EBA · 2016_2992 Final Q&A

Reporting of assets lending on an unsecured basis

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
425, para. 2
Topic
Liquidity risk
Submitted by
Credit institution
Submitted
2016-11-14
Answered
2017-06-16
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

When collateral lending on an unsecured basis maturing within the 30-day period, shall the institution report this as inflows?

Background

According to Article 30(11) of LCR Commission Delegated Regulation (EU) No 2015/61: “ Assets borrowed on an unsecured basis and maturing within 30 calendar days shall be assumed to run-off in full, leading to a 100 % outflow of liquid assets unless the credit institution owns the securities and they do not form part of the credit institution's liquidity buffer ”. Is it correct to adopt a symmetrical approach in case of asset lent on an unsecured basis, and consequently, to consider a 100% inflow of liquid assets in case of assets lent on an unsecured basis maturing within 30 calendar days?

Answer

According to Article 32(1) of LCR Commission Delegated Regulation (EU) No 2015/61 liquidity inflows subject to the assessment over a period of 30 calendar days shall comprise only contractual inflows from exposures that are not past due and for which the institution has no reason to expect non-performance measured over the next 30 calendar days. Therefore, if these conditions are fulfilled and the lending transaction is maturing within 30 calendar days, assets lent on an unsecured basis will be considered as a cash inflow by 100% of their liquidity value in accordance with Title II of LCR Commission Delegated Regulation (EU) 2015/61. Please see also Q&A 2014_792 .

Original source: European Banking Authority, Q&A ID 2016_2992

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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