• Question ID: 2021/0002
• Date of publication: 21/05/2021
• Subject matter: General clarifications, Special categories of counterparties

The obligation of investment firms authorised as credit institutions to report under AnaCredit

Question

The regulatory and prudential environment for investment firms has recently changed significantly as a result of the Investment Firm Regulation^[1] (IFR) and Investment Firm Directive^[2] (IFD) (collectively known as the “IFR/IFD Framework”). Most of the IFR’s provisions will become directly applicable in all Member States on 26 June 2021. Among other things, the IFR amends the definition of credit institution laid down in the Capital Requirements Regulation^[3] (CRR) and requires investment firms satisfying various eligibility criteria to apply for a licence as a credit institution and become subject to the requirements of the CRR and the Capital Requirements Directive^[4] (CRD) in the same manner as any credit institution. Under the AnaCredit Regulation^[5], resident credit institutions are obliged to report granular credit and credit risk data to their relevant national central bank (NCB).

In this context, the question arises whether investment firms that are to be authorised as credit institutions will be required to report under AnaCredit, and, if so, when will they have to start such reporting.

Answer

The IFR/IFD Framework introduces a new classification of investment firms into categories based on their activities, size, and interconnectedness with other financial and economic actors. As a result, investment firms are subject to differentiated requirements depending on their category. The category entitled “Class 1 investment firms” covers systemic investment firms or investment firms that are exposed to the same types of risks as credit institutions to which the full CRR/CRD applies.

Consequently, with the amendments to the CRR introduced in Article 62 of the IFR, the CRR definition of credit institution has changed to the effect that “‘credit institution’ means an undertaking the business of which consists of any of the following:

1. to take deposits or other repayable funds from the public and to grant credits for its own account;
2. to carry out any of the activities referred to in points (3) and (6) of Section A of Annex I to Directive 2014/65/EU of the European Parliament and of the Council^[6], where one of the following applies, but the undertaking is not a commodity and emission allowance dealer, a collective investment undertaking or an insurance undertaking:
   1. the total value of the consolidated assets of the undertaking is equal to or exceeds EUR 30 billion;
   2. the total value of the assets of the undertaking is less than EUR 30 billion, and the undertaking is part of a group in which the total value of the consolidated assets of all undertakings in that group that individually have total assets of less than EUR 30 billion and that carry out any of the activities referred to in points (3) and (6) of Section A of Annex I to Directive 2014/65/EU is equal to or exceeds EUR 30 billion; or
   3. the total value of the assets of the undertaking is less than EUR 30 billion, and the undertaking is part of a group in which the total value of the consolidated assets of all undertakings in the group that carry out any of the activities referred to in points (3) and (6) of Section A of Annex I to Directive 2014/65/EU is equal to or exceeds EUR 30 billion, where the consolidating supervisor, in consultation with the supervisory college, so decides in order to address potential risks of circumvention and potential risks for the financial stability of the Union;

for the purposes of points (b)(ii) and (b)(iii), where the undertaking is part of a third‐country group, the total assets of each branch of the third‐country group authorised in the Union shall be included in the combined total value of the assets of all undertakings in the group”.

As a result, the amended CRR definition of credit institutions implies that undertakings which meet point (a) above remain classified as credit institutions, and also that investment firms which meet any of the points (b)(i) to (b)(iii) (i.e. “Class 1 investment firms”) will be required to apply for a license as a credit institution and will thereafter be subject to the CRR/CRD requirements in the same manner as any credit institution. Notably, an authorisation by the competent authority as a credit institution is a necessary condition for an investment firm to become (and remain) a credit institution as defined in the amended CRR definition.

AnaCredit uses the definition of credit institution as set out in the CRR, and as amended by the IFR, to define the population of entities that fall within its scope. Specifically, resident^[7] credit institutions and resident foreign branches of credit institutions, regardless of whether they are institutions supervised under the CRD^[8] or not, are subject to the AnaCredit reporting requirements.

The change in the definition of credit institution implies that investment firms which are authorised by the competent authority as a credit institution will become, under Article 3 of the AnaCredit Regulation, part of the AnaCredit actual reporting population and thus subject to reporting under AnaCredit.

The first reference date in relation to which such investment firms will be required to report to AnaCredit is the last day of the month in which the authorisation as a credit institution by the competent authority becomes effective, provided that the relevant NCB has not granted a derogation in accordance with Article 16(1) of the AnaCredit Regulation. More specifically, where the investment firm has an authorisation as a credit institution by the close of the last day of a month, the investment firm fulfils the definition of reporting agent under AnaCredit as at the end of the respective month and is in principle required to report the statistical information to the relevant NCB by the respective deadline set out by the NCB under Article 13(2) of the AnaCredit Regulation.

The amended definition of credit institution entered into force on 25 December 2019 and will be applicable as of 26 June 2021. Investment firms meeting the necessary requirements may only be authorised by the competent authority as a credit institution after that date. No investment firm will therefore be subject to the reporting requirements under AnaCredit before 30 June 2021. Nonetheless, the investment firms concerned should proceed with preparation for reporting under AnaCredit without delay.

The relevant NCB may grant a partial or full derogation to investment firms authorised as a credit institution, depending on the outstanding amount of their loans and provided that the conditions set out in Article 16(1) of the AnaCredit Regulation have been met.

Furthermore, if investment firms authorised as credit institutions are unable to fulfil their AnaCredit reporting obligations without a delay, the relevant NCB may authorise investment firms to alleviate their reporting burden by fulfilling their AnaCredit reporting obligation through temporary procedures, as set out in Article 15(2) of the AnaCredit Regulation. Such temporary procedures may include a temporary postponement of reporting for a period not exceeding six months. Decisions on the approval of a temporary procedure are taken by the relevant NCB on a case-by-case basis.