Reporting of ceded assets, that are part of a cover pool, in asset encumbrance.

As stated in point 2.4.3 of annex XVII to the regulation 680/2014, column 40 of template F32.04 refers to the fair value of the collateral received that are re-used/encumbered as a result of the different type of transactions specified in the row s, as for instance, covered bonds issued (row 100). As regards the business case, although Bank B obtained temporary legal title over Bank A’s securities, these securities remained recognised in Bank A’s balance sheet since the accounting criteria for derecognition w ere not met and, for Bank B, such collateral represents a collateral received. Bank B could now obtain financing from a third party (Bank C) by re-posting the collateral received from Bank A or issuing covered bonds (being loan_1 a part of its cover pool). Bank B would still have to return equivalent assets w hen the original transaction w ith Bank A matures. The re-use of collateral by Bank B w ould result in encumbrance of off-balance sheet collateral for Bank B. Therefore, r100, c040 from template F32.04, should be opened.