Recital 8

(8)Regulation (EU) No 575/2013 implements the internationally-agreed standards of the Basel Committee on Banking Supervision third International Regulatory Framework for banks ² (hereinafter referred to as ‘Basel III’). Therefore, the appropriate rules on credit risk adjustments should also be consistent with the Basel framework which provides that one of the criteria for the distinction between General Credit Risk Adjustments and Specific Credit Risk Adjustments has to be that general provisions or general loan-loss reserves are ‘freely available to meet losses which subsequently materialise’. According to Basel III, provisions or loan-loss reserves held against future, presently unidentified losses are freely available to meet losses stemming from credit risk which subsequently materialise and therefore qualify for inclusion within Tier 2 capital. In addition, amounts included in the calculation of General Credit Risk Adjustments should be fully available, with regards to timing and amount, to meet such losses, at least on a gone-concern basis where capital is able to absorb losses in insolvency prior to depositors losing any money.