Europe’s new default rules: a defined benefit?

EBA’s single definition of default will have multiple effects for credit risk management, say consultants from PwC

Faced with disparate practices across member states, the European Banking Authority has harmonised the definition of a borrower being declared in default. The revised definition of default is coming into force at the end of 2020 – if not sooner, depending on discussions between individual banks and their local supervisors.

The new definition applies to all lenders in the European Union, whether on the standardised approach or on the internal ratings-based (IRB) approach for calculating credit