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Q&As refer to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.

Please note that the Q&As related to the supervisory benchmarking exercises have been moved to the dedicated handbook page. You can submit Q&As on this topic here.

List of Q&A's

Prior state aid approval when using resolution tools

Does the use of resolution tools require a prior state aid approval?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Interaction between the State aid framework and the application of resolution actions

Could you please clarify the interaction of the State aid framework and the application of resolution actions in the context of Article 34 (3) and Recital 47 of Directive 2014/59/EU (BRRD)?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Procedural requirements of the sale of business tool with regard to state aid

How can an open and competitive sale process in accordance with the state aid rules be conducted in case of applying sale of business tool and fulfilling the provisions from Article 39(3)?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Eligibility as collateral where securitisation positions are issued by an SSPE belonging to the same group

What group entities are considered as “related” to the obligor for the purpose of the second sub-paragraph of Article 207(2) of Regulation (EU) No 575/2013 (CRR)? In particular, does this apply to securitisation special purpose entities (SSPE)?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Application of Article 159 on the level of total own funds

Can the excess of provisions for non-defaulted exposures be used to cover the shortfall of provisions on defaulted exposures?On the reporting side, which of the two options is the correct way for the own funds reporting (C 04.00) in the following case?Option 1 – netting in C.01.00 row 380 “(-) IRB shortfall of credit risk adjustments to expected losses“ – (1000) row 910 „IRB Excess of provisions over expected losses eligible“ – 600 Effect to the total capital – minus 400Option 2 – no netting at all (no recognition of any excess because it is on defaulted exposures) row 380 “(-) IRB shortfall of credit risk adjustments to expected losses“ – (1000) row 910 „IRB Excess of provisions over expected losses eligible“ – 0 Effect to total capital – minus 1000 

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Appropriate amount in Article 8(4)

What is meant by “appropriate amount” referred to in Article 8(4) DGSD?

  • Legal act: Directive 2014/49/EU (DGSD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ECAI ratings

1) For the determination of the risk-weight applicable to an exposure, is a “Bank Deposit Rating” an issue rating as per Article 139 of the CRR? 2) For the determination of the risk-weight applicable to an exposure, should a “Bank Deposit Rating” be used instead of an “Issuer rating” for exposures to institutions which are in the form of deposits (i.e. bank deposits)? What would be the treatment in accordance with Article 139 of the CRR?3) For instance, which Moody’s rating should be used to risk-weight an exposure to an institution which is in the form of a deposit (i.e. bank deposit): - the “Issuer Rating”? - the “Bank Deposit Rating”? - the “Obligation rating”? - one of the other ratings described in Moody’s methodology? Similar considerations apply to ratings issued by other ECAIs.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Treatment of "E-money" in Liquidity Reporting

We seek clarification on how the issue of “e-money” is to be treated in the computation of liquidity requirements and reporting; “LCR, stable funding reporting and ALMM”.From a liquidity related context, would the issued “e-money” be accounted for/treated according to “Article 421(1)” of CRR under retail deposits? And therefore, be included in the computation of demand deposits, where the outflow is stressed with 5% according to “Article 421(1) (a)? Or stressed with 10% following “Article 421(2), in relation to whether a customer has an established relationship with the bank and is covered by the “Deposit Guarantee Scheme”?Alternatively, would the issued “e-money”, from a liquidity related perspective be accounted for under “Other Liabilities” according to “Article 422 of CRR? Hence, entail the computation of “Other Liabilities” as per “Article 422(5), where outflows are stressed with 40% and 20% respectively? Depending on whether the commitment/liability is covered by the “Deposit Guarantee Scheme”?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: EBA/GL/2013/01 - Guidelines on retail deposits subject to different outflows for purposes of liquidity reporting

Incentives to redeem of a hybrid instrument with a call for grandfathering purposes

Article 489 of Regulation (EU) No 575/2013 (CRR) provides for the grandfathering treatment of hybrid instruments with a call and an incentive to redeem. A bank has issued a bond with a fixed coupon before the first call date and a floating rate coupon after the first call date. The credit spread of the fixed coupon as of the issuance date is the same as the margin of the floating rate coupon after the first call date, so there is no immediate step-up there. However, the floating rate coupon is floored at the level of the fixed rate coupon. Does this constitute an incentive to redeem ?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

Obligation to carry out analysis and to consult with EBA on planned increase of risk weights before RTS on this matter are finally adopted and published in the Official Journal of the European Union

Is there an obligation to carry out appropriate analysis and to consult with EBA on planned increase of risk weights since RTS on this matter are not finally adopted and published in the Official Journal of the European Union?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Distribution by an originator to its shareholders of a participation instrument the pay out of which is directly linked to the net cash flows under the net economic interest retained

Would a credit institution acting as originator in relation to a securitisation and holding the net economic interest pursuant to Article 6 Regulation 2017/2402 be in breach of Article 12 of Regulation (EU) 625/2014 if such credit institution decides to issue to its shareholders, free of charge, a participation instrument the pay out of which is directly linked to the net cash flows under the net economic interest retained by the originator?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 625/2014 - RTS on requirements for investor, sponsor, original lenders and originator institutions of transferred credit risk exposures

Scope of asset value correlation adjustment for regulated entities

Should Undertakings for Collective Investment in Transferable Securities (UCITS) be treated as “subject to prudential regulation in the Union,” such that credit exposures to UCITS are only subject to the Asset Value Correlation (AVC) adjustment where the total assets of the counterparty on an individual or consolidated basis exceed EUR 70 billion? Should third country funds which are regulated on a comparable basis to UCITS (for example, US Investment Act 1940 funds, Employee Retirement and Income Security Act funds) receive the same treatment ?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Leverage ratio - Add-on calculation for SFT transactions in Financial collateral simple method

In the example below, under Financial Collateral Simple Method would the add-on be the same as under Article 429e(2) of the CRR, that is 25, or should it be based on (1025 * 0.20) = 205 – 200 (1000 * 0.20), that is 5?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Interpretation of Article 88(1) and 89(1) BRRD with respect to the scope of resolution colleges for third country institutions or third country parent undertakings

Is an Article 88 resolution college required for a subsidiary of a third country parent undertaking where that subsidiary itself has subsidiaries in other Member States? If so, is an Article 89 European resolution college also required? In particular, where there is an unrelated sister subsidiary of the third country parent undertaking in another Member State, will both an Article 89 BRRD European resolution college (covering the entire presence of the third country parent undertaking in the Union) and an Article 88 BRRD resolution college (covering any subsidiary which itself has subsidiaries in other Member States) need to be established?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Can third country insurance companies be considered as unregulated financial entities

If a third country insurance or re-insurance is considered as not subject to "prudential supervisory and regulation requirements at least equivalent to those applied in the union" (as stated in article 142 (4) ) should we definitely consider this entity as neither "large financial sector entity" neither "unregulated financial sector entity" as defined under article 142 (4) and (5) ? Indeed the definition of "unregulated financial sector entity" ("an entity that is not a regulated financial sector entity but that performs, as its main business, one or more of the activities listed in annex I to directive 2013/36/EU or in annex I to directive 2004/36/EC") does not cover insurance activities.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Third country equivalent large financial sector entities

If the Implementing Act of the EU has stated equivalent third countries for investment firms, exchange and credit institution there is no such a list for insurance and re-insurance companies.Nevertheless, if we understand that CRR contains no list of equivalent countries for insurance and re-insurance companies, or no recommendations on EBA to produce such a list, institutions need clear guidelines if they want to correctly apply article 142 (4) of CRR.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Credit Risk – treatment of Russian credit institutions

1. Please advise whether Russian Credit Institutions are to be treated as an "Institution" or ‘Corporate client’, considering Article 107, paragraph 3 definition:"For the purposes of this Regulation, exposures to third- country investment firms and exposures to third country credit institutions and exposures to third country clearing houses and exchanges shall be treated as exposures to an institution only if the third country applies prudential and supervisory requirements to that entity that are at least equivalent to those applied in the Union."2. Does definition of an "Institution" in Article 107(3) definition only refer to the capital requirement for credit risk?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Equivalence of third country supervisory and regulatory arrangements to those applied in the Union

Who decides which third countries apply supervisory and regulatory arrangements at least equivalent to those applied in the Union? Unlike other articles in CRR (such as e.g. Article 114(7)), Article 212 does not explicitly empower the Commission to adopt, by way of implementing acts, and subject to the examination procedure referred to in Article 464.2, a decision as to whether a third country applies supervisory and regulatory arrangements at least equivalent to those applied in the Union.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

Equivalence of third country supervisory and regulatory arrangements to those applied in the Union

Who decides (after the transitional period, if applicable) which third countries apply supervisory and regulatory arrangements at least equivalent to those applied in the Union in case the Commission does not make use of its power to adopt, by way of implementing acts, and subject to the examination procedure referred to in Article 464(2), a decision as to whether a third country applies supervisory and regulatory arrangements at least equivalent to those applied in the Union?The same question occurs with regard to Articles 107(4), 115(4), 116(5), 132(3) and 142(2) CRR.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

C 09.04, row 010, column 010 – Exposure value under the standardised approach for relevant credit exposures

Is the data model for the C 09.04 correctly specified in the 2.5.0.1 taxonomy?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)