In F_09.01.1 all off-balance sheet exposures listed in Annex I of CRR (both revocable and irrevocable commitments) shall be reported broken down by counterparty sectors and broken down by type of commitments (loan commitments, financial guarantees, and other commitments).

Question 1

In FINREP, the counterparty sector allocation shall be based on the nature of the immediate counterparty.

The instructions clearly define the immediate counterparty for trade receivables (on-balance sheet exposures from factoring contracts).

"44. The immediate counterparties in the following transactions shall be:

1. for loans and advances, the immediate borrower. For trade receivables, the immediate borrower shall be the counterparty obliged to pay the receivables, except in transactions with recourse, where the immediate borrower shall be the transferor of receivables where the reporting institution does not acquire substantially all the risks and rewards of ownership of the transferred receivables;"

However for off-balance sheet exposures, the instructions are the following:

7. "for loan commitments and other commitments given, the counterparty whose credit risk is assumed by the reporting institution;"

It is not clear who shall be considered as the immediate counterparty for off-balance sheet exposures from factoring contracts. The factoring client (transferor of receivables) or the account debtor (counterparty obliged to pay the receivables)?

In our experience institutions report off-balance sheet exposures (any undrawn purchase commitments) from factoring contracts (both with and without recourse) in F_09.01.1, but reporting practices are not uniform.

There are institutions which book and report all off-balance sheet exposures from factoring contracts (both with and without recourse) as assigned to the factoring client.

However there are also institutions which report according to the following:

1. In their view, in case of factoring contracts without recourse, the institution cannot make any claims against the factoring client and the risk partner is the account debtor. Therefore the off-balance sheet exposure (debtor limit) is booked and reported as assigned to the account debtor.
2. While in case of factoring contracts with recourse, the risk partner is the factoring client.

Question 2
Regarding the breakdown by type of commitments, where should these off-balance sheet exposures (undrawn purchase commitment) from factoring contracts be reported? In our experience, most of the institutions report these commitments in row 0010 “Loan commitments given”, however some institutions report in row 0170 “Other commitments given”.