Question ID:
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Supervisory reporting - COREP (incl. IP Losses)
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
Annex V
Disclose name of institution / entity:
Type of submitter:
Credit institution
Subject Matter:
Counterparty breakdown - classification based by immediate counterparty

What is definition of jointly incurred exposures for the purposes of FinREP (Annex V par. 43) ? Are there examples? Can guarantors be regarded as obligors and thus the exposures guaranteed by them as jointly incurred exposures?

Background on the question:

In accordance with articles 43, 44 of ITS for FinREP:
43. The counterparty sector allocation shall be based exclusively on the nature of the immediate counterparty. The classification of the exposures incurred jointly by more than one obligor shall be done on the basis of the characteristics of the obligor that was the more relevant, or determinant, for the institution to grant the exposure. Among other classifications, the distribution of jointly incurred exposures by counterparty sector, country of residence and NACE codes shall be driven by the characteristics of the more relevant or determinant obligor.
44. The immediate counterparties in the following transactions shall be:
(a) for loans and advances, the immediate borrower. For trade receivables, the immediate borrower shall be the counterparty obliged to pay the receivables, except in transactions with recourse, where the immediate borrower shall be the transferor of receivables where the reporting institution does not acquire substantially all the risks and rewards of ownership of the transferred receivables;
(b) for debt securities and equity instruments, the issuer of the securities;

Our bank invests in syndicated loans and bonds. Typically the borrower of such syndicated loan or bond is an (intermediate) holding company of a larger group of entities (‘borrower group’), whereby the loan is guaranteed by companies in the group that operate the business activities. The guarantee is irrevocable, unconditional, joint and several. In the case of bonds SPEs can also be created by the borrowers for the purposes of financing. In case of default we can address to any Guarantor of the borrowing group to be repaid the full amount of loan. Besides, the decision to invest in the loan or in security is based on assessment of activities of the entire borrower group and not on the immediate borrower.

Date of submission:
Published as Final Q&A:
Final Answer:

According to Annex V, part 1.43 of Regulation (EU) 2014/680 (ITS on Supervisory Reporting) the counterparty sector allocation shall be based exclusively on the nature of the immediate counterparty.

Pursuant to Annex V, part 1.44, a) of the ITS on Supervisory Reporting the immediate counterparty for loans and advances shall be the immediate borrow er.
For debt securities, the immediate counterparty is the issuer of the securities(Annex V, part 1.44 b).

In the described example, the holding company is either the immediate borrower (syndicated loan) or the issuer of the securities (syndicated bond). Thus, the
allocation of the counterparty sector shall be based on the characteristics of the holding company.

Final Q&A
Answer prepared by:
Answer prepared by the EBA.