Use of conversion factor estimates appropriate for economic downturn
Article 55
When assessing whether the requirement to use conversion factor estimates that are appropriate for an economic downturn as laid down in point (b) of Article 182(1) of Regulation (EU) No 575/2013 is fulfilled, competent authorities shall verify that: (a) the institution uses conversion factor estimates that are appropriate for an economic downturn, where those are more conservative than the long-run average; (b) the institution provides both the long-run averages and the conversion factor estimates appropriate for an economic downturn for justification of its choices; (c) the institution applies a rigorous and well documented process for identifying an economic downturn and assessing its effects on the drawing of credit limits and for producing conversion factor estimates appropriate for an economic downturn; (d) the institution incorporates in the conversion factor estimates any adverse dependencies that have been identified between on the one hand the selected economic indicators and on the other hand the drawing of credit limits.