Reporting of Counterparties on LE2 and LE3 Templates - connected counterparties

The reporting institution has identified that ‘Subsidiary B’ is connected to ‘Parent company A’, thus forming a group of connected clients in accordance with Article 4(1)(39) of Regulation (EU) No 575/2013 (CRR), which is named for example ‘Group A’:   Annex IX of Regulation (EU) No 680/2014 on Supervisory Reporting of institutions regarding the reporting of large exposures and concentration risk, sets out in the instructions in part II paragraph 6 that: ‘data on large exposures and the relevant largest exposures to groups of connected clients and individual clients not belonging to a group of connected clients shall be reported in template LE2 (in which a group of connected clients shall be reported as one single exposure)’. Thus the exposure to ‘Subsidiary B’ should be reported as part of the exposure to the group of connected clients ’Group A’ on template C 28.00 (LE2). In accordance with the instructions for C 28.00, the code that shall be used shall be the code of the group of connected clients or the code of the parent company.   In case the reporting institution has only an exposure to one member of a previously identified group of connected clients (it means that the group of connected client has been previously identified when the institution had also an exposure to one or more other members of the group of connected clients)  and also knows the parent company (preferably the ultimate parent company, that is the “holding” of the group of connected clients) of its borrower, the institution should report the group of connected clients.  This guarantees consistent reporting and identification of counterparties over time.   Reporting instructions in part II, paragraph 7 state that ’institutions shall report, in the C 29.00 (LE3) template, data regarding the exposures to individual clients belonging to groups of connected clients, which are reported in the C 28.00 template’. Thus the exposure to ‘Subsidiary B’ should also be reported on template C 29.00.