EBA · 2015_2193 Final Q&A

Definition of large financial sector entity

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
142, para. 1
Topic
Model validation
Submitted by
Credit institution
Submitted
2015-08-04
Answered
2016-03-11
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

In applying the definition of “large financial sector entity” under Article 142(1)(4)(a) of Regulation (EU) No 575/2013, is it correct to consider the assets of the counterparty (individual or consolidated balance sheet), rather than consolidated assets for any Group to which the counterparty belongs?

Background

The definition of “large financial sector entity” under Article 142(1)(4)(a) of Regulation (EU) No 575/2013 sets a threshold greater than or equal to € 70 billion, calculated on an individual or consolidated basis. It is not clear how wide is the consolidation perimeter to consider, especially in the light of the Basel III framework, which is more comprehensive as it extends to exposures to any entity of a group where parent or subsidiaries have consolidated assets above a comparable threshold of USD 100 billion.

Answer

Article 142(1)(4) of Regulation (EU) No 575/2013 (CRR) defines a large financial sector entity as an entity which meets inter alia the condition that its total assets are greater than or equal to a EUR 70 billion threshold. Furthermore it is stated that the assets of the entity in question are calculated on an individual or consolidated basis. As Article 142(1)(4) (a) of the CRR only refers to the asset owned by the entity in question itself, for the purposes of assessing whether the threshold is met on a consolidated basis, the relevant scope of consolidation includes the entity itself and its subsidiaries but not the wider group to which the counterparty together with its subsidiaries may additionally belong.

Original source: European Banking Authority, Q&A ID 2015_2193

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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