The European Banking Authority has launched a public consultation on revised guidelines that would update how EU banks set limits on their exposures to “shadow banking” entities operating outside a regulated framework.
The draft changes would align the guidelines with updated EU rules on large-exposure reporting that took effect after regulatory technical standards entered into force in January 2024, the EBA said on Thursday.
Shadow banking entities are defined under EU rules as non-bank organisations that carry out bank-like credit intermediation but are not subject to equivalent prudential regulation and supervision.
Under the proposals, the basis for calculating limits would shift from “eligible capital” to Tier 1 capital — a core measure of a bank’s financial strength — while keeping existing governance requirements and the current primary and fallback methods for setting exposure limits.
The package would also remove a 0.25% materiality threshold as part of a move to simplify the framework.
The consultation also asks stakeholders about the potential implementation impacts of the revised approach, and seeks information on how institutions identify exposures to shadow banking entities, set limits and manage related risks.
Hearings, deadlines and next steps
Feedback can be submitted until 9 July 2026 at 23:59 CEST, and all contributions will be published after the consultation unless respondents request otherwise.
The EBA will also hold a virtual public hearing on 25 June 2026 from 10:00 to 12:00 CEST, with registration open until 17 June 2026 at 16:00 CEST.
The input will be used as the EBA finalises the guidelines and feeds into wider policy work, including a report to the European Commission on the contribution of shadow banking entities to the Capital Markets Union and an assessment of institutions’ exposures and limits that the authority expects to deliver in December 2027.
