Submission #7

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Austrian Federal Economic Chamber, Division Bank and Insurance

Question 1: Do you agree with the conditions of Article 1 paragraph 2 for identifying an entity as a non-shadow banking entity? Please provide reasons if you do not agree with any of the conditions or have comments with regard to any of them.

In order to facilitate the identification process, we suggest that the EBA set up an EEA-wide register of institutions and shadow banking entities. This could ideally be combined with the EBA’s initiative for an integrated reporting system (IRS) in accordance with the mandate under Article 430c CRR.
Please consider adding an recital to clarify that entities included in the supervision on a consolidated basis of the CRR are not to be identified as shadow banking entities. Consequently, are we correct in assuming that entities excluded from the scope of prudential consolidation (according to Article 19 CRR) are to be treaded as potential shadow banking entities?

Question 2: Have you got any comments regarding the list of entities that, being exempted or optionally excluded from those four legal acts in Annex I, should not be considered as shadow banking entities?

To identify entities excluded from these legal acts, an EEA-wide register would be highly beneficial for all parties involved.
The EBA Guidelines pursuant to Article 395 CRR do not foresee an exemption or optionally exclusion of entities from EMIR (as proposed in the Draft RTS). Therefore, does the EBA plan to also change its Guidelines accordingly (after finalising the Draft RTS)?

Question 3: Conversely, what are your views concerning other entities exempted or optionally excluded from the other legal acts in Annex I and that would be identified as shadow banking entities? Please provide reasons in case you view that any of those entities should fall under the exemption in Article 1 paragraph 3 and therefore not be treated as shadow banking entities. n.a.

Question 4: Have you got any other comments with regard to the content of Article 1 of the draft RTS? In your view, is it clear and easy to implement for the purposes of the reporting obligation of Article 394(2) of Regulation (EU) No 575/2013?

Branches to shadow banking entities:
The Draft RTS do not provide information regarding the identification of shadow banking in the case of branches. We would highly welcome to have these cases clarified. For example, a branch of a third-country shadow bank is licenced in the EEA or an equivalent third-country. Are reporting institutions required to treat this branch and its head office differently in the context of the reporting obligation under Article 394(2) CRR? If so, how should reporting institutions report exposures to such a branch if the branch would be identified as a shadow bank (but not the head office) or vice versa?
Shadow banks in groups of connected clients:
We would appreciate some information regarding the determination of the 10 largest shadow banks, if these shadow banks are part of a (mixed) group of connected clients? According to EBA’s answer to question 2013_492, the group shall be qualified as ‘institution’ or ‘unregulated financial entity’ / ’shadow bank’ if the parent company is an ‘institution’ or a ‘shadow bank’. Consequently, this shall be reported if the national reporting system provides a unique code for these groups of connected clients. Pursuant to question 2013_572, the relevant exposure amount for determining the 10 largest exposures to ‘institutions’ or ‘shadow banks’ is the aggregated, total amount of the exposures to all entities within the group of connected clients including exposures to entities within this group which are neither institutions nor shadow banks (template LE 2, column 210).
Consequently: Are we correct in assuming that exposures to shadow banks that are part of a group of connected clients only qualify among the 10 largest if the parent company of this group itself is a shadow bank? If so, is the total exposure to the whole group relevant, regardless of the amount of exposures to individual shadow banks within the same group? Or should reporting entities only consider the total exposures to all individual shadow banks within the group in order to determine the ‘10 largest exposures to shadow banking entities’ pursuant to Article 394(2) CRR?

Question 5: In general, what are your views on the treatment of funds in these draft RTS? Do you agree with the approach adopted in these draft RTS, that follows the approach in the EBA Guidelines on limits on exposures to shadow banking entities, or alternatively should it be extended to capture those funds as shadow banking entities? n.a.

Question 6: What would be the advantages and disadvantages of taking a broader approach with respect to the scope of funds included as shadow banking entities? n.a.

Question 7: What are your views with regard to the consideration of money market funds as shadow banking entities? n.a.

Question 8: Do you face any difficulties identifying whether an alternative investment fund (AIF) should be considered as a shadow banking entity? n.a.

Question 9: Have you got any specific comments with regard to AIFs and in particular, with points (b) and (c) of Article 1 paragraph 5? n.a.

Question 10: Do you agree with the description of banking services and activities as included in Article 2 of the draft RTS? Have you got any specific comments regarding any of the points included?

We welcome that the EBA’s approach to describing “banking services and activities” is the same as that adopted in the EBA Guidelines on limitations on exposures to shadow banking entities. In the Guidelines, however, the EBA uses the term “credit intermediation activities” to define bank-like activities. We therefore suggest that the same terminology and identification process of this Draft RTS be used for the Guidelines.

Question 11: Do you agree with the possibility granted under paragraph 1 of Article 3 to prevent the identification of a bank in a third country as a shadow banking entity in the absence of an equivalence decision under Article 391 of the CRR?

In this context, we would appreciate the EBA to refer to an official register or list of international bodies (such as IMF or BCBS) stipulating countries or jurisdictions applying at least Basel core principles.
Furthermore, in the absence of an equivalence decision regarding the United Kingdom (UK), we would appreciate the EBA to clarify whether the criteria for excluding entities under paragraph 1 of Article 3 would generally apply for supervised institutions in the UK.

Question 12: Have you got any comments regarding the approach set out in paragraph 2 of Article 3 for other entities established in third countries to prevent their identification as shadow banking entities? n.a.

Question 13: Do you agree with the list of legal acts included in Annex I? n.a.

Question 14: Is there any other legal act that should be included in Annex I? If yes, please mention the act and legal reference, and provide reasons to support it based on the criteria included in Article 394(4) of Regulation (EU) No 575/2013. n.a.

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Name of the organization Austrian Federal Economic Chamber, Division Bank and Insurance