EBA · 2015_1800 Final Q&A

Treatment of an asset entitled 'Rent Deposit'

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
Article 99
Topic
Supervisory reporting - Asset Encumbrance
Submitted by
Other
Submitted
2015-02-05
Answered
2021-06-04
Answer provided by
ESAs (EBA, ESMA, EIOPA)
Browse ECB SSM Register → More Q&As on this regulation →

Question

Should an asset of a 'rent deposit' held in the current assets of a company's balance sheet be treated as encumbered or unencumbered? If it is to be included as encumbered should the fair value of the encumbrance be the amount of the entire contract that the rental deposit secures?

Background

The deposit is for the sum of £156,000.

Answer

The rental deposit should be treated as encumbered. The fair value of the encumbrance should be the amount of the entire contract that the rental deposit secures. The reason is that it is subject to an arrangement to secure rental property and cannot be easily withdrawn and used for future encumbrance.

Original source: European Banking Authority, Q&A ID 2015_1800

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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