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List of Q&A's

Prudential Classification of Repo Transaction

What treatment for market risk capital requirement should be adopted for repos included in an A-IMA trading desk where those repos are used for funding of trading positions and valued at accrual and thus excluded from the regulatory trading book, following Basel Committee’s provision?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2024_7071
  • Topic: Market risk
  • Date of submission:
  • Published as Rejected Q&A: 28/05/2024

Validation rules of templates F 24.01 and F 24.02 specifically EGDQ_0665, EGDG_0666, XBRL v8035_m and XBRL v8052_m. These validations impose that the closing figures of the prior financial year end should tally with the opening figures of the current reporting quarter without allowing for reclassifications or changes of the counterparties’ reporting criteria segregated in F 24.01 and F 24.02, namely collateral type, and SME criteria.

For accounts which do not have a change in non-performing status, how are changes in collateral and/or SME status of the counterparty are to be reported in F 24.01 and F 24.02, since validation rules of templates F 24.01 and F 24.02, specifically EGDQ_0665, EGDG_0666, XBRL v8035_m and XBRL v8052_m, cannot all be complied with simultaneously when such changes occur after the previous financial year end?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2021/451 – ITS on supervisory reporting of institutions
  • ID: 2024_7070
  • Topic: Supervisory reporting - FINREP (incl. FB&NPE)
  • Date of submission:
  • Published as Rejected Q&A: 31/05/2024

Provision of external payroll accounting services to an employer

Does the activity of external payroll processing for an employer constitute a payment service under PSD2, if it consists of receiving funds for wages and related deductions (taxes, health and social insurance) in the payroll processor’s payment account from the employer, and transferring these to employees, tax authorities, insurance companies etc.? Would the answer change depending on whether the payroll processor  maintains an account separately for each employer?   

  • Legal act: Directive 2015/2366/EU (PSD2)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2024_7065
  • Topic: Authorisation and registration
  • Date of submission:

Unrated short term claim/exposure

As per CRR Article 120(para 3, subpara c), it states: "If there is a short-term assessment and such an assessment determines a less favourable risk weight than the use of the general preferential treatment for short-term exposures, as specified in paragraph 2, then the general preferential treatment for short-term exposures shall not be used and all unrated short-term claims shall be assigned the same risk weight as that applied by the specific short-term assessment." Question: 1. Is the term claim and exposure used interchangeably and mean the same?                   2. What is meant by unrated short term claim in this paragraph? If there is a general issuer rating available for the counterparty, but no issue specific rating for the exposure to the counterparty, will the exposures with residual maturity of less than 3 months be classed as Unrated and not eligible for preferential risk weight treatment as per CRR Article 120 (2)?                   3. Also, for ex- if the bank has trading book exposure to this institution for exposure less than 3 months. But this institution has issued short term debt, but the bank has no exposure to it, in that case which rating will be used to risk weight the exposure in the trading book. Will it be the issuer rating or short term debt rating the institution has issued which the bank has no exposure?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Draft ITS on Supervisory Reporting of Institutions
  • ID: 2024_7064
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 15/06/2024

Template 2 – Total gross carrying amount reported in column A

Should column a be equal to sum (columns b to g + o)*(1- column p) as per XBRL validation rule?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2022/2453 - ITS on ESG disclosures
  • ID: 2024_7063
  • Topic: Transparency and Pillar 3
  • Date of submission:
  • Published as Rejected Q&A: 28/06/2024

Template 5 – Total gross carrying amount reported in column B

Which gross carrying amount should be reported in column b? Should it be the total of the exposures by sector as reported in Template 1 or should it be the total of columns c to f?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2022/2453 - ITS on ESG disclosures
  • ID: 2024_7062
  • Topic: Transparency and Pillar 3
  • Date of submission:
  • Published as Rejected Q&A: 28/06/2024

Definition of 'explicit guarantee arrangements' for the purpose of classification of non-commercial undertakings as public sector entities

What conditions should be met by a given agreement in order to qualify as an 'explicit guarantee arrangement'? Shall the ‘explicit guarantee arrangements’ for the purpose of definition of public sector entities also be ‘guarantees’ eligible as unfunded credit protection or not? How much should the guarantee cover?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2024_7061
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 15/06/2024

Fair-valued assets and liabilities excluded because of partial impact on CET1 – Prudential Filters

Template C32.01 Prudent valuation. Fair-Valued assets and liabilities requires the Prudential filters Fair-valued assets and liabilities excluded because of partial impact on CET1 (col 0050) to be reported in accordance with Article 4(2) of Delegated Regulation (EU) 2016/101 due to the transitional application of the prudential filters referred to in Articles 467 and 468 of Regulation (EU) No 575/2013. Since Articles 467 and 468 of Regulation (EU) No 575/2013 are related to COVID transitional fix items, should the institution report 0 in this column until the guidance is updated?   Additionally, validation v6566 related to this template, states that values reported for Fair-valued assets and liabilities excluded because of partial impact on CET1 – Prudential Filters (c0050) have to be equal to or higher than 0. Could you please confirm if this validation is applicable in all the contra liability balances?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2024_7059
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 04/07/2024

Level of application of permissions for consolidated netting

How should the term 'consolidated basis' be read in Article 325b CRR? Should permissions in accordance with that article be granted only to the highest EU consolidating entity or is it possible to grant these permissions also to several EU sub-consolidating entities? If it is possible to apply this requirement also on a sub-consolidated basis, should the offsetting of the positions only refer to undertakings included in such an entity’s sub-consolidated group?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2024_7058
  • Topic: Market risk
  • Date of submission:
  • Published as final Q&A: 21/06/2024

Credit

Does this credit qualify as consumer credit, exclusively available to individual consumers? Or can it also be extended to legal entities?

  • Legal act: Directive 2015/2366/EU (PSD2)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2024_7056
  • Topic: Other topics
  • Date of submission:

LCR treatment of a committed facility provided to multiple borrowers

What is the LCR treatment of a committed credit facility provided to multiple borrowers where:each individual borrower might draw the full (undrawn) amount of the committed credit facility;all borrowers belong to the same overarching group which, from group perspective, would qualify as a non-financial corporate; whileone or more of the individual borrowers might qualify as a financial customer under Article 411(1) CRR on a stand-alone basis.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Delegated Regulation (EU) 2015/61 - DR with regard to liquidity coverage requirement
  • ID: 2024_7055
  • Topic: Liquidity risk
  • Date of submission:
  • Published as Rejected Q&A: 31/07/2024

LCR treatment of open maturity reverse repos which can be terminated at any point in time

By reference to EBA Q&A 2021_6163, are there some circumstances under which a bank could consider inflows from open reverse repos that  are not contingent for the purposes of its recognition in the LCR? 

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Delegated Regulation (EU) 2015/61 - DR with regard to liquidity coverage requirement
  • ID: 2024_7053
  • Topic: Liquidity risk
  • Date of submission:
  • Published as final Q&A: 03/05/2024

Interest flows

Interest flows for retail on sight accounts (without contractual maturity)

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2024_7052
  • Topic: Liquidity risk
  • Date of submission:

Alignment of the GAR Templates 7 and 8 with the templates used by the European Commission

According to the European Commission, in the COMMISSION DELEGATED REGULATION (EU) 2023/2486 of 27 June 2023, information on the six objectives must be reported. In addition, there are differences between the EC and Pillar 3 GAR templates, such as the absence of rows for financial corporations not subject to NFRD in Pillar 3, the presence of an "Of which adaptation" in column J, which is redundant as the objective in Pillar 3 is adaptation to climate change, and the presence of columns for the use of proceeds in the EC template, whereas the columns in Pillar 3 are for specialised lending. When will the Pillar 3 ESG reporting templates (6, 7, 8 and 9) be updated in line with those of the EC?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2022/2453 - ITS on ESG disclosures
  • ID: 2024_7049
  • Topic: Transparency and Pillar 3
  • Date of submission:
  • Published as Rejected Q&A: 28/06/2024

ESG P3 - Templates 9.1 and 9.2 Decision Tree KPI BTAR for Financial Corporations

According to the question 2023_6681, the Financial Corporation located outside European Union (EU) and Financial Corporation located in EU but not subject to NFRD disclosures exposures should be reported in the row 44 of the template 7 Other assets (e.g. Goodwill, commodities etc.). In which row/group of rows should be reported in the Template 9.1 - Mitigating actions: Assets for the calculation of BTAR and Template 9.2 - BTAR Since there are only specific rows for Non-Financial Corporation?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2022/2453 - ITS on ESG disclosures
  • ID: 2024_7048
  • Topic: Transparency and Pillar 3
  • Date of submission:
  • Published as Rejected Q&A: 28/06/2024

Definition of ICT services

Does the licensing of software by a third party to a financial entity for use on the financial entity's own premises meet the definition of "ICT services"

  • Legal act: Directive 2022/2556/EU (DORA)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2024_7046
  • Topic: Other DORA topics
  • Date of submission:
  • Published as Rejected Q&A: 19/07/2024

Definition of Financial Institution / Third Country Undertakings

Should the definition of "Financial Institution" as used in IFR be interpreted as excluding firms established in third countries unless otherwise expressly stated?

  • Legal act: Regulation (EU) No 2019/2033 (IFR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2024_7045
  • Topic: Prudential consolidation
  • Date of submission:
  • Published as Rejected Q&A: 26/04/2024

Net position risk - K-NPR

We understand that rTM measures are for firms that deal on their own account. The relevant K-Factor for position risk, K-NPR falls under rTM, therefore the assumption would be that K-NPR refers only to firms dealing on their own account. However, Article 21(4) sets out that for purpose of calculating the rTM K-factor requirement, firms should also include positions other than trading book positions where it gives rise to foreign exchange or commodity risk.  Does then Article 21(4)  bring firms that do not deal on their own account into the scope of K-NPR or is it an additional requirement only for firms that deal on their own account?

  • Legal act: Regulation (EU) No 2019/2033 (IFR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2024_7043
  • Topic: K-factor requirements
  • Date of submission:

ESG P3 - Template 5 validation rule v12726_m

Is the validation rules v12726_m correctly defined?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2022/2453 - ITS on ESG disclosures
  • ID: 2024_7041
  • Topic: Transparency and Pillar 3
  • Date of submission:
  • Published as Rejected Q&A: 09/04/2024

Alternative arrangements for variable remuneration in investment firms

Can the use of alternative arrangements for the payment of variable remuneration be approved where the use of instruments under art 32(1)(j) IFD is theoretically possible but might endanger the stability of the investment firm?

  • Legal act: Directive (EU) 2019/2034 (IFD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: EBA/GL/2021/14 - Guidelines on internal governance under Directive (EU) 2019/2034
  • ID: 2024_7040
  • Topic: Remuneration
  • Date of submission:
  • Published as final Q&A: 07/06/2024