With its “Circular 3/2019 (BA) on the Application of the Default Definition pursuant to Article 178 of the Capital Requirements Regulation (CRR) and on probability of default (PD) Estimation, loss-given-default (LGD) Estimation and Treatment of Defaulted Risk Positions”, the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin) transposes relevant standards of the European Banking Authority (EBA) into its administrative practice as of 1 January 2021. Specifically, BaFin fully adopts the EBA Guidelines (GL) 2016/07 ("GL on the Application of the Default Definition pursuant to Art. 178 of Regulation (EU) No. 575/2013"), except for paragraphs 25 and 26 (concerning risk positions vis-à-vis central governments, local authorities and public authorities), as well as the EBA GL 2017/16 ("GL for PD Estimation, LGD Estimation and the Treatment of Defaulted Exposures").

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