2015_2305 Certificate of Deposits (CDs) | European Banking Authority

Question ID:: 2015_2305
Legal Act:: Regulation (EU) No 575/2013 (CRR)
Topic:: Liquidity risk
Article:: 420, 421, 422, 423, 460
Paragraph:: -
Subparagraph:: -
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:: Delegated Regulation (EU) 2015/61 - DR with regard to liquidity coverage requirement
Article/Paragraph:: Title III, Ch 2, Article 22-30
Disclose name of institution / entity:: No
Type of submitter:: Credit institution
Subject Matter:: Certificate of Deposits (CDs)
Question:: 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?
Background on the question:: 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.
Date of submission:: 18/09/2015
Published as Final Q&A:: 13/05/2016
Final Answer:: 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.
Status:: Final Q&A
Answer prepared by:: Answer prepared by the EBA.
Note to Q&A:: 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.