Question
Buckets 2 and 11 of Table 4 in Article 325ah refer to the category of multilateral development banks (MDBs) and international organisations (IORGs) referred to in Article 117(2) or Article 118 of CRR. At the same time, paragraph 2 of the same article 325ah, requires the use of a classification that is commonly used in the market for grouping issuers by sector, in order to assign a risk exposure to a sector. Assuming that such a market wide accepted classification would show a certain counterparty as an MDB, as long as this specific counterparty is not listed in the above listed articles mentioned for buckets 2 and 11 of Table 4 in Article 325ah (as a one to one match) , then this counterparty would need to be assigned to a different bucket, likely 4 or 13. Can there be a departure from the specific list of MDBs and IORGs, as referred to in Article 117(2) or Article 118 of CRR, for the purpose of Table 4 in Article 325ah of CRR?
Background on the question
In the case of the Islamic Development Bank (IsDB or the Parent), the issuance of debt is not made directly by the MDB itself, but through a dedicated SPV issuer that is fully guaranteed by the Parent, the IsDB. This set-up is due to the way Islamic finance works, requiring asset-based financing. This is visible in the latest investors prospectus publish in June 2024, which details in page 24 the structure and participants to such issuances: https://www.isdb.org/sites/default/files/media/documents/2025-03/IsDB%20Investor%20Presentation%20%28April%202025%29.pdf?secureweb=Teams . Provided that Article 117(2) lists the IsDB and is not clear as to whether this refers to the IsDB Group or just the IsDB as a legal entity, one could assume that if a one to one match is not achieved, than the required condition for the use of bucket 2 and 11 is not met. At the same time, considering that the IsDB would not issue debt on its-own, but always use a dedicated SPV for this purpose, taking this stricter approach will never allow a match of such issuances to the exact names listed in Article 117(2) and would hence lead to a higher level bucket classification and hence to a bigger risk weight % requirement.
Answer
No, there cannot be any departure from the list referred to in Article 117 CRR. Accordingly, in the example provided, the debt issued by the SPV should not be considered as a debt issued by an entity listed in Article 117 CRR - hence, it should not be allocated to Buckets 2 and 11 of Table 4 in Article 325ah CRR.