EBF White Paper on Specialised Lending

EBF EBF White Paper on Specialised Lending

Brussels, 16 June 2026 - The European Banking Federation (EBF) has published its White Paper on Specialised Lending, warning that overly conservative prudential rules are pushing the financing of Europe's strategic assets out of the EU banking system.

The trend is already visible. In 2025, Chinese banks provided 50% of the funding for Airbus, an industry Europe once financed itself. Shipping tells a similar story: European banks' global ship-finance portfolios have fallen from USD 276 billion in 2014 to USD 152 billion in 2024, while Asia-Pacific lenders have expanded. With around two-thirds of corporate financing in Europe relying on the banking sector, transactions that are low-risk by nature, including aviation, shipping and project finance, are increasingly migrating towards less-regulated financiers outside the EU.

Specialised lending is a key asset class for the real economy, covering project finance, object finance, commodity finance and income-producing real estate. It underpins many of the EU's strategic objectives, from energy independence and the energy transition to shipping, aviation and core infrastructure such as digital networks and railways. Thanks to its bespoke and secured nature, with predictable long-term cash flows, comprehensive security packages and protective covenants, it is a low-risk asset class, yet since the finalisation of Basel 4 it has been met with unduly burdensome requirements that no longer reflect its true economic risk.

The evidence is striking. Global Credit Data shows that 71% of realised losses in project finance fall below the regulatory 25% LGD floor, and around three-quarters of historical losses in aircraft finance fall below the floor set for a typical loan, meaning the floors penalise the bulk of the portfolio rather than guarding against genuine outliers.

The paper sets out how these impediments can be addressed while maintaining prudential soundness, calling for urgent action to:

1. Allow flexible modelling for low-default portfolios such as specialised lending, consistent with Article 174 CRR.
2. Lower the LGD input floors for specialised lending, or at least maintain the current 50% transitional arrangement, and recalibrate regulatory LGD values under the F-IRB.
3. Improve collateral recognition under CRR Article 199 by reverting to an approach closer to the Basel standard.
4. Review the Slotting Approach to enhance risk sensitivity and recognise financial collateral.
5. Lower risk weights for high-quality project finance and object finance, and make the high-quality object finance transitional arrangement permanent, to make the Standardised Approach more risk sensitive.

The paper further calls for the transitional arrangement for unrated corporates under CRR Article 465(3) to be made permanent and for the output floor to be frozen, to prevent a disproportionate impact on specialised lending.

The EBF believes that restoring adequate risk sensitivity and recognising high-quality collateral, while maintaining prudential soundness, is essential to preserve the competitiveness and resilience of the European banking sector and its capacity to finance long-term investment in the European real economy.