Question
Given that there is no specific guidance for where to classify Related Party balances in several templates eg 1.1, 1.2, 2.0, should Related Party balances be classifed on the nature of the underlying balance or transaction, e.g. Related Parties Loans and Advances within Loans and Advances?
Background on the question
Guidance appears unclear on this matter.
Answer
FINREP templates shall be filled in on a consolidated basis, using the prudential scope of consolidation, as defined by the Regulation (EU) No. 575/2013 (CRR) (Part 1, Paragraph 11 of Annex V of Regulation (EU) No 680/2014 - ITS on Supervisory Reporting of institutions (ITS)). That means that amounts generated in transactions with related parties which are included in the prudential scope of consolidation are eliminated in the process of consolidation and shall therefore not be reported in the FINREP templates. In the case of those related parties which are not included in the prudential scope of consolidation, the amounts generated in transactions with them shall be allocated on the basis of the nature of these transactions and the party to the transaction rather than the resulting balance and reported in more detail in templates F 31.01 and F 31.02. For this purpose, instructions to these templates (Part 2, Paragraphs 119 to 122 of Annex V of the ITS on Supervisory reporting) provide guidance on how to report them.