EBA Consults on Shadow Banking Exposure Limits

The EBA has launched a consultation on revised Guidelines governing banks’ exposures to shadow banking entities under CRR III — marking the first major update to the framework since 2015.

The revised Guidelines aim to strengthen how banks identify, monitor, and limit exposures to non-bank financial entities conducting bank-like activities outside the regulated perimeter.

Key proposed changes:

• replacing the current exposure limit basis from “eligible capital” to the narrower “Tier 1 capital” measure
• removing the existing 0.25% materiality threshold to simplify reporting and align with the updated CRR III framework
• aligning the Guidelines with the 2024 RTS introducing harmonised criteria for identifying shadow banking entities
• maintaining the existing “principal approach” and “fallback approach” for exposure limits while reinforcing governance and risk management expectations.

Importantly, the EBA is not yet introducing stricter hard quantitative caps.

However, under the fallback approach, institutions would still generally apply an aggregate limit of:
• 25% of Tier 1 capital

The EBA is also collecting evidence on whether tighter aggregate or individual limits may be needed in the future, with a broader assessment expected by the end of 2027. 

Consultation open until 9 July 2026.