Question ID
2013_476
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Liquidity risk
Article
416
Paragraph
1
Subparagraph
e
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
not applicable
Name of institution / submitter
Austrian Federal Economic Chamber, Division Bank and Insurance
Country of incorporation / residence
Austria
Type of submitter
Industry association
Subject matter
Stand By Credit Facilities as Liquid Assets
Question

In Article 416(1) of Regulation (EU) No. 575/2013 states: “Institutions shall report the following as liquid assets unless excluded by paragraph 2 and only if the liquid assets fulfil the conditions in paragraph 3: … e) standby credit facilities granted by central banks within the scope of monetary policy to the extent that these facilities are not collateralised by liquid assets and excluding emergency liquidity assistance;” Which real world examples exist for standby credit facilities, which are not collateralized by liquid assets, but at the same time fulfil the prerequisite of paragraph 3? Would the unused amount for potential ECB tender transactions which are not collateralised by liquid assets, as defined in the CRR, qualify for a standby credit facility?

Background on the question

Institutions pledge assets under ECB tender operations. That means that those assets have a special depository upon which the ECB can draw in order to collateralise those transactions. However, although those assets could eventually be drawn in the case of a transaction, usually the pool of assets exceeds the used amount. The unused amount effectively constitutes a facility, which can be used at any time. As the ECB has other criteria for the definition of suitable assets, there may be assets that are not LCR eligible but ECB eligible.

Submission date
Final answer

In accordance with Article 416(1)(e) of Regulation (EU) No. 575/2013 (CRR), standby credit facilities granted by central banks within the scope of monetary policy (excluding emergency liquidity assistance) may be reported as liquid assets to the extent that the facilities are not collateralised by liquid assets and that they fulfil the other conditions of eligibility of Article 416 of the CRR and the operational requirements of Article 417, noting in particular such standby credit facilities are exempt from the conditions of Article 416(3)(c), (d) and (e). In light of the upcoming delegated act on the liquidity coverage ratio, further guidance on this matter may be provided at a future date.

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 Article 14 of Delegated Regulation (EU) 2015/61.