Annex IX to Regulation (EU) No 680/2014 (ITS on Supervisory Reporting) says in Part II, chapter 1, paragraph 7 that institutions shall report in template LE3 (C 29.00) data regarding the exposures to individual clients belonging to the groups of connected clients, which are reported in template LE2 (C 28.00). In other words, the amount reported for a given group of connected clients (GCC) in C 28.00 is regularly the sum of all amounts reported for the individual clients belonging to that GCC in the corresponding template C 29.00.

For the given example, this leads to the result that the exposure towards entity A guaranteed by the SOV has to be reported in C 29.00 as direct exposure to A with the effect of CRM. The exposure towards the SOV has to be shown in C 29.00 as indirect exposure.
In C 28.00 for the GCC consisting of SOV and A, there has to be reported the direct exposure stemming from A, the indirect exposure stemming from the SOV and the effect of CRM stemming from A. The ‘total original exposure’ in C 28.00 is the sum of both C 29.00 for A and the SOV, the position ‘total exposure value after CRM’ (C 28.00, column 330) shows the real existing risk.

Please note that this is not a case of double counting for the purposes of the application of the large exposures limit according to Article 395 (1) of the CRR. Double counting for large exposures purposes would mean that the value of an exposure is assigned twice to the same client. This is not the case here. For the purposes of applying the large exposures limit to the client ‘SOV-A-GCC’, the value of the exposure originally granted to A and then shifted to SOV is counted only once.

In case of any additional GCC the SOV is being member of, e.g. ‘SOV-B-GCC’, the indirect exposure stemming from SOV’s guarantee (towards A) has also to be reported as indirect exposure.