EBA streamlines supervisory approvals for IRB model changes

EBA Press Releases

Published March 30th, 2026

Detected March 30th, 2026

Summary

The EBA published amendments to Regulatory Technical Standards on material model changes, significantly reducing the number of changes classified as material by shifting to quantitative thresholds and limiting qualitative triggers to model redevelopments and definition of default changes. This streamlines the approval process for IRB model changes while maintaining supervisory oversight. The revised RTS align with CRR3 and are expected to accelerate IRB model approvals for EU banks.

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What changed

The EBA amended its RTS on material model changes for IRB approach banks, substantially revising materiality criteria. The changes introduce stronger reliance on quantitative thresholds, reducing overall material classifications while limiting qualitative triggers to model redevelopments, re-estimations of risk parameters, or significant changes to default definitions. Routine maintenance will generally require notification only unless quantitative thresholds are exceeded. References to deprecated approaches (IRB for equity exposures, AMA) have been removed to align with CRR3.

Banks should review their model change classification procedures under the revised thresholds. The coordinated EBA-ECB effort aims to reduce approval timelines and administrative burden for both banks and supervisors. No specific compliance deadline or penalties are stated; the changes aim to ease rather than add obligations.

What to do next

Review internal procedures for classifying IRB model changes against revised quantitative thresholds
Update model change documentation to reflect new notification requirements for routine maintenance
Confirm alignment of any pending model change applications with updated CRR3-compatible criteria

Source document (simplified)

The EBA streamlines supervisory approvals for IRB model changes

Press Release
30 March 2026

The European Banking Authority (EBA) is making the supervisory approval process for banks using Internal Ratings Based (IRB) models more efficient. Today’s publication of the Regulatory Technical Standards (RTS) on material model changes introduces targeted amendments that significantly reduce the number of changes classified as material, allowing supervisors to apply a more risk‑based approach in the supervision of IRB models. This will ease the administrative burden on both banks and supervisors while maintaining appropriate supervisory oversight.

The EBA’s amendments to its RTS on material model changes are driven by two main objectives. First, they address the high volume of material model change applications, which have put pressure on supervisory resources. This had led to lengthy approval timelines for material model changes and delayed banks’ ability to remediate deficiencies or implement improvements. These delays have hampered effective model use. Against this background, the EBA opted for a pragmatic recalibration of the materiality criteria, with a view to reducing the overall number of changes subject to prior approval.

As a result, the revised RTS place stronger reliance on quantitative thresholds, substantially reducing the number of changes classified as material while preserving appropriate supervisory visibility. Qualitative triggers are limited to changes that imply model redevelopments and re-estimations of risk parameters, or significant changes to banks’ definitions of default. Changes related to routine model maintenance will generally be subject to notification, unless they exceed the quantitative thresholds.

Second, the RTS have been aligned with changes introduced under the Capital Requirements Regulation III (CRR3). References to approaches that are no longer part of the prudential framework have been removed, such as the IRB approach for equity exposures and the Advanced Measurement Approach (AMA).

The revised RTS run in parallel with the work undertaken by the European Central Bank (ECB) to simplify its approval processes for material model changes. Together, these efforts are expected to support more efficient supervisory procedures at the ECB and national competent authorities within the EU, leading to quicker and smoother IRB model approvals for EU banks.

Legal references and background

The EBA is mandated under Article 143(5) of Regulation (EU) No 575/2013 to develop draft RTS specifying the conditions for assessing the materiality of changes to rating systems under the IRB Approach, including their extension to additional exposures.

The revised RTS also contribute to the EBA’s broader work on improving the efficiency the EU regulatory and supervisory framework, in particular recommendation 2.4 on enhancing supervisory processes set out in the EBA’s report on the efficiency of the regulatory and supervisory framework.

The work has been conducted in close coordination with supervisory authorities to support more efficient supervisory processes. In this context, the ECB has also published today an update on its progress in streamlining its approval process for IRB model changes.