authority (EBA) opened consultation EBA/CP/2026/09 on amending Regulatory Technical Standards (RTS). The question at stake is how banks back specialised lending with risk weights – and therefore how much hard capital these exposures tie up. For the head of credit risk and the regulatory capital manager, this is not a technical footnote but a potential shift in the capital requirement of entire business lines.

The decisive message up front, because it tends to slip in the early reporting: this consultation concerns the slotting approach under the Internal Ratings Based (IRB) method, not the standardised approach. That is more than a formality. CRR3 has, in parallel, also introduced new specialised-lending classes in the standardised approach – anyone who conflates the two tracks plans for the wrong exposure class. Exactly where the dividing line runs, we clarify shortly. First, the basics.

What Is the SSCA – and Who Does the Reform Concretely Affect?

Specialised lending consists of loans whose repayment comes primarily from the income of a financed asset or project, not from the general creditworthiness of a diversified borrower. The classic example: an offshore wind farm repays its loan from feed-in revenues, not from the group budget of a broadly positioned company. The EU framework distinguishes five sub-classes: Project Finance (PF), Object Finance (OF, the financing of objects such as ships or aircraft), Commodities Finance (CF), Income-Producing Real Estate (IPRE) and High-Volatility Commercial Real Estate (HVCRE).

The Supervisory Slotting Criteria Approach (SSCA) is a variant of the IRB method. Instead of its own internal default probabilities, an institution assigns each specialised-lending exposure, on the basis of prescribed supervisory criteria, to one of five risk-weight categories: Strong, Good, Satisfactory, Weak or Default. The assessment runs along fixed factors – financial strength, the political and legal environment, transaction and asset characteristics, sponsor strength and the security package. Each category carries a fixed risk weight, which in turn determines the risk-weighted assets (RWA) and thus the capital requirement.

Here is the distinction that is critical for planning: CRR3 has, in parallel, introduced new specialised-lending classes in the standardised approach via Article 122a, there with fixed risk weights. The present RTS consultation, however, concerns exclusively the IRB slotting track, not the standardised approach. An institution that lumps the two paths together risks a double misallocation: it ascribes to the standardised-approach rules an effect that occurs only in IRB slotting – or vice versa. So anyone assessing the impact of this consultation must first know which parts of the portfolio actually sit within the SSCA.

Not all banks are therefore affected equally, but specifically the IRB institutions with significant project-finance, real-estate and infrastructure portfolios. In Germany this primarily concerns the Landesbanken, large cooperative institutions and internationally active universal banks – precisely those houses that finance the energy transition, transport infrastructure and commercial construction.

What Does CRR3 Change in the Slotting Regime – and Why Now?

The trigger for the consultation is cleanly anchored in regulation. The EBA acts on the basis of Article 153(9) of the CRR. This provision mandates the Authority to specify how institutions are to take into account the factors referred to in Article 153(5) when assigning risk weights to specialised lending exposures under the slotting approach. This is not a new mandate plucked from thin air, but a consequence of the CRR3 reform: the revised Capital Requirements Regulation (Regulation (EU) 2024/1623) has applied since 1 January 2025 and makes an update of the existing RTS necessary.

The EBA states the purpose of the amendments clearly:

Two words deserve attention: "enhance the risk sensitivity". This is the actual lever. Until now, supervisory floors, the factor-weight floors, dampened how strongly individual assessment factors could shift the category classification. If these floors fall, creditworthiness and risk characteristics feed through more sharply – the classification becomes keener, in both directions. The precise mechanism and its three central adjusting screws are covered in the next section.

On the timetable: the EBA has scheduled the public hearing for 27 May 2026, as a one-hour conference call from 10:00 to 11:00 CEST. The deadline for submitting comments ends on 7 August 2026. Anyone wishing to influence the final shape has this window – after which the usual path follows via final RTS and adoption by the European Commission.

The Three Substantive Changes

The consultation turns three adjusting screws. Each has its own logic and its own capital effect – and each becomes tangible with a concrete example.

First: removal of the factor-weight floors. The existing RTS set lower limits on how strongly individual assessment factors could pull the slotting category downwards. With the removal of these floors, risk sensitivity rises: a weak sponsor or a thin security package can in future downgrade a financing more strongly than before – but conversely a strong profile can also upgrade it. The direction of the capital effect is therefore portfolio-dependent and not uniformly "more capital". This is one of the traps: the removal of the floors can relieve or burden depending on the portfolio.

Second: introduction of ESG factor references. This is the most substantial novelty. The existing RTS (Delegated Regulation (EU) 2021/598) contain no ESG references whatsoever. In future, climate risks are to feed into the category classification as a negative influence – an asset with high climate exposure can thereby slip into a worse category. For an institution this means: the climate-risk assessment is no longer a separate sustainability exercise but a capital-relevant component of the risk-weight assignment. What this means in numerical terms is illustrated by the box below.

Third: treatment of Unrated Financial Company Products (UFCP). The consultation addresses the treatment of products of unrated financial companies in the slotting context. This point is technical in nature, but relevant for institutions with corresponding exposures – and it is among the areas where a well-founded comment offers the greatest value, because the operationalisation here is still open.

What Should Institutions Do Now?

Before the concrete measures, an honest contextualisation belongs here. Three points where the simple reading chafes. First, the "simplified application" often cited in commentary holds only in part. The removal of the floors may streamline the framework in one place – but the new ESG requirements increase the assessment complexity in another. Second, and this has already been stressed: the SSCA (IRB) and the standardised approach (Article 122a) must be cleanly separated, otherwise the path confusion looms. Third, the consultation paper quantifies no capital effects. Anyone who wants to know whether the removal of the floors relieves or burdens their portfolio must calculate it themselves. From this, four concrete steps follow.

The strategic consequence is thus outlined. EBA consultation EBA/CP/2026/09 does not merely move detail rules; it changes the mechanics by which a substantial part of project-finance, object-finance and real-estate portfolios is backed with capital. The direction of the effect is portfolio-dependent and not quantified in the paper – which is precisely what makes one's own simulation indispensable. Anyone who calculates, classifies and helps shape now enters the final RTS prepared. Anyone who waits until the standards are in force learns of the capital effect when they can no longer influence it.

Christian Schablitzki

Strategy & Management Consultant · Agentic AI expert for financial institutions

Over 20 years in investment banking and derivatives trading, followed by more than 10 years advising financial institutions. Currently a Partner at Infosys Consulting in Germany. Certified in Google AI, Generative AI Leader (Google Cloud) and IBM RAG and Agentic AI.

LinkedIn profile →