EBA · 2019_4751 Rejected question

Recognition criteria for off-balance sheet items for exposure value calculation

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
24, para. 1
Topic
Credit risk
Submitted by
Credit institution
Submitted
2019-05-29
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Question

If based on the applicable accounting framework (IFRS-EU) it is concluded that there is no contingent liability that should be disclosed for accounting purposes, is it then still possible that an off-balance sheet item exists, which should be recognised for exposure value calculation per Articles 111 CRR or 166 CRR?

Background

Article 24(1) CRR states that the valuation of assets and off-balance sheet items shall be effected in accordance with the applicable accounting framework. In case of a written commitment that the bank will provide additional capital to a third party, where however it can be assessed that the likelihood of having to put in this additional capital, i.e. having an outflow of economic resources, is (clearly) remote, IFRS 37.28 in such cases describes that no contingent liability is disclosed. It is unclear whether it is correct to assume that in this case there is also no off-balance sheet item for which either Article 111 CRR or Article 166 CRR should be followed.
No answer published yet.

Original source: European Banking Authority, Q&A ID 2019_4751

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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