The European Banking Authority (EBA) today launched a public consultation on revised Guidelines on limits on exposures to shadow banking entities, aiming to align with the updated EU large-exposure reporting framework and support sound risk management practices across institutions. The consultation, open until 9 July 2026, seeks feedback on potential implementation impacts and current industry practices, with a virtual public hearing scheduled for 25 June 2026.
Document details and nature
The consultation paper, published on 9 April 2026, originates from the EBA and is mandated by Article 395(2) of the Capital Requirements Regulation (CRR 3). It updates the 2015 EBA Guidelines on shadow banking exposure limits, which set guidance for institutions' risk management and limits on exposures to entities providing banking activities outside a regulated framework. The revised Guidelines are not binding but serve as a supervisory tool to promote convergence.
Key changes and policy orientations
The proposal aligns the Guidelines with the revised regulatory framework following the entry into force, in January 2024, of the Regulatory Technical Standards (RTS) specifying criteria to identify shadow banking entities for large-exposure reporting. It updates the scope of application and the basis for limits by moving from eligible capital to Tier 1 capital, while preserving existing governance requirements and the primary and fallback methods for setting exposure limits. The proposal also removes the 0.25% materiality threshold to simplify the framework. The consultation gathers input on current practices and on the possible effects of quantitative limits on lending to shadow banking entities, which will inform a report on the contribution of shadow banking entities to the Capital Markets Union and an assessment of institutions' exposures and limits, expected by December 2027.
Impact on stakeholders
The revised Guidelines will primarily affect EU banks and investment firms, which must adjust their risk management frameworks to the new Tier 1 capital basis and simplified threshold. Shadow banking entities themselves may face tighter lending conditions if quantitative limits are imposed, potentially reducing their access to bank funding. EU regulators will benefit from a more harmonised identification and limit-setting framework, enhancing supervisory convergence. Meanwhile, the broader financial system could see reduced contagion risks from shadow banking activities, aligning with the EBA's mandate to safeguard financial stability.
Expected institutional follow-up
Following the consultation, the EBA will finalise the Guidelines and submit a report to the European Commission by 31 December 2027 on shadow banking entities' contribution to the Capital Markets Union and the appropriateness of aggregate or tighter individual limits. This work complements ongoing EU efforts to deepen capital markets, as recently outlined by Commissioner Maria Luís Albuquerque in her Savings and Investments Union proposals, and echoes the debate in the ECON Committee on balancing regulation with investment freedom.