1.Institutions shall adjust the risk-weighted exposure amounts for non-defaulted exposures to an SME (RWEA), which are calculated in accordance with Chapter 2 or 3 of Title II of Part Three, as applicable, in accordance with the following formula:
\mathrm{RWEA}^* = \mathrm{RWEA} \cdot \frac{\min \{\mathrm{E}^* ; \mathrm{EUR\,2\,500}a, 000\} \cdot 0.7619 + \max \{\mathrm{E}^* - \mathrm{EUR\,2\,500}a, 000 ; 0\} \cdot 0.85}{\mathrm{E}^*}
where:
RWEA* = the RWEA adjusted by an SME supporting factor; and |
E* = the total amount owed to the institution, its subsidiaries, its parent undertakings and other subsidiaries of those parent undertakings, including any exposure in default, but excluding claims or contingent claims secured on residential property collateral, by the SME or the group of connected clients of the SME. |
2.For the purposes of this Article:
the exposure to an SME shall be included either in the retail or in the corporates or secured by mortgages on immovable property classes;
an SME is defined in accordance with Commission Recommendation 2003/361/EC 30; among the criteria listed in Article 2 of the Annex to that Recommendation only the annual turnover shall be taken into account;
institutions shall take reasonable steps to correctly determine E* and obtain the information required under point (b).