A leasing company establishes multiple separate special purpose leasing entities (hereinafter abbreviated to “leasing-SPE”). Each leasing-SPE owns a specific leasing object (real estate or large movables such as airplanes and ships) and leases it to the lessee. The leasing-SPE remains owner of the leasing object from a tax point of view. However, the obligations linked with the object generally are transferred to the lessee. The refinancing of the leasing-SPEs is provided by an institution. The financing contract is concluded between the institution and the leasing-SPE. An essential feature is the non-recourse. The leasing-SPE is only required to service the financing contract to the extent it receives leasing payments from the lessee. The leasing-SPE pledges the claims against the lessee to the institution. The payment process is not serviced by an external third party, but managed by the leasing-SPE. The lessee pays into an account of the leasing-SPE kept at the institution on which the institution has a lien according to its general terms and conditions of business. The leasing-SPE forwards all interests and principal payments actually received on the leasing-SPE’s account to the institution. The leasing-SPEs remain part of the group of the leasing company. However, according to the information provided, a bankruptcy of the leasing company should only have a negligible influence on the single leasing-SPEs. Finally and regarding the practical relevance of the questions it should be mentioned that institutions finance several leasing-SPEs and also have exposures to the leasing company. In case the leasing-SPE needs to be regarded as client all these exposures would have to be added and counted towards the single large exposures limit of the parent company, i.e. the leasing company.

Institutions wish to know whether the financing contract with the leasing-SPE can – under the conditions described – be regarded as “other transaction where there is an exposure to underlying assets” within the meaning of Article 390 (7) CRR. If the answer is positive the institution would generally need to look through to the underlying and count the exposures towards the different LE limits of the lessees.

Secondly the question arises whether the leasing-SPE constitutes an additional risk within the meaning of Article 390 (7) CRR and has to be regarded as client for large exposures purposes. If the answer is negative the LE limit towards the leasing company remains unencumbered.