Scope of CRR definition of Financial Institution

Are deposits maintained by entities meeting the literal requirements of Article 4(1)(26) CRR excluded from the coverage of the Deposit Guarantee Schemes (DGS)?

The application and extension of the Financial Institution definition contained in Article 4(1)(26) CRR seems clear within the scope of said regulation, Directive 2013/36/EU (the Capital Requirements Directive or CRD) and its national implementing regulations. As in practice some national regulations implementing other Directives like Directive 2014/59/EU (Bank Recovery and Resolution Directive or BRRD) or Directive 2014/49/EU (Deposit Guarantee Schemes Directive or DGSD) make reference to the Financial Institutions definition, for the sake of precision and legal certainty, there is a need to clarify said definition outside the scope of CRR. We have found three answers in EBA’s Single Rulebook Q&A that tackle the definition of Financial Institution: • Two of the answers ( Q&A 2013_310 and Q&A 2014_857 ) focus on aspects strictly related to the scope of capital requirements (the former focusing on the prudential consolidation and the latter on the aim of deductions set out in CRR Article 36); and • The third answer ( Q&A 2016_2676 ) confirmed the exclusion of deposits of certain Financial Institutions from the coverage of DGS. In our understanding, the two first answers reflect the view that the definition of Financial Institutions is designed to work and function in the regulatory capital environment, while the third answer confirms the exclusion of Financial Institutions from coverage from DGS. The question we are now raising may look evident, but, we think clarification is needed as to answers to Q&As 310 and 857 given by EBA so far on this topic being constructed and limited exclusively to capital requirements, and not automatically extended to other contexts, and, in particular, to the context of the protection granted by the DGSs under the DGSD. In particular we seek confirmation that deposits of entities meeting the literal requirements of article 4(1)(26) CRR are to be understood excluded from coverage of the DGS, in line with the answer given in Q&A 2676). An answer given by EBA in this regard would confirm the non-automatic extension of Q&A 310 and Q&A 857 to the scope of DGSD regarding Financial Institutions (extension that could otherwise be mistakenly understood).