NACE reporting in FINREP

In FINREP where presentation towards NACE sector is requested, in case the immediate counterparty is a holding company, should the applicable NACE sector be based on the NACE sector applicable for the holding company itself, or should the NACE sector be based on the NACE sector of the specific obligor under the holding company which receives the funding from the holding company?

In FINREP the concept of immediate counterparty is used, see for example Annex V to Regulation (EU) 2021/451 (ITS), Part 1.43-44 and Part 2.271. There is, however, no explicit statement in Annex V that this should also be the case for determination and presentation of the applicable NACE sector. Annex V to ITS, Part 2.90 does state that gross carrying amount of loans and advances shall be classified by sector of economic activities, using NACE codes on the basis of the principal activity of the counterparty, but it is thus not explicit that NACE should also be based on the immediate counterparty. There is, however, also no explicit instruction that a “look through” approach should be applied to consider the activities of the specific obligor under the holding company. We would greatly appreciate a clear answer for the holding company example, as we believe different interpretations are currently being applied by institutions.