Question ID: 3064
Regulation Reference: (EU) 2022/2454 - ITS with regard to supervisory reporting of risk concentrations and intra-group transactions (FICOD
Topic: Reporting templates on risk concentrations and intra-group transactions for conglomerates (FICOD)
Article: Annex II
Status: Final
Date of submission: 03 Apr 2024
Question
Annex II to the Final Draft Report briefly mentions the “waterfall” example: A invests in B (e.g. purchases shares), B in C and C in D, where B and C are unregulated units of the conglomerate. This transaction shall be taken into account as specified. => In my view, A would not have to report a transaction (since investment does not meet a liability, see above), B and C would not have to act as they are not supervised, only D would have to report, as a supervised entity and through the sale of shares, funds flow, namely transaction A => D. Is this view correct?
Background of the question
Confirmation is sought on how to report a cascade of transaction.
EIOPA answer
For the purpose of intra-group transaction reporting, the Annex II of Commission Implementing Regulation (EU) 2022/2454 (section 2.1, 3.1, 4.1, 5.1 and 6.1) clarifies that “where there is a chain of related intra-group transactions (e.g. A invests in B and B invests in C), such transaction shall be reported as an indirect transaction. Therefore, A to C transactions shall be reported and the intermediary steps shall be mentioned in the comments. In the case of a cascade of transactions (e.g. from A to B to C to D sequentially, where both B and C are in the conglomerate but are unregulated entities), those transactions shall also be reported.”
In accordance with the above general guideline and the instruction provided for columns 0020, 0040, 0050, 0070 and 0080, the following approach shall apply :
- In case where intermediary entities are part of the financial conglomerates, including non regulated entities, each step shall be reported in a separate line and a specific ID shall be provided column 0080 in order to identify the transactions comprised in a given chain;
- In case where intermediary entities are third parties, only the transactions between entities that are part of the financial conglomerates shall be reported in a separated lines, intermediary steps involving third parties have to be mentioned in comment.
Below a simplified illustration of the reporting expectations where A (a bank of the financial conglomerate) lend to B (third party) which in turn lend to C (an investment firm of the financial conglomerate) which in turn lend to D (an insurance of the financial conglomerate):
Identification of the transaction |
Comments |
|||||
ID of the intragroup transaction |
Identification of the parties involved |
Indirect transactions |
||||
Investor/l ender name |
Sector of the investor/lender |
Issuer/borro wer name |
Sector of the issuer/borrower |
|||
FC0010 |
FC0020 |
FC0040 |
FC0050 |
FC0070 |
FC0080 |
FC0210 |
1 |
A (FICO BANK) |
banking sector |
C (FICO IF) |
investment services sector |
IT1 |
Intermediary steps through THIRD PARTY X |
2 |
C (FICO IF) |
investments services sector |
D (FICO insurance) |
insurance sector |
IT1 |
NA |