EBA · 2016_2811 Rejected question

Assignment of exposures to exposure class of Public Sector Entities

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
116
Topic
Credit risk
Submitted by
Competent authority
Submitted
2016-07-01
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Question

Can only the entities having legal forms of non-profit associations and foundations qualify as PSE-s and be assigned to exposure class of PSEs, or could PSEs also include legal forms of either public or private limited liability companies, which are either owned by or set up and sponsored by central governments, regional governments or local authorities and are under public supervision?

Background

According to Article 4(1)(8) of Regulation (EU) No 575/2013 (CRR) public sector entities (PSE) are defined as non-commercial bodies. Therefore, it is unclear whether only the entities having legal forms of non-profit associations and foundations can qualify as PSEs and be assigned to exposure class of PSEs, or whether PSEs could also include legal forms of either public or private limited liability companies, which are either owned by or set up and sponsored by central governments, regional governments or local authorities and are under public supervision. Article 116 CRR states risk weights for exposures to PSEs. According to the definition PSEs should be non-commercial bodies. There are companies in Estonia, owned by central or regional governments, exercising same responsibilities as non-commercial bodies but formed and regulated under the Commercial Code. For example, there are hospitals, owned, set up and sponsored by central governments or local governments, some of them are foundations by legal form and some are limited liability companies.
No answer published yet.

Original source: European Banking Authority, Q&A ID 2016_2811

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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