meta_id 3133589

On May 7, 2026, the European Banking Authority (EBA) published its final Report amending the Guidelines on the application of the definition of default under Article 178 of Regulation (EU) No 575/2013 (Capital Requirements Regulation). The amendments introduce targeted changes to address specific technical aspects of non-recourse factoring and align the Guidelines with amendments introduced by the Capital Requirements Regulation 3 (CRR 3). The key amendment extends the past-due treatment threshold for non-recourse factoring at the individual invoice level from 30 to 90 days. This extension better reflects the operational features of invoice-based receivables and reduces the risk of incorrect default classifications. The EBA confirmed that the 1 percent net present value (NPV) threshold applied to reductions in NPV loss in debt restructuring remains appropriate for prudential default recognition. The EBA determined that the current NPV threshold framework is sufficiently flexible, risk-sensitive, and consistent with the accounting framework. It does not lead to default misclassifications as it applies only to borrowers experiencing financial difficulties and to restructurings resulting in losses. The EBA noted that amending this framework—such as by increasing the NPV threshold—could undermine post-financial-crisis efforts to reduce non-performing loans, weaken the reliability of capital and provisioning assessments, and entail significant operational costs for credit institutions, including model redevelopment and revalidation. The amendments align with the EBA's mandate under Article 178(7) of the CRR, as amended by Regulation (EU) 2024/1623, to review and update the Guidelines while encouraging proactive, preventive, and meaningful debt restructuring to support obligors.