Single Rulebook Q&A

Question ID: 2015_2368
Legal act : Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 – CRR2
Topic : Supervisory reporting
Article: 99
Paragraph:
Subparagraph: FINREP
COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (as amended)
Article/Paragraph : Annex V, Part 1 / Paragraph 35 f
Type of submitter: Credit institution
Subject matter : FINREP: COUNTERPARTY BREAKDOWN: HOUSEHOLDS
Question:

Can Personal Investment Companies (PIC) be seen as households in the Finrep counterparty breakdown? Personal investment company (PIC) means an undertaking or a trust whose owner or beneficial owner, respectively, is a natural person or a group of closely related natural persons, which was set up with the sole purpose of managing the wealth of the owners and which does not carry out any other commerical, industrial or professional activity.

Background on the question:

It is not clear whether Personal Investment Companies should be classified in the Finrep as Households or as Other financial corportations.

Date of submission: 02/10/2015
Published as Final Q&A: 12/07/2019
EBA answer:

Annex V, Part 1.42 of Regulation (EU) No 680/2014 describes the six categories of counterparties according to FINREP. As mentioned in EBA Q&A 2015_1758 and Q&A 2017_3424, the European System of National and Regional Accounts (ESA 2010) has been used as a basis on which to report counterparty sector information in templates of Annexes III and IV.

For the specific case of a Personal Investment Company (PIC), the sectoral classification should be determined on a case-by-case basis, in line with the criteria of ESA 2010.

In particular, it is necessary to assess whether the PIC has “autonomy of decision” (ESA2010 2.12). If it has autonomy of decision, then it is an institutional unit and would fit the definition of “financial corporation” (i.e. it can be considered a market producer of financial services) and should therefore be classified under “other financial corporations” for FINREP purposes. If it does not have autonomy of decision, then it is not an institutional unit and paragraph 2.13(c) applies (“entities which, while keeping a complete set of accounts, have no autonomy of decision, are part of the units which control them;”), and should therefore be classified as a household.

Status: Final Q&A
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