Art. 4

02013R0575-20240709 → 02013R0575-20250101

Article 4 Definitions 1. For the purposes of this Regulation, the following definitions shall apply: (1) credit institution means an undertaking the business of which consists of any of the following: (a) to take deposits or other repayable funds from the public and to grant credits for its own account; (b) to carry out any of the activities referred to in Annex I, Section A, points (3) and (6) of Section A of Annex I (6), to Directive 2014/65/EU of the European Parliament and of the Council Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349)., where one of the following applies, but the undertaking is not a commodity and emission allowance dealer, a collective investment undertaking undertaking, an insurance undertaking, or an insurance undertaking: investment firm for which the authorisation as a credit institution is waived in accordance with Article 8a of Directive 2013/36/EU: (i) the total value of the consolidated assets of the undertaking established in the Union, including any of its branches and subsidiaries established in a third country, is equal to or exceeds EUR 30 billion; (ii) the total value of the assets of the undertaking established in the Union, including any of its branches and subsidiaries established in a third country, 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 are established in the Union, including any of their branches and subsidiaries established in a third country, that individually have total assets of less than EUR 30 billion and that carry out any of the activities referred to in Annex I, Section A, points (3) and (6) of Section A of Annex I (6), to Directive 2014/65/EU is equal to or exceeds EUR 30 billion; or (iii) the total value of the assets of the undertaking established in the Union, including any of its branches and subsidiaries established in a third country, 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 Annex I, Section A, points (3) and (6) of Section A of Annex I (6), to Directive 2014/65/EU 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 or 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 … 528 unchanged words … 347, 28.12.2017, p. 35).; (14) sponsor means a sponsor as defined in point (5) of Article 2 of Regulation (EU) 2017/2402; (14a) original lender means an original lender as defined in point (20) of Article 2 of Regulation (EU) 2017/2402; (15) parent undertaking means: (a) a parent means an undertaking that controls, within the meaning of Articles 1 and 2 of Directive 83/349/EEC; (b) for the purposes of Section II of Chapters 3 and 4 of Title VII and Title VIII of Directive 2013/36/EU and Part Five of this Regulation, a parent point (37), one or more undertakings; (16) subsidiary means an undertaking that is controlled, within the meaning of Article 1(1) of Directive 83/349/EEC and any undertaking which effectively exercises a dominant influence over point (37), by another undertaking; (16) subsidiary means: (a) a subsidiary undertaking within the meaning of Articles 1 and 2 of Directive 83/349/EEC; (b) a subsidiary undertaking within the meaning of Article 1(1) of Directive 83/349/EEC and any undertaking over which a parent undertaking effectively exercises a dominant influence. Subsidiaries subsidiaries of subsidiaries shall also be considered to be subsidiaries of the undertaking that is their original parent undertaking; (17) branch means a place of business which forms a legally dependent part of an institution and which carries out directly all or some of the transactions inherent in the business of institutions; (18) ancillary services undertaking means an undertaking the principal activity of which, whether provided to undertakings inside the group or to clients outside the group, consists of any of the following: (a) a direct extension of banking; (b) operational leasing, the ownership or management of property, the provision of data processing services or any other activity insofar as those activities are ancillary to banking; (c) any other activity considered similar by EBA to those referred to in points (a) and (b); (19) asset management company means an asset management company as defined in point (5) of Article 2 of Directive 2002/87/EC or an AIFM as defined in Article 4(1)(b) of Directive 2011/61/EU, including, unless otherwise provided, third-country entities that carry out similar activities and that are subject to the laws of a third country which applies supervisory and regulatory requirements at least equivalent to those applied in the Union; (20) financial holding company means an undertaking that meets all of the following conditions: (a) it is a financial institution, the subsidiaries of which are exclusively or mainly institutions or financial institutions, and which institution; (b) it is not a mixed financial holding company; the subsidiaries of a financial institution are mainly institutions or financial institutions where (c) it has at least one of them subsidiary that is an institution and where institution; (d) more than 50 % of any of the financial institution's equity, consolidated assets, revenues, personnel or other indicator considered relevant by the competent authority following indicators are associated associated, on a steady basis, with subsidiaries that are institutions or financial institutions; institutions, and with activities carried out by the undertaking itself that are not related to the acquisition or owning of holdings in subsidiaries when those activities are of the same nature as the ones carried out by institutions or financial institutions: (i) the undertaking’s equity based on its consolidated situation; (ii) the undertaking’s assets based on its consolidated situation; (iii) the undertaking’s revenues based on its consolidated situation; (iv) the undertaking’s personnel based on its consolidated situation; (v) other indicators considered relevant by the competent authority. The competent authority may decide that an entity does not qualify as a financial holding company even if one of the indicators referred to in the first paragraph, points (i) to (iv), is met, where the competent authority considers that the relevant indicator does not convey a fair and true view of the main activities and risks of the group. Before making such decision, the competent authority shall consult EBA and provide a substantiated and detailed qualitative and quantitative justification. The competent authority shall have due regard to EBA’s opinion and, where it decides to deviate from it, shall within three months of the date of receipt of EBA’s opinion, provide to EBA the rationale for deviating from the relevant opinion; (20a) investment holding company means an investment holding company as defined in Article 4(1), point (23), of Regulation (EU) 2019/2033; (21) mixed financial holding company means mixed financial holding company as defined in point (15) of Article 2 of Directive 2002/87/EC; (22) mixed activity holding company means a parent undertaking, other than a financial holding company or an institution or a mixed financial holding company, the subsidiaries of which include at least one institution; (23) third-country insurance undertaking means third-country insurance undertaking as defined in point (3) of Article 13 of Directive 2009/138/EC; (24) third-country reinsurance undertaking means third-country reinsurance undertaking as defined in point (6) of Article 13 of Directive 2009/138/EC; (25) recognised third-country investment firm means a firm meeting all of the following conditions: (a) if it were established within the Union, it would be covered by the definition of an investment firm; (b) it is authorised in a third country; (c) it is subject to and complies with prudential rules considered by the competent authorities at least as stringent as those laid down in this Regulation or in Directive 2013/36/EU; (26) financial institution means an undertaking other than that meets both of the following conditions: (a) it is not an institution and other than institution, a pure industrial holding company, a securitisation special purpose entity, an insurance holding company as defined in Article 212(1), point (f), of Directive 2009/138/EC or a mixed-activity insurance holding company as defined in Article 212(1), point (g), of that Directive, except where a mixed-activity insurance holding company has a subsidiary institution; (b) it meets one or more of the following conditions: (i) the principal activity of which the undertaking is to acquire or own holdings or to pursue one or more of the activities listed in Annex I, points 2 to 12 and point 15 of Annex I points 15, 16 and 17, to Directive 2013/36/EU, including or to pursue one or more of the services or activities listed in Annex I, Section A or B, to Directive 2014/65/EU in relation to financial instruments listed in Annex I, Section C, to Directive 2014/65/EU; (ii) the undertaking is an investment firm, a financial holding company, a mixed financial holding company, an investment holding company, a payment institution within the meaning services provider as categorised under Article 1(1), points (a) to (d), of Directive (EU) 2015/2366 of the European Parliament and of the Council Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, p. 35)., an asset management company or an ancillary services undertaking; (26a) pure industrial holding company means an undertaking that meets all of the following conditions: (a) its principal activity is to acquire or own holdings; (b) it is not referred to in point (27)(a), or point (27)(d) to (l), of this paragraph and is not an investment firm or an asset management company, but excluding insurance holding companies and mixed‐activity insurance holding companies or a payment service provider as defined in categorised under Article 1(1), points (f) and (g) of Article 212(1) (a) to (d), of Directive 2009/138/EC; (EU) 2015/2366; (c) it does not hold any participations in a financial sector entity; (27) financial sector entity means any of the following: (a) an institution; (b) a financial institution; (c) an ancillary services undertaking included in the consolidated financial situation of an institution; (d) an insurance undertaking; (e) a third-country insurance undertaking; (f) a reinsurance undertaking; (g) a third-country reinsurance undertaking; (h) an insurance holding company as defined in point (f) of Article 212(1) of Directive 2009/138/EC; (k) an undertaking excluded from the scope of Directive 2009/138/EC in accordance with Article 4 of that Directive; (l) a third-country undertaking with a main business comparable to any of the entities referred to in points (a) to (k); (28) parent institution in a Member State means an institution in a Member State which has an institution, institution or a financial institution or an ancillary services undertaking as a subsidiary subsidiary, or which holds a participation in an institution, financial institution or ancillary services undertaking, financial institution, and which is not itself a subsidiary of another institution authorised in the same Member State, or of a financial holding company or mixed financial holding company set up in the same Member State; (29) EU parent institution means a parent institution in a Member State which is not a subsidiary of another institution authorised in any Member State, or of a financial holding company or mixed financial holding company set up in any Member State; (29a) parent investment firm in a Member State means a parent undertaking in a Member State that is an investment firm; (29b) EU parent investment firm means an EU parent undertaking that is an investment firm; (29c) parent credit institution in a Member State means a parent institution in a Member State that is a credit institution; (29d) EU parent credit institution means an EU parent institution that is a credit institution; (30) parent financial holding company in a Member State means a financial holding company which is not itself a subsidiary of an institution authorised in the same Member State, or of a financial holding company or mixed financial holding company set up in the same Member State; (31) EU parent financial holding company means a parent financial holding company in a Member State which is not a subsidiary of an institution authorised in any Member State or of another financial holding company or mixed financial holding company set up in any Member State; (32) parent mixed financial holding company in a Member State means a mixed financial holding company which is not itself a subsidiary of an institution authorised in the same Member State, or of a financial holding company or mixed financial holding company set up in that same Member State; (33) EU parent mixed financial holding company means a parent mixed financial holding company in a Member State which is not a subsidiary of an institution authorised in any Member State or of another financial holding company or mixed financial holding company set up in any Member State; (34) central counterparty or CCP means a CCP as defined in point (1) of Article 2 of Regulation (EU) No 648/2012; (35) participation means participation within the meaning a participating interest as defined in Article 2, point (2), of Directive 2013/34/EU of the first sentence European Parliament and of Article 17 of Fourth the Council Directive 78/660/EEC 2013/34/EU of 25 July 1978 the European Parliament and of the Council of 26 June 2013 on the annual accounts financial statements, consolidated financial statements and related reports of certain types of companies OJ undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 222, 14.8.1978, 182, 29.6.2013, p. 11., 19)., or the ownership, direct or indirect, of 20 % or more of the voting rights or capital of an undertaking; (36) qualifying holding means a direct or indirect holding in an undertaking which represents 10 % or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of that undertaking; (37) control means the relationship between a parent undertaking and a subsidiary, as defined described in Article 1 22 of Directive 83/349/EEC, 2013/34/EU, or in the accounting standards to which an institution is subject under Regulation (EC) No 1606/2002, 1606/2002 of the European Parliament and of the Council Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (OJ L 243, 11.9.2002, p. 1)., or a similar relationship between any natural or legal person and an undertaking; (38) close links means a situation in which two or more natural or legal persons are linked in any of the following ways: (a) participation in the form of … 709 unchanged words … an index; (51) initial capital means the amounts and types of own funds specified in Article 12 of Directive 2013/36/EU; (52) operational risk means the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events, including, but not limited to, legal risk, model risk or information and communication technology (ICT) risk, but excluding strategic and reputational risk; (52a) legal risk means the risk of loss, including, expenses, fines, penalties or punitive damages, which an institution might incur as a consequence of events that result in legal proceedings, including the following: (a) supervisory actions and private settlements; (b) failure to act where action is necessary to comply with a legal obligation; (c) action taken to avoid compliance with a legal obligation; (d) misconduct events, which are events that arise from wilful or negligent misconduct, including inappropriate supply of financial services or the provision of inadequate or misleading information on the financial risk of products sold by the institution; (e) non-compliance with any requirement derived from national or international statutory or legislative provisions; (f) non-compliance with any requirement derived from contractual arrangements, or with internal rules and codes of conduct established in accordance with national or international rules and practices; (g) non-compliance with rules on ethics; (52b) model risk means the risk of loss resulting from decisions that are principally based on the output of internal models, due to errors in the design, development, parameter estimation, implementation, use or monitoring of such models, including the following: (a) the improper design of a selected internal model and its characteristics; (b) the inadequate verification of a selected internal model’s suitability for the financial instrument to be evaluated or for the product to be priced, or of the selected internal model’s suitability for the applicable market conditions; (c) errors in the implementation of a selected internal model; (d) incorrect mark-to-market valuations and risk measurement as a result of an error when booking a trade into the trading system; (e) the use of a selected internal model or of its outputs for a purpose for which that model was not intended or designed, including manipulation of the modelling parameters; (f) the untimely or ineffective monitoring or validation of model performance or of the predictive ability to assess whether the selected internal model remains fit for purpose; (52c) ICT risk means the risk of loss related to any reasonably identifiable circumstances related to the use of network and information systems which, if materialised, might compromise the security of the network and information systems, of any technology-dependent tool or process, of operations and processes, or of the provision of services, by producing adverse effects in the digital or physical environment; (52d) environmental, social and governance risk or ESG risk means the risk of any negative financial impact on an institution stemming from the current or prospective impact of environmental, social or governance (ESG) factors on that institution’s counterparties or invested assets; ESG risks materialise through the traditional categories of financial risks; (52e) environmental risk means the risk of any negative financial impact on an institution stemming from the current or prospective impact of environmental factors on that institution’s counterparties or invested assets, including factors related to the transition towards the objectives set out in Article 9 of Regulation (EU) 2020/852 of the European Parliament and of the Council Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).; environmental risk includes legal both physical risk and transition risk; (52f) physical risk, as part of the environmental risk, means the risk of any negative financial impact on an institution stemming from the current or prospective impact of the physical effects of environmental factors on that institution’s counterparties or invested assets; (52g) transition risk, as part of the environmental risk, means the risk of any negative financial impact on an institution stemming from the current or prospective impact of the transition to an environmentally sustainable economy on that institution’s counterparties or invested assets; (52h) social risk means the risk of any negative financial impact on an institution stemming from the current or prospective impact of social factors on its counterparties or invested assets; (52i) governance risk means the risk of any negative financial impact on an institution stemming from the current or prospective impact of governance factors on that institution’s counterparties or invested assets; (53) dilution risk means the risk that an amount receivable is reduced through cash or non-cash credits to the obligor; (54) probability of default or PD means the probability of default of an obligor or, where applicable, of a counterparty credit facility over a one-year period, and, in the context of dilution risk, the probability of dilution over a one-year period; (55) loss given default or LGD means the ratio of the loss on an exposure related to a single facility due to the default of an obligor or, where applicable, of a counterparty credit facility to the amount outstanding at default; default or at a given reference date after the date of default, and, in the context of dilution risk, the loss given dilution meaning the ratio of the loss on an exposure related to a purchased receivable due to dilution, to the amount outstanding of the purchased receivable; (56) conversion factor or credit conversion factor or CCF means the ratio of the currently undrawn amount of a commitment from a single facility that could be drawn from that single facility from a certain point in time before default and that would therefore be outstanding at default to the currently undrawn amount of the commitment, commitment from that facility, the extent of the commitment being determined by the advised limit, unless the unadvised limit is higher; (57) credit risk mitigation means a technique used by an institution to reduce the credit risk associated with an exposure or exposures which that institution continues to hold; (58) funded credit protection or FCP means a technique of credit risk mitigation where the reduction of the credit risk on the exposure of an institution derives is derived from the right of that institution, in the event of the default of the counterparty obligor or the credit facility, or on the occurrence of other specified credit events relating to the counterparty, obligor, to liquidate, or to obtain transfer or appropriation of, or to retain certain assets or amounts, or to reduce the amount of the exposure to, or to replace it with, the amount of the difference between the amount of the exposure and the amount of a claim on the institution; (59) unfunded credit protection or UFCP means a technique of credit risk mitigation where the reduction of the credit risk on the exposure of an institution derives is derived from the obligation of a third party to pay an amount in the event of the default of the borrower obligor or the credit facility, or the occurrence of other specified credit events; (60) cash assimilated instrument means a certificate of deposit, a bond, including a covered bond, or any other non‐subordinated non-subordinated instrument, which has been issued by an institution or an investment firm, a lending institution, for which the that lending institution or investment firm has already received full payment and which is to shall be unconditionally reimbursed by the institution or investment firm at its nominal value; (60a) gold bullion means gold in the form of a commodity, including gold bars, ingots and coins, commonly accepted by the bullion market, where liquid markets for bullion exist, and the value of which is determined by the value of the gold content, defined by purity and mass, rather than by its interest to numismatists; (61) securitisation means a securitisation as defined in point (1) of Article 2 of Regulation (EU) 2017/2402; (62) securitisation position means a securitisation position as defined in point (19) of Article 2 of Regulation (EU) 2017/2402; (63) resecuritisation means a resecuritisation as … 422 unchanged words … immovable property as determined by a prudent assessment of the future marketability of the property taking into account long-term sustainable aspects of the property, the normal and local market conditions, the current use and alternative appropriate uses of the property; (74a) property value means the value of a residential property or commercial immovable property determined in accordance with Article 229(1); (75) residential property means a residence which is occupied by the owner or the lessee any of the residence, including following: (a) an immovable property which has the nature of a dwelling and satisfies all applicable laws and regulations enabling the property to be occupied for housing purposes; (b) an immovable property which has the nature of a dwelling and is still under construction, provided that there is the expectation that the property will satisfy all applicable laws and regulations enabling the property to be occupied for housing purposes; (c) the right to inhabit an apartment in housing cooperatives located in Sweden; (d) land accessory to a property referred to in point (a), (b) or (c); (75a) commercial immovable property means any immovable property that is not residential property; (75b) income producing real estate exposure or IPRE exposure means an exposure secured by one or more residential properties or commercial immovable properties where the fulfilment of the credit obligations related to the exposure materially depends on the cash flows generated by those immovable properties securing that exposure, rather than on the capacity of the obligor to fulfil the credit obligations from other sources; the primary source of such cash flows being lease or rental payments, or proceeds from the sale of the residential property or commercial immovable property; (75c) non-income-producing real estate exposure or non-IPRE exposure means any exposure secured by one or more residential properties or commercial immovable properties that is not an IPRE exposure; (75d) exposure secured by residential property or exposure secured by a mortgage on residential property means an exposure secured by residential property or an exposure regarded as such in accordance with Article 108(4); (75e) exposure secured by commercial immovable property or exposure secured by a mortgage on commercial immovable property means an exposure secured by a commercial immovable property; (75f) exposure secured by immovable property or exposure secured by a mortgage on immovable property, or exposure secured by immovable property collateral means an exposure secured by a residential property or commercial immovable property or an exposure regarded as such in accordance with Article 108(4); (76) market value means, for the purposes of immovable property, the estimated amount for which the property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion; (77) applicable accounting framework means the accounting standards to which the institution is subject under Regulation (EC) No 1606/2002 or Directive 86/635/EEC; (78) one-year default rate means the ratio between the number of defaults obligors or, where the definition of default is applied at credit facility level pursuant to Article 178(1), second subparagraph, credit facilities in respect of which a default is considered to have occurred during a period that starts from one year prior to a date T of observation T, and the number of obligors obligors, or where the definition of default is applied at credit facility level pursuant to Article 178(1), second subparagraph, credit facilities assigned to this grade or pool one year prior to that date; date of observation T; (78a) land acquisition, development and construction exposures, or ADC exposures, means exposures to corporates or special purpose entities financing any land acquisition for development and construction purposes, or financing the development and construction of any residential property or commercial immovable property; (78b) non-ADC exposure means any exposure secured by one or more residential properties or commercial immovable properties that is not an ADC exposure; (79) speculative immovable property financing means loans for the purposes of the acquisition of or development or construction on land in relation to immovable property, or of and in relation to such property, with the intention of reselling for profit; (80) … 1,089 unchanged words … as under Article 38 of Directive 86/635/EEC; (113) goodwill has the same meaning as under the applicable accounting framework; (114) indirect holding means any exposure to an intermediate entity that has an exposure to capital instruments issued by a financial sector entity or to liabilities issued by an institution where, in the event the capital instruments issued by the financial sector entity or the liabilities issued by the institution were permanently written off, the loss that the institution would incur as a result would not be materially different from the loss the institution would incur from a direct holding of those capital instruments issued by the financial sector entity; entity or of those liabilities issued by the institution; (115) intangible assets has the same meaning as under the applicable accounting framework and includes goodwill; (116) other capital instruments means capital instruments issued by financial sector entities that do not qualify as Common Equity Tier 1, Additional Tier 1 or Tier 2 instruments or Tier 1 own-fund insurance items, additional Tier 1 own-fund insurance items, Tier 2 own-fund insurance items or Tier 3 own-fund insurance items; (117) other reserves means reserves within the meaning of the applicable accounting framework that are required to be disclosed under the applicable accounting standard, excluding any amounts already included in accumulated other comprehensive income or retained earnings; (118) own funds means the sum of Tier 1 capital and Tier 2 capital; (119) own funds instruments means capital instruments issued by the institution that qualify as Common Equity Tier 1, Additional Tier 1 or Tier 2 instruments; (120) minority interest means the amount of Common Equity Tier 1 capital of a subsidiary of an institution that is attributable to natural or legal persons other than those included in the prudential scope of consolidation of the institution; (121) profit has the same meaning as under the applicable accounting framework; (122) reciprocal cross holding means a holding by an institution of the own funds instruments or other capital instruments issued by financial sector entities where those entities also hold own funds instruments issued by the institution; (123) retained earnings means profits and losses brought forward as a result of the final application of profit or loss under the applicable accounting framework; (124) share premium account has the same meaning as under the applicable accounting framework; (125) temporary differences has the same meaning as under the applicable accounting framework; (126) synthetic holding means an investment by an institution in a financial instrument the value of which is directly linked to the value of the capital instruments issued by a financial sector entity; entity or to the value of the liabilities issued by an institution; (127) cross-guarantee scheme means a scheme that meets all the following conditions: (a) the institutions fall within the same institutional protection scheme as referred to in Article 113(7) or are permanently affiliated with a network to a central body; (b) the institutions are fully consolidated in accordance with Article 1(1)(b), (c) or (d) or Article 1(2) 22 of Directive 83/349/EEC 2013/34/EU and are included in the supervision on a consolidated basis of an institution which is a parent institution in a Member State in accordance with Part One, Title II, Chapter 2 2, of this Regulation and subject to own funds requirements; (c) the parent institution in a Member State and the subsidiaries are established in the same Member State and are subject to authorisation and supervision by the same competent authority; (d) the parent … 761 unchanged words … rates or commodity prices; (142) foreign exchange risk means the risk of losses arising from movements in foreign exchange rates; (143) commodity risk means the risk of losses arising from movements in commodity prices; (144) trading desk means a well-identified group of dealers set up established by the institution in accordance with Article 104b(1) to jointly manage a portfolio of trading book positions, or the non-trading book positions referred to in paragraphs (5) and (6) of that Article, in accordance with a well-defined and consistent business strategy and operating under the same risk management structure; (145) small and non-complex institution means an institution that meets all the following conditions: (a) it is not a large institution; (b) the total value of its assets on an individual basis or, where applicable, on a consolidated basis in accordance with this Regulation and Directive 2013/36/EU is on average equal to or less than the threshold of EUR 5 billion over the four-year period immediately preceding the current annual reporting period; Member States may lower that threshold; (c) it is not subject to any obligations, or is subject to simplified obligations, in relation to recovery and resolution planning in accordance with Article 4 of Directive 2014/59/EU; (d) its trading book business is classified as small within the meaning of Article 94(1); (e) the total value of its derivative positions held with trading intent does not exceed 2 % of its total on- and off-balance-sheet assets and the total value of its overall derivative positions does not exceed 5 %, both calculated in accordance with Article 273a(3); (f) more than the institution’s consolidated assets or liabilities relating to activities with counterparties located in the European Economic Area, excluding intragroup exposures in the European Economic Area, exceed 75 % of both the institution's institution’s consolidated total assets and liabilities, excluding in both cases the intragroup exposures, relate to activities with counterparties located in the European Economic Area; exposures; (g) the institution does not use internal models to meet the prudential requirements in accordance with this Regulation except for subsidiaries using internal models developed at the group level, provided that the group is subject to the disclosure requirements laid down in Article 433a or 433c on a consolidated basis; (h) the institution has not communicated to the competent authority an objection to being classified as a small and non-complex institution; (i) the competent authority has not decided that the institution is not to be considered a small and non-complex institution on the basis of an analysis of its size, interconnectedness, complexity or risk profile; (146) large institution means an institution that meets any of the following conditions: (a) it is a G-SII; (b) it has been identified as an other systemically important institution (O-SII) in accordance with Article 131(1) and (3) of Directive 2013/36/EU; (c) it is, in the Member State in which it is established, one of the three largest institutions in terms of total value of assets; (d) the total value of its assets on an individual basis or, where applicable, on the basis of its consolidated situation in accordance with this Regulation and Directive 2013/36/EU is equal to or greater than EUR 30 billion; (147) large subsidiary means a subsidiary that qualifies as a large institution; (148) non-listed institution means an institution that has not issued securities that are admitted to trading on a regulated market of any Member State, within the meaning of point (21) of Article 4(1) of Directive 2014/65/EU; (149) financial report means, for the purposes of Part Eight, a financial report within the meaning of Articles 4 and 5 of Directive 2004/109/EC of the European Parliament and of the Council Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004, p. 38).; (150) commodity and emission allowance dealer means an undertaking the main business of which consists exclusively of the provision of investment services or activities in relation to commodity derivatives or commodity derivative contracts referred to in points (5), (6), (7), (9) and (10), derivatives of emission allowances referred to in point (4), or emission allowances referred to in point (11) of Section C of Annex I to Directive 2014/65/EU. (151) revolving exposure means any exposure whereby the borrower’s outstanding balance is permitted to fluctuate based on its decisions to borrow and repay, up to an agreed limit; (152) transactor exposure means any revolving exposure that has at least 12 months of repayment history and that is one of the following: (a) an exposure for which, on a regular basis of at least every 12 months, the balance to be repaid at the next scheduled repayment date is determined as the drawn amount at a predefined reference date, with a scheduled repayment date not later than after 12 months, provided that the balance has been repaid in full at each scheduled repayment date for the previous 12 months; (b) an overdraft facility where there have been no drawdowns over the previous 12 months; (153) fossil fuel sector entity means a company, enterprise or undertaking statistically classified as having its principal economic activity in the coal, oil or gas sector of economic activities, as set out in Annex XXXIX, Template 3, to Commission Implementing Regulation (EU) 2021/637 Commission Implementing Regulation (EU) 2021/637 of 15 March 2021 laying down implementing technical standards with regard to public disclosures by institutions of the information referred to in Titles II and III of Part Eight of Regulation (EU) No 575/2013 of the European Parliament and of the Council and repealing Commission Implementing Regulation (EU) No 1423/2013, Commission Delegated Regulation (EU) 2015/1555, Commission Implementing Regulation (EU) 2016/200 and Commission Delegated Regulation (EU) 2017/2295 (OJ L 136, 21.4.2021, p. 1). and as identified by reference to the statistical classification of economic activities (NACE Revision 2) codes listed in Annex I, Sections B, C, D and G, to Regulation (EC) No 1893/2006 of the European Parliament and of the Council Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as certain EC Regulations on specific statistical domains (OJ L 393, 30.12.2006, p. 1).; where the principal economic activity of a company, enterprise or undertaking is not classified using the NACE Revision 2 codes set out in Regulation (EC) No 1893/2006, or a national classification derived therefrom, institutions shall conservatively determine whether such company, enterprise or undertaking has its principal activity in one of those sectors; (154) exposures subject to the impact of environmental or social factors means exposures hindering the ambition of the Union to achieve its regulatory objectives relating to ESG factors, in a way that could have a negative financial impact on institutions in the Union; (155) shadow banking entity means an entity that carries out banking activities outside the regulated framework. For the purposes of the first subparagraph, points (1)(b)(ii) and (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. For the purposes of the first subparagraph, point (1)(b)(iii), the consolidating supervisor may request all relevant information from the undertaking in order to take its decision. For the purposes of the first subparagraph, point (52a), legal risk shall not comprise refunds to third parties or employees and goodwill payments due to business opportunities, where no breach of any rules or ethical conduct has occurred and where the institution has fulfilled its obligations on a timely basis. Nor shall legal risk comprise external legal costs where the event giving rise to those external costs is not an operational risk event. For the purposes of the first subparagraph, point (145)(e), of this paragraph, an institution may exclude derivative positions it entered with its non-financial clients and the derivative positions it uses to hedge those positions, provided that the combined value of the excluded positions calculated in accordance with Article 273a(3) does not exceed 10 % of the institution’s total on- and off-balance-sheet assets. 2. Where reference in this Regulation is made to immovable property, to residential property or commercial immovable property or to a mortgage on such property, it shall include shares in Finnish residential housing companies operating in accordance with the Finnish Housing Company Act of 1991 or subsequent equivalent legislation. Member States or their competent authorities may allow shares constituting an equivalent indirect holding of immovable property to be treated as a direct holding of immovable property provided that such an indirect holding is specifically regulated in the national law of the Member State concerned and that, when pledged as collateral, it provides equivalent protection to creditors. 3. Trade finance as referred to in point (80) of paragraph 1 is generally uncommitted and requires satisfactory supporting transactional documentation for each drawdown request enabling refusal of the finance in the event of any doubt about creditworthiness or the supporting transactional documentation. Repayment of trade finance exposures is usually independent of the borrower, the funds instead coming from cash received from importers or resulting from proceeds of the sales of the underlying goods. 4. EBA shall develop draft regulatory technical standards specifying in which circumstances the conditions set out in point (39) of paragraph 1 are met. EBA shall submit those draft regulatory technical standards to the Commission by 28 June 2020. Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010. 5. By 10 January 2026, EBA shall issue guidelines, in accordance with Article 16 of Regulation (EU) No 1093/2010, specifying the criteria for the identification of activities referred to in paragraph 1, first subparagraph, point (18) of this Article.