Are development banks included in the definition of general government exposures (paragraph 42 (b) of Annex V ITS no. 680/2014) and should be reported in the template C33.00 General Government Exposures?
The information for the purpose of template C33.00 shall cover all exposures to ‘General governments’ as defined in paragraph 42 (b) of Annex V ITS no. 680/2014. Paragraph 42 defines the counterparty breakdown for FinRep and for the C033 Template. For development banks it must be decided if they qualify as general governments according to par. 42 (b) and should be reported in C33.00 or if they should be excluded from C33.00 reporting. According to Article 116(4) of CRR, in exceptional circumstances exposure to public-sector entities like development banks may be treated in CoRep reporting as exposures to governments if in the opinion of the competent authorities of this jurisdiction there is no difference in risk because of the existence of an appropriate guarantee by the government.
Among development banks, multilateral development banks shall be classified as “Credit institutions” according to Annex V, Part 1, paragraph 42(c) of the ITS on Supervisory Reporting. As such they are outside the scope of template C 33.00.For development banks that are not multilateral development banks, the sectorial classification will need to be determined on a case-by-case basis taking into account the definition of ESA 2010. The scope of template C 33.00 comprises all exposures for counterparty sector “General governments” as specified in the FinRep instructions (Annex V, Part 1, Article 42(b)). 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 (FinRep).
ESA 2010 specifies that the general government sector consists of all government units and all non-market non-profit institutions that are controlled by government units (paragraph 20.05).
Should the immediate counterparty be a development bank meeting the definition of general government in ESA 2010, the corresponding exposure shall be reported in template C 33.00.
Moreover, in the context of risk weighting under the Standardised Approach, Article 116(4) of Regulation (EU) No 575/2013 (CRR) states that: “In exceptional circumstances, exposures to public-sector entities may be treated as exposures to the central government, regional government or local authority in whose jurisdiction they are established where in the opinion of the competent authorities of this jurisdiction there is no difference in risk between such exposures because of the existence of an appropriate guarantee by the central government, regional government or local authority”.
It should be stressed that Article 116(4) of the CRR is not intended to change the allocation of the counterparty sector but only the applicable risk weight. Therefore, notwithstanding the treatment of public-sector entities under Article 116(4) of the CRR, the reporting of the exposures to these entities in template C 33.00 shall follow exclusively the nature of the immediate counterparty as per Annex V, Part 1, paragraph 42(b) and Part 3 of the ITS on Supervisory Reporting.