Question ID
2020_5253
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Liquidity risk
Article
428h
Paragraph
1
Subparagraph
(c)
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
Not applicable
Type of submitter
Credit institution
Subject matter
Counterparties referred to in Article 428h (1) (c) CRR
Question
Does Article 428h (1) (c) of regulation 2019/876, amending Regulation No 575/2013, imply that the counterparty necessarily must be a bank? More specifically, would this condition also be met if the counterparty is a private limited liabilities company, which according to Regulation 575/2013 is not required to apply the NSFR?
Background on the question
Article 428h(1) of Regulation No 575/2013 as amended by Regulation (EU) 2019/876 (CRR) specifies conditions for preferential treatment within a group or within an institutional protection scheme. Of these four named conditions, (c) determines that “the counterparty applies a required stable funding factor that is equal to or higher than the higher available stable funding factor or applies an available stable funding factor that is equal to or lower than the lower required stable funding factor;”. As our institute has a private limited liabilities company as a counterparty, it is of great interest to understand better whether Article 428h (1) (c) applies to such a counterparty as well.
Submission date
Final publishing date
Final answer

Article 428h(1) of Regulation (EU) No 575/2013 (CRR) requires that all conditions specified in Article 428h(1) CRR are met.

While the list of eligible counterparties referred to in Article 428h(1)(a) CRR does not limit the application of this discretion to institutions, Article 428h(1)(c) CRR states that “the counterparty applies a required stable funding factor that is equal to or higher than the higher available stable funding factor or applies an available stable funding factor that is equal to or lower than the lower required stable funding factor”.

A counterparty that is not subject to the net stable funding requirement as referred to in Article 413(1) CRR and further specified in Title IV of Part Six of the CRR cannot fulfill the requirement of Article 428h(1)(c) CRR. Hence, since the NSFR only applies to institutions, and, at consolidated level, to the entities referred to in Article 11(2) CRR, only these entities are effectively in the scope of counterparties referred to in Article 428h(1)(a) CRR, and the discretion more generally.

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

Disclaimer

The Q&A refers 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.