Classification as a “specialised debt restructurer” (SDR) pursuant to Article 36(5) of Regulation No 575/2013

To be classified as specialised debt restructurer in accordance with Article 36(5) of the Regulation No 575/2013 (CRR), an institution’s sight deposits must not exceed 5% of its total liabilities. How should the term “sight deposits” be interpreted in the context of the Article 36(5) of the CRR?

There is no definition of “sight deposits” (sometimes also referred to as “overnight deposits”) in the Regulation (EU) No 575/2013 (CRR). However, there are several ways of understanding the term “sight deposits” available from others European legal or regulatory texts. In particular: Overnight deposits has been described as “Deposits which are convertible into currency and/or which are transferable on demand by cheque, banker’s order, debit entry or similar means, without significant delay , restriction or penalty.” ( cf . Section 5.1 of Annex II of the Regulation (EU) No 1074/2013.) “Sight deposits are deposits legally redeemable immediately at demand without significant delay , restriction or penalty” ( cf . 2023 EU-Wide Stress Test Methodological Note para. 341). Sight deposits has also been described as “all cash deposits that can be immediately withdrawn without notice ” and “sight deposits should be assumed to mature overnight, therefore the related volume and spreads should be reported in the ‘overnight bucket’” ( cf . EBA Question ID 2015_1901). Deposits redeemable at notice has been described as “Non-transferable deposits without any agreed maturity which cannot be converted into currency without a period of prior notice ” ( cf . Section 5.3 Annex II of the Regulation (EU) No 1074/2013). The common criterion seems to be that sight deposits requires the deposits to be available for the depositor immediately or without significant delay, thus more similar to so-called transaction accounts which handles day-to-day business and payments for the depositor, as opposed to so-called savings accounts where the intention of the depositor is to earn interest and reach saving goals and where the deposits are available subject to a notice period.