Financial Markets Atlas: Foreign Bank in the EU

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Level 1 flows of the EU operations of a large foreign bank, with a Japanese megabank as the worked example: the EU bank in Paris (a French credit institution with its own capital, branches passported across the EU, the group’s euro clearer), the parent’s remaining third-country branch, the intermediate EU parent and the EU securities firm under it, the London branch next door as the EMEA hub, and the head office in Tokyo behind them all. Columns are the parties, rows the phases; numbered steps are messages, bookings, contracts, payments or reports between them, with the channel or infrastructure in the pill. Hover a step for the detail, click it or use the walkthrough to be taken through the diagram step by step. The groups are what makes a foreign bank different from a domestic one, in the EU’s version: structure and booking after Brexit, euro funding, euro clearing for the group, corporate banking, markets through the EU firm, capital, liquidity and resolution, reporting and control. The product lifecycles themselves are on the EU sell-side page; here the steps that differ are who books, who funds and who reports. EU market conventions and EUR throughout; all numbers illustrative. New to this? Begin with Start here.

How the diagrams work, the flow common to all 23 diagrams, a map of the flows, which entity books each and what it takes in funding, capital and reporting, and a glossary.

How to read a diagram

Columns are the partiesThe client on the left, then the EU bank (a French credit institution with branches passported across the EU), the group entities (the London branch as the EMEA hub, the head office in Tokyo, the intermediate EU parent, the EU securities firm, the parent’s third-country branch), the market, the infrastructure (the T2 account at the Banque de France, EURO1 and SEPA, the CSDs on T2S, Eurex, CLS, BOJ-NET) and the regulators on both sides; the group entities share a lighter navy so the line between the EU bank and the rest of the group is visible on every diagram.
Rows are the phasesTime runs down the page: mandate, booking, funding, settlement, life of the relationship, control and reporting, or the phases of the flow in hand (the Tokyo, European and New York hours; the warehouse, the structuring and the closing). The band label gives the timing.
Arrows are stepsNumbered in order. Solid arrows are messages, deliveries or payments; dashed ones are standing flows like reports and statements; two-headed ones are exchanged or matched. Boxes on a lifeline are things a party does internally; an arrow between the EU bank and the London branch is a contract between two legal entities, an arrow between the branch and the head office is a booking inside one.
Pills are the channelAmber for voice and chat, blue for electronic platforms and portals, rose for SWIFT messages, grey for infrastructure and regulatory systems (T2, EURO1, COREP, FINREP, the trade repositories), teal for market data, lavender for the bank’s internal systems. Each pill shows a one-line definition on hover.
Figures are the worked exampleThe short figures under the arrows follow one illustrative trade, loan or day through the flow; the strip above the diagram summarizes it. Hovering a step shows the full detail; clicking it opens the walkthrough.
The worked example is a Japanese megabank in ParisA French EU bank supervised by the ECB and the ACPR, with branches in Düsseldorf, Milan, Madrid and Amsterdam, a third-country branch of the parent in Brussels, the London branch next door; Tokyo as head office, the yen as the home currency, the JFSA and the Bank of Japan as the home authorities. An Amsterdam EU bank under DNB and the AFM, or a Frankfurt one under BaFin and the Bundesbank, or a European or Canadian parent, changes the names and little else.

A flow can be read two ways: scroll the diagram and hover for detail, or press Walk through the steps above any diagram to follow it one step at a time, with the detail in a card. The arrow keys move forward and back.

The flow every diagram follows

BankGroup entitiesClientMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsElectronic platform, APISWIFT messageInfrastructure system (payment, clearing, reporting)Internal systemOtherhover an arrow or a badge for the full detail
MANDATE T approved BOOKING T by entity FUNDING T from the group and the Banque de France SETTLEMENT T to T+2 in Paris LIFE OF RELATIONSHIP daily serviced CONTROL AND REPORTING daily; quarterly four regimes CLIENT a European corporate, a Japanese subsidiary, an institutional investor EU BANK (PARIS) the group’s EU credit institution; branches passported to Düsseldorf, Milan, Madrid, Amsterdam EU SECURITIES FIRM the MiFID investment firm under the IPU: dealing, underwriting, the Bund and OAT dealer seats LONDON BRANCH the EMEA hub: the trading books, the EMEA treasury, the dollar and sterling business HEAD OFFICE (TOKYO) the parent bank: capital, group treasury, the yen book, the credit authority T2, EURO1 AND THE CSDS the central bank account, the payment systems, T2S, CLS ECB, ACPR AND AMF the SSM supervisor, the national competent authority, the conduct regulator; the SRB Banking business with the EU bank: a loan, a deposit, a SEPA payment, an FX trade or a letter of credit: the EU bank is a French credit institution with its own capital, lending under its own committee’s authority within the group line set in Tokyo; the deposits are covered by the FGDR Banking business with the EU bank Loan system: The system of record for the loan book: facilities, draws, rates, fees, covenants and the agent interfaces. Loan system Cash management portal: The bank’s online banking platform for corporate clients: balances, payments, reporting, pooling. Cash management portal FXall: LSEG’s multi-dealer FX platform where managers put dealers in competition for spot, forwards and swaps. FXall 1 Securities business with the EU firm: an underwriting, a Bund trade, a CLO, a Japanese share: the EU securities firm under the IPU is the MiFID firm the client faces, with best execution and the transaction reports; it faces the client with capital of its own Securities business with the EU firm Bloomberg: Terminal, chat and trading platform used across the market; also a SEF and a bond and FX venue. Bloomberg FIX API: The standard electronic messaging protocol between trading systems; how an order or a price travels machine to machine. FIX API Bund auction: The Finanzagentur’s auctions of German government securities through the Bund Issues Auction Group in the Bundesbank’s bidding system, with a retention quota kept for secondary market operations. Bund auction 2 Booking: risk to London and Tokyo under the expectations: the EU bank keeps the client credit risk and a share of the market risk under its own limits, and hedges the rest with the London branch by intragroup swaps (contracts between two legal entities, reported under EMIR, exempt from clearing and margin); the ECB reads the desk mapping Booking: risk to London and Tokyo under the expectations Trade capture: The front-office system where every trade is booked and positions, risk and P&L are kept, one per desk family in most banks (Murex MX.3, Calypso, Summit, Bloomberg TOMS, Fidessa, in-house). Trade capture Risk engine: Computes end-of-day and intraday sensitivities, VaR and stress results from the trade population and market data; in-house, or the risk module of the trade capture system. Risk engine Trade repository: A designated trade repository (DTCC’s DDR, CME’s or ICE’s) to which Canadian derivatives trades are reported under the provincial trade reporting rules (OSC Rule 91-507 and its equivalents), by the dealer side where one of the parties is a dealer. Trade repository 3 Euros from the group and the Eurosystem: dollars or yen swapped into euros by the EMEA treasury and placed with the EU bank as intragroup funding counted in its LCR; the EU bank’s own ECP, deposits and bonds; the Eurosystem’s operations at the Banque de France against the collateral pool as the backstop Euros from the group and the Eurosystem Book transfer: A transfer between two accounts on the same bank’s books, no payment system involved; how the head office account and the nostros of the group move dollars inside the bank. Book transfer CLS: CLS Bank settles both sides of a currency trade at the same moment (payment versus payment) so neither party pays without receiving. CLS T2: The Eurosystem’s real-time gross settlement system for euro central bank money since March 2023 (the successor to TARGET2), with TIPS for instant payments; the banks’ settlement accounts and the CSDs’ cash legs run through it. T2 4 Settlement through T2, EURO1 and SEPA: the EU bank’s T2 account at the Banque de France settles the euros of the EU bank and of the whole group: the client payments, the group’s euro nostros, the CLS pay-ins, the loan draws; intraday credit against collateral, free and uncapped Settlement through T2, EURO1 and SEPA T2: The Eurosystem’s real-time gross settlement system for euro central bank money since March 2023 (the successor to TARGET2), with TIPS for instant payments; the banks’ settlement accounts and the CSDs’ cash legs run through it. T2 EURO1: EBA Clearing’s large-value euro payment system: continuous multilateral netting within bilateral and multilateral limits, settled once a day through T2. EURO1 SEPA: The Single Euro Payments Area: the credit transfers, instant transfers and direct debits between euro accounts, the retail rail behind the dealers’ client payments. SEPA 5 Settlement on T2S; clearing at Eurex and LCH: the EU firm’s trades settle on T2S through Clearstream and Euroclear on T+2 and clear at Eurex Clearing or LCH SA; the repo on GC Pooling; the Japanese securities at JASDEC through the sub-custodian Settlement on T2S; clearing at Eurex and LCH T2S: TARGET2-Securities: the Eurosystem’s single settlement platform on which the participating CSDs (Euroclear’s ESES, Clearstream Banking Frankfurt, Monte Titoli, Iberclear and others) settle securities against central bank money, delivery versus payment, on T+2. T2S Eurex Clearing: The Deutsche Börse CCP: clears Eurex’s listed derivatives, repo (Eurex Repo and GC Pooling), cash equities on Xetra and euro interest rate swaps; its ISA Direct model lets buy-side firms clear directly with a clearing agent behind them. Eurex Clearing Euroclear: The Brussels-based group: Euroclear Bank is the international CSD for Eurobonds and cross-border holdings (with its triparty and collateral services), and Euroclear’s ESES CSDs (France, Belgium, the Netherlands) are domestic CSDs on T2S. Euroclear 6 Life of the relationship: draws and repayments, the deposits swept and pooled across the euro area, the FX hedges rolled, the trade documents paid, the camt.053 statements to the client and to its parent in Japan; the relationship managed in Düsseldorf and in Tokyo together Life of the relationship Statements: The client’s monthly or quarterly account statement from the custodian, and the firm’s performance report. Statements camt.053: ISO 20022 end-of-day bank account statement, the successor to MT950. camt.053 Client portal: The manager’s reporting platform for its clients: holdings, performance, risk and documents. Client portal 7 Reports and the SREP: COREP, FINREP and the liquidity templates to the ECB through the Banque de France, AnaCredit and the statistics, EMIR, MiFIR and SFTR by T+1, the SRB’s resolution data, the branch’s CRD VI report; the JST runs the SREP, the AMF supervises the conduct, the JFSA inspects from home, the college joins them Reports and the SREP COREP: The EBA’s common reporting framework for the banks’ capital, liquidity and large exposures (with FINREP for the financial statements and ALMM for the liquidity metrics), filed with the ECB or the NCA. COREP FINREP: The EBA’s financial reporting framework: the banks’ financial statements on IFRS, reported quarterly to the supervisor alongside COREP. FINREP Trade repository: A designated trade repository (DTCC’s DDR, CME’s or ICE’s) to which Canadian derivatives trades are reported under the provincial trade reporting rules (OSC Rule 91-507 and its equivalents), by the dealer side where one of the parties is a dealer. Trade repository 8
Every flow on this page is a variation of this sequence: the client’s business with the EU bank (a French credit institution with its own capital) or the EU firm (a MiFID investment firm), the booking of risk with London and Tokyo on the terms the ECB sets, the euros raised by the group and by the EU bank itself with the Eurosystem behind, the settlement through the EU bank’s T2 account and the EU firm’s memberships, the life of the relationship, and the reports to four regimes. What changes from New York is that the client faces a European bank rather than a branch, the back-to-back trade is a contract rather than a booking, and the backstop is the EU bank’s own central bank.

The flows, 23 of them

Each card opens its diagram. The tabs at the top do the same; the search box finds a flow by name, rule, report or keyword.

Which entity books it, how it is funded or executed, where it settles, what capital and liquidity it takes, what is reported

The same five questions for every flow. A foreign bank’s EU operations are the answer to the first: the EU bank is a European credit institution with its own capital, its own supervisors and the group behind it, the parent’s branch is the exception CRD VI narrows, and every product sits on one side of that line.

Structure and Booking
FlowEntity that booksFunded or executedSettled and heldCapital and liquidityReported
Entity Mapthe EU bank and its passported branches for loans, deposits and FX; the EU firm for securities; the parent’s branch for wholesale businessthe EU bank’s own committee within the group line; the EU firm’s syndicateT2S for the bonds; the EU bank’s accounts for the loan and the DGS-covered depositsthe EU bank’s CRR capital; the IPU consolidated; the parent behind the branchCOREP, FINREP, MiFIR; the booking model in the SREP and the SRB’s plan
Back to Backthe EU bank faces the client; an intragroup swap with the London branchpriced off the London book; hedged on an MTF, cleared at LCH or Eurexthe client swap bilateral under the CSA; the intragroup swap exempt from clearing and marginthe EU bank keeps a share of the risk under its own limits; the CVA and the sales reserveEMIR reports by both sides; the desk mapping to the ECB; UK EMIR for London
Follow the Suneach trade in the entity that dealt it: head office, the EU bank, the London branch, the New York branchTokyo, then Paris and London together, then New York; one risk systemT2 at the Banque de France, T2S through the CSDs, Eurex and LCH margin, CLS for the crossesone VaR, four entities’ capital charges; the EU bank’s share mapped for the ECBthe P&L by entity daily; four regulators
Euro Funding
FlowEntity that booksFunded or executedSettled and heldCapital and liquidityReported
FX Swapthe EMEA treasury in London or the head office deals the swap; the EU bank receives euros as intragroup fundingFX swaps against dollars and yen; cross-currency basis swaps and the EU bank’s own bonds for termCLS on T+2; the euros into the EU bank’s T2 account at the Banque de Franceintragroup funding counted in the LCR; the FTP at €STR or EURIBOR plus the basis and the LCR costthe LCR monthly and the NSFR quarterly with the monitoring metrics; the SREP liquidity block
ECP and Depositsthe EU bank issues the ECP and takes the deposits in its own namesold to the European money funds through the ECP dealers; the deposits from corporates and Japanese subsidiariesEuroclear and Clearstream against payment; the T2 accountrun-off assumed in the LCR; the DGS contributions on the depositsMMSR daily for the panel; BSI and MIR monthly; the liquidity monitoring metrics
The Eurosystemthe EU bank at its T2 account at the Banque de France as a monetary policy counterparty€STR unsecured; GC Pooling repo; the weekly MRO and the 3-month LTROs against collateralT2; the collateral pool at the Banque de France; the deposit facilityminimum reserves 1% at 0%; the deposit facility 2.00%; the ILAAPBSI for the reserve base; MMSR; the liquidity SREP
Euro Clearing for the Group
FlowEntity that booksFunded or executedSettled and heldCapital and liquidityReported
Group Paymentsthe EU bank as T2 participant and EURO1, STEP2 and TIPS member; the euro nostros of the group and the correspondentsinstructed by pacs.008 and pacs.009; screened and released by the payment hubT2 gross and final; EURO1 netted and settled through T2; SEPA through STEP2 and TIPSthe collateral at the Banque de France for intraday credit; the correspondent due diligenceAML to TRACFIN; the EU sanctions reporting; camt.053 statements to the nostros
Intraday Liquiditythe EU bank’s treasury and payment operationsthe collateral pool, the queue by priority, the squaring at €STR and on Eurex Repothe T2 account; EURO1 and STEP2 cycles; customer cut-off 17:00, interbank 18:00 CETfree intraday credit against collateral; the reserve requirement on averagethe Basel intraday metrics in the ILAAP; the Eurosystem’s oversight
Corporate Banking
FlowEntity that booksFunded or executedSettled and heldCapital and liquidityReported
Syndicated Loanthe EU bank’s Düsseldorf branch as lender of recordinvited by the lead arranger; approved by the EU bank’s own committee within the group limitdraws paid to the agent by T2; assignments through ClearPar under the LMA termsthe EU bank’s CRR capital at the ECB-approved risk weights; the FTP; the large exposure limitAnaCredit monthly; COREP; the leveraged lending guidance; the SREP
Project Financethe EU bank as lead arranger, lender and accounts banksyndicated to the European project banks; JBIC direct, NEXI cover, the EIB alongsidedrawdowns by T2 over the construction; the waterfall through accounts at the EU bankslotting or IRB under the CRR with the ECA cover; the parent’s rules again; term funding through the EU bank’s bondsto the EU bank’s board and to Tokyo quarterly; the ECB’s climate risk expectations
Letter of Creditthe head office issues; the EU bank advises, confirms and paysMT700 from Tokyo; the documents examined under UCP 600paid by T2 or SEPA at sight; reimbursed by a book entry on the head office’s euro nostrothe confirmation as an intragroup exposure on the parent under the CRRFINREP contingents; the leverage ratio; the EU sanctions and dual-use screening
Japanese Subsidiariesthe EU bank’s Düsseldorf branch for the accounts, the line and the FX; the head office for the yen legSEPA transfers and direct debits, T2; the FX desk; the parent’s guarantee as a CRR mitigantthe euros at the EU bank, the yen through BOJ-NET or Zengin the same afternoonoperational deposits in the LCR; DGS-covered; the parent’s creditcamt.053 and the API to the parent’s treasury; BaFin on the German branch’s AML
Markets Through the EU Firm
FlowEntity that booksFunded or executedSettled and heldCapital and liquidityReported
Dealer Seatsthe EU securities firm with the Bund auction group and SVT seatsthe Bundesbank’s bidding system by 11:30 CET; MTS and BrokerTec; Tradeweb and BloombergT2S through Clearstream and Euroclear on T+2; Eurex Clearing or LCH SA; GC Poolingthe IFR’s K-factors or the CRR; the Eurosystem’s collateral frameworkMiFIR by T+1; SFTR; APA transparency; the agencies’ rankings
CLOsthe EU bank for the warehouse; the EU firm as arranger; the head office as investorramped through ClearPar under the LMA terms; marketed to the Japanese and European AAA buyersEuroclear and Clearstream against payment; the warehouse repaidthe warehouse under the ECB’s leveraged lending expectations; the AAA under the JFSA’s rulesthe Securitisation Regulation’s reporting to a repository; the ACPR and the AMF; ESMA
EUR/JPY and the BasisTokyo faces the insurer; the EU bank books the euro leg where an EU entity faces the trade; London hedgesEUR/JPY and EUR/USD basis swaps and FX swaps in the interdealer marketCLS; the T2 account and BOJ-NET; bilateral margin under EMIR and the Japanese rulesthe EU bank’s share of the basis risk under its limits; the group’s euro funding off the same curvean EU trade repository by the EU bank; the Japanese repository; the JFSA
Japanese Securitiesthe EU firm faces the client; the Tokyo affiliate executeson the TSE sessions through the Tokyo desk; JGBs at BOJ-NET or through EuroclearJASDEC on T+2 through the sub-custodian; the CSDR discipline does not reach Japanagency: little capital; the commission split by intercompany agreementMiFIR by T+1 to the AMF; MAR surveillance; the JFSA for the exchange trades
Capital, Liquidity and Resolution
FlowEntity that booksFunded or executedSettled and heldCapital and liquidityReported
Third-Country Branchthe parent’s branch in Brussels, part of the Tokyo legal entitynone: the standing requirementsthe endowment capital and the local liquid assets at a Belgian custodianthe parent’s Basel III in Tokyo; endowment capital and local liquidity under CRD VIthe annual CRD VI report to the authority and the EBA register; the national returns
The EU Bankthe EU bank, the EU firm and the IPU, each on its own ratiosnone: the capital plan, the ICAAP and the SREPnoneCRR capital with the buffers and the Pillar 2 add-ons; internal MREL set by the SRB; large exposures at 25%COREP, FINREP, the SRB’s LDR, Pillar 3; the SREP decision
Liquiditythe EU bank, the branch and the IPU, run by the EU bank’s treasurynone: the buffers and the ILAAPreserves at the Banque de France, Bunds, OATs; the branch’s assets in Belgiumthe LCR at 100% daily and the NSFR at the EU bank; the branch’s local buffer; the parent’s LCR by currencythe LCR monthly, the NSFR quarterly, the monitoring metrics; the ILAAP in the SREP
Resolutionthe parent’s holding company, the IPU, the EU bank and the branch, each under its own regimenone: the plansthe FMI access mapped; the euro clearing kept running; the DGS behind the depositsinternal MREL and pre-positioned liquidity; the SRF behind the SRB; the endowment capital for the branch’s creditorsthe SRB’s plan and the LDR annually; the crisis management group; the resolvability assessment
Reporting and Control
FlowEntity that booksFunded or executedSettled and heldCapital and liquidityReported
Reporting Calendarthe EU bank, the EU firm, the IPU and the branch, each on its own templatesnone: the reportsnonethe reports are where the capital and liquidity rules are testedEMIR, MiFIR and SFTR daily; COREP and FINREP quarterly; the LDR and the CRD VI report annually
Reporting to Tokyothe EU bank and the IPU into the group consolidationnone: the ledgersnonethe transfer pricing of the intragroup dealings for several tax authoritiesdaily to Tokyo at the European close; monthly within five days; December 31 and March 31
Supervisory Cyclethe EU bank and the IPU under the JST; the EU firm under the AMF and the ACPR; the branch under the NBBnone: the SREP and the inspectionsnonethe SREP decision sets the Pillar 2 add-ons and the measuresthe SREP decision and the findings; the JFSA’s inspection; the college

Glossary

The terms that come back on every diagram. Every pill in the diagrams also shows its definition on hover.

Concepts, terms and rules

Third-country branch: A direct branch in a member state of a bank headquartered outside the EU, authorized under national law until the harmonized CRD VI regime applies from January 2027; part of the parent’s legal entity, with endowment capital and local liquidity instead of capital of its own.
CRD VI: The 2024 directive (2024/1619) that harmonizes the regime for third-country branches (authorization, two classes, endowment capital, local liquidity, booking and reporting requirements, a subsidiarization assessment for systemic branches) and bans core banking services into the EU without an EU branch, applied from 11 January 2027.
Article 21c: The CRD VI rule that a third-country undertaking may provide core banking services (deposit taking, lending, guarantees) to EU clients only through an EU branch, with exceptions for interbank and intragroup services and reverse solicitation; it closes cross-border lending from Tokyo or London into the EU.
Endowment capital: The assets a third-country branch must hold in its member state under CRD VI (1% of liabilities with a EUR 10,000,000 floor for a class 1 branch, EUR 5,000,000 for class 2), available to the authority; the EU counterpart of the US asset pledge.
Intermediate EU parent undertaking: The single EU holding entity (a credit institution or an approved financial holding company) a third-country group with EUR 40,000,000,000 or more of EU assets and two or more EU institutions must hold them under since 2023 (CRD V); supervised on a consolidated EU basis; the EU counterpart of the US intermediate holding company.
Passporting: The right of a credit institution or investment firm authorized in one member state to establish branches and provide services across the EU on its home authorization.
Credit institution: An undertaking that takes deposits and grants credit, authorized under CRD and subject to the CRR: a bank, in EU law.
Investment firm: A firm authorized under MiFID II to provide investment services, subject to the IFR’s capital rules (the K-factors) unless it is large enough to be treated as a credit institution.
Class 1 investment firm: An investment firm that deals on own account or underwrites with assets of EUR 30,000,000,000 or more (or EUR 15,000,000,000 by the supervisor’s decision), treated as a credit institution under the CRR.
Significant institution: A bank the ECB supervises directly under the SSM: the largest euro area banks and the EU subsidiaries of third-country groups above the thresholds (size, economic importance, cross-border activity); the others are less significant and stay with the national authorities.
Booking expectations: The ECB’s supervisory expectations after Brexit that EU entities of international groups have the traders, risk management and capital for the risk they book, limit back-to-back hedging to documented arrangements and show a desk-by-desk mapping of where risk is managed.
Desk mapping: The ECB’s review of each trading desk of the significant institutions to see which legal entity manages its risk, used to decide how much of a group’s EU business may be hedged back to back with London or the parent.
Reverse solicitation: The exception under which a third-country firm may serve an EU client who sought the service on its own initiative, without an EU license; narrowly read by ESMA.
Equivalence: The Commission’s decision that a third country’s rules and supervision are equivalent to the EU’s for a given purpose (trading venues, CCPs, exposures to institutions, the MiFIR firms’ regime), which unlocks access or preferential treatment; Japan has equivalence for its venues and CCPs, not for its investment firms.
Funds transfer pricing: The internal rate at which treasury charges the businesses for funding and credits them for deposits; for a foreign branch it carries the swap-implied dollar cost (SOFR plus the basis plus the term and liquidity premiums), so a loan’s margin is measured against it.
FX swap: A spot exchange of two currencies with an agreed reverse exchange at a forward date; the instrument through which a bank long in one currency borrows another; the forward points carry the rate differential and the cross-currency basis.
Cross-currency basis: The spread added to the non-USD leg of a cross-currency swap so that it prices at par; a measure of how expensive USD is to borrow through the swap market.
ECP: Euro commercial paper: short-term notes of up to a year issued under a program with an issuing and paying agent into the ICSDs, bought by the European money market funds and corporate treasuries.
Money Market Fund Regulation: The EU’s 2017 rules for money market funds: the public debt CNAV, LVNAV and VNAV types, the issuer limits (5%), the liquidity ratios and the 60-day weighted average maturity.
Deposit guarantee scheme: The national scheme under the DGS Directive covering bank deposits to EUR 100,000 per depositor per bank, including client money a firm holds at the bank where the client is identified as the depositor.
Minimum reserves: The reserves a euro area bank must hold on average over a maintenance period, 1% of its reserve base (deposits and short debt), remunerated at zero since September 2023.
Deposit facility: The Eurosystem’s overnight facility in which banks place their surplus reserves at the deposit facility rate, the floor of the euro money market while reserves are abundant.
Main refinancing operation: The Eurosystem’s weekly one-week lending operation at the MRO rate, with full allotment against eligible collateral; with the three-month longer-term operations, the regular supply of reserves.
Marginal lending facility: The Eurosystem’s overnight lending facility at the top of the rate corridor, against collateral, for a bank short of reserves at the close.
Collateral framework: The Eurosystem’s rules on the assets accepted for its credit operations (government and supranational bonds, covered bonds, corporate bonds, ABS, credit claims) and their haircuts; the bank’s collateral pool at its central bank.
Intragroup exemption: EMIR’s exemption of derivatives between entities of the same group from the clearing obligation and the margin requirements, on notification to the authorities; EMIR 3 removed the need for an equivalence decision for the third-country entity.
Active account requirement: EMIR 3.0’s requirement (2024) that firms subject to the clearing obligation keep an active account at an EU CCP for euro and Polish zloty interest rate swaps and euro short-term rate futures, to move clearing from London.
Large exposures: The CRR limit on a bank’s exposure to one client or group of connected clients: 25% of tier 1 capital, lower between the largest banks; intragroup exposures count unless the supervisor exempts them.
SREP: The supervisory review and evaluation process: the ECB’s annual assessment of a bank’s business model, governance, capital and liquidity, producing a decision with the Pillar 2 requirement and guidance and any other measures.
Pillar 2 requirement: The bank-specific capital requirement the SREP adds to the minimum, binding and met mostly with CET1; public since 2021.
Pillar 2 guidance: The capital the ECB expects a bank to hold above its requirements and buffers from the stress test results; not binding, but a breach triggers supervisory dialogue.
ICAAP: The internal capital adequacy assessment process: the bank’s own assessment of the capital it needs, reviewed in the SREP.
ILAAP: The internal liquidity adequacy assessment process: the bank’s own assessment of its liquidity and funding, reviewed in the SREP’s liquidity block.
Countercyclical buffer: The capital buffer the national macroprudential authorities set by country (0% to 2.5% of RWA) and a bank applies in proportion to its exposures there.
LCR: The liquidity coverage ratio: high-quality liquid assets over 30-day net stressed outflows, at 100% (or 85% in the reduced form); applies to the IHC by category and to the parent at home.
NSFR: The net stable funding ratio: available stable funding over required stable funding over one year; applies to the IHC by category and to the parent at home.
MREL: The minimum requirement for own funds and eligible liabilities set by the resolution authority under the BRRD: the loss-absorbing capacity a bank must hold so that it can be resolved without public money; internal MREL for a subsidiary that is not a resolution entity.
Internal MREL: The MREL a non-resolution entity (an EU subsidiary of a group resolved elsewhere) issues to its parent, which the SRB can write down or convert to recapitalize it without opening a resolution; the EU counterpart of internal TLAC.
Single point of entry: The resolution strategy in which losses are absorbed at the group’s holding company by writing down or converting its TLAC while the operating entities keep running; the strategy of the Japanese, US and most European G-SIBs.
Bail-in: The resolution tool that writes down or converts a failing bank’s capital and eligible liabilities in the order of the creditor hierarchy to absorb losses and recapitalize it.
Senior non-preferred: The class of bank debt created in 2017 that ranks below ordinary senior claims and above subordinated debt, issued to meet MREL and bailed in before the senior preferred creditors.
No creditor worse off: The safeguard that no creditor may receive less in a resolution than it would have in a normal insolvency, assessed by an independent valuation after the resolution.
Resolution stay: The resolution authority’s power to suspend termination rights and payment obligations for a short period during a resolution; EU banks must have the stay recognized in their non-EU-law contracts.
Crisis management group: The home and host authorities of a G-SIB meeting under the home authorities’ chair to agree and test the group’s resolution strategy: the JFSA for a Japanese bank, the Fed and the FDIC for a US bank, the SRB and the national authority for a euro area bank, with the host supervisors and resolution authorities around the table.
Securitisation Regulation: The EU’s 2019 framework for securitizations: 5% risk retention by the originator, sponsor or original lender, investor due diligence, transparency reporting through a securitisation repository, the STS label for simple, transparent and standardized deals, and a ban on re-securitisation.
Risk retention: The rules requiring a securitization’s originator, sponsor or lender to keep a share of the risk (5% in the EU, the UK and Japan); the US rule no longer applies to open-market CLO managers since 2018.
LMA: The Loan Market Association: the standard documentation and settlement conventions for European syndicated and leveraged loans, traded by assignment or participation.
Letter of credit: A bank’s undertaking to pay a beneficiary against documents that comply with its terms, under UCP 600; issued for an importer by its bank, advised and often confirmed by a bank in the exporter’s country.
UCP 600: The ICC’s Uniform Customs and Practice for Documentary Credits, the rules incorporated in almost every letter of credit: the banks deal in documents, the undertaking is independent of the sale, examination within five banking days.
Main bank: A Japanese company’s house bank: historically a shareholder and lender of last resort, today the primary lender and cash management bank, whose relationship extends to the company’s subsidiaries abroad.
Authorized OECD approach: The method for attributing profit to a permanent establishment such as a branch: treat it as a separate enterprise dealing at arm’s length with the rest of the bank, with capital attributed for tax.
JGAAP: Japanese generally accepted accounting principles, the basis of the group’s consolidated accounts for most Japanese banks; the branch keeps a US GAAP ledger for the US authorities and reconciles the two.
Fiscal year (Japan): April 1 to March 31, with the half-year at September 30; the group closes on it while the branch’s US calendar runs to December 31.

Reports and filings

COREP: The EBA’s common reporting framework for the banks’ capital, liquidity and large exposures (with FINREP for the financial statements and ALMM for the liquidity metrics), filed with the ECB or the NCA.
FINREP: The EBA’s financial reporting framework: the banks’ financial statements on IFRS, reported quarterly to the supervisor alongside COREP.
Pillar 3: The public disclosure of a bank’s capital, risk-weighted assets, liquidity and risk management on the EBA’s templates, quarterly, semi-annually and annually by size.
AnaCredit: The Eurosystem’s loan-by-loan credit register since 2018: every euro area credit institution and branch reports monthly its loans to legal entities of EUR 25,000 and above, with the counterparty, instrument, collateral and risk data.
MMSR: The ECB’s money market statistical reporting: the daily transaction-level report of the panel banks’ unsecured, secured, FX swap and OIS money market trades, the source of €STR.
LDR: The liability data report: the annual template the SRB collects from each bank for the MREL calibration and the resolution plan.
CRD VI register: The registry of assets and liabilities a third-country branch must keep under CRD VI, and the EBA’s central register of third-country branches the authorities feed.
EMIR: The European Market Infrastructure Regulation: the clearing obligation for standardized OTC derivatives, the margin rules for uncleared trades, the reporting of every derivative to a trade repository, and the CCP rules; EMIR 3.0 (2024) adds the active account requirement at an EU CCP.
MiFIR: The regulation beside MiFID II: pre- and post-trade transparency, transaction reporting to the NCAs, the trading obligations for shares and derivatives, and the 2024 review that bans payment for order flow from June 2026 and sets up the consolidated tapes.
SFTR: The Securities Financing Transactions Regulation: loan-by-loan reporting of repo, securities lending, buy-sellbacks and margin lending to a trade repository, and the reuse and disclosure rules for collateral.
DORA: The Digital Operational Resilience Act (applied from January 2025): the ICT risk management, incident reporting, resilience testing and third-party risk rules for financial entities, investment firms included, with the oversight of the critical ICT providers.
Trade repository: A designated trade repository (DTCC’s DDR, CME’s or ICE’s) to which Canadian derivatives trades are reported under the provincial trade reporting rules (OSC Rule 91-507 and its equivalents), by the dealer side where one of the parties is a dealer.
ARM: An approved reporting mechanism: the channel through which an investment firm sends its transaction reports (RTS 22, with the client and trader identifiers) to the NCA by the next business day.
APA: An approved publication arrangement: the MiFIR post-trade transparency channel through which an investment firm publishes its OTC and SI trades (price, size, time, with the deferrals for large or illiquid trades); the consolidated tapes will aggregate them.

Infrastructure, agencies and authorities

Eurosystem: The ECB and the national central banks of the euro area, which execute the monetary policy operations, run T2 and T2S, hold the banks’ reserve accounts and collect the monetary statistics.
ECB: The European Central Bank in Frankfurt: the monetary authority of the euro area and, since 2014, the supervisor of the significant banks under the SSM; the two functions are separated internally.
SSM: The Single Supervisory Mechanism: the ECB’s direct supervision of the significant euro area banks since 2014, with the national supervisors for the rest; the SREP review and the Pillar 2 requirements come out of it.
Joint supervisory team: The ECB and national authority staff who supervise one significant institution, led from Frankfurt: the SREP, the continuous monitoring, the requests for information, the follow-up of inspections.
EBA: The European Banking Authority in Paris: writes the technical standards, the reporting frameworks and the guidelines the EU banks follow, runs the EU-wide stress test and keeps the registers.
ESMA: The European Securities and Markets Authority: writes the technical standards under MiFID II, EMIR, CSDR, the UCITS and AIFM directives, keeps the registers and coordinates the national competent authorities; it supervises a few entities directly (the trade repositories, the credit rating agencies).
SRB: The Single Resolution Board in Brussels, the resolution authority for the banking union’s significant banks and cross-border groups, working with the national resolution authorities; it sets MREL, draws up the resolution plans and runs the Single Resolution Fund.
BRRD: The Bank Recovery and Resolution Directive: the EU framework of recovery plans, resolution plans, resolution tools (bail-in, sale, bridge bank, asset separation), MREL, the resolution stays and the recognition of third-country resolutions.
Single Resolution Fund: The fund the banking union’s banks finance through ex ante contributions to back the SRB’s resolution tools; at its target level of about 1% of covered deposits since 2023, with contributions paused while it stays there.
ACPR: The Autorité de contrôle prudentiel et de résolution, the French prudential supervisor and national resolution authority, attached to the Banque de France: the national competent authority in the ECB’s joint supervisory teams for the French significant institutions, the supervisor of the less significant ones, and the executor of the SRB’s resolution decisions in France.
AMF (France): The Autorité des marchés financiers, the French markets and conduct regulator: the investment firms’ conduct and the markets business, the MiFIR transaction reports, the market abuse surveillance, the listed companies’ disclosure and the universal registration documents.
FGDR: The Fonds de Garantie des Dépôts et de Résolution, the French deposit guarantee scheme: the deposits at the French credit institutions covered to EUR 100,000 per depositor, with a payout within seven working days, funded by the banks’ contributions.
TRACFIN: The French financial intelligence unit (Traitement du renseignement et action contre les circuits financiers clandestins), attached to the Ministry of the Economy, which receives the suspicious transaction reports of the French financial institutions and their branches.
Bundesbank: The German central bank: the Eurosystem’s largest member, the operator of the Bund bidding system, the national authority in the ECB’s joint supervisory teams for German banks.
Banque de France: The French central bank: the Eurosystem member for France, the operator of the OAT auction system, with the ACPR as the French prudential authority.
AMLA: The EU Anti-Money Laundering Authority (Frankfurt, operational from 2025), which will directly supervise the riskiest cross-border financial entities from 2028 and coordinate the national supervisors and the FIUs under the 2024 AML package.
T2: The Eurosystem’s real-time gross settlement system for euro central bank money since March 2023 (the successor to TARGET2), with TIPS for instant payments; the banks’ settlement accounts and the CSDs’ cash legs run through it.
T2S: TARGET2-Securities: the Eurosystem’s single settlement platform on which the participating CSDs (Euroclear’s ESES, Clearstream Banking Frankfurt, Monte Titoli, Iberclear and others) settle securities against central bank money, delivery versus payment, on T+2.
EURO1: EBA Clearing’s large-value euro payment system: continuous multilateral netting within bilateral and multilateral limits, settled once a day through T2.
STEP2: EBA Clearing’s pan-European clearing house for SEPA credit transfers and direct debits, settling in cycles through T2.
TIPS: TARGET Instant Payment Settlement: the Eurosystem’s service settling instant payments in central bank money in seconds, around the clock, on prefunded accounts.
SEPA: The Single Euro Payments Area: the credit transfers, instant transfers and direct debits between euro accounts, the retail rail behind the dealers’ client payments.
Euroclear: The Brussels-based group: Euroclear Bank is the international CSD for Eurobonds and cross-border holdings (with its triparty and collateral services), and Euroclear’s ESES CSDs (France, Belgium, the Netherlands) are domestic CSDs on T2S.
Clearstream: The Deutsche Börse group’s CSDs: Clearstream Banking Luxembourg, the international CSD (with Vestima for funds and its triparty service), and Clearstream Banking Frankfurt, the German domestic CSD on T2S.
Eurex Clearing: The Deutsche Börse CCP: clears Eurex’s listed derivatives, repo (Eurex Repo and GC Pooling), cash equities on Xetra and euro interest rate swaps; its ISA Direct model lets buy-side firms clear directly with a clearing agent behind them.
Eurex Repo: Deutsche Börse’s electronic repo market, with GC Pooling as the cleared general collateral segment settled at Eurex Clearing against Clearstream’s collateral pool.
LCH: London clearing house; LCH SwapClear clears most interest rate swaps in the world.
CLS: CLS Bank settles both sides of a currency trade at the same moment (payment versus payment) so neither party pays without receiving.
MTS: The interdealer electronic market for euro government bonds and repo, owned by Euronext, with the national MTS markets where the primary dealers quote; the European BrokerTec.
Bund auction: The Finanzagentur’s auctions of German government securities through the Bund Issues Auction Group in the Bundesbank’s bidding system, with a retention quota kept for secondary market operations.
OAT auction: Agence France Trésor’s auctions of French government securities through the SVTs, on Thursdays through the Banque de France’s system.
Finanzagentur: The German Finance Agency, the debt manager of the federal government: it runs the Bund auctions and the Bund Issues Auction Group.
Agence France Trésor: The French debt agency: it runs the OAT and BTF auctions and the SVT network.
SVT: Spécialiste en valeurs du Trésor: one of the fifteen primary dealers in French government securities under Agence France Trésor’s charter, with quoting and placement obligations and an annual ranking.
EIB: The European Investment Bank, the EU’s lending institution and climate bank, which lends directly to infrastructure and energy projects alongside the commercial banks.
JBIC: The Japan Bank for International Cooperation, the policy bank that co-finances overseas projects with Japanese interests alongside the commercial banks.
NEXI: Nippon Export and Investment Insurance, Japan’s export credit insurer, covering the political and commercial risk of the commercial lenders’ tranches in projects with Japanese participation.
JSCC: The Japan Securities Clearing Corporation, the Japanese CCP for cash equities, listed derivatives and yen swaps, recognized by ESMA as a third-country CCP.
BOJ-NET: The Bank of Japan’s real-time gross settlement system for yen and for JGBs; the head office’s yen settlement account and the yen leg of every CLS and cross-border trade.
Zengin: The Japanese interbank clearing system for retail and corporate yen transfers, with its 24-hour More Time system since 2018.
JASDEC: The Japan Securities Depository Center, the CSD for Japanese equities and corporate bonds, settling on T+2 against yen through BOJ-NET.
TSE: The Tokyo Stock Exchange, with a morning session from 09:00 JST and an afternoon session to 15:30; the prime, standard and growth markets.
JFSA: The Japan Financial Services Agency, the consolidated supervisor of the Japanese banks, chair of their supervisory colleges and crisis management groups.
Bank of Japan: Japan’s central bank: operates BOJ-NET, examines the banks, and lends dollars to them in a stress through its USD funds-supplying operations on the Fed swap line.
DICJ: The Deposit Insurance Corporation of Japan, the resolution authority that carries out the orderly resolution measures under the Deposit Insurance Act.

Inside the bank: systems and documents

Head office account: The branch’s ledger account with its parent through which the interbranch funding, the back-to-back trades and the service charges pass; an internal system, not a payment rail.
Issuing and paying agent: The US bank that issues a CD or CP program’s paper into DTC on the issuer’s instruction, keeps the register and pays at maturity.
Consolidation system: The group’s system at the head office into which each entity and branch submits its monthly package for the consolidated accounts and the management reporting.
Sanctions screening: The filter that checks every payment, party and trade document against the OFAC and other sanctions lists before release; a hit is held for the sanctions team.
Transaction monitoring: The system that flags unusual payment patterns for the AML team to investigate and, where warranted, report to FinCEN; certified yearly under DFS Part 504.
Stress test engine: The models and data that project the balance sheet, capital and liquidity under the supervisory and internal scenarios.
Loan system: The system of record for the loan book: facilities, draws, rates, fees, covenants and the agent interfaces.
Trade finance system: The system that issues, advises, examines and pays documentary credits, guarantees and collections, and generates the SWIFT trade messages.
Credit memo: The credit department’s written analysis and recommendation on which a credit committee approves an exposure; for a branch it travels to the head office above the local authority.
Cash management portal: The bank’s online banking platform for corporate clients: balances, payments, reporting, pooling.
Agent portal: The administrative agent’s portal through which lenders in a syndicated loan receive notices, rate sets and the borrower’s compliance certificates.
Reporting hub: The engine that turns bookings into regulatory reports (TRACE, CAT, SDR, SBSDR, RTRS, FR 2052a) and tracks acknowledgments and rejects (DTCC Report Hub, AxiomSL, in-house).
Liquidity dashboard: Treasury’s view of funding needs and sources for the day and the coming weeks, including collateral calls and the buffer.
FTP engine: Funds transfer pricing: charges every position the bank’s cost of funding for its tenor and liquidity, and credits stable deposits, so each desk sees its true cost of balance sheet.
SWIFT message types used in the diagrams
MT300: SWIFT confirmation of an FX trade.
MT305: SWIFT confirmation of an FX option.
MT320: SWIFT confirmation of a fixed-term loan or deposit.
MT950: SWIFT account statement from a correspondent bank.
camt.053: ISO 20022 end-of-day bank account statement, the successor to MT950.
MT535: SWIFT statement of securities holdings from a custodian.
MT541: SWIFT instruction to receive securities against payment.
MT543: SWIFT instruction to deliver securities against payment.
camt.057: ISO 20022 notice to the account holding bank or custodian to expect an incoming payment, the successor of the MT210.
MT900: SWIFT debit confirmation from a bank.
MT304: SWIFT advice of an FX trade from a manager to its custodian, so the custodian can settle it.
MT545: SWIFT confirmation from the custodian that securities were received against payment.
MT547: SWIFT confirmation from the custodian that securities were delivered against payment.
MT548: SWIFT settlement status from the custodian: pending, matched, failed, with the reason.
MT566: SWIFT corporate action confirmation: the cash or securities credited for an event.
MT540-543: SWIFT instructions to receive or deliver securities, with or without payment; used to move collateral.
MT515: SWIFT client confirmation of a securities trade.
MT527: SWIFT triparty collateral instruction.
MT600: SWIFT confirmation of a precious metals trade.
MT604: SWIFT precious metals transfer or allocation instruction.
MT670: SWIFT standing settlement instruction update: how a counterparty notifies its SSIs by authenticated message.
MT340: SWIFT confirmation of a forward rate agreement.
MT564: SWIFT corporate action notification from a custodian or depository: the event, the options and the deadline.
MT502: SWIFT order to buy or sell securities, sent by a client to its broker or manager.
MT509: SWIFT trade status message from a broker or custodian.
MT101: The SWIFT request for transfer a corporate sends its bank, or a bank sends another, to move funds from the customer’s account.
MT700: The SWIFT message by which a bank issues a documentary credit to the advising bank.
MT710: The SWIFT advice of a documentary credit issued by a third bank, sent by the advising bank onward.
MT742: The SWIFT reimbursement claim a paying or negotiating bank sends the reimbursing bank under a documentary credit.
MT754: The SWIFT advice of payment, acceptance or negotiation sent by the paying bank to the issuing bank under a documentary credit.
MT799: The SWIFT free-format message between banks, used for trade finance correspondence and bank-to-bank undertakings.
MT940: The SWIFT customer statement message a bank sends an account holder (or its other bank) with the day’s entries and balances.
MT540: The SWIFT instruction to receive securities free of payment, used for the stock loans and the collateral deliveries.
MT306: The Swift confirmation of the FX options the MT305 cannot describe: average rate (Asian) options and forwards, barriers, digitals and other exotic structures, with their averaging or observation dates.
MT380: The Swift FX order: an investment manager instructs its custodian to buy or sell a currency for a fund; the custodian confirms the execution with an MT381.
MT606: The Swift precious metal debit advice: the account keeper tells the account owner its metal account was debited, with the bar list when the metal moves into allocated bars.
MT607: The Swift precious metal credit advice: the account keeper tells the account owner its metal account was credited, in fine troy ounces.
MT608: The Swift statement of a metal account: the opening and closing balances in ounces and the movements of the period, or the bars held in an allocated account.
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The message
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