Question ID:
2014_1692
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Topic:
Large exposures
Article:
391
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Article/Paragraph:
not applicable
Disclose name of institution / entity:
No
Type of submitter:
Credit institution
Subject Matter:
Definition of "institution" for large exposure purposes
Question:

Should EC implementing decision on the equivalence of the supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures according to Regulation (EC) No. 575/2013 be used to determine equivalence for LE purposes?

Background on the question:

The EC has issued its first equivalence decision with regards to assigning risk weights under Articles 107, 114, 115, 116 and 142 of CRR regulation. Article 391 of the CRR allows the treatment as 'institution' only if a third country has equivalent prudential and supervisory requirements implemented. The decision on equivalence for credit risk weight purposes does not refer to Article 391. therefore, should banks apply the recently issued decision on credit risk weights to the definition of 'institution' for large exposure purposes or will a separate decision be issued in due course which may list jurisdictions as equivalent, although they were not considered equivalent in the first equivalence decision for credit risk weight purposes?

Date of submission:
19/12/2014
Published as Final Q&A:
15/07/2016
Final Answer:

Article 391 of Regulation (EU) No 575/2013 (CRR) doesn't refer to any EC implementing decision to be adopted in order to determine whether a private or public undertaking, including its branches, established in a third country can be considered an "institution" for large exposures purposes. It is thus for the institution and supervisory authority concerned to decide whether an entity fulfils the equivalence requirement set out in Article 391 of CRR. In doing so, the EC implementing decision on equivalence of prudential supervisory and regulatory requirements applicable to third country institutions adopted according to other provisions of CRR may be used as guidance (see Commission Implementing Decision, 12 December 2014, n. 2014/908/EU).

Disclaimer:

This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General for Financial Stability, Financial services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.

Status:
Final Q&A
Answer prepared by:
Answer prepared by the European Commission because it is a matter of interpretation of Union law.
Note to Q&A:

Update 26.03.2021: This Q&A has not yet been reviewed by the European Commission in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR).

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