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QA2019-1 - CFR - Time for substitution

QA2019-1 - CFR - Time for substitution

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Feb 01, 2024
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QA2019-1

Question


How should we assess the time for the substitution, is it: (i) the time until the client can find the alternative service provider in the market, or ii) the time for taking over the entire portfolio?


Response


The view to be taken is that of a failing institution. This means all clients need to either (i) find an alternative provider themselves or (ii) obtain similar services following a transfer of the portfolio, whichever is quicker. In both cases, the number of alternative providers, their ability to take over the clients, and information on whether some clients already use alternative providers need to be taken into account (see guidance 2.4.4). For deposits, it mainly concerns the financial, operational and technical capacity of alternative providers to offer deposit-taking services to the reporting bank’s customers and not the transfer of the deposits to another provider as the consequence of an act by an authority or the receipt of compensation from the DGS. For lending, this should not refer to a run-off of the outstanding portfolio, but rather to the ability of households, corporates and governments to obtain similar loans from other providers.