The European Banking Authority (EBA) has launched a discussion paper on the regulatory measures needed to ensure a robust and clear framework for Internal Ratings Based (IRB) models. The discussion paper seeks stakeholders' feedback on both how to implement the necessary measures in a consistent way and how to bring forward future changes to the current approach. In addition, an overview of the regulatory measures that are under way is provided. The consultation runs until 5 May 2015.

The EBA work on IRB models will focus its work to improve the comparability of IRB models across institutions on three key areas: review of the IRB regulatory framework, supervisory consistency, which will include annual benchmarking exercises, and increased transparency based on standardised comparable templates. The Discussion paper details how these three strands of work will improve the IRB models, with a particular emphasis on the regulatory framework.

In order to improve the robustness of the current IRB approach and provide a higher degree of comparability across EU banks, a number of necessary regulatory changes have been identified by legislators and the EBA. The number of changes is however likely to result in a significant burden, especially in terms of approval and implementation. In order to ensure an orderly and efficient implementation of the necessary changes, the discussion paper provides clear prioritising and sequencing of the regulatory actions taken by the EBA in order to minimise the operational costs.