List of Q&As

Legal requirements for the authentication procedure when SCA exemptions are applied for remote payment transactions

What are the legal requirements for the type of authentication procedure used when conditions for the application of of Strong customer authentication (SCA) exemption for remote payment transactions are fulfilled?

Legal act: Directive 2015/2366/EU (PSD2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2018/389 - RTS on strong customer authentication and secure communication

ID: 2020_5673| Topic: Strong customer authentication and common and secure communication (incl. access)| Date of submission: 28/12/2020

Requirements towards SCA if association is done based on phone call

Does the requirement to apply Strong customer authentication (SCA) under Article 24 paragraph 2 b of Regulation (EU) 2018/389 - RTS on strong customer authentication and secure communication apply when customer is served using telephone call? Or is the only possibility to associate authentication credentials with the customer not having active credentials at hand, only possible having customer present?

Legal act: Directive 2015/2366/EU (PSD2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2018/389 - RTS on strong customer authentication and secure communication

ID: 2020_5650| Topic: Strong customer authentication and common and secure communication (incl. access)| Date of submission: 09/12/2020

Delegation of 2-Factor Authentication (2FA) to PISP, AISP or other third party

Where a Payment Service Provider (PSP) is providing financial services via a third party application - either through a Payment Initiation Services Provider (PISP), Account Information Service Provider (AISP) or by providing embedded financial products or banking as a service solutions (i.e. financial services via an Application Programming Interface (API)) - is it permitted for the PSP to delegate the application of 2-Factor Authentication (2FA) to the third party?

Legal act: Directive 2015/2366/EU (PSD2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2018/389 - RTS on strong customer authentication and secure communication

ID: 2020_5643| Topic: Strong customer authentication and common and secure communication (incl. access)| Date of submission: 03/12/2020

Meaning of ‘intragroup’ for the purpose of reporting in COREP template C 67.00

What is the scope of ‘intragroup counterparties’ for the purposes of classification of funding in COREP template C 67.00, column 050 (Product Type)? Is particular, can funding from a parent entity in a third country be considered ‘intragroup’?

Legal act: Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (as amended)

ID: 2020_5638| Topic: Supervisory reporting - Liquidity (LCR, NSFR, AMM)| Date of submission: 30/11/2020

v3078_m - Maximum Amount of Guarantee Given

Should the maximum amount of guarantee given reported in F_09.02 be capped at the carrying amount or nominal amount after deduction of provisions of the related exposure?

Legal act: Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2020_5634| Topic: Supervisory reporting - FINREP (incl. FB&NPE)| Date of submission: 27/11/2020

Collateral obtained by taking possession: Classification as Residential or Commercial

Clarification of the applicable criteria for the classification of foreclosed asset as Residential or Commercial in FINREP templates

Legal act: Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (as amended)

ID: 2020_5632| Topic: Supervisory reporting - FINREP (incl. FB&NPE)| Date of submission: 25/11/2020

Conditions for the usage of the net present value when calculating open positions in each currency and in gold.

According to Article 352 para. (3) of Regulation (EU) No 575/2013 (CRR) as amended, insitutions have the option to use the net present value when calculating the net open position in each currency and in gold provided that the institution applies this approach consistently. Which requirements have to be met in order to consider the approach as applied consistently?

Legal act: Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2020_5631| Topic: Market risk| Date of submission: 25/11/2020

Treatment of non-performing exposures underlying a CIU

Could you clarify if non-performing exposures underlying a CIU should be subject to deductions in accordance with point (m) of article 36(1) of CRR2 when using the look-through approach in accordance with article 132a(1) of CRR2 or the mandate based approach in accordance with article 132a(2) of CRR2?

Legal act: Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2020_5629| Topic: Credit risk| Date of submission: 19/11/2020

Is the activity of pension fund administrators included in the "Portfolio management and advice" and thus, pension fund administrators qualify as financial institutions?

Is the activity of pension fund administrators included in the "Portfolio management and advice" and thus, pension fund administrators qualify as financial institutions?

Legal act: Directive 2013/36/EU as amended by Directive (EU) 2019/878 (CRD5)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2020_5628| Topic: Other issues| Date of submission: 19/11/2020

Leverage Exposure Exclusion for guaranteed parts of Export Credit

I am seeking to clarify whether a qualifying guarantee which meets the conditions of Article 429.a.1.f, can only be used to reduce the Exposure of On Balance sheet Export related Credit (i.e. drawn amounts) or whether it can also be applied to the Off Balance Sheet exposures related to Export Credits, such as the undrawn portion of an Export related Facility. It isn't clear whether the qualifying guarantees can be used to reduce drawn and undrawn exposures related to export credits or just the drawn. Grateful if this can be clarified please.

Legal act: Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Delegated Regulation (EU) 2015/62 - DR with regard to the leverage ratio

ID: 2020_5627| Topic: Leverage ratio| Date of submission: 18/11/2020

Subcontractor of electronic money distributor

Does Article 3, paragraph 4 of Directive 2009/110/EC (EMD) mean that that a legal person acting as an electronic money distributor on behalf of an electronic money institution may enter into a contract with another legal person (subcontractor) for the execution of distribution and redeeming of electronic money? Or on the contrary, an electronic money distributor may not use subcontractors to distribute electronic money in the name of the electronic money institution under EU law?

Legal act: Directive 2009/110/EC (EMD)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2020_5624| Topic: Not applicable| Date of submission: 17/11/2020

Application of SCA to issuing a payment instrument and tokenisation

Is strong customer authentication (SCA) required when a Payment Service Provider (PSP) issues a payment instrument or creates a token?

Legal act: Directive 2015/2366/EU (PSD2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2018/389 - RTS on strong customer authentication and secure communication

ID: 2020_5622| Topic: Strong customer authentication and common and secure communication (incl. access)| Date of submission: 16/11/2020

Use of new technology for SCA

Is a Payment Services Provider (PSP) allowed to adopt innovative technologies for verifying Payment Services Users (PSUs) where the PSP maintains fraud levels below a certain threshold?

Legal act: Directive 2015/2366/EU (PSD2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2018/389 - RTS on strong customer authentication and secure communication

ID: 2020_5621| Topic: Strong customer authentication and common and secure communication (incl. access)| Date of submission: 16/11/2020

Use of behavioural data for SCA

Can a Payment Service Provider (PSP) use behavioural data and auditable scores to apply Strong customer authentication (SCA) in a way that protects consumer privacy?

Legal act: Directive 2015/2366/EU (PSD2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2018/389 - RTS on strong customer authentication and secure communication

ID: 2020_5620| Topic: Strong customer authentication and common and secure communication (incl. access)| Date of submission: 16/11/2020

Independence of the elements for SCA

Can a Payment Service Provider (PSP) apply Strong customer authentication (SCA) using elements from the same category provided that the elements are independent (i.e. breach of one does not compromise reliability of the other elements)?

Legal act: Directive 2015/2366/EU (PSD2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2018/389 - RTS on strong customer authentication and secure communication

ID: 2020_5619| Topic: Strong customer authentication and common and secure communication (incl. access)| Date of submission: 16/11/2020

Clarification regarding the CRRII article 152c and ITS DPM3.0 instructions

According to the CRR2 amendments, it is introduced a new method for the calculation of the risk-weighted exposure amount for institutions that apply the look-through approach. It is requested a clarification on the treatment of the units investment fund under the permanent partial use and, thus, subject to the provisions of article 152 (referred to CIUs under IRB approach). Assuming that the bank applies the look-through approach and the underlying exposures of CIU are composed as follows: - 1.000 in equity instrument; - 300 instruments issued by an internally rated bank (i.e. covered under IRB approach); - 200 in government bond (i.e. valued under Standardised approach as the bank has not internal model for such exposure class). We also assume that the institution helds 30% of the units in investmend funds. It is possible to consider the following two approaches to fill-in CoRep templates with reference to the underlying exposures: OPTION A: it is recognized the possibility to use the IRB methods to the underlying exposures although the exposure in CIU - 300 (i.e. 30%*1000): equity instruments for which is applied the simple risk weight (as requested by article 152(4)) and consequently included in the template C10.01; - 90 (i.e. 30%*300): instruments issued by the rated bank and thus included in the template C08.01 - Asset class Institution; - 60 (i.e. 30%*200): instruments related to government bond included in the template C07.00 in the new field - Look-through Approach. OPTION B: the underlying exposures of CIU are valued at standardized approach given that the exposure in CIU is under permanent partial use - 300 (i.e. 30%*1000): equity instruments for which is applied the standard approach (i.e. risk weight at 100%) and included in the template C07.00 in the new field - Look-through Approach; - 90 (i.e. 30%*300): instruments issued by the rated bank valued with the standard approach (i.e. based on ECAI ratings) and included in the template C07.00 in the new field - Look-through Approach. - 60 (i.e. 30%*200): instruments related to government bond included in the template C07.00 in the new field - Look-through Approach. Which of these options is the correct one to be applied?

Legal act: Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Draft ITS on Supervisory Reporting of Institutions

ID: 2020_5618| Topic: Supervisory reporting - COREP (incl. IP Losses)| Date of submission: 16/11/2020

Consideration of posted variation margin in LRCalc, when conditions of Article 429c (3) point (a) to (e) are met

Following the second sentence of Article 429c (3) provided cash collateral, which meets all the conditions set out in points (a) to (e) of Article 429c (3), shall be considered as variation margin posted to the counterparty and shall be included in the calculation of the replacement cost of the netting set under SA-CCR for leverage ratio. We kindly ask EBA for instructions how to consider cash variation margin provided to the counterparty, when points (a) to (e) of Article 429(c) are met, in LRCalc.

Legal act: Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Draft ITS on Supervisory Reporting of Institutions

ID: 2020_5617| Topic: Supervisory reporting - Leverage ratio| Date of submission: 16/11/2020

Adding to own funds the unredeemed part of own funds.

When and under what conditions can the unredeemed own fund, for the redemption of which an institution has previously obtained approval from the competent authority CA (under Article 29 of Regulation (EU) 241/2014 ), be included in the own funds again?

Legal act: Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 241/2014 - RTS for Own Funds requirements for institutions

ID: 2020_5615| Topic: Own funds| Date of submission: 13/11/2020

Validation rules between template F 18.01 and F 24.01

We have three groups of rules affected: A. There are these validations in template F 18.01 : Template ID columns Formula F 18.01 v7866_m (0010) {r0050} >= {r0070} + {r0080} F 18.01 v7867_m (0010) {r0050} >= {r0090} F 18.01 v7868_m (0010) {r0100} >= {r0110} F 18.01 v7869_m (0010) {r0100} >= {r0120} F 18.01 v8114_m (0010) {r0050} >= {r0060} F 18.01 v8115_m (0010) {r0060} >= {r0070} F 18.01 v8116_m (0020) {r0050} <= {r0060} F 18.01 v8117_m (0020) {r0060} <= {r0070} B. There are validations between these templates: ID Formula v8509_i {F 18.01, r0060, c0010}=={F 24.01, r0020, c0050} v8510_i {F 18.01, r0060, c0020}=={F 24.01, r0120, c0050} v8511_i {F 18.01, r0070, c0010}=={F 24.01, r0020, c0060} v8512_i {F 18.01, r0070, c0020}=={F 24.01, r0120, c0060} v8513_i {F 18.01, r0080, c0010}=={F 24.01, r0020, c0070} v8514_i {F 18.01, r0080, c0020}=={F 24.01, r0120, c0070} v8517_i {F 18.01, r0110, c0010}=={F 24.01, r0020, c0030} v8518_i {F 18.01, r0110, c0020}=={F 24.01, r0120, c0030} C. And this within template F 24.01: ID Template Formula v8051_m F 24.01 {r0320} = {r0010} + {r0020} + {r0120} Knowing that we have to comply with rule group A, rules B and C cannot be complied with simultaneously. What set of rules should we follow, B or C?

Legal act: Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (as amended)

ID: 2020_5613| Topic: Supervisory reporting - FINREP (incl. FB&NPE)| Date of submission: 13/11/2020

Reconciliation between the sum of Total Risk Exposure contributions in {C06.02;c250} and the Total Risk Exposure reported in ({C02.00;r010;c010}).

The sum of Total Risk Exposure contributions in {C06.02;c250} is not expected to differ greatly from the Total Risk Exposure reported in C02 ({C02.00;r010;c010}). However, the amount in the COREP C02 includes the RWA for entities consolidated using the equity method, while the amount in the COREP C06.02 does not, because entities consolidated using the equity method are out of the scope of this COREP. According to the reporting instructions, the entity should allocate the RWAs so that the value for the group is the sum of the values reported for each entity in ‘Group Solvency’ template. The entity consolidated using the equity method should play no role. I understand that the column 250 (and therefore columns 260 to 290) of the COREP C06.02 should not report actual risk figures, but “contributions”. According to the regulation 2014/680 Annex II paragraph 35, “The institutions shall define the most appropriate breakdown method between the entities to take into account the possible diversification effects for market risk and operational risk”. I understand that reporting entities has to split the total RWA for credit risk, market risk and operational risk (and other risks) – as reported in the COREP C02 – between entities reported in the COREP C06.02, using a breakdown method. Therefore, I understand that the “real” amount of RWA of entities consolidated using the equity method is in fine allocated to other entities. Hence, could you confirm that indeed, the amount of RWA of entities consolidated using the equity method should be allocated by the reporting entity to other entities using the “most appropriate breakdown method” in the COREP C06.02?

Legal act: Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR2)

COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable

ID: 2020_5612| Topic: Supervisory reporting - COREP (incl. IP Losses)| Date of submission: 12/11/2020