2014年-EBA欧洲银行管理局_JC-CP-2014-04_Joint_Consultation_Paper_draft_RTS_art_21a_1a_FICOD_31页_732kb

Summary of Joint Consultation Paper: Draft Regulatory Technical Standards on Risk Concentration and Intra-Group Transactions

Core Content

This document outlines a Joint Consultation Paper by the European Supervisory Authorities (ESAs) — the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA) — proposing Draft Regulatory Technical Standards (RTS) on risk concentration and intra-group transactions under Article 21a(1a) of the Financial Conglomerates Directive (FICOD).

The proposed RTS aim to ensure consistent application of FICOD's provisions and to coordinate supervisory practices across different sectors and Member States. The consultation period ended on 24 October 2014, and responses were requested on specific questions listed in the document.

Main Views and Key Information

1. Purpose of the Draft RTS

• Clarify definitions of intra-group transactions and risk concentration in Article 2 of FICOD.
• Coordinate supervisory measures under Articles 7, 8, and Annex II of FICOD.
• Enhance consistency in the reporting and oversight of financial conglomerates across the EU.

2. Scope of the RTS

• The RTS apply to regulated entities and mixed financial holding companies.
• They provide methodologies for identifying significant risk concentration and intra-group transactions.
• They outline supervisory measures that competent authorities should consider.

3. Key Elements of the Draft RTS

Article 1: Subject Matter

• Defines the scope of the RTS, focusing on:
  • Precise formulation of definitions (intra-group transactions and risk concentration).
  • Coordination of provisions on reporting and supervisory measures.

Article 2: Significant Risk Concentration

• Definition: Risk concentration arises from exposures to counterparties not part of the conglomerate.
• Considerations for identification:
  • Solvency and liquidity of the conglomerate and its entities.
  • Size, complexity, and structure of the conglomerate.
  • Risk management and governance.
  • Diversification of exposures and financial activities.
  • Inter-risk concentration, contagion effects, and circumvention of sectoral rules.
• Reporting requirements:
  • Description of risk concentration by type.
  • Breakdown by counterparties, geographical areas, economic sectors, currencies.
  • Total amount of risk concentration valued under sectoral rules.
  • Risk mitigation and weighting factors, if applicable.
  • Management of conflicts of interest and contagion.

Article 3: Significant Intra-Group Transactions

• Definition: Includes a wide range of transactions within the conglomerate.
• Examples:
  • Investments, intercompany balances, real estate, equity, loans, etc.
  • Guarantees, derivatives, and asset/liability transactions.
  • Insurance and reinsurance operations.
  • Transactions that shift risk exposure between entities.
• Considerations for identification:
  • Structure, complexity, and location of counterparties.
  • Contagion effects, circumvention of sectoral rules, and conflicts of interest.
  • Solvency and liquidity of counterparties.
• Reporting requirements:
  • Dates and amounts of transactions.
  • Description of transaction types.
  • Total volume of transactions in a reporting period.
  • Management of conflicts of interest and contagion.

Article 4: Supervisory Measures

• Competent authorities should consider the following:
  • Arm’s length transactions: Require certain transactions to be performed at arm’s length or notify non-arm’s length ones.
  • Internal approval procedures: Transactions must be approved through specific internal processes.
  • Frequent reporting: Entities must report more frequently than annually.
  • Thresholds: Define appropriate thresholds for identifying significant transactions.
  • Additional reporting: Require more detailed reporting on risk concentration and transactions.
  • Risk management: Strengthen risk management and internal control mechanisms.
  • Compliance plans: Entities must present or improve a plan to restore compliance with supervisory requirements.

Article 5: Implementation

• The RTS will enter into force 20 days after publication in the Official Journal of the European Union.
• It is binding and directly applicable in all Member States.

4. Cost-Benefit Analysis and Impact Assessment

• The baseline scenario assumes that FICOD and its national implementations exist without further coordination.
• The objective of the RTS is to ensure consistent application of FICOD Articles 2, 7, 8, and Annex II.
• The policy options considered include:
  • Precise formulation of definitions (only Articles 2(18) and (19) are targeted).
  • Coordination of reporting and thresholds.
  • Supervisory measures for consistency and transparency.
• The ESAs conducted public consultations and analysed costs and benefits to inform the RTS development.

5. Background and Rationale

• FICOD was the first cross-sectoral prudential supervision directive, introducing supplementary supervision for financial conglomerates.
• It allows flexibility for Member States in implementation, leading to divergent supervisory approaches.
• The risk-based approach has evolved since FICOD’s enactment, especially with FICOD I (2011/89/EU).
• The need for coordination arose due to varying national regimes and the risk of inconsistent application of FICOD.

6. Consultation Process

• The ESAs invited comments on the draft RTS and specific questions.
• Responses must be submitted before 24 October 2014 via the ESA websites.
• Confidentiality of responses must be clearly indicated.
• The European Commission will adopt the RTS and publish them in the Official Journal.

Conclusion

The draft RTS aim to harmonise supervisory practices across the EU, ensuring consistent reporting and effective oversight of risk concentration and intra-group transactions in financial conglomerates. The ESAs have developed a risk-based framework to guide supervisors, while also providing flexibility for Member States. The final RTS will be binding and directly applicable once adopted by the Commission.