Response to consultation on draft Guidelines on the delineation and reporting of available financial means of DGS

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Question 1: Do you agree with the proposals for the criteria that QAFM should fulfil, i.e. on the exclusion of borrowed resources, the exclusion of contributions from QAFM that contain an obligation to be repaid upon receiving recoveries and keeping track of the origin of funds, as outlined in section 4.1 and 4.4 of the guidelines?

Yes, we agree, with both (i) the criteria to be met for qualifying as QAFM and (ii) the obligations related to keeping track of the funds origin. In Romania contributions (extraordinary or not) may not be subject to an obligation of the DGS to repay them upon receiving recoveries (once they are collected, they may not be repaid to members, irrespective of the case – e.g. the target level is exceeded).

Question 2: Do you agree with the proposed approach to allocate recoveries to QAFM and other AFM, as outlined in section 4.2 of the guidelines?

Yes, we agree with the proposed approach.
However, we could also agree with the alternative approach, since it seems:
- less complex - at any time, DGSs allocate total recoveries received from inception of the disbursement event to QAFM and other AFM according to their share of the financing mix in the initial disbursement event (the rule for inflows).
- more predictable - in the example presented, the total contributions to be levied over the six year period to meet the target level would be identical.
Yet, when the initial intervention is at least partially financed by other AFM (such as in the provided example) the full attribution of recoveries to QAFM is not justified and leads to the undesirable situation (as per point 26 of the draft Guidelines) in which QAFM would be inflated with funds stemming from borrowed funds that have to be repaid.

Question 3: In your view, is the alternative approach or any other approach to allocating recoveries better, with particular focus on the method’s a) suitability to respect the principles of QAFM set out in section 4.1 and 4.4 of the guidelines, b) and simplicity of application?

See above.

Question 4: Do you agree with the proposal that the treatment of administrative fees relative to QAFM does not need to be specified?

Yes, we agree with the proposal.

Question 5: Do you agree with the treatment of investment income relative to QAFM as proposed in section 4.3 of the guidelines?

Yes, we agree with the proposal.

Question 6: Do you agree with the proposed treatment of unclaimed repayments with regard to AFM?

Considering the current lack of clarity regarding the definition of “unclaimed repayments”, according to the EBA findings, also, having in view the potential immateriality of such amounts, we tend to agree not to specify the treatment of unclaimed repayments in the guidelines. However, in this situation we only see historical “unclaimed repayments”. If a DGS is in the very beginning of a process of paying compensation, we consider that the volume of “unclaimed yet repayments” could be significant and the amount should be deducted from the AFM.

Question 7: Do you agree with the proposed reporting of a) outstanding liabilities that have been incurred for the purpose of a DGS intervention, b) alternative financing arrangements and c) unclaimed repayments to the EBA and the publication of this information by the EBA as presented in section 4.4 of the guidelines?

We agree with the proposed reporting and publication of outstanding liabilities that have been incurred for the purpose of a DGS intervention, alternative financing arrangements and unclaimed repayments. Regarding the reporting of „unclaimed repayments”, considering the EBA conclusions on the lack of clarity regarding the definition, we consider that the reporting mechanism should also provide the necessary elements for inclusion in this category in order to ensure the comparability of the data to be reported by the DGSs.

Question 8: Do you consider that it would be beneficial to publish further data? If so, which data and for what reason?

N/A

Name of the organization

National Bank of Romania