Inclusion of indirect holdings in the large exposures regime

Amounts of holdings under Article 36(1)(h) or (i) of Regulation (EU) No. 575/2013 (CRR) that are not deducted from own funds are included in the calculation of the exposure value according to Article 390 for identifying large exposures according to Article 392 of this Regulation. The financial sector entity to which the institution is exposed because of the holding in its Common Equity Tier 1 instruments is the relevant "client" for the exposure included in the calculation of the exposure value for large exposures purposes. For the purposes of the large exposures regime, "exposures" are defined in Article 389 of the CRR as "any asset or off-balance sheet item referred to in Part Three, Title II, Chapter 2 of the CRR (i.e. Standardised Approach), without applying the risk weights or degrees of risk". Article 390(6)(e) of the CRR sets out that exposures deducted from Common Equity Tier 1 items or Additional Tier 1 items own funds in accordance with Articles 36 ,   and 56 and 66 of the CRR or any other deduction from those items that reduces the solvency ratio should shall not be included in the calculation of exposure values for large exposures purposes. Further, if amounts of holdings are not deducted from Common Equity Tier 1 items in accordance with Articles 46(4), 48(4) or 49(4) of the CRR, these exposures do not qualify for the exclusion from the definition of "exposures" under Article 390(6)(e).