EBA · 2023_6897 Final Q&A

ITS ESG P3 - Template 2 - Should loan/collateral ratio (loan-to-value) be taken into account?

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
449a
Topic
Transparency and Pillar 3
Submitted by
Credit institution
Submitted
2023-09-28
Answered
2024-03-22
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

We have interpreted column a in Template 2 to be filled in with the gross carrying amount of the loan collateralized with commercial and residential immovable property and of repossessed real estate collaterals. What if the collateral value is less than the gross carrying amount of the loan? Should we in this case fill in the gross carrying amount of the loan or use the amount of the loan that is actually collateralized with commercial/residential immovable property in Template 2?

Background

The guidance given in the ITS is misleading in some way. It refers to Annex V of CIR (EU) 2021/451; that is, the instructions for Finrep. The Part 1 of Annex V is the general part where you find the definition of gross carrying amount etc. However, it does not give guidance on what should be done if the loan is undercollateralised.

Answer

According to EBA Q&A 6714 and the reviewed Q&A 6517 , Annex II - Instructions for disclosure of ESG risks of Regulation (EU) 2022/2453 (ITS on ESG disclosures) shall be followed. The instructions state that the gross carrying amount is to be reported as defined in Part 1 of Annex V of Commission Implementing Regulation (EU) 2021/451. Therefore, the amounts reported as “loans collateralized by immovable property” in template 2 (and template 5) shall match the gross carrying amount of the loans collateralized by immovable property reported in FINREP.

Original source: European Banking Authority, Q&A ID 2023_6897

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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