Treasury shares – how to report them in Own Funds and in the NSFR

Question 1 : According to IAS 32.33-34, treasury shares shall be deducted from equity. According to Art. 36 (1) f) CRR direct holdings by an institution of own Common Equity Tier 1 instruments shall be deducted from Common Equity Tier 1 items. The COREP C 01.00 instructions for row 0080 ‘(-) Direct holdings of CET1 instruments’ clarify that treasury shares are reported within this row (and not in row 0200). The deduction shall be reported only once in C 01.00 (in row 0080), implying that other rows of section ID 1.1.1 where the amount of accounting equity would be reflected net of treasury shares shall be adjusted accordingly. Question 2 : In any case, a consistent treatment of assets and liabilities has to be ensured. According to Article 428i and 428p(1) CRR, the available and required stable funding shall be the accounting value of liabilities, own funds, assets and, where applicable, off-balance sheet items multiplied by the ASF or RSF factors to be applied, unless otherwise specified in Chapter 3 and 4 of Tittle IV CRR. If the own shares are not included in a bank’s assets and are deducted from equity (IAS 32.33-34), the accounting value applied to the CET1 items according to Article 428i CRR is the net value. Thus, in the context of NSFR, the amount of own shares should not be considered as a deduction for the purpose of Article 428o(a)-(c) CRR and must not be included in the reporting on available stable funding. Correspondingly, such own share are not included in the reporting on required stable funding and do not trigger any stable funding requirements in the NSFR under CRR. In the case where treasury shares are accounted for as an asset, the RSF applicable according to article 428ah(b) is 100%. The CET 1 items subject to an ASF of 100% according to 428(a) are considered before the deductions referred to in Article 428o(a)-(c) CRR and Article 36 CRR.