1 July 2015
Riga
Regulations No 103
(Financial and Capital Market Commission
Board meeting minutes No 24, Para. 2)
Regulations on the Preparation of the Report on Covered Deposits and the
Determination of Adjustment Factors Applicable to Payments into the Deposit
Guarantee Fund
Issued in accordance with
Section 11 of the Deposit Guarantee Law
I. General provisions
1. Regulations on the Preparation of the Report on Covered Deposits and the Determination
of Adjustment Factors Applicable to Payments into the Deposit Guarantee Fund (hereinafter –
the Regulations) prescribe the procedure under which the deposit taker prepares and submits
to the Financial and Capital Markets Commission (hereinafter – the Commission) the
quarterly report on covered deposits and payments into the deposit guarantee fund, as well as
the procedure under which the Commission determines the adjustment factor applicable to the
deposit taker's payment into the deposit guarantee fund.
2. The Regulations shall be binding on deposit takers to which the provisions of the
Deposit Guarantee Law apply.
3. The terms used in the Regulations are consistent with those used in the Deposit
Guarantee Law.
4. In accordance with the provisions of the Deposit Guarantee Law, once a quarter, a
deposit taker shall make a payment into the deposit guarantee fund, the amount of which shall
be 0.05 per cent of the average balance of the covered deposits with the deposit taker in the
previous quarter and to which the adjustment factor, determined by the Commission under the
Regulations, is applied.
5. When determining the adjustment factor, the Commission shall express the calculated
result in per cent to two decimal places (if the third decimal is 5 or greater, the second decimal
shall be rounded up).
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KUNGU IELĀ 1
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LV-1050 RĪGĀ
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TĀLRUNIS +371 6777 4800
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FAKSS +371 6722 5755
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E-PASTS: FKTK@FKTK.LV
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6. If a deposit taker has started its operations in the relevant calendar year and has no
indicators of its performance in the previous calendar year, the Commission shall not
determine the applicable adjustment factor.
7. By the 20th day of the first month of the following quarter, a deposit taker shall make
payments, rounded to whole cents, into the deposit guarantee fund, transferring them to the
Commission's account No LV40LACB0000000022365 with the Bank of Latvia, code
LACBLV2X.
II. Preparing the report on covered deposits and payments made into the deposit
guarantee fund
8. A deposit taker shall prepare the Report on Covered Deposits and Payments into the
Deposit Guarantee Fund (hereinafter – the quarterly report) quarterly using the form enclosed
to Annex 1 hereto, and submit it to the Commission by the 20th day of the first month of the
following quarter.
9. In the quarterly report, information on existing covered deposits with the deposit taker
shall be presented. The deposits specified in Sections 3 and 4 of the Deposit Guarantee Law
shall be presented in an aggregate amount not exceeding 100,000 euros. When determining
the amount of covered deposits, the restrictions laid down for deposits shall not be taken into
account.
10. If a depositor has several covered deposits with a single deposit taker, then, when
completing the quarterly report, all the covered deposits of a single depositor shall be
aggregated and considered one covered deposit.
11. The average balance of the covered deposits for the quarter shall be calculated as the
average mean of the balances of covered deposits of the respective months on the last day of
the month.
III. Determining an adjustment factor for banks registered in Latvia and the Latvian
branches of foreign banks
12. The Commission shall determine the adjustment factor to be applied to the payments
into the deposit guarantee fund made by a particular bank registered in Latvia and for the
Latvian branch of a foreign bank in accordance with the formula specified in Annex 2 hereto,
using the capital adequacy indicators (K1, K2), liquidity indicators (L1, L2, L3, L4), large
exposures indicators (R1, R2), loan portfolio quality indicators (Q1, Q2, Q3) and the indicators
of the banks, the activities of which are aimed at customers – non-residents (P1, P2), to be
calculated as the average mean of the quarter in the previous calendar year.
13. Capital adequacy indicators:
13.1. the capital adequacy indicator (K1) shall be determined pursuant to row “050” of the
report C 03.00 - CAPITAL RATIOS AND OWN FUNDS (CA3) of Annex 1 to the
Commission Implementing Regulation (EU) No 680/2014 of 16 April 2014 laying down
implementing technical standards with regard to supervisory reporting of institutions
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according to Regulation (EU) No 575/2013 of the European Parliament and of the
Council (hereinafter – EU regulation No 680/2014). If the Commission performs the
adjustment of own capital or capital adequacy calculation, the adjusted capital adequacy ratio
shall be used;
13.2. the ratio of the Tier I capital to risk-weighted assets (K2) shall be determined, using:
13.2.1. the sum total of the Tier I capital, determined pursuant to row “015” of the report C
01.00 – OWN FUNDS (CA1) (hereinafter – the report CA1) of Annex 1 to EU regulation No
680/2014;
13.2.2. risk-weighted assets, which are determined pursuant to row “010” of the report
C 02.00 – OWN FUNDS REQUIREMENTS (CA2) (CA2) of Annex 1 to EU regulation No
680/2014.
14. Liquidity ratios:
14.1. the ratio of highly liquid assets to total assets (L1) shall be determined, using:
14.1.1. highly liquid assets, which represent the following unencumbered assets:
14.1.1.1. cash in hand pursuant to row 1 of item 1010 of Annex 1 Report on Term
Structure of Assets and Liabilities (hereinafter – the Report on TSOAAL) of the
Commission's regulations No 195 Regulations on Liquidity Requirements, Compliance
Procedures and Liquidity of 28 December 2009 (hereinafter – Liquidity Requirements
Compliance Regulations),
14.1.1.2. claims on the Bank of Latvia with residual maturity up to seven days, pursuant to
rows 2 and 3 of item 1030 of the Report on TSOAAL,
14.1.1.3. claims on solvent credit institutions with residual maturity up to seven days,
pursuant to rows 2 and 3 of item 1040 of the Report on TSOAAL,
14.1.1.4. The Republic of Latvia government debt securities in the amount shown on row 1
of item 1061 of the Report on TSOAAL, after deducting the amount shown on row 10 of
item 1061 of the Report on TSOAAL,
14.1.1.5. The central government debt securities in the amount shown on row 1 of items
1062 and 1063 of the Report on TSOAAL, after deducting the amount shown on row 10 of
items 1062 and 1063 of the Report on TSOAAL. If necessary, the result shall be adjusted,
taking into account the requirements laid down in Paragraph 3.3 of the Liquidity
Requirements Compliance Regulations;
14.1.2. total assets pursuant to row 7 of item 200000 of Annex 1 Monthly Financial
Position Report of the Bank of Latvia Regulation No 132 Regulation for Compiling the
Monthly Financial
Position
Report
of
Monetary Financial
Institutions of
16 May 2014 (hereinafter – the Monthly Financial Position Report), after deducting the
amounts shown on row 7 of items 370100 and 370500;
14.2. when the securities referred to in Paragraph 14.1.1.5 of the Regulations are included
in the highly liquid assets calculation, the liquidity of these securities shall be assessed, i.e.
the ability to sell them within a short time without incurring considerable losses or using them
as collateral for a loan;
14.3. the ratio of non-bank loans to total assets (L2) shall be determined, using:
14.3.1. the carrying value of non-bank loans pursuant to row 1 of item 1050 of the Report
on TSOAAL;
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14.3.2. total assets in the amount shown on row 7 of item 200000 of the Monthly Financial
Position Report, after deducting the amount shown on row 7 of items 370100 and 370500 of
the same report,
14.4. the ratio of core liabilities to other assets, which are not highly liquid assets (L3),
shall be determined, using:
14.4.1. core liabilities, which represent:
14.4.1.1. deposits with a remaining term of over 361 days pursuant to row 8 of item 2020
of the Report on TSOALL,
14.4.1.2. 35 per cent of deposits with a remaining term up to 360 days pursuant to rows 2-7
of item 2020 of the Report on TSOALL,
14.4.1.3. liabilities to credit institutions with a remaining term of over 361 days pursuant to
row 8 of item 2010 of the Report on TSOALL,
14.4.1.4. subordinated liabilities with a remaining term of over 361 days pursuant to row 8
of item 2090 of the Report on TSOALL,
14.4.1.5. capital and reserves pursuant to row 7 of item 390000 of the Monthly Financial
Position Report, except revaluation reserves, i.e. the positive amounts shown on row 7 of
items 396100, 396200, 396300, and 396400 of the same report;
14.4.2. other assets, which are not highly liquid assets, which represent:
14.4.2.1. non-bank loans with a remaining term of over 361 days and overdue loans
pursuant to rows 8-9 of item 1050 of the Report on TSOALL,
14.4.2.2. securities of other issuers pursuant to row 1 of item 1064 of the Report on
TSOALL,
14.4.2.3. stocks pursuant to row 1 of item 1065 of the Report on TSOALL,
14.4.2.4. other securities pursuant to row 1 of item 1066 of the Report on TSOALL,
14.4.2.5. holdings in the share capital of other companies pursuant to row 1 of item 1070
of the Report on TSOALL,
14.4.2.6. derivative contracts pursuant to row 1 of item 1080 of the Report on TSOALL,
14.4.2.7. fixed assets and intangible assets pursuant to row 1 of item 1090 of the Report on
TSOALL,
14.4.2.8. own stock pursuant to row 1 of item 1100 of the Report on TSOALL,
14.4.2.9. other assets pursuant to row 1 of items 1110, 1120 and 1130 of the Report on
TSOALL,
14.4.2.10. 50 per cent of off balance liabilities pursuant to row 1 of item 2100 of the
Report on TSOALL,
14.1. the ratio of basic commitments to total liabilities (L4) shall be determined, using:
14.5.1. the core liabilities indicator pursuant to Paragraph 14.4.1 of the Regulations;
14.5.2. total liabilities pursuant to row 1 of item 2000 of the Report on TSOALL.
15. Large exposures indicators:
15.1. the ratio of the sum total of large exposures to the relevant funds (R1) shall be
determined, using:
15.1.1. the sum total of large exposures pursuant to row “330” of the report C 28.00
Exposures in non-trading and trading portfolio (LE 2) of Annex 8 to EU regulation
No 680/2014;
15.1.2. relevant capital pursuant to row “220” of the report C 04.00 MEMORANDUM
ITEMS (CA4) of Annex 1 to EU regulation No 680/2014;
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15.2. economy sector concentration in the loan portfolio (R2) shall be determined, using:
15.2.1. the amount of loans issued to the representatives of the major economy sector,
which shall be determined, using the report prepared pursuant to the classification system set
forth in Paragraph 18 of the Commission's regulations No 24 Regulations for the Preparation
and Submission of Information on the Bank's Loan Portfolio Structure (hereinafter –
Regulations No 24);
15.2.2. the loan portfolio, which is determined pursuant to row 7 of item 240000 of the
Monthly Financial Position Report.
16. Loan portfolio quality indicators:
16.1. the ratio of the sum total of overdue loans (over 90 days) to own funds (Q1) shall be
determined, using:
16.1.1. the sum total of loans with payments overdue for over 90 days, which shall be
determined, using the report prepared according to the maturity period classification system
specified in Paragraph 21 of Regulations No 24, including loans with overdue periods “from
91 to 180 days” and “over 180 days”. Loans shall be reported at their carrying value, i.e. after
deducting provisions created for the particular group of loans;
16.1.2. own funds pursuant to row “010” of the report CA1 of Annex 1 to EU regulation
680/2014. If the Commission performs own funds adjustment, the adjusted own funds shall be
used;
16.2. the ratio of the sum total of overdue loans (over 30 days) to the loan portfolio (Q2)
shall be determined, using:
16.2.1. the sum total of loans with payments overdue for over 30 days, which is
determined, using the report, which is prepared according to the maturity period classifier,
specified in Paragraph 21 of Regulations No 24;
16.2.2. the loan portfolio, which is determined pursuant to row 7 of item 240000 of the
Monthly Financial Position;
16.3. the provision for overdue loans (over 90 days) (Q3) shall be determined, using:
16.3.1. the sum total of provisions for loans with payments overdue for over 90 days,
which shall be determined, using the report prepared pursuant to Regulations No 24;
16.3.2. the sum total of loans with payments overdue for over 90 days, which is
determined, using a report which is prepared according to the maturity period classifier
specified in Paragraph 21 of Regulations No 24, including loans with overdue periods “from
91 to 180 days” and “over 180 days”. Loans shall be reported at carrying value.
17. The Commission shall apply adjusting measures to banks, the operations of which are
aimed at customers – non-residents and impose the duty to maintain:
17.1. a higher level of own funds than that set forth in Regulation (EU) No 575/2013 of the
European Parliament and of the Council of 26 June 2013 on prudential requirements for credit
institutions and investment firms and amending Regulation (EU) No 648/2012, as increased
by the total capital reserve requirement pursuant to the provisions of the Credit Institutions
Law, the minimum capital adequacy indicator adjustment determined by the Commission
shall be used;
17.2. a higher liquidity indicator than that specified in Paragraph 3.3 of the Liquidity
Requirements Compliance Regulation pursuant to the provisions of the Credit Institutions
Law, using the individual liquidity indicator adjustment determined by the Commission.
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IV. Determining an adjustment factor for credit unions
18. The Commission shall determine the adjustment factor to be applied by a particular
credit union to the payments into the deposit guarantee fund in accordance with the formula
specified in Annex 3 hereto, using the capital adequacy indicator (K), liquidity indicator (L),
large exposures indicator (R), and the loan portfolio quality indicator (Q), which are
calculated as the average mean of the quarter in the previous calendar year.
19. The capital adequacy indicator (K) shall be determined, using:
19.1. the own funds indicator pursuant to row 7 of item 390000 of the Monthly Financial
Position Report. If the Commission performs the adjustment of the own funds, the adjusted
capital adequacy indicator shall be used;
19.2. the sum total of assets and off balance items pursuant to the sum total on row 7 of
items 200000, 510000, 520000 and 530000 of the Monthly Financial Position Report.
20. The ratio of highly liquid assets to total assets (L) shall be determined, using:
20.1. highly liquid assets, which represent the following unencumbered assets:
20.1.1. cash at hand pursuant to row 1 of item 110 of Annex 1 Report on Term Structure of
Assets and Liabilities of the Commission's regulations No 20/8 Regulations on the
Calculation of the Indicators Characterising the Activities of Credit Unions” of 23 November
2001 (hereinafter –Report on TSOAAL for Credit Unions);
20.1.2 claims on solvent credit institutions of the Republic of Latvia with residual
maturity, which does not exceed seven days, pursuant to rows 2 and 3 of item 120 of the
Report on TSOAAL for Credit Unions,
20.1.3. debt securities in the amount shown in row 1 of item 140 of the Report on
TSOAAL for Credit Unions, after deducting the amount shown in row 10 of item 140 of the
Report on TSOAAL for Credit Unions,
20.1.4. total assets pursuant to row 7 of item 200000 of the Monthly Financial Position
Report;
20.2. if the securities referred to in Paragraph 19.1.3 of the Regulations are included in the
calculation of highly liquid assets, the liquidity of these securities shall be assessed, i.e. the
ability to sell them within a short time without incurring considerable losses or using them as
collateral for a loan.
21. The large exposures indicator (R) shall be determined, using:
21.1. sum total of large exposures pursuant to item “Sum total of large exposures” of
Annex 2 to Regulations No 20/8 Regulations on the Calculation of the Indicators
Characterising the Activities of Credit Unions of 23 November 2001;
21.2 the own funds figure pursuant to row 7 of item 390000 of the Monthly Financial
Position Report. If the Commission performs the adjustment of the own funds, the adjusted
capital adequacy indicator shall be used.
22. The loan portfolio quality indicator (Q) shall be determined, using:
22.1. sum total of the loans with payments overdue over 30 days pursuant to the sum total
of rows 4, 5 and 6 of the item 020 of Annex 1 Report on the Assessment of Assets and Off
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Balance Liabilities to the Commission's regulations No 24/9 Regulations for the Assessment
of Assets and Off Balance Liabilities of 21 December 2001;
22.2 the loan portfolio pursuant to row 7 of item 240000 of the Monthly Financial Position
Report.
V. Final provision
23. Declare as void the Commission's regulations No 135 Regulations for the Preparation
of the Report on Covered Deposits and the Determination of Adjustment Factors Applicable
to Payments into the Deposit Guarantee Fund of 22 October 2009.
Chairman
Financial and Capital Market Commission
THIS DOCUMENT IS SIGNED ELECTRONICALLY WITH
A SECURE ELECTRONIC SIGNATURE AND CONTAINS A TIME STAMP
K. Zakulis