November 14, 2017

EBA published its final guidelines on the treatment of connected clients as defined in the Capital Requirements Regulation (CRR; EU Regulation No 575/2013). These guidelines shall apply from January 01, 2019.

The guidelines clarify that institutions should make use of their clients' consolidated financial statements when assessing the existence of control. They also provide a non-exhaustive list of indicators of control that institutions should use when assessing clients to which EU accounting rules do not apply; these clients could be natural persons, central governments, and clients that prepare consolidated financial statements in accordance with the accounting rules of a third country. Regarding the assessment of interconnections based on economic dependencies, the final guidelines confirm the requirement to consider two or more clients a single risk when funding or repayment difficulties of one client are likely to affect other client. Guidance is also provided on the assessment of situations where control and economic dependency are interlinked and can, therefore, lead to the existence of one group of connected clients, as opposed to two separate groups of connected clients.

The guidelines expect institutions to identify all control relationships and to take reasonable steps to investigate and identify economic dependencies among their clients. The guidelines apply to all areas of the CRR where the concept of group of connected client is used, including the EBA technical standards and the EBA guidelines that refer to that concept. These guidelines aim to support institutions in identifying all possible connections among their clients, particularly when control relationships or economic dependency should lead to the grouping of clients because they constitute a single risk.

 

Related Links 

Effective Date: January 01, 2019

Keywords: Europe, Banking, Connected Clients, CRR, Large Exposures, EBA

Related Articles
News

EBA Report Assesses Regulatory Framework for Fintech Activities

EBA published the findings of its analysis on the regulatory framework applicable to fintech firms when accessing the market.

July 18, 2019 WebPage Regulatory News
News

OSFI Revises Capital Requirements for Operational Risk for Banks

OSFI is revising its capital requirements for operational risk, in line with the final Basel III revisions published by BCBS in December 2017.

July 18, 2019 WebPage Regulatory News
News

OSFI Consults on Revised Principles for Management of Liquidity Risk

OSFI proposed revisions to Guideline B-6 on the principles for the management of liquidity risk.

July 18, 2019 WebPage Regulatory News
News

ESMA Guidance on Disclosures for Credit Rating Sustainability Issues

ESMA published the technical advice on sustainability considerations in the credit rating market, along with the final guidelines on disclosure requirements applicable to credit ratings.

July 18, 2019 WebPage Regulatory News
News

FASB Issues Q&A on Estimation of Expected Credit Losses by Firms

FASB issued a second question-and-answer (Q&A) document that addresses more than a dozen frequently asked questions related to the Accounting Standards Update No. 2016-13 titled “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”

July 17, 2019 WebPage Regulatory News
News

US Agencies Delay Enforcing Volcker Rule Restrictions on Foreign Funds

US Agencies (FDIC, FED, and OCC) announced that they will not take action related to restrictions under the Volcker Rule for certain foreign funds for an additional two years.

July 17, 2019 WebPage Regulatory News
News

SRB Announces SRF Receives Cash Injection, Grows to EUR 33 billion

SRB announced that the Single Resolution Fund (SRF or the Fund) received a cash injection of EUR 7.8 billion from 3,186 institutions in 2019, bringing the total amount in the Fund to about EUR 33 billion.

July 17, 2019 WebPage Regulatory News
News

FASB to Propose to Delay CECL Compliance Deadline for Certain Entities

FASB published a summary of the tentative decisions taken at its Board meeting in July 2019.

July 17, 2019 WebPage Regulatory News
News

IMF Publishes Report on 2019 Article IV Consultation with Vietnam

IMF published its staff report in context of the 2019 Article IV consultation with Vietnam.

July 16, 2019 WebPage Regulatory News
News

European Parliament Elects Next President of European Commission

European Parliament elected Ursula von der Leyen from Germany as the first female President of the next European Commission for a five-year term from November 01, 2019.

July 16, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3476