Commission Implementing Regulation (EU) No 710/2014Show full title

Commission Implementing Regulation (EU) No 710/2014

of 23 June 2014

laying down implementing technical standards with regard to conditions of application of the joint decision process for institution-specific prudential requirements according to Directive 2013/36/EU of the European Parliament and of the Council

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC(1), and in particular the third subparagraph of Article 113(5) thereof,

Whereas:

(1) Efficient exchange of appropriate information is essential for reaching a joint decision on the adequacy of own funds, the supervisory measures relating to liquidity supervision, the level of liquidity and capital requirements applied to each institution of a group and the group.

(2) In order to ensure a consistent application of the process for the reaching of a joint decision, it is important that each step is well defined. A clear process also facilitates exchange of information, promotes mutual understanding, develops relationships between supervisory authorities and promotes effective supervision.

(3) In order to perform the risk assessment and the assessment of the liquidity risk profile for a group of institutions, the consolidating supervisor should have an overview of the activities carried out by all of the institutions within the group, including institutions operating outside the Union. Interaction between the competent authorities in the Union and third-country supervisors should therefore be promoted in order to enable the former to assess the global risks faced by the group.

(4) Timely and realistic planning for the joint decision process is essential. Every competent authority involved should provide the consolidating supervisor with relevant information on a timely basis. In order for individual assessments to be presented and interpreted in a consistent and uniform manner, it is necessary to introduce a common template for the results of the supervisory review and evaluation processes specific to each institution.

(5) To ensure uniform condition of application, the steps to be followed for the performance of the joint risk assessment and the reaching of the joint decision should be established, recognising that some tasks of the joint risk assessment and joint decision process may be performed in parallel and others sequentially.

(6) To facilitate the reaching of joint decisions, it is important that the competent authorities involved in the decision-making process engage in a dialogue with each other, in particular before finalizing the risk assessment reports and joint decisions.

(7) The consolidating supervisor should provide the competent authorities involved with all relevant information necessary for the preparation of their individual risk assessment and the reaching of the capital and liquidity joint decisions.

(8) The report containing the risk assessment of the group is a core document enabling competent authorities to understand and record the assessment of the overall risk profile of the banking group for the purpose of reaching a joint decision on the adequacy of own funds and level of own funds that the group is required to hold. The report containing the assessment of the liquidity risk profile of the group is an important document enabling competent authorities to understand and record the assessment of the overall liquidity profile of the group. In order to present the overall risk assessment and liquidity risk assessment of the group in a consistent manner, support meaningful discussions among competent authorities and enable a robust assessment of cross border banking group risks, common templates for these reports should be established.

(9) Whilst recognising that outcomes of the supervisory review and evaluation process specified in Article 97 of Directive 2013/36/EU may be documented differently across the Member States depending on the implementation of that Article in the national legislation while taking into account the guidelines issued by the European Supervisory Authority (European Banking Authority) (EBA) in accordance with Article 107(2) of Directive 2013/36/EU, standard templates should provide consistent formats for the communication of findings and outcomes of the supervisory review process for the purposes of reaching joint decisions.

(10) Neither the group risk assessment report nor the report containing the group liquidity risk assessment should be limited to an aggregation of individual contributions from competent authorities. Both reports should be used as a tool for performing the joint assessment of the risks of the whole group and analysing the interaction of intra-group items.

(11) Establishing clear processes for the content and articulation of the joint decision should ensure that joint decisions are fully reasoned and facilitate the monitoring of joint decisions and their enforcement.

(12) In order to clarify the process to be followed once the joint decision is reached, provide transparency on the treatment of the outcome of the decision and facilitate appropriate follow-up action where needed, standards regarding the communication of the fully reasoned joint decision and the monitoring of its implementation should be established.

(13) The process to be followed for the updates of joint decisions should be established in order to ensure a consistent and transparent approach as well as appropriate involvement of competent authorities and the communication of the outcomes.

(14) The joint decision process under Article 113 of Directive 2013/36/EU includes the process to be followed where no joint decision is reached. To ensure uniform conditions of application on this aspect of the process, the articulation of fully reasoned decisions and the treatment of views and reservations expressed by host supervisors, standards covering the timeline for taking decisions in the absence of a joint decision and the communication of the details of such decisions should be established.

(15) This Regulation is based on the draft implementing technical standards submitted by EBA to the Commission;

(16) EBA has conducted open public consultations on the draft implementing technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the opinion of the Banking Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council(2);

HAS ADOPTED THIS REGULATION:

Modifications etc. (not altering text)

C1 The “appropriate regulator” has power to make such provision as they consider appropriate by means of an instrument in writing to prevent, remedy or mitigate any failure of the provisions of this Regulation to operate effectively or any other deficiency arising from the withdrawal of the United Kingdom from the EU, see The Financial Regulators' Powers (Technical Standards etc.) (Amendment etc.) (EU Exit) Regulations 2018 (S.I. 2018/1115), regs. 2, 3, Sch. para. 132 (with saving on IP completion day by S.I. 2019/680, regs. 1(2), 11; 2020 c. 1, Sch. 5 para. 1(1))

C2 Regulation: power to modify conferred (11.7.2023) by Financial Services and Markets Act 2023 (c. 29), ss. 3, 86(3), Sch. 1 Pt. 3; S.I. 2023/779, reg. 2(d)

(1)

OJ L 176, 27.6.2013, p. 1.

(2)

Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC (OJ L 331, 15.12.2010, p. 12).