Question ID: 2184
Regulation Reference: (EU) No 2015/2450 - templates for the submission of information to the supervisory authorities
Topic: Other
Article: N/A
Template: S.06.02
Status: Final
Date of submission: 27 Aug 2020
Question
The answer to EIOPA Q&A 1997 is misleading from our point of view. According to COMMISSION DELEGATED REGULATION (EU) 2019/981 (42 a) amending Article 187 of Delegated Regulation (EU) 2015/35, "exposures that are fully, unconditionally and irrevocably guaranteed by regional governments and local authorities [...], where the guarantee meets the requirements set out in Article 215 of this Regulation, shall be treated as exposures to the central government." As you agreed in EIOPA Q&A 1950, "when classifying an asset using the CIC table, undertakings shall take into consideration the most representative risk to which the asset is exposed to. [You agreed] that an asset that is a full faith and credit obligation of a government should be categorised with CIC 1." May you please confirm that bonds with a guarantee by regional governments should receive CIC 13 third and fourth position; bonds with a guarantee by local authorities should receive CIC 14 third and fourth position since the risk is the decisive criteria for the CIC classification?
Background of the question
Focussing on the guarantee and the risk structure of financial instruments and consequently assigning bonds issued and guaranteed by the same institution to the same CIC, is necessary in order to present a consistent picture between IFRS and the Asset QRTs. For example, in IFRS, the decisive factor to define government bonds is the question of liability and consequently the guarantee. A different interpretation would lead to a different CIC for bonds with the same risk structure (both have a guarantee from the same federal state). This contradicts the idea of the CIC to cluster the basic risk structure. In case you don’t follow our understanding, please explain the rationale.
EIOPA answer
The CIC code is an alpha-numeric code composed by 4 digits. The first two alpha digits can be either the country code or XL, XV or XT depending on whether and where the asset is listed.
The ITS on reporting indicates that regarding government bonds with a qualifying guarantee, the third and fourth position (of the CIC, which are numeric) shall be attributed by reference to the entity providing the guarantee.
Therefore, bonds with a guarantee by regional governments should receive CIC 13 and bonds with a guarantee by local authorities should receive CIC 14