How should we treat CDs (Certificate of Deposits) that we have issued? Could we treat them as deposit or should they be treated the same why as an issued senior bond?
Some banks issue CDs for funding. When calculating LCR it is crucial to know how these are treated in the legal framework to know how much liquid assets are needed.
Certificates of Deposit (CDs) are to be treated as debt securities as long as they are negotiable and with the exception of those sold exclusively in the retail market and held in a retail account as outlined in Article 28(6) of the Commission Delegated Regulation (EU) 2015/61, in which case those instruments can be treated as the appropriate retail deposit category. Non-negotiable CDs should be treated as deposits of the relevant category.
Update 26.03.2021: This Q&A has been reviewed in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR) and continues to be relevant.