Question ID
2023_6842
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Transparency and Pillar 3
Article
449a
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Regulation (EU) 2021/637 - ITS with regard to disclosures of information referred to in Titles II and III of Part Eight CRR
Article/Paragraph
18a and Annex II
Name of institution / submitter
French Banking Federation / Karen Degouve
Country of incorporation / residence
France
Type of submitter
Industry association
Subject matter
Template 3 / Exposures to companies operating in several sectors
Question

In Template 3, should corporate exposures corresponding to general-purpose financing lines be split across different sectors according to “the counterparties’ activity distribution, including by counterparties’ turnover by activity” (and therefore several different NACE codes), or should corporate exposures be fully allocated to one NACE code only corresponding to its main activity (as in template 1)? In the first option, how granular is the activity distribution expected to be reported, is there a minimum threshold of turnover to start reporting an activity? How is the information expected to be collected if not communicated by the corporates, can external data providers be used?

Background on the question

Banks do not know how corporate exposures are expected to be reported, similar to differently to template 1, hence clarification is needed.

Submission date
Final publishing date
Final answer

According to point (d) of paragraph 4 in the instructions of Template 3 “Banking book - Indicators of potential climate change transition risk: Alignment metrics” in Annex XL of Regulation (EU) 2021/637 (ITS on Pillar 3 disclosures), in column (c) institutions shall disclose “[…] the gross carrying amount as defined in Part 1 of Annex V to Implementing Regulation (EU) 2021/451 of those exposures towards non-financial corporates in each of the sectors specified in columns (a) and (b), including loans and advances, debt securities and equity instruments, classified in the accounting portfolios in the banking book in accordance with that Implementing Regulation, excluding financial assets held for trading or held for sale assets.” In addition, according to a subparagraph under point (e) of the same paragraph, “[…] For loans whose use of proceeds is unknown, the gross carrying amount of the exposure shall be allocated to the relevant sectors and alignment metrics based on the counterparties’ activity distribution, including by counterparties’ turnover by activity. [...]”

Paragraph 3 of the same instruction also states, that “Institutions that are already estimating information on their sectoral alignment to the Paris Agreement shall disclose the information in this template. Institutions are to explain in the narrative part accompanying the template the method used and the data source. […]”

Taking into account the above, the value in column (c) shall present the exposures to the sectors mentioned in column (a) and (b). These sectors may not be limited to the principal activity of the counterparties for loans whose use of proceeds is unknown, like general purpose financing could be.

A non-exhaustive list for NACE codes to be considered has been added under Template 3 in Annex XXXIX of ITS on Pillar 3 disclosures, that could be also used as a basis for the level of granularity for NACE codes, but in principle, those sectors shall be disclosed deemed material for the purpose of this template. The institutions are allowed to set relevant thresholds, if necessary, in their internal policies, and to use external data providers, proxies and estimates for the allocation of exposures to the applicable sectors. The usage of such thresholds and estimates by the institutions shall then be explained in the accompanying narrative related to the template.

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

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