Question
Could you please confirm whether, following the implementation of Regulation (EU) 2024/1623 of the European Parliament and of the Council amending Regulation (EU) No 575/2013 (Capital Requirements Regulation 3 – CRR3), institutions will be required to report subordinated debt holdings differently in FINREP and COREP.
Background on the question
Under Fin Rep the definition of subordinated assets includes any asset which is not highest in the order of priority. [Para 45 refers to a detailed definition in para 54: “Subordinated debt” instruments provide a subsidiary claim on the issuing institution that can only be exercised after all claims with a higher status have been satisfied”]. CRR3 introduces the concept of subordinated debt exposures under Article 128. This classification is prudential, based on eligibility for resolution/MREL purposes, and does not strictly follow legal ranking in insolvency. For example, a bond flagged as senior but treated as subordinated for CRR3 purposes would remain senior in FINREP unless its prospectus includes contractual subordination clauses.
Answer
This Q&A has been rejected because answering it may pre-empt policy work currently in progress on Level 2 and 3.