In its instructions on the EBA LCR Monitoring Exercise for the end-June 2013 and end-September 2013 data collection the EBA gives examples of promotional banks whose bonds can be reported in row 10 of the ‘LCR EU Only’ tab, if they are not already reported in section A of that exercise. In this context we would like to raise two questions: 1. Is the list of promotional banks given in the instructions exhaustive and also applicable for the reporting of these assets in Row 180 of the Liquid Assets template of COREP (C 51.00)? 2. Do bonds issued by promotional banks always have to be reported in row 180 of the respective template?
According to Art. 416 para 2 part a (iii) CRR bonds issued by promotional banks can be reported as liquid assets if the promotional bank has been set up by a Member State or regional government and the bond is predominantly used to fund promotional loans granted on a non-competitive, not for profit basis in order to promote that governments public policy objectives. In order to be recognized the government that has set up the promotional bank 1. has an obligation to protect the economic basis of the institution and to maintain its viability throughout its lifetime or 2. explicitly guarantees the asset or 3. directly or indirectly guarantees at least 90 percent of the loans grant-ed by the promotional bank. These bonds (in principle) have to be reported in row 180 of the Liquid Assets template (C 51.00). On the other side bonds guaranteed by the central government of a Member State or a region with fiscal autonomy to raise and collect taxes denominated in the domestic currency of the issuer can be recognized if the institution incurs a liquidity risk in that Member State that it covers by holding these as-sets (Art. 416 para 1 part c (i) CRR). The respective bonds have to be reported in row 050 of the Liquid Assets template. Furthermore bonds issued by non-central government public sector entities denominated in the domestic currency of the issuer can be recognized as liquid assets for reporting purposes (Art. 416 para 1 part c (ii) CRR). These bonds have to be reported in row 060 of the Liquid Assets template. Promotional banks can be non-central government public sector entities if they are non-commercial undertakings that are owned by or set up and sponsored by a regional government or a local authority, and have explicit guarantee arrangements. These include self-administered bodies governed by law that are under public supervision (Art. 4 para 8 CRR).
Question 1.
The list of promotional banks specified in the EBA LCR Monitoring Exercise has no legal effect for the purpose of the reporting requirements according to the Regulation (EU) No 680/2014 13 ITS on Supervisory reporting. There is no legal definition of promotional banks in the Regulation (EU) No. 575/2013 (CRR). The EBA report on definitions of liquid assets published in December 2013 referred to promotional banks as those envisaged in the last point of Article 416 (2) a) iii) of CRR where "at least 90% of the loans granted by the institution are directly or indirectly guaranteed by that government and the asset is predominantly used to fund promotional loans granted on a non-competitive, not for profit basis in order to promote that government 19s public policy objectives"
Question 2.
Assets meeting the requirements of Article 416 (2) a) iii) of CRR should be reported in row 180 under ID 1.7 of C 51.00 Template if they meet the requirements set out in Articles 416 and 417 of the CRR or in ID 2 of C 51.00 Template if they do not meet the requirements of Art. 417 (b) and (c) CRR.
The following IDs do not apply for reporting of assets issued by promotional banks: