Question ID:
2013_683
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Topic:
Supervisory reporting - Large Exposures
Article:
4
Paragraph:
1
Subparagraph:
39
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (as amended)
Article/Paragraph:
Annex VIII and IX column 040 of LE3 (C 29.00)
Disclose name of institution / entity:
No
Type of submitter:
Competent authority
Subject Matter:
Reporting "type of connection" in column 040 of LE3 (C 29.00)
Question:

What type of connection should an institution report for Client A if "Client A" in a group of connected clients controls "Client B" (cotrol relationship - "a") and is additional economically connected with "Client C" (interconnectedness - "b")?

Background on the question:

CEBS Guidelines in the implementation of the revised large exposure regime Par. 53 define situation where an institution needs to connect two groups of connected clients into one single group, because of the economic dependency between two members of each group (please see last sentence of Par53). In such a case two members (case in Par. 53: D and F) are connected with some other members by typ of connection "a" (A,B,C and E,F,G) and between each other by type "b". What should be reported for those two members of a group (type "ab"?)

Date of submission:
20/12/2013
Published as Final Q&A:
27/02/2015
Final Answer:
Where two or more entities constitute a single risk because of their interconnectedness (as described in point (b) of Article 4(1)(39) of Regulation (EU) No. 575/2013 (CRR)) but there is no relationship of control between all of these entities (as described in point (a) of Article 4(1)(39) of CRR), the type of connection constituting this group of connected clients is "interconnectedness". This requires to report "b" - as the type of connection between an individual entity and this group of connected clients - in column 040 of template C 29.00 (LE3), according to Point 7.1 of the Instructions in Annex VIII of Regulation (EU) No 680/2014 (ITS on Supervisory Reporting of institutions). This applies irrespective of whether an entity has a control relationship to some (but not all) other entities belonging to this group of connected clients.
 
In contrast, where an entity belongs to two different groups of connected clients because not all the entities belonging to these groups constitute together a single risk according to point (a) or (b) of Article 4(1)(39), the type of connection needs to be identified and reported separately for each of these groups of connected clients.
 
This answer is without prejudice to further guidance which may be provided in the context of the review of the Guidelines on the revised large exposures regime.
Status:
Final Q&A
Answer prepared by:
Answer prepared by the EBA.
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