16 February 2021
The European Banking Authority (EBA) published today final guidelines specifying the conditions for the application of the alternative treatment of institutions’ exposures related to ‘tri-party repurchase agreements’ for large exposure purposes. Under the alternative treatment, institutions are allowed to replace the total amount of their exposures to a collateral issuer due to tri-party repurchase agreements facilitated by a tri-party agent, with the full amount of the limits that the institution has instructed the tri-party agent to apply to those exposures.
If institutions perform such a replacement, the Capital Requirements Regulation (CRR) requires them to comply with three conditions, which are further specified in the final guidelines, namely:
In addition, the final guidelines set the requirements on the conditions and frequency for determining, monitoring and revising the limits specified by the institution.
The final guidelines were consulted for three months during which the EBA received feedback from stakeholders, which led to some minor amendments to clarify some aspects. The guidelines will apply from 28 June 2021.
The EBA has developed the final guidelines in accordance with Article 403(4) of Regulation (EU) No 575/2013 and Article 16 of its founding Regulation, which mandatesthe Authority to issue guidelines and recommendations addressed to competent authorities or financial institutions with a view to establishing consistent, efficient and effective supervisory practices within the European System of Financial Supervision, and to ensuring the common, uniform and consistent application of Union law.
Franca Rosa Congiu