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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.

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List of Q&A's

Scope of application of FINREP

Pursuant to article 99.2 CRR, institutions subject to Article 4 of Regulation (EC) No 1606/2002 and institutions other than those referred to in Article 4 of that regulation that prepare their consolidated accounts in conformity with the IFRS/IAS shall also report financial information. Shall an institution publishing its consolidated accounts in IFRS submit the reporting FINREP at its level when it is controlled by a parent financial holding company? It is worth noting that this institution applies the own funds requirements on the basis of the consolidated situation of the financial holding company in accordance with the article 11.2 of the CRR, and not on the basis of its own consolidated accounts. In addition this institution is not subject to own fund requirements at its level either on a sub-consolidated or on an individual basis.

  • 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Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
  • ID: 2015_2201
  • Topic: Supervisory reporting - FINREP (incl. FB&NPE)
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Transitional provisions on the introduction of IAS 19 revised

Which are the reporting dates that institutions should refer in the calculation of the applicable amount in accordance with 473 (2) of Regulation (EU) No 575/2013 (CRR)?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1197
  • Topic: Accounting and auditing
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Inclusion of expected loss for equity exposures in calculation of Expected loss amount reducing CET1

Shall the expected loss amount for equity exposures under the IRB approach be offset against the specific and general credit risk adjustments of all risk positions?If not, how shall they be treated? Does it has to be deducted from CET 1 in either case, also if there is a surplus increasing T2 according to Article 62 (d)?Does this also mean that EL for equity exposures shall be reported in CA4 row 140 respective 155 or not?

  • 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)
  • ID: 2014_1217
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Conditons to be fulfilled when netting positions in market risk of third countries

According to Article 325 (3) letter b CRR undertakings located in third countries have to comply, on an individual basis, with own funds requirements "equivalent to those laid down in this Regulation". To assess whether this condition is fulfilled by the third country institution, is it sufficient for the institution to look only on Article 92 CRR, or has the assessment to be based on e.g. Article 25, 51 et seq., 63 et seq, 102 and 325 CRR or even on the CRR as a whole? In particular, is there a relation to the Commission´s delegated act on third country equivalence that will be issued by the end of 2014? Once the delegated act on third country equivalence is issued, will supervisors and institutions be able to treat exposures to the third countries mentioned therein as equivalent without effecting further analyses under Article 325 (3) letter b CRR? With regard to Article 325 (3) letter c CRR: what proof of evidence is deemed necessary to assess the fulfillment of this condition? Is this Article fulfilled if a lawyer located in the respective third country states that there is no regulation in place which might significantly affect the transfer of funds within the group? Does this opinion have to be given e.g. by a lawyer resident in the home country of the third country institution or the country of the institution wanting to apply Article 325 CRR or the third country regulator? As we are of the opinion that letter c is hard to be fulfilled (or rather evidence is hard to provide) we would like to understand the rationale behind this condition.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1323
  • Topic: Market risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Treatment of subordinated loans in respect of Art 133 (3) CRR

Could you please confirm that subordinated loans according to Art 62.a CRR, which are acknowledged as Tier 2 are not regarded as equity exposures according to Art. 133.3 CRR.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1384
  • Topic: Own funds
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Balance Sheet Netting as a CRM technique

Is Balance Sheet Netting according to Article 195 limited to Cash Balances in the same currency?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1413
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Groups including investment firm(s) referred to in Article 95(1) and investment firm(s) referred to in Article 96(1) and not including credit institutions.

What method of calculating the own funds requirement should be used when a group consists of both 95(1) and 96(1) investments firm and no credit institutions?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1414
  • Topic: Own funds
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Conditions to benefit from the 4% risk weight in Article 305(3) and treatment in Article 306

Does the application of the 4% risk weight referred to in Article 305(3) presuppose that the omnibus model meets all requirements set out in Article 305(2) lit (a) to (d) CRR and article 305(3) CRR together? Or, is Article 305(3) CRR meant to replace the requirement in article 305(2)(a), which presupposes an individual style segregation model?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1485
  • Topic: Market infrastructures
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Activities subject to mutual recognition

What trading activities of credit institutions listed in Annex I of the CRD IV which are subject to mutual recognition, do gold, precious metals and other commodities trading activities of credit institutions, other than trading with derivative instruments on gold, precious metals and other commodities as underlying, belong to?

  • Legal act: Directive 2013/36/EU (CRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1552
  • Topic: Other issues
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Definition of the term „applicable amount“ with regard to the determination of the deductions from common Equity Tier 1 items of holdings by the institution of instruments of financial sector entities where the institution has a significant investment in those entities in Article 36(1)(i)) CRR

What is the relevant definition of the „applicable amount” in Article 36(1)(i) of Regulation (EU) No 575/2013 (CRR) with regard to the determination of the deductions of holdings by the institution of the Common Equity Tier 1 instruments of financial sector entities where the institution has a significant investment in those entities and for those entities the institution used the equity method under Regulation (EC) No 1606/2002 on a consolidated basis?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1568
  • Topic: Own funds
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

FINREP

According to the Financial Conduct Authority in the United Kingdom, only groups that report under International Financial Reporting Standards (IFRS) are subject to FINREP. However, the EBA has issued templates and instructions for groups that report under National GAAP. Therefore the EBA is indicating that groups must submit FINREP reports regardless of whether they report under IFRS or National GAAP. Please advise if groups reporting under National GAAP are required to provide FINREP submissions.

  • 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)
  • ID: 2014_1621
  • Topic: Supervisory reporting - FINREP (incl. FB&NPE)
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Determination of client for large exposures purposes regarding exposures constituted by non recourse financing of leasing-SPEs

1. Can a financing transaction where the institution contractually agrees to abstain from recourse to its legal obligor to the extent that payment obligations of a third party (the lessee) to the institution’s legal obligor (the lessor) are not fulfilled, i.e. where the institution takes over the credit risk stemming from its obligors´claims against a third party, be regarded as “other transaction where there is an exposures to underlying assets” within the meaning of Article 390(7) of Regulation (EU) No 575/2013 (CRR)?2. Is it admissible to regard the structure of such a transaction as not constituting an additional exposure to the leasing-SPE or any other third party within the meaning of Article 390(7) CRR in connection with Article 7(1) of Regulation (EU) No. 1187/2014 , where a. the payment flows from the underlying asset to the investing institution are separated from the leasing-SPE, in a way that the exposures to the lessee are managed by the leasing-SPE, but the payments are made by the lessee directly to an account of the leasing-SPE kept at the institution on which the institution has a lien according to its general terms and conditions of business, and b. the SPE is bankruptcy remote, in particular according to the documented and detailed information available to the institution, the bankruptcy of the parent company should only have a negligible influence on the leasing-SPE?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1635
  • Topic: Large exposures
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Risk weight of guarantees not in the domestic currency of the borrower

What is the correct risk weight of a loan, which has been granted to a client in euro, and guaranteed by an EU central government also in euro, but the domestic currency of the borrower is not euro?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1697
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Assignment of irrevocable standby letters of credit and guarantees, which neither have the character of credit substitutes nor are related to trade finance, to the relevant risk category according to Annex I of the CRR.

Are irrevocable standby letters of credit and guarantees, which neither have the character of credit substitutes nor are related to trade finance, assigned to the risk category ‘medium risk’ according to Annex I?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2015_1728
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Calculation and reporting of own funds requirement for Market risk: Foreign exchange risk

According to article 351 of CRR the own funds requirement for foreign exchange risk shall be the sum of its overall net foreign-exchange position and its net gold position in the reporting currency, multiplied by 8 % while in article 352 (4) of CRR the net foreign exchange position is calculated as follow: “ Net short and long positions in each currency other than the reporting currency and the net long or short position in gold shall be converted at spot rates into the reporting currency. They shall then be summed separately to form the total of the net short positions and the total of the net long positions respectively. The higher of these two totals shall be the institution's overall net foreign-exchange position.” It seems that according to article 351 the institution should calculate two different Positions subject to capital charge: the first one for exposures in foreign exchange currencies and the second one for gold and calculate as a consequence two different own fund requirement - according to Eba template design. While according to calculation described in article 352 it seems that the institution should calculate only one Position subject to capital charge that considers foreign exchange currencies and gold too; as a consequence in order to fill in the EBA templates that requires all information splitted in different rows, the institution should provide a breakdown of the total value previously calculated according to a proportion. In this case how should the institution calculate this proportion? According to this different approaches it is possible to obtain two different results (in terms of total own fund requirement), here below an example: Article 351: Net long positions Net short positions MAX – position subject to capital charge Foreign exchange currencies 70 50 70 Gold 60 60 Total 130 Article 352 (4): Net long positions Net short positions MAX – position subject to capital charge Foreign exchange currencies 70 50 Gold 60 Total 70 110 110 According to the first approach the institution will obtain a higher Position subject capital charge. Which approach shall we use?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2015_1745
  • Topic: Market risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Covered bonds issued by non-EEA member states

In the context of two identical covered bonds, the first issued by a French bank and qualifying for covered bond status, and the second issued by a Canadian bank identical in all other respects, can the latter one be treated as a covered bond under the third country equivalence decision or can covered bonds only be issued by credit institutions having their registered office located in a Member State?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2015_1767
  • Topic: Securitisation and Covered Bonds
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Applicable exposure class for exposures to institutions based in a third country that does not apply prudential supervisory and regulatory requirements

For those institutions based in a third country that does not apply prudential supervisory and regulatory requirements at least equivalent to those applied in the Union, should the exposure class to these institutions be disclosed as an exposure to corporate or exposure to institution? 

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2015_1806
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Requirements for financial collateral (Covered Bonds)

Article 207(2)(2) states that "Securities issued by the obligor, or any related group entity, shall not qualify as eligible collateral. This notwithstanding, the obligor's own issues of covered bonds falling within the terms of Article 129 qualify as eligible collateral when they are posted as collateral for a repurchase transaction, provided that they comply with the condition set out in the first subparagraph". Whereas the first sentence includes securities issued by "any related group entity", the second sentence which acts as the carve out, omits such securities. Is this an intended ommission?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2015_1858
  • Topic: Securitisation and Covered Bonds
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022