EBA · 2013_170 Archive

Netting within cash pooling agreement used as part of cash management products

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
420, para. 1
Topic
Liquidity risk
Submitted by
Credit institution
Submitted
2013-08-19
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

Where customers have both assets and liability balances within a cash pooling agreement (supported by a credit netting agreement) can the balance within the cash pooling agreement be treated as either a single net asset (Article 425) or a net liability (Article 420) i.e. not treated gross?

Background

Cash pooling within a cash managment product.

Answer

Articles 422(6) and 425(3) of Regulation (EU) No 575/2013 (CRR) permit the netting of inflows and outflows expected over the 30 day horizon from relevant derivative contracts only. Other inflows shall be reported in accordance with Article 425, other outflows shall be reported in accordance with Article 420.  Netting within cash pooling agreements for other liquidity flows is not explicitly provided for in CRR for liquidity reporting purposes. Contractual inflows and relevant outflows should be treated individually to determine the applicable inflow and outflow rates.

Original source: European Banking Authority, Q&A ID 2013_170

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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