EBA: amendments to the guidelines on the definition of default

On 7 May 2026, the European Banking Authority (“EBA”) published the final report amending the guidelines on the application of the definition of default, developed in implementation of Article 178 of Regulation (EU) 2013/575 (the “CRR”), as amended by Regulation (EU) 2024/1623 (“CRR 3”), which mandates the EBA to review and update the Guidelines.

In particular, the principal amendments introduced concern the following aspects:

• with regard to non-recourse factoring, the reference period for the technical past-due treatment at the of individual invoice level has been extended from 30 to 90 days, with a view to better reflecting the operational features of invoice-based receivables and reducing the risk of incorrect default classification; and
• the guidelines have been aligned with the amendments introduced by CRR 3; and
• the adequacy of the 1% threshold applied to reductions in net present value (the so-called “NPV threshold”) has been confirmed as sufficiently flexible, risk-sensitive and consistent with the accounting framework, as well as aligned with the other thresholds used for the identification of default. An increase in the NPV threshold would risk undermining the efforts made after the financial crisis to reduce non-performing loans, with consequent significant operational costs.