Question ID
2013_170
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Liquidity risk
Article
420
Paragraph
1
Subparagraph
b
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
Not Applicable
Name of institution / submitter
HSBC Holdings PLC
Country of incorporation / residence
UK
Type of submitter
Credit institution
Subject matter
Netting within cash pooling agreement used as part of cash management products
Question

Where customers have both assets and liability balances within a cash pooling agreement (supported by a credit netting agreement) can the balance within the cash pooling agreement be treated as either a single net asset (Article 425) or a net liability (Article 420) i.e. not treated gross?

Background on the question

Cash pooling within a cash managment product.

Submission date
Final answer

Articles 422(6) and 425(3) of Regulation (EU) No 575/2013 (CRR) permit the netting of inflows and outflows expected over the 30 day horizon from relevant derivative contracts only. Other inflows shall be reported in accordance with Article 425, other outflows shall be reported in accordance with Article 420.  Netting within cash pooling agreements for other liquidity flows is not explicitly provided for in CRR for liquidity reporting purposes.

Contractual inflows and relevant outflows should be treated individually to determine the applicable inflow and outflow rates.

Status
Archive
Answer prepared by
Answer prepared by the EBA.
Note to Q&A

Update 26.03.2021: This Q&A has been archived as the issue it deals with is addressed in Q&A 2016_2740.