EBA · 2019_4894 Final Q&A

Classification of collective investment undertakings

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
99
Topic
Supervisory reporting - FINREP (incl. FB&NPE)
Submitted by
Competent authority
Submitted
2019-09-04
Answered
2020-09-11
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

The classification of investment funds (collective investment undertakings) in FINREP table F 1.1 is not clear as there seems to be a contradiction between the reference to IAS 32 on the one side and Annex V on the other side. Should investment funds be treated as debt or as equity?

Background

There is a reference to IAS 32.11 for “Equity instruments” of rows r070, r097, r142 c010 in FINREP table F 1.1. As “puttable instruments” according to IAS 32 investment funds (CIUs) should in IFRS 9 be treated as debt and not as equity instrument. In contradiction to the reference 32.11 Annex V Part 3 table 2 point (n) clearly states that collective investment undertakings should be treated as equity instruments in FINREP Annex III and IV. Furthermore there are references for debt securities in table F 1.1 to Annex V Part 1.31, which refers to ECB BSI Regulation, where CIUs are not classified as debt securities but as equities. The classification of investment funds as collective investment undertakings either as debt instrument or as equity instrument is unclear based on these references.

Answer

Part 3 table 2 point (n) of Annex V to Regulation (EU) No 680/2014 (ITS on supervisory reporting) states that: “Investments in CIU shall be classified as Equity instruments in FINREP, regardless of whether the CRR allows look-through”. Furthermore FINREP definition for “Debt instruments” refers to BSI definition that does not include CIUs. Based on the above, CIUs shall be reported as equity instruments in FINREP.

Original source: European Banking Authority, Q&A ID 2019_4894

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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