Question ID:
2020_5495
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Topic:
Supervisory reporting - FINREP (incl. FB&NPE)
Article:
99
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (as amended)
Article/Paragraph:
ANNEX III, ANNEX IV, F09.01.1
Disclose name of institution / entity:
No
Type of submitter:
Competent authority
Subject Matter:
FINREP Loan commitments, financial guarantees and other commitments given
Question:

What should be reported in columns 0100 and 0110 for “Other commitments measured under IAS 37 and financial guarantees measured under IFRS 4” for loan commitments given?

Background on the question:

In FINREP table F09.01.1 “Off-balance sheet exposures: Loan commitments, financial guarantees and other commitments given” it is not clear what should be reported in columns 0100 and 0110 for “Other commitments measured under IAS 37 and financial guarantees measured under IFRS 4” for loan commitments in rows 0010 to 0080 for the following reason:

IFRS 9.2.3 lists all loan commitments under IFRS 9. Therefore, all not listed loan commitments should in principle be treated under IAS 37. But IFRS 9.2.1 lit. g states that the impairment regulations of IFRS 9 also apply to all those loan commitments that in principle do not fall under IFRS 9.

Due to the fact that columns 0010 to 0065 in F09.01.1 already include nominal amount or provisions on off-balance sheet commitments and financial guarantees under IFRS 9 impairment it is not clear what should be reported in columns 0100 and 0110 “Other commitments measured under IAS 37 and financial guarantees measured under IFRS 4” for loan commitments. We expect that all loan commitments should be treated under IFRS 9 and values for rows 0010 to 0080 can only be reported in columns 0010 to 0065 and columns 0100 and 0110 should be greyed out for these rows. This is also consistent with the column header that does not refer to loan commitments.

If EBA is not of the opinion to grey out these cells, we ask for clarification about the content of these cells for loan commitments. More concretely, does EBA expect to report revocable commitments as loan commitments in columns 0100 and 0110 or should revocable commitments be reported under other commitments in table F09.01.1? Then we also suggest to amend the column header accordingly to “Loan commitments and other commitments measured under IAS 37 and financial guarantees measured under IFRS 4”

Date of submission:
11/09/2020
Published as Final Q&A:
19/03/2021
EBA Answer:

In template F 09.01.01 of Annex II to Regulation (EU) No 680/2014 (ITS on Supervisory Reporting), the breakdown of off-balance sheet exposures in: loan commitments given; financial guarantee given and other commitments, is set out in accordance with Annex I of Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR).

The scope of ‘loan commitments’ in accordance with the CRR is broader than the definition of ‘loan commitments’ in accordance with IFRS 9 since it includes both ‘irrevocable’ and ‘revocable’ loan commitments. In other terms, some of the loan commitments listed in Annex I CRR do not comply with the definition of loan commitment of IFRS 9 Appendix A because they are ‘revocable’ (they are outside the definition of ‘loan commitments’ of IFRS 9. Please refer also to IFRS 9 BC5.243).

 

In Annex V, paragraph 104 states that:

 

104.      Loan commitments, financial guarantees and other commitments given listed in Annex I to CRR may be instruments that are in the scope of IFRS 9 where they are measured at fair value through profit or loss, or where they are subject to the impairment requirements of IFRS 9, as well as instruments that are within the scope of IAS 37 or IFRS 4.

 

 

Therefore, the following cases can be identified:

 

1)         ‘loan commitments’ listed in IFRS 9.2.3 that can be reported under columns 0010 to 0065 in accordance with paragraph 109 of Annex V or under columns 0120 and 0130 in accordance with paragraph 110 of Annex V or they can be outside the template F 9.01.01 (e.g. they are derivatives);

 

2)         ‘loan commitments’ that meet the IFRS 9 definition of ‘loan commitment’ but they are outside of IFRS 9, except for impairment requirements as stated in IFRS 9.2.1.(g). They shall be reported in columns 0010 to 0065;

 

3)         ‘loan commitments’ that do not meet the IFRS 9 definition (e.g. they are revocable), then they are entirely dealt with under IAS 37. These commitments are not considered as ‘loan commitments’ in accordance with IFRS 9, therefore neither the impairment requirements of IFRS 9 can be applied. They shall be reported in columns 0100 and 0110.

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