Advice is needed with regards to the eligibility of classification within the participation line in QRT S.01.02 (cell A6).
The log specifies that this item is applicable only for those assets reported within CIC categories 3x and 28 (in combination with S.06.02 participation flag different than “N” and linked flag “N”). In particular further guidelines are needed to clarify whether or not it is possible to extend the scope of assets included within participations to:
- CIC code 4x: in our Group we have several cases of investment funds fully consolidated under IFRS standards that, strictly applying LOGs’ provisions, would be excluded from participations only because of their CIC classification. We believe those assets shall be qualified as participations and wonder whether we should flag them within CIC 3x or enlarge the scope of participations to CIC codes 4x.
- CIC code 8x: intra-Group subordinated lending in the form of loans is common and, under our point of view, assets falling in this category shall be included in the scope of participations for Solvency II purposes, as there are no material differences with respect to asset category 28.
In fact there was a mistake in template S.06.02. The LOG of this template was amended for the public consultation of the Technical Standard.
Assets with CIC category 4 (CIU) could be classified as participation if relevant.
Subordinated debt cannot be classified as participation. Similarly, assets in CIC category 8 cannot be classified as participations. Intragroup subordinated loans have to be reported separately in the balance sheet under the relative category (loans and mortgages).
However, please note that in the template Participations (not included in preparatory phase) information on whether the undertaking holds subordinated debt of any participation will be required.