Are deposits maintained by entities meeting the literal requirements of Article 4(1)(26) CRR excluded from the coverage of the Deposit Guarantee Schemes (DGS)?
The application and extension of the Financial Institution definition contained in Article 4(1)(26) CRR seems clear within the scope of said regulation, Directive 2013/36/EU (the Capital Requirements Directive or CRD) and its national implementing regulations.
As in practice some national regulations implementing other Directives like Directive 2014/59/EU (Bank Recovery and Resolution Directive or BRRD) or Directive 2014/49/EU (Deposit Guarantee Schemes Directive or DGSD) make reference to the Financial Institutions definition, for the sake of precision and legal certainty, there is a need to clarify said definition outside the scope of CRR.
We have found three answers in EBA’s Single Rulebook Q&A that tackle the definition of Financial Institution:
Two of the answers (those with Q&A310 and Q&A 857) focus on aspects strictly related to the scope of capital requirements (the former focusing on the prudential consolidation and the latter on the aim of deductions set out in CRR article 36); and
The third answer (Q&A 2676) confirmed the exclusion of deposits of certain Financial Institutions from the coverage of DGS.
In our understanding, the two first answers show that EBA’s interpretation of Financial Institutions has so far been constructed bearing in mind, that it is a concept designed to work and function in the regulatory capital environment, while the third answer confirms the exclusion of Financial Institutions from coverage from DGS. The question we are now raising may look evident, but, we think clarification is needed as to answers to Q&A 310 and Q&A 857 so far on this topic being construed and limited exclusively to capital requirements, and not automatically extended to other contexts, and, in particular, to the context of the protection granted by the DGSs under the DGSD.
We therefore ask EBA to clarify whether deposits of entities meeting the literal requirements of article 4(1)(26) CRR are to be understood excluded from coverage of the DGS, in line with the third answer on this topic given by Q&A 2676).
An answer given by EBA is this regard would confirm the non-automatic extension of answers to Q&A 310 and Q&A 857 to the scope of DGSD regarding Financial Institutions (extension that could be mistakenly understood in case EBA does not address this query).
This question has been rejected because the matter it refers to has been answered in Q&A 2676.