Regarding the definition of “financial customer”, CRR Art. 411 (1) requires firms to consider whether the customer is one of the types of entity set out under points (a) – (j); or whether it performs one or more of the CRD Annex I activities as its “main business”.

Subsidiaries of non-financial corporates may undertake a variety of activities for different purposes.

In some cases, these activities are clearly “financial” and are would not have to be undertaken by the wider corporate group if not carried out by the subsidiary - for example, a leasing captive as referred to in EBA Q&A 2013_364. Such entities may exist in isolation of the group, operate autonomously and could be disposed without having its activities transferred elsewhere in the corporate group.

In other cases, the activity is undertaken solely to support the corporate group, which would not be able to operate without it. For example, a subsidiary which issues debt into the market on behalf of the parent and distributes (upstream) the proceeds. Such an entity would not exist in isolation of the group and could not operate autonomously. The activity itself would be required by the corporate entity irrespective of whether it was undertaken by a separate entity, or a cost centre within the parent legal entity.

Looking at the examples above, it is clear that the main “purpose” of these entities is different, suggesting it is relevant for assessing the “main business” of a customer.