ECB guideline on NPE coverage for LSIs published in OJ

Guideline (EU) 2025/2595 of the European Central Bank (ECB) has been published in the Official Journal of the European Union. The guideline, adopted on 10 December, sets out a harmonised supervisory approach for national competent authorities (NCAs) to assess the management and coverage of non performing exposures (NPEs) held by less significant institutions (LSIs) within the Single Supervisory Mechanism. It aims to ensure consistent supervisory standards across member states by requiring NCAs to review LSIs’ provisioning policies and treatment of assets in terms of own funds requirements. Such data is not currently included in the information that institutions are required to report under Commission Implementing Regulation (EU) 2021/451, and therefore NCAs should require LSIs to report it for each relevant reporting reference date. NCAs must: assess NPE coverage using Article 47c factors under the Capital Requirements Regulation; apply the framework to all LSIs unless specific exemption conditions are met; and introduce reporting requirements for each reporting reference date using ECB developed templates. Transitional reduced coverage factors apply for the 2025–2027 reporting periods, with full application from the 31 December 2028 reference date. The guideline takes effect on the day of its notification to the NCAs of the participating member states.

Return to main website.