The European Banking Authority (EBA) published on 30 March 2026 revised Regulatory Technical Standards (RTS) on material model changes for Internal Ratings Based (IRB) approaches, aiming to reduce the administrative burden on banks and supervisors by reclassifying many changes as non-material and thus not requiring prior supervisory approval. The amendments introduce quantitative thresholds to limit the number of changes deemed material, while qualitative triggers are reserved for major model redevelopments or changes to definitions of default. Routine maintenance changes will generally only require notification unless they exceed the thresholds.
The revised RTS are part of the EBA's broader effort to improve the efficiency of the EU regulatory and supervisory framework, following its report on the efficiency of the regulatory and supervisory framework, particularly recommendation 2.4 on enhancing supervisory processes. The EBA developed these standards under its mandate from Article 143(5) of Regulation (EU) No 575/2013 (CRR). The work was conducted in close coordination with supervisory authorities, including the European Central Bank (ECB), which also published today an update on its progress in streamlining its own approval process for IRB model changes.
Policy orientations and trade-offs The EBA's recalibration of materiality criteria reflects a trade-off between reducing administrative burden and maintaining supervisory oversight. By placing stronger reliance on quantitative thresholds, the revised RTS reduce the number of changes requiring prior approval, which should speed up banks' ability to remediate deficiencies and implement improvements. However, this could reduce supervisory visibility into some model changes that might still carry risk, although the EBA argues that appropriate oversight is preserved through notification requirements and the retention of qualitative triggers for significant changes. The alignment with CRR III removes references to obsolete approaches (e.g., IRB for equity exposures and the Advanced Measurement Approach), ensuring consistency with the current prudential framework.
Impact on stakeholders - EU banks: Banks using IRB models will benefit from reduced administrative burden and faster approval timelines for model changes, enabling quicker remediation and implementation of improvements. This could lower compliance costs and improve risk management agility. However, banks must still ensure that changes not subject to prior approval remain within quantitative thresholds and comply with notification requirements. - National competent authorities and the ECB: Supervisors will see a reduction in the volume of material change applications, freeing up resources for more risk-based supervision. The ECB's parallel simplification efforts are expected to further streamline procedures, leading to more efficient supervisory processes. However, supervisors may need to adjust their monitoring to ensure that non-material changes do not accumulate into material risk. - EU consumers and businesses: Indirectly, more efficient IRB model approvals could lead to better risk management by banks, potentially improving lending conditions and financial stability. However, the direct impact on consumers is limited. - EU regulatory bodies: The EBA's revised RTS contribute to the broader goal of enhancing the efficiency of the EU regulatory framework, as called for in the Savings and Investments Union (SIU) agenda promoted by Commissioner Maria Luís Albuquerque in recent speeches (e.g., March 2026). The SIU aims to deepen capital markets and boost competitiveness, and streamlined supervisory processes are a supporting element.
Expected institutional follow-up The final draft RTS have been submitted to the European Commission for adoption. Once adopted, they will become binding on competent authorities across the EU. The EBA will continue to monitor implementation and may further refine the framework based on experience. The parallel work by the ECB to simplify its approval processes is expected to complement the EBA's efforts, creating a more harmonised and efficient supervisory environment for IRB models in the EU.
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