EBA欧洲银行-EBA-Op-2014-11-28Opinion-on-CfA-on-art-108-and-10929_19页_391kb

EBA Opinion on Application of Articles 108 and 109 of CRD and P1 and P2 of CRR

Introduction and Legal Basis

The European Banking Authority (EBA) was asked by the European Commission to provide technical advice on the appropriateness of the exemption regimes under Articles 108 and 109 of Directive 2013/36/EU (CRD) and Part One, Title II and Article 113(6) and (7) of Regulation (EU) No 575/2013 (CRR). This opinion, based on responses from 22 national competent authorities covering over 6000 supervised institutions, addresses both calls for advice (CfAs) due to their close correlation.

The EBA's competence is derived from Article 34(1) of Regulation (EU) No 1093/2010. The opinion was adopted by the Board of Supervisors in accordance with Article 14(5) of the EBA's Rules of Procedure.

General Comments

• The EBA's opinion reflects the views of national competent authorities (CAs) and is based on a questionnaire.
• The opinion focuses on whether waivers under Pillar 1 (P1) and Pillar 2 (P2) are prudentially justified and whether they should be modified or extended.
• Future review of waivers should consider their interaction with recovery and resolution strategies under the Banking Recovery and Resolution Directive (BRRD), particularly the condition of free transfer of funds.
• The EBA suggests that the Commission should also review the impact of these waivers on the prudential supervision of investment firms, as outlined in Article 508(3) CRR.
• The EBA notes that many responses were qualitative due to the short timeframe, so caution is advised when using them to inform future regulatory changes.

Specific Comments

1. Article 508(1) CRR – Level of Application for Pillar 1 Requirements

• Article 6 CRR: Directly binding on institutions, no changes are required.
• Article 11 CRR: Directly binding on institutions, no changes are required.
• Article 12 CRR: Directly binding on institutions, no changes are required.
• Article 13 CRR: Directly binding on institutions, no changes are required.
• Article 14 CRR: Directly binding on institutions, no changes are required.
• Article 22 CRR: Purpose is unclear; the EBA suggests its review and possible removal or alteration.
• Article 23 CRR: Necessary for global consolidated supervision; no changes are required.

2. Current Exemption Regime

• Article 7 CRR: Used in 5 MS (and 2 others with no actual cases). The EBA considers it should not be extended or made mandatory. Market impact of changes would be significant and requires full assessment.
• Article 8 CRR: Relatively new, many MS are processing applications for the first time. The EBA considers it too early to review, but suggests retaining individual liquidity reporting in certain cases. The impact of BRRD's group financial support conditions should be considered.
• Article 9 CRR: Used in 3 MS (and 5 others with no cases). The EBA suggests no extension or mandatory application. The term 'parent institution' is not defined, leading to variable interpretations.
• Article 10 CRR: Used in 6 MS, covering about 130 institutions. The EBA considers the waiver should not be removed but should be aligned with P1. Concerns were raised about the potential for financial instability.
• Article 15 CRR: Used by groups of investment firms. The EBA considers the conditions appropriate and no changes are needed at present. This article should be part of the broader review under Article 508(3) CRR.
• Article 16 CRR: The leverage ratio derogation is not yet operational. The EBA considers the conditions appropriate and no changes are needed. It should be part of the broader review under Article 508(3) CRR.

3. Possibility for Further Harmonisation

• The EBA recommends retaining appropriate distinctions between credit institutions and investment firms due to their different sizes, activities, and risk profiles.
• Harmonisation of derogations and waivers for investment firms is not necessary at this time, as the treatment was established during CRR negotiations with recognition that Basel III applies to banks, not investment firms.
• The EBA suggests that the Commission should review the regime for investment firms as part of the broader review under Article 508(3) CRR.

4. Criteria for Excluding Entities from Prudential Requirements

• Article 19 CRR: Used in 9 MS, but generally limited and controlled. Some MS reported no use of criterion (a), and the Commission may wish to consider its removal. The EBA suggests that CAs should be required to notify when entities are excluded under this article to ensure transparency.

5. Suggested Modifications

• A general suggestion is to align the waiver regimes with the new intragroup financial support regime under the BRRD, particularly in terms of free transfer of funds.
• Article 108(1)(2): Should be aligned with the P1 waiver, i.e., apply only if the P1 waiver is in place.
• Article 109(1): The EBA suggests modifying it to ensure that institutions are always compliant with the general principles (Articles 74 and 75) and some governance rules (e.g., Articles 88 and 91) on an individual basis. This is to prevent the risk of inadequate risk management at the solo level.

6. Extension of Waivers

• The EBA suggests that an extension on materiality grounds for Article 108(1)(2) could be considered, such as adding a materiality threshold based on group assets and local market activity.
• The EBA recommends retaining the current waivers pending the outcome of the Commission's review under Article 508(3) CRR.

7. Appropriateness of Conditions

• The EBA considers the conditions for waivers under Articles 7, 10, and 15 CRR to be appropriate and sufficiently extensive.
• Additional criteria could be introduced, such as:
  • A uniform methodology for risk identification, measurement, and management on a consolidated basis.
  • A requirement that the parent institution must be empowered to issue binding instructions to subsidiaries.
  • Further detail on integrated risk management.

8. Harmonisation of P2 Requirements

• The EBA encourages alignment of waivers for ICAAP (Article 108 CRD) and SREP (Article 109 CRD) to ensure consistency in prudential supervision.
• Alignment of P2 waivers with P1 waivers is also encouraged to avoid fragmentation in regulatory approaches.
• Subsidiary undertakings not subject to CRD prudential requirements should be treated appropriately, with the possibility of including them in the review process under the same criteria as those subject to the waiver.