EBA · 2014_920 Final Q&A

Reporting of two groups of connected clients when one client is considered as the most significant entity within both groups

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
394 & 4(1)point(39), para. -
Topic
Supervisory reporting - Large Exposures
Submitted by
Credit institution
Submitted
2014-03-07
Answered
2015-01-16
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

How should an institution report two different groups of connected clients / which "code" should it use, if one client is considered as most significant entity within both groups?

Background

Guidelines on the implementation of the revised large exposure regime par. 32 define, that one client can be included in more than one group of connected clients (for example in 2 different groups). If this client, which is included in both groups of connected clients, is considered as the most significant entity within both groups, an institution should (according to the instructions for large exposures reporting) use the code of this client for a group code for reporting purposes. Is it acceptable tha two different groups of connected clients have the same "group code" for reporting purposes?

Answer

In order to ensure the use of the code in a consistent way across time, each group of connected clients must have its own "group code" for reporting purposes.Therefore, for example, if the following conditions are met: i) a client ( "Z ") can be included in 2 groups of connected clients (group "A" and group "B"); ii) the reporting institution is able to demonstrate that there is not any connection according to art. 4 (1) point 39 of CRR between these two groups; iii) neither of the two groups have a parent undertaking; iv) the same client ( "Z") could be considered as the most significant within both groups, then the institution should consider such client ( "Z") as the most significant only for one group (for example Group "A"). Within the other group ( "B") the institution should consider another client as the most significant for the reporting purposes. So the institution should use two different "codes" for the group "A" and "B". This approach allows using the code in a consistent way across time (i.e. for example the exposures to group "A" is paid in full, the use of different codes for the two group does not jeopardize the consistency of the reporting).

Original source: European Banking Authority, Q&A ID 2014_920

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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