New EU banking supervision templates 2026: what changes for banks with internal models

Key data

Banks with approved internal models in the EU have a marked date: 1 September 2026. On that day, Implementing Regulation (EU) 2026/1872 enters into force, updating the technical standards for the supervisor benchmarking exercise and replacing five key annexes of Regulation 2016/2070. The change is not cosmetic: it affects the forms, reference portfolios and instructions that entities must use to report to their supervisors.

The regulation also incorporates the changes introduced by Directive 2024/1619 regarding ESG risks, adding a new dimension to the supervision exercise. For risk and compliance teams, this means reviewing both reporting systems and internal exposure classification.

What does this regulation establish?

Regulation 2026/1872 modifies the technical implementation standards of Regulation 2016/2070, which regulates the annual supervisor benchmarking exercise for banks in the EU. This exercise allows authorities to compare the results of internal models from different entities to detect unjustified divergences in capital calculations.

The specific changes are as follows:

It is directly applicable in all EU Member States without the need for national transposition.

Economic and operational impact

The most immediate impact is operational: risk, regulatory and technology teams must update reporting systems to adapt to the new annexes (II, V, VI, VII and X) before 1 September 2026. This involves reviewing templates, completion instructions and, in many cases, data extraction and validation processes.

From a strategic perspective, there are two relevant impacts:

• Temporary reduction in reporting burden: Until 1 January 2027, entities that only have IRB models (credit risk) are outside the scope of the exercise. This represents temporary relief for a relevant segment of the sector.
• New ESG dimension in reporting: The incorporation of ESG risks in accordance with Directive 2024/1619 anticipates greater supervisory pressure on how internal models capture these risks. Entities that have not advanced in integrating ESG factors into their models will need to accelerate this.
• Alignment with Regulation 2024/3117: Entities with IRB models must review whether their current exposure classes match the new templates. Misalignment can generate inconsistencies in reporting and supervisory observations.

Who is affected?

• Banks and credit institutions with approved IMA model for market risk: affected from 1 September 2026, with the obligation to use the new templates in the next benchmarking exercise.
• Entities with IRB models for credit risk: must align their exposure classes with Regulation 2024/3117; their participation in the benchmarking exercise is temporarily suspended until 1 January 2027.
• Risk, regulatory and technology teams of entities supervised in the EU: responsible for implementing changes in reporting systems and processes.
• CFOs and compliance officers of banking groups with presence in multiple Member States: the regulation is directly applicable throughout the EU, so there are no national variations.
• Consulting and audit firms advising financial entities on the annual supervisor benchmarking exercise.

Practical example

A medium-sized Spanish bank with an approved IMA model for market risk and an IRB model for credit risk faces the following situation:

• Market risk (IMA): Must participate in the benchmarking exercise from 1 September 2026 using the new templates and reference portfolios. Its regulatory team must update reporting systems to reflect the new Annexes II, V, VI, VII and X before that date.
• Credit risk (IRB): Temporarily outside the scope of the exercise until 1 January 2027. However, it must already review the alignment of its exposure classes with the templates of Regulation 2024/3117, because from that date it will have to report with the new structure.
• ESG: If its internal models do not yet incorporate ESG factors in accordance with Directive 2024/1619, the next supervisory cycle may generate observations or improvement requirements.

In practice, this bank has a three-month window (September-December 2026) to prepare for complete adaptation before the scope of the exercise expands in January 2027.

What should entities do now?

1. Identify immediate scope: Confirm whether the entity has an approved IMA for market risk. If so, the obligation to use the new templates is effective from 1 September 2026.
2. Update reporting systems: Review and adapt internal systems to incorporate the new Annexes II, V, VI, VII and X of Regulation 2016/2070, as modified by Regulation 2026/1872.
3. Review IRB exposure classes: Compare the current classification of credit exposures with the templates of Regulation 2024/3117 and identify misalignments before 1 January 2027.
4. Evaluate ESG risk integration: Analyze the extent to which internal models already capture ESG risks in accordance with Directive 2024/1619 and plan necessary adjustments.
5. Coordinate with the supervisor: Consult with the competent supervisor (ECB or national authority) if there are doubts about the application of the new reference portfolios or instructions.
6. Document changes: Formally record the adaptations made to models, systems and processes to facilitate supervisory review.

Official source

Consult complete regulation in official source (EUR-Lex, CELEX:32026R1872)

Disclaimer: This article is for informational purposes only and does not constitute legal advice. For specific decisions, consult a qualified professional. Source: https://eur-lex.europa.eu/./legal-content/AUTO/?uri=CELEX:32026R1872