EBA欧洲银行-EBA-RTS-2015-08-RTS-on-financial-support_31页_444kb

EBA Final Draft Regulatory Technical Standards on Group Financial Support

Executive Summary

The EBA final draft Regulatory Technical Standards (RTS) under Article 23 of Directive 2014/59/EU aim to establish a clear, harmonised framework for group financial support within the European Union. The purpose is to enable cross-border groups to optimally allocate liquidity and collateral in financial distress, while maintaining prudential safeguards and legal certainty. The conditions for financial support include the expected success of the support, the interest of the group as a whole, the terms of the support, and the impact on financial stability and resolvability.

Key points:

• A support agreement under Chapter III is not a condition for providing liquidity within a group, especially for regular liquidity management.
• The provisions do not affect contractual or statutory liability arrangements that protect institutions through cross-guarantees.
• Competent authorities must assess whether the conditions are met to authorise the provision of support, and management must ensure compliance with these conditions.
• The conditions include safeguards for the providing entity and its creditors, as well as for the financial stability of the group and the broader financial system.

Core Content and Key Conditions

1. Conditions for Group Financial Support

• (a) Reasonable prospect that the support will redress the financial difficulties of the receiving entity

  • Must be supported by an analysis of the receiving entity's capital and liquidity needs, internal and external causes of financial difficulties, and a plan for redress.
  • Projections and descriptions of the financial situation should be coherent and plausible.

• (c) Terms of the support in accordance with Article 19(4)

  • The terms should reflect the default risk of the receiving entity, the seniority of the claim, and the expected loss to the providing entity in case of default.
  • In the case of a loan, the maturity profile must be considered based on full disclosure of relevant information.

• (e) The support does not jeopardise the liquidity or solvency of the providing entity

  • The providing entity's assets must be reasonably expected to be higher than its liabilities at all times.
  • The entity must be able to meet its liabilities as they fall due, considering potential adverse developments.

• (i) The support does not undermine the resolvability of the providing entity

  • The support should not make the implementation of the resolution strategy for the providing entity substantively less feasible or less credible.
  • The assessment should consider the impact on loss absorption, interconnectedness, contagion risk, group complexity, and the capital and liquidity situation.

2. Prudential Requirements and Authorisation

• Prudential requirements for capital, liquidity, and large exposures must be respected, but competent authorities may authorise non-compliance if necessary.
• Guidelines are provided to ensure flexibility in assessing each case, while maintaining clarity for firms and investors.

Rationale and Background

• Chapter III of Directive 2014/59/EU aims to harmonise rules for group financial support to overcome obstacles posed by national laws and diverging regulatory requirements.
• The harmonisation is intended to facilitate optimal liquidity and collateral allocation in distressed groups, especially cross-border ones.
• Article 19(4) requires Member States to remove legal impediments to intra-group financial support transactions.
• The RTS and guidelines are designed to balance the need for group support with the need to protect financial stability and ensure resolvability.

Impact Assessment

• The impact assessment highlights the importance of intra-group financial support in crisis management.
• It notes the high level of cross-border activities in the EU banking sector, with around 28% of credit institutions being foreign-controlled subsidiaries and branches.
• The assessment is mainly qualitative due to the lack of systematic data on intra-group funding, relying on academic research and expert opinions.

Conclusion

The EBA draft RTS and guidelines provide a structured and harmonised approach to assessing the conditions for group financial support, ensuring that such support is both effective in addressing financial distress and does not compromise the stability or resolvability of the group or its entities. The standards aim to create a clear framework for competent authorities and institutions, enabling them to make informed decisions on the provision of support while maintaining necessary prudential safeguards.