Shadow banking entities: Commission Delegated Regulation (EU) 2023/2779 with regard to RTS specifying the criteria for the identification of shadow banking entities

New Commission Delegated Regulation (EU) 2023/2779 as regards the identification of „shadow banks“ for purposes of reporting the ten largest credit positions with respect to such „shadow banks“ pursuant to Article 394(2) of the Capital Requirements Directive was published in the Official Journal (OJ) of the EU. Specifically, pursuant to the noted Article, financial institutions are required to report such exposures to help regulators identify potential risks such „shadow banks“ and their activities may pose to the financial market and financial market stability.
In detail, the new delegated regulation deems shadow banks to include the following:
1. money market funds;
2. an alternative investment fund that employs leverage on a substantial basis;
3. an alternative investment fund engaging in lending activity (even via purchase of loans); and
4. any institution that offers banking services without proper authorization and supervision in accordance with the noted regulations and directives (please see the annex in this context).
Likewise, the delegated regulation defines those institutions that shall not be considered shadow banks, particularly those authorized or supervised in accordance with the regulations and directives noted in same annex, foreign institutions subject to the Basel Core Principles in their home jurisdictions, and certain entities belonging to a group.
Finally, the delegated regulation defines those activities that should be considered „banking services“ for purposes of point (4) noted above.