Question ID:
2020_5253
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Topic:
Liquidity risk
Article:
428h
Paragraph:
1
Subparagraph:
(c)
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Article/Paragraph:
Not applicable
Disclose name of institution / entity:
No
Type of submitter:
Credit institution
Subject Matter:
Counterparties referred to in Article 428h (1) (c) CRR
Question:

Does Article 428h (1) (c) of regulation 2019/876, amending Regulation No 575/2013, imply that the counterparty necessarily must be a bank?
More specifically, would this condition also be met if the counterparty is a private limited liabilities company, which according to Regulation 575/2013 is not required to apply the NSFR?

Background on the question:

Article 428h(1) of Regulation No 575/2013 as amended by Regulation (EU) 2019/876 (CRR) specifies conditions for preferential treatment within a group or within an institutional protection scheme. Of these four named conditions, (c) determines that “the counterparty applies a required stable funding factor that is equal to or higher than the higher available stable funding factor or applies an available stable funding factor that is equal to or lower than the lower required stable funding factor;”.

As our institute has a private limited liabilities company as a counterparty, it is of great interest to understand better whether Article 428h (1) (c) applies to such a counterparty as well.

Date of submission:
13/05/2020
Published as Final Q&A:
24/09/2021
Final Answer:

Article 428h(1) of Regulation (EU) No 575/2013 (CRR) requires that all conditions specified in Article 428h(1) CRR are met.

While the list of eligible counterparties referred to in Article 428h(1)(a) CRR does not limit the application of this discretion to institutions, Article 428h(1)(c) CRR states that “the counterparty applies a required stable funding factor that is equal to or higher than the higher available stable funding factor or applies an available stable funding factor that is equal to or lower than the lower required stable funding factor”.

A counterparty that is not subject to the net stable funding requirement as referred to in Article 413(1) CRR and further specified in Title IV of Part Six of the CRR cannot fulfill the requirement of Article 428h(1)(c) CRR. Hence, since the NSFR only applies to institutions, and, at consolidated level, to the entities referred to in Article 11(2) CRR, only these entities are effectively in the scope of counterparties referred to in Article 428h(1)(a) CRR, and the discretion more generally.

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