Asset class classification: differences between asset classes

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Dear Sir or Madam,

We are still in the process of classifying our assets according to the table 5.2 provided in the FI guidance document. It seems, the asset classes mentioned are not mutually exclusive.

Can you please provide more guidance on classification of following strategies into the right product/asset class?

  1. Commercial Mortgage Loan
    These could be classified both as “Corporate Loan: Commercial Real Estate” or as “Private Debt”. Can you please provide further background (and examples) to clarify the difference between these two categories?
  2. Infrastructure Debt
    These can be classified either as “Private Debt”, “Project Finance” or “Corporate Loan”. Can you please provide further background (and examples) to clarify the difference between these three categories?
  3. Direct Lending
    These could be classified both as “Corporate Lending: SME Loans” or as “Private Debt”. Can you please provide further background (and examples) to clarify the difference between these two categories?

Further, does the FI have to provide argumentation why we would potentially allocate investments in optional asset classes?

Many thanks for your feedback.

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Information on how the FI categorizes investments/lending into (sub-)asset classes should be provided in its target submission to facilitate understanding/agreement.

To help, Table 5.2 of the Near-Term Financial Sector SBT Guidance, which provides minimum coverage requirements, has been updated in the draft Version 2 with more granular specifications for each asset class. For example, a separate real estate asset class has been explicitly added to make requirements there clearer. And infrastructure project finance and investments in infrastructure assets are currently out of scope while loans to infrastructure companies and investments in equity/debt securities issued by
infrastructure companies are in scope.

The proposed changes are up for public consultation so we welcome your feedback/questions on this document, and two other new documents, through the survey by Aug 14.