EBA · 2025_7375 Rejected question

Recognition of non-transferable liquidity held by and arising in third country subsidiaries in the context of the calculation of the consolidated LCR

Name: Recognition of non-transferable liquidity held by and arising in third country subsidiaries in the context of the calculation of the consolidated LCR: EBA Q&A — EU Financial Regulatory Q&A
Creator: European Banking Authority
License: https://creativecommons.org/licenses/by/4.0/

Regulation: Regulation (EU) No 575/2013 (CRR)
Article: 460, para. 1
Topic: Liquidity risk
Submitted by: Competent authority
Submitted: 2025-03-10

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Question

What is the (combined) treatment of liquid assets held by and liquidity inflows arising in third country subsidiaries being subject to transfer restrictions for the purpose of the calculation of the LCR at consolidated level?

Background

For the purpose of the calculation of the LCR at consolidated level, Articles 8(2) LCR DR and 32(8) LCR DR combined appear to define the framework for the recognition of liquid assets held by and liquidity inflows arising in third country entities in the case of transfer restrictions. As such, the EU framework appears different to Basel LCR10.7 according to which liquid assets held by a legal entity being consolidated can be included in the consolidated LCR to the extent that such liquid assets are used to cover the total net cash outflows of that entity, notwithstanding that the assets are subject to liquidity transfer restrictions. Consider, for instance, a subsidiary in a third country which is being considered "trapped" and which reports, at individual level, liquid assets of 300 units, liquidity outflows of 180 units, and liquidity inflows (before cap) of 100 units.

No answer published yet.

Original source: European Banking Authority, Q&A ID 2025_7375

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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