Third party Loan portfolios managed by the institution as loan servicer provider should be reported as memorandum item in template F 22.02? Under which row?
Some external entities (namely Public Entities) use banks’ branches and/or servicing services to grant loans to households and/or non-financial companies. The banks charge servicing fees/commissions for providing these servicing services, and keep records of those loan portfolios as memorandum items for portfolios managed as servicer provider.
As for reporting template F 22.01 in FINREP the banks report the fees and commissions income generated providing Loan servicing activities (F 22.01, r0190, c0010).
Nevertheless, it is not completely clear whether should be reported in FINREP template F 22.02 (and in that case under which row) the loan portfolio as asset involved in the servicing services provided.
Instructions in paragraph 285, Part 2 of Annex V to Regulation (EU) 2021/451 (ITS) do not explicitly specify whether third party loan portfolios managed by the institution as loan servicer provider should be reported in F 22.02 as a requirement. Indeed, it is reported in F 22.01 as Loan servicing activities but loan servicing and asset management in F 22.02 are two different concepts which cannot be assimilated (please see here below). Other rows in F 22.02 (under Asset management and in general in this template) do not fit to report loan servicing. Consequently, the appropriate solution would be not to report the loan portfolio as asset involved in the servicing services provided in F 22.02.
Paragraph 284, letter (o), Part 2 of Annex V to the ITS:
'(o) Fees from ‘Loan servicing activities’ shall include, on the income side, the fee and commission income generated by the institution providing loan servicing services and on the expense side, the fee and commission expense charged to the institution by loan service providers'.
Paragraph 285, letter (a), Part 2 of Annex V to the ITS:
'(a) ‘Asset management’ shall refer to assets belonging directly to the customers, for which the institution is providing management. ‘Asset management’ shall be reported by type of customer: collective investment undertakings, pension funds, customer portfolios managed on a discretionary basis, and other investment vehicles'.