Question ID
2024_7241
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Supervisory reporting - FINREP (incl. FB&NPE)
Article
430
Paragraph
FINREP Guidance
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Regulation (EU) 2021/451 – ITS on supervisory reporting of institutions (repealed)
Article/Paragraph
FINREP Guidance
Type of submitter
Other
Subject matter
FINREP Template F01.01
Question

We would like to seek clarification regarding the classification of repurchase agreements (repos) in the context of the FINREP reporting framework.
Specifically, we am inquiring whether repurchase agreements with a maturity of less than or equal to one day, where the counterparty is a credit institution, can be reported under row 0040 (Other demand deposits) in report F01.01.

Background on the question

In the process of preparing our FINREP reports, we have encountered a classification question regarding short-term repurchase agreements (repos) with credit institutions. Specifically, we are reviewing the appropriate categorization of repos with a maturity of one day or less within the F01.01 report structure.
Our current understanding of the FINREP framework suggests that such short-term repos might potentially be classified under row 0040 (Other demand deposits) in report F01.01. However, given the specific nature of repo transactions and their importance in liquidity management, we want to ensure we are applying the correct classification methodology in line with regulatory expectations.
Question: We respectfully request clarification on whether repurchase agreements meeting the following criteria can be reported under row 0040 (Other demand deposits) in report F01.01:
1.    The repo has a maturity of less than or equal to one day
2.    The counterparty is a credit institution
Additionally, if this classification is not appropriate, we would greatly appreciate guidance on the correct reporting category for such short-term repos within the FINREP framework.

Submission date
Final publishing date
Final answer

According to the Commission Implementing Regulation (EU) 2021/451 (ITS), Annex V, Part 2, paragraph 85, letter e): 'Reverse repurchase loans’ shall include finance granted in exchange for securities or gold bought under repurchase agreements or borrowed under securities lending agreements as defined in paragraphs 183 and 184 of this Part'

According to the ITS, Annex V, part 2, paragraphs 183 and 184: ‘Repurchase agreements’ (‘repos’) shall be transactions in which the institution receives cash in exchange for financial assets sold at a given price under a commitment to repurchase the same (or identical) assets at a fixed price on a specified future date [....]. Repurchase agreements’ (‘repos’) and ‘reverse repurchase loans’ (‘reverse repos’) shall involve cash received or loaned out by the institution'. 

Under IFRS, a repo transaction does not lead to the derecognition of the financial asset provided as collateral, but a repo liability (debt) is accounted for by the reporting institution in counterparty of the cash received (representing the obligation to reimburse the cash). A repo transaction does not lead to the recognition of a repo asset.

Consistently with the definition and the accounting treatment of repo transaction, under a reverse-repo transaction, the reporting institution loans cash in exchange for financial assets bought at a given price under a commitment to resell the same (or identical) assets at a fixed price on a specified future date. In this transaction, the reporting institution accounts for a loan on the basis of the cash amount lent.

In template F 05.01, there is an ad-hoc row 0050 where all reverse repo transactions shall be reported, regardless of the maturity and the counterparty. Therefore, these transactions should not be reported in row 0010 of F 05.01.

Consistently with this approach, in template F 01.01, the reverse repo transactions should be reported as 'loan' in the relevant accounting portfolio following the applicable accounting rules, outside the row 0040 'Other demand deposits'. Indeed, the reverse repo transactions do not match the definition of 'other demand deposits' in Commission Implementing Regulation (EU) 2021/451, Annex V, part 2, paragraph 3 that are 'loans and advances that are balances receivable on demand with credit institutions'.

Status
Final Q&A
Answer prepared by
Answer prepared by the EBA.

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