FINREP reporting of loans secured by mortgage mandates (Belgium)

Background provided by the submitter · verbatim

The question relates to FINREP requirements as per Annex V of the ITS on supervisory reporting. In FINREP table 18.2 the bank is required to report on (i) CRE loans and (ii) on loans collateralised by immovable property. For the definition of 'CRE loans' reference is made to the definition of ESRB Recommendation of 21 March 2019, which includes loans 'secured by a commercial real estate property'. For the definition of 'loans collateralised by immovable property', article 86 of Annex V of the ITS states that it 'shall include loans and advances formally secured by residential or commercial immovable property collateral, regardless of their loan/collateral ratio and the legal form of the collateral'.

In the view of the bank, neither definition explictly adresses the particular situation of mortgage mandates in Belgium. Under Belgian law a mortgage mandate is an agreement between the borrower and the bank, granted the bank the power to establish a mortgage. Hence the mortgage mandate does not provide for an actual security right on the immovable property but only gives the right to establish a mortgage at a later point in time. It is only at the moment of the conversion of the mortgage mandate into an actual mortgage, that the mortgage will be registered.

While the mortgage mandate is a recognized form of collateral, because there is yet no actual right on the immovable property it is open to interpretation whether such loans would classify as either 'CRE loan' and/or 'collateralized by immovable property' in the specific context of FINREP reporting and hence whether the corresponding loan amounts are to be included or excluded from the reporting amounts in table F18.2.