The Capital Requirements Regulations 2013

Assessment of equivalence of consolidated supervision by supervisory authorities in non-EEA States U.K.

21.—(1) In this regulation, a “relevant institution” is an institution which satisfies the following conditions—

(a) the institution is authorised by the PRA or FCA;

(b) the parent undertaking of the institution is an institution, financial holding company or mixed financial holding company whose head office is not located in an EEA State;

(c) the institution is not subject to supervision on a consolidated basis in accordance with Article 111 of the capital requirements directive;

(d) the PRA or FCA would (but for paragraph (4)) be responsible for supervision of the institution on a consolidated basis; and

(e) either—

(i) the parent undertaking of the institution, or any regulated entity established in the EEA which is a member of the same group as the institution, has requested the assessment referred to in paragraph (2) be carried out; or

(ii) the PRA or FCA has decided on its own initiative to carry out that assessment.

(2) The appropriate regulator must assess whether a relevant institution is subject to supervision on a consolidated basis by a supervisory authority of a country outside the EEA which is equivalent to to the standard of supervision applicable to an institution under the capital requirements directive and Chapter 2 of Title 2 of Part 1 of the capital requirements regulation.

(3) For the purposes of carrying out the assessment referred to in paragraph (2), the appropriate authority must—

(a) consult the other competent authorities which are responsible for the supervision of members of the group of which the relevant institution is a member; and

(b) take into account any guidance issued by the European Banking Committee in accordance with Article 127(2) of the capital requirements directive.

(4) Where the appropriate regulator concludes that a relevant institution is not subject to equivalent supervision in accordance with paragraph (2), the appropriate regulator may apply—

(a) the requirements of the capital requirements directive and capital requirements regulation to the institution, amended as necessary; or

(b) other appropriate supervisory techniques, which must be designed to achieve the objectives of supervision on a consolidated basis in accordance with Chapter 3 of Title 7 of the capital requirements directive.

(5) The other appropriate supervisory techniques referred to in paragraph (4) may include a requirement on the institution to establish a financial holding company or mixed financial holding company with its head office in an EEA State, so that supervision on a consolidated basis may be applied in relation to the consolidated situation of that holding company.

(6) The appropriate regulator must—

(a) consult the competent authorities referred to in paragraph (3)(a) before determining which supervisory techniques may be applied for the purposes of paragraph (4)(b); and

(b) notify those competent authorities, the European Commission and EBA of the supervisory techniques it applies.