meta_id 3016323

On March 30, 2026, the European Banking Authority (EBA) published revised Regulatory Technical Standards (RTS) on material model changes for banks using Internal Ratings Based (IRB) models. The amendments significantly reduce the number of changes classified as material, enabling supervisors to apply a more risk-based approach to IRB model supervision while easing administrative burden on both banks and supervisors. The EBA's recalibration addresses two key issues. First, the high volume of material model change applications has strained supervisory resources, resulting in lengthy approval timelines that delayed banks' ability to remediate deficiencies or implement improvements. The revised RTS adopt a pragmatic approach by placing stronger reliance on quantitative thresholds, substantially reducing changes subject to prior approval while preserving supervisory visibility. Qualitative triggers are now limited to changes involving model redevelopments, re-estimations of risk parameters, or significant changes to banks' definitions of default. Routine model maintenance will generally be subject to notification unless exceeding quantitative thresholds. Second, the RTS align with changes introduced under the Capital Requirements Regulation III (CRR3), removing references to approaches no longer part of the prudential framework, including the IRB approach for equity exposures and the Advanced Measurement Approach (AMA). The revised RTS work in parallel with the European Central Bank's (ECB) efforts to simplify its approval processes for material model changes. Together, these initiatives are expected to support more efficient supervisory procedures across the European Union, enabling quicker and smoother IRB model approvals for EU banks. The EBA developed these standards under Article 143(5) of Regulation (EU) No 575/2013 and in coordination with supervisory authorities to enhance the efficiency of the EU regulatory and supervisory framework.