For banks and other financial undertakings, the ESAs expect you to use the same “enterprise value” definition in Annex I, point 4, even though balance sheets are structured differently. You should not create a bespoke bank-specific definition. Instead, you apply the existing EVIC concept in a way that is consistent and appropriate for your institution, using it as the denominator for the relevant indicators.
When looking to carbon footprint major indices under the SFDR, we noticed that Enterprise Value Including Cash (EVIC) is expected as the denominator. Typically, Enterprise Value's main components are debt and cash which are not used by financial undertakings (e.g. banks) in the same way they are for non-financial undertakings. Banks are normally evaluated from loans and deposits. We do not believe there is an alternative EV value for banks. Is the expectation for EVIC that the FMP self-derives "current market cap + book value of debt + minority interests" instead of EVIC for financial undertakings? Or that you exclude financial undertakings in the calculation altogether? It does seem that in the case of financial undertakings, using gross debt rather than net debt creates peculiar results.
The ESAs recognise that the Enterprise Value definition in point 4 of Annex I of the Delegated Regulation was not specifically designed for credit institutions, but that definition is still meaningful and should be used as it provides an appropriate allocation mechanism to allow calculations to be made. Financial market participants should not develop their own definitions for the terms used in that definition.
European Supervisory Authorities (ESAs)
