CHAPTER 2

CONDITIONS REGARDING THE FUNCTIONING OF COLLEGES FORMED IN ACCORDANCE WITH ARTICLE 116 OF DIRECTIVE 2013/36/EU
SECTION 1

Establishment and functioning of colleges

Establishment of the mapping of a group of institutions
Article 2
1
For the purpose of identifying the members and potential observers of the supervisory college, the consolidating supervisor shall establish the mapping of a group of institutions in accordance with Article 2 of Commission Implementing Regulation (EU) 2016/99 .
2
The mapping of a group of institutions shall result in the identification of the following group entities:
a
institutions authorised and branches established in a Member State;
b
financial sector entities authorised in a Member State;
c
institutions authorised and branches established in a third country.
3
The following information shall be reflected in the mapping for each institution authorised and branch established in a Member State:
a
the Member State where the institution is authorised or the branch established;
b
the competent authority responsible for the supervision of the institution or the competent authority of the host Member State where the branch is established as well as other financial sector authorities of that Member State, such as competent authorities responsible for the supervision of markets in financial instruments, the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, or consumer protection;
c
for an institution, including for a subsidiary of an EU parent undertaking established in the same Member State as well as for the EU parent undertaking itself, information as to whether the institution is subject to prudential supervision on an individual basis or whether it has been granted a waiver from the application of requirements set out in Parts Two to Eight of Regulation (EU) No 575/2013 of the European Parliament and of the Council on an individual basis pursuant to Articles 7, 8, or 10 of that Regulation;
d
for an institution, information relating to the importance of the institution for the Member State where it is authorised and the relevant criteria used by the competent authorities to determine this importance as well as information on the importance of that institution for the group, provided that the total amount of assets and off-balance sheet items of that institution exceeds 1 % of the group's total assets and off balance sheet items on consolidated basis;
e
for a branch, information relating to the importance of the branch for the Member State where it is established, in particular whether this branch has been designated or is proposed to be designated as significant in accordance with Article 51 of Directive 2013/36/EU, as well as information on the importance of that branch for the group, provided that the total amount of assets and off-balance sheet items of that branch exceeds 1 % of the group's total assets and off balance sheet items on consolidated basis.
4
The following information shall be reflected in the mapping for each financial sector entity, institution or branch referred to in points (b) and (c) of paragraph 2:
a
the Member State where the financial sector entity is authorised or the third country where the institution is authorised or the branch is established;
b
the authority responsible for or involved in the supervision of that financial sector entity, institution or branch;
c
information on the importance of the financial sector entity, of the institution or of the branch for the group, provided that the total amount of assets and off-balance sheet items of that financial sector entity, institution or branch exceeds 1 % of the group's total assets and off balance sheet items on consolidated basis.

Designation of the members and observers of a college
Article 3
1
The consolidating supervisor shall invite the following authorities to become members of the college:
a
the competent authorities responsible for the supervision of institutions which are subsidiaries of an EU parent institution or of an EU parent financial holding company or of an EU parent mixed financial holding company and the competent authorities of host Member States where significant branches as referred to in Article 51 of Directive 2013/36/EU are established;
b
the ESCB central banks of Member States that are involved in accordance with their national law in the prudential supervision of the legal entities referred to in point a, but which are not competent authorities;
c
the EBA.
2
The consolidating supervisor may invite the competent authorities of host Member States where non-significant branches are established to participate in the college as observers in accordance with the process determined in Article 3(1)(b) of Implementing Regulation (EU) 2016/99.
3
The consolidating supervisor may invite the supervisory authorities of third countries where institutions are authorised or branches are established to participate in the college as observers in accordance with the process determined in Article 3(1)(c) of Implementing Regulation (EU) 2016/99.
4
The consolidating supervisor may invite the following authorities to participate in the college as observers in accordance with the process determined in Article 3(1)(d) of Implementing Regulation (EU) 2016/99:
a
the ESCB central banks which are not empowered by national law to supervise an institution authorised or a branch established in a Member State;
b
the public authorities or bodies in a Member State, which are responsible for or involved in the supervision of a group entity, including authorities responsible for the prudential supervision of the group's financial sector entities or competent authorities responsible for the supervision of markets in financial instruments, the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, or consumer protection.
5
The consolidating supervisor and the members of the college shall specify the arrangements covering the participation of the observers in the college in the written coordination and cooperation arrangements referred to in Article 5(c). The consolidating supervisor shall notify these arrangements to the observers.

Communication of the setting up and composition of a college
Article 4
The consolidating supervisor shall communicate to the EU parent undertaking of the group the establishment of a college and the identity of its members and observers, as well as any changes in that composition.

Establishment of the written coordination and cooperation arrangements
Article 5
The written coordination and cooperation arrangements referred to in Article 115 of Directive 2013/36/EU shall include at least the following:
1. information on the overall structure of the group covering all group entities;
2. identification of the members and observers of the college;
3. a description of the terms covering the participation of observers in the college as referred to in Article 3(5) of this Regulation, including their involvement in the various dialogues and processes of the college and their rights and obligations with regard to exchanging information;
4. a description of the arrangements for exchanging information including their scope, frequency and channels of communication;
5. a description of the arrangements for the treatment of confidential information;
6. a description of the arrangements on entrustment of tasks and on delegation of responsibilities, where relevant;
7. a description of any substructures of the college;
8. a description of the framework for the planning and coordination of supervisory activities in going concern situations;
9. a description of the framework for the planning and coordination of supervisory activities in preparation for and during emergency situations, including contingency planning, communication tools and procedures;
10. a description of the communication policy of the consolidating supervisor and the members of the college with the EU parent undertaking and with the group entities;
11. agreed procedures and deadlines to be followed for the circulation of the meeting documents;
12. any other agreement between the college members, including agreed indicators for identifying the early warning signs, potential risks and vulnerabilities;
13. a description of the framework for providing coordinated input to the resolution college, in particular for providing coordinated input without restriction for the purposes of the consultation process referred to in Articles 12, 13, 16, 18, 91 and 92 of Directive 2014/59/EU;
14. a description of the role of the consolidating supervisor in particular with regard to coordinating the provision of the input referred to in point (m) through the group-level resolution authority to the relevant resolution college;
15. provisions covering arrangements where a member or an observer terminates its participation in the college.

Participation in college meetings and activities
Article 6
1
When deciding which authorities shall participate in a college meeting or activity in accordance with Article 116(7) of Directive 2013/36/EU, the consolidating supervisor shall take into account the following:
a
the topics to be discussed and the objective of the meeting or activity, in particular with regard to their relevance for each group entity;
b
the importance of the group entity for the Member State where the group entity is authorised or established, and its importance for the group.
2
The consolidating supervisor and the members of the college shall ensure that the most appropriate representatives participate in the college meetings or activities, based on the topics discussed and objectives pursued. Those representatives shall have the power to commit their authorities as members of the college, to the maximum extent possible, for the decisions planned to be taken during the meetings or activities.
3
The consolidating supervisor may invite representatives of group entities to participate in a college meeting or activity, based on the topics and objectives of the college meeting or activity.

Entrustment of tasks and delegation of responsibilities
Article 7
1
When developing the college supervisory examination programme pursuant to Article 16, and updating it where necessary, the consolidating supervisor and the members of the college shall consider the possibility of agreements on voluntary entrustment of tasks and delegation of responsibilities pursuant to Article 116(1)(b) of Directive 2013/36/EU, especially if such entrustment or delegation is expected to lead to more efficient and effective supervision, in particular by removing unnecessary duplication of supervisory requirements, including those in relation to information requests.
2
The conclusion of an agreement on entrustment of tasks or delegation of responsibilities shall be notified by the consolidating supervisor to the EU parent undertaking, and by the competent authority, which delegates its powers, to the institution concerned.

Exchange of information between college members and a group of institutions
Article 8
1
The consolidating supervisor shall be responsible for communicating to and requesting information from the EU parent undertaking. The members of the college shall be responsible for communicating to and requesting information from the institutions and branches under their supervisory remit.
2
When, exceptionally, a member of the college intends to communicate to or request information from the EU parent undertaking, it shall inform in advance the consolidating supervisor.
3
When, exceptionally, the consolidating supervisor intends to communicate to or request information from an institution or a branch outside its supervisory remit, it shall inform in advance the member of the college responsible for supervising this institution or branch.
SECTION 2

Planning and coordination of supervisory activities in going concern situations

General conditions with regard to exchange of information between the consolidating supervisor and college members
Article 9
1
The consolidating supervisor and the members of the college shall exchange all information necessary to facilitate the exercise of the tasks referred to in Articles 112 and 113 of Directive 2013/36/EU, subject to the confidentiality requirements laid down in Section II of Chapter 1 in Title VII of that Directive, and where applicable, Articles 54 and 58 of Directive 2004/39/EC of the European Parliament and of the Council .
2
The consolidating supervisor and the members of the college shall also exchange all information necessary to facilitate the exercise of the tasks referred to in Article 8 of Directive 2014/59/EU.
3
The consolidating supervisor and the members of the college shall exchange the information referred to in paragraphs 1 and 2, whether received from a group entity, a competent or supervisory authority or any other source, and in accordance with Article 7 of the Implementing Regulation (EU) 2016/99. That information shall be sufficiently adequate, accurate and timely.

Information exchange for performing group risk assessments and reaching joint decisions
Article 10
1
For the purposes of joint decisions on institution-specific prudential requirements as referred to in Article 113 of Directive 2013/36/EU, the consolidating supervisor and the relevant members of the college referred to in paragraph 1 of that Article shall exchange all information necessary, at both individual and consolidated level, to reach a joint decision.
2
In particular, the consolidating supervisor and the relevant members of the college referred to in paragraph 1 shall exchange information on the outcomes of the supervisory review and evaluation process performed in accordance to Article 97 of Directive 2013/36/EU. This information shall provide the outcome of the assessment, at least, of the following elements:
a
business model analysis, including the assessment of the viability of current business model and sustainability of institution's forward-looking business strategy;
b
internal governance arrangements and institution-wide controls;
c
individual risks to institution's capital, covering the following elements:
1. inherent individual risks;
2. risk management and controls;
d
capital adequacy assessment, including proposed required own funds pursuant to Article 104(1)(a) of Directive 2013/36/EU;
e
risks to institution's liquidity and funding, covering the following elements:
1. liquidity risk and funding risk;
2. liquidity and funding risk management;
f
liquidity adequacy assessment, including proposed quantitative and qualitative liquidity measures pursuant to Article 105 of Directive 2013/36/EU;
g
other supervisory measures or early intervention measures taken or planned to be taken in order to address the inefficiencies identified as a result of the supervisory review and evaluation process;
h
results of the supervisory stress tests performed pursuant to Article 100 of Directive 2013/36/EU;
i
findings from on-site inspections and off-site monitoring that are relevant for the assessment of the risk profile of the group or any of its entities.

Information exchange with regard to the ongoing review of the permission to use internal approaches and non-material extensions or changes in internal models
Article 11
1
For the purposes of ensuring coherence and coordination with regard to the ongoing review of the permission to use internal approaches as referred to in Article 101 of Directive 2013/36/EU, the consolidating supervisor and the relevant members of the college, who supervise institutions that have been granted permission to use internal approaches in accordance with Articles 143(1), Article 151(4) or (9), Article 283, Article 312(2), or Article 363 of Regulation (EU) No 575/2013, shall exchange all information on the outcome of this ongoing review and all other relevant information.
2
Where the consolidating supervisor or any relevant member of the college referred to in paragraph 1 has identified that an institution authorised in a Member State, including the EU parent undertaking, no longer meets all requirements for applying an internal approach or has identified weaknesses in accordance with Article 101 of Directive 2013/36/EU, they shall immediately exchange the following information, as applicable, for the purposes of facilitating the reach of common agreement as referred to in Article 8 of Implementing Regulation (EU) 2016/99:
a
assessment of the effect of the weaknesses identified and issues of non-compliance and their materiality;
b
assessment of the plan to restore compliance and to address the weaknesses identified as presented by the EU parent institution or any institution authorised in a Member State, including information on the timeline for its implementation;
c
information on the intention of the consolidating supervisor or of any relevant member of the college to revoke the permission or restrict the use of the model to compliant areas or those where compliance can be achieved within an appropriate timeline, or those areas that are not affected by the weaknesses identified;
d
information on any proposed additional own funds requirements pursuant to Article 104(2)(d) of Directive 2013/36/EU as a supervisory measure to address the issues of non-compliance or weaknesses identified.
3
The consolidating supervisor and the relevant members of the college referred to in paragraph 1 shall also exchange information regarding extensions or changes in these internal models which are not material model extensions or changes, as referred to in Article 13 of Commission Implementing Regulation (EU) 2016/100 .
4
Information referred to in paragraphs 1 and 2 shall be discussed and taken into account while developing the group risk assessment and reaching a joint decision in accordance with Article 113(1)(a) of Directive 2013/36/EU.

Information exchange on early warning signs, potential risks and vulnerabilities
Article 12
1
The consolidating supervisor and the members of the college participating in the development of a group risk assessment report referred to in Article 113(2)(a) of Directive 2013/36/EU or a group liquidity risk assessment report referred to in Article 113(2)(b) of that Directive for the purposes of reaching joint decisions on institution-specific prudential requirements in accordance with that Article shall exchange quantitative information aiming to identify early warning signs, potential risks and vulnerabilities and to inform the group risk assessment report and group liquidity risk assessment report.
2
The information referred to in paragraph 1 shall be developed based on the information collected by the competent authorities in accordance with Implementing Regulation (EU) No 680/2014, in order to ensure consistency and comparability on the data used. This information shall cover at least all group entities authorised or established in a Member State, and at least the following areas:
a
capital;
b
liquidity;
c
asset quality;
d
funding;
e
profitability;
f
concentration risk.
3
The consolidating supervisor and the members of the college referred to in paragraph 1 shall also consider exchanging information on the macroeconomic environment in which the group of institutions and its group entities operate.

Information exchange with regard to non-compliance and sanctions
Article 13
1
The members of the college shall communicate to the consolidating supervisor information regarding any situations in respect of which the members of the college have determined that an institution or a branch under their supervisory remit has not complied with national or Union law or with requirements, in relation to the prudential supervision or market conduct supervision of institutions, including the requirements laid down in Regulation (EU) No 575/2013 and Directive 2013/36/EU and any of the administrative penalties imposed or other administrative measures applied in accordance with Articles 64 to 67 of Directive 2013/36/EU when this information affects or is likely to affect the risk profile of the group or any of its group entities. The members of the college shall discuss with the consolidating supervisor the possible impact of these issues of non-compliance and sanctions for the group entities or for the group as a whole.
2
The consolidating supervisor shall decide to communicate information specified in paragraph 1 to the members of the college for whom this information is deemed relevant in accordance with Article 7 of Implementing Regulation (EU) 2016/99.

Information exchange for the assessment of the group recovery plan
Article 14
1
The consolidating supervisor and the members of the college shall exchange all information necessary for those who participate in the process of joint decision on the elements referred to in Article 8(2) of Directive 2014/59/EU.
2
For the purposes of paragraph 1, the consolidating supervisor shall provide the group recovery plan to the members of the college following the procedure specified in Article 7 of Implementing Regulation (EU) 2016/99.
3
The consolidating supervisor shall ensure that all members of the college are appropriately informed of the outcome of the process referred to in paragraph 1.
4
The consolidating supervisor shall inform the group-level resolution authority about the timeline followed for the review and assessment of the group recovery plan and indicate a date for the group-level resolution authority to provide its recommendations, if any, in accordance to Article 6(4) of Directive 2014/59/EU.

Information exchange with regard to group financial support agreements
Article 15
The consolidating supervisor shall ensure that all members of the college are appropriately informed of the main terms of authorisations of group financial support agreements that have been granted in accordance with the joint decision process referred to in Article 20 of Directive 2014/59/EU.

Establishment and update of the college supervisory examination programme
Article 16
1
For the purposes of establishing the college supervisory examination programme in accordance with Article 116(1)(c) of Directive 2013/36/EU, the consolidating supervisor and the members of the college shall identify the supervisory activities to be undertaken.
2
The college supervisory examination programme shall contain at least the following:
a
the areas of joint work identified as a result of the group risk assessment and group liquidity risk assessment and joint decisions on institution-specific prudential requirements pursuant to Article 113 of Directive 2013/36/EU or as a result of any other college activities undertaken, including efforts to contribute to efficient supervision and to remove unnecessary duplication of tasks in accordance with Article 116(1)(d) of that Directive;
b
the respective supervisory examination programmes of the consolidating supervisor and the members of the college for the parent undertaking and for all institutions authorised and branches established in a Member State;
c
the areas of focus of the college work and its planned supervisory activities, including planned onsite inspections pursuant to Article 99(1)(c) of Directive 2013/36/EU;
d
the members of the college responsible for undertaking the planned supervisory activities;
e
the expected timelines, both in terms of timing and duration, for each of the planned supervisory activities.
3
The establishment and update of the college supervisory examination programme shall be performed pursuant to Article 11 of Implementing Regulation (EU) 2016/99.
SECTION 3

Planning and coordination of supervisory activities in preparation for and during emergency situations

Establishment of a college framework for emergency situations
Article 17
1
The consolidating supervisor and the members of the college shall establish a college framework in anticipation of possible emergency situations in accordance with Article 112(1)(c) of Directive 2013/36/EU (hereinafter ‘college framework for emergency situations’), taking into account the specificities and structure of the group of institutions.
2
The college framework for emergency situations shall include at least the following:
a
the college-specific procedures that shall apply where an emergency situation as referred to in Article 114(1) of Directive 2013/36/EU arises;
b
the minimum set of information that shall be exchanged where an emergency situation as referred to in Article 114(1) of Directive 2013/36/EU arises.
3
The minimum set of information referred to in point (b) of paragraph 2 shall include the following:
a
an outline of the situation that has occurred, including the underlying cause of the emergency situation, and the expected impact of the emergency situation on the group entities and the group as a whole, on the market liquidity and on the stability of the financial system;
b
an explanation of the measures and actions that have been taken or are planned to be taken, by the consolidation supervisor or any of the members of the college or by the group entities themselves;
c
the latest available quantitative information regarding liquidity and capital position of the group entities affected or likely to be affected by the emergency situation on an individual and consolidated basis.

General conditions with regard to exchange of information during an emergency situation
Article 18
1
The consolidating supervisor and the members of the college shall exchange all information necessary to facilitate the exercise of the tasks referred to in Article 114(1) of Directive 2013/36/EU, subject to the confidentiality requirements laid down in Section II of Chapter 1 of Title VII of that Directive, and where applicable, Articles 54 and 58 of Directive 2004/39/EC.
2
Upon being alerted of an emergency situation by any member or observer of the college or having identified an emergency situation, the consolidating supervisor shall communicate the information referred to in Article 17(2)(b), following the procedures referred to in Article 17(2)(a), to the members of the college who supervise group entities that are affected or likely to be affected by the emergency situation, and the EBA.
3
Depending on the nature, severity, potential systemic impact or other impact, and likelihood of contagion of the emergency situation, the members of the college who supervise group entities that are affected or likely to be affected by the emergency situation and the consolidating supervisor may decide to exchange additional information.
4
The consolidating supervisor shall consider whether the information referred to in paragraphs 2 and 3 is relevant for the performance of the tasks of the resolution college. In this case, the consolidating supervisor shall communicate this information to the group-level resolution authority as defined in point 44 of Article 2(1) of Directive 2014/59/EU.
5
The information referred to in paragraphs 2 and 3, where applicable, shall be updated immediately when new information is available.
6
When the exchange of information or communication referred to in this Article is made orally, the concerned competent authorities shall follow up it with written communication in a timely manner.

Coordination of the supervisory assessment of an emergency situation
Article 19
1
Where an emergency situation occurs, the consolidating supervisor shall coordinate the assessment of the emergency situation (hereinafter ‘coordinated supervisory assessment’) in cooperation with the members of the college who supervise group entities that are affected or likely to be affected by that emergency situation.
2
The coordinated supervisory assessment of the emergency situation, performed in accordance with Article 14 of Implementing Regulation (EU) 2016/99, shall cover at least the following elements:
a
the nature and severity of the emergency situation;
b
the impact or potential impact of the emergency situation on the group and on any of its affected or likely to be affected group entities;
c
the risk of cross-border contagion.
3
When assessing point (c) of paragraph 2, the consolidating supervisor shall consider the potential systemic consequences in any of the Members States where entities of the group are authorised or where significant branches are established.

Coordination of the supervisory response to an emergency situation
Article 20
1
Where an emergency situation occurs, the consolidating supervisor shall coordinate the development of a supervisory response to the emergency situation (hereinafter ‘coordinated supervisory response’ in cooperation with the members of the college who supervise group entities that are affected or likely to be affected by that emergency situation.
2
The coordinated supervisory assessment referred to in Article 19 shall form the basis of the coordinated supervisory response, which shall define the supervisory actions needed, their scope, and the timetable for their implementation.
3
The coordinated supervisory response shall be developed by the consolidating supervisor and the members of the college who supervise group entities that are affected or likely to be affected by the emergency situation.

Monitoring of the implementation of the coordinated supervisory response to an emergency situation
Article 21
1
The consolidating supervisor and the members of the college who supervise group entities that are affected or likely to be affected by the emergency situation shall monitor and exchange information on the implementation of the coordinated supervisory response referred to in Article 20.
2
The information to be exchanged shall include at least an update on the implementation of the agreed actions within the foreseen timeline, as referred to in Article 20(2), and the need to update or adjust these actions.

Coordination of external communication in an emergency situation
Article 22
1
Within the framework of applicable Union and national law, the consolidating supervisor and the members of the college who supervise group entities that are affected or likely to be affected by the emergency situation shall coordinate to the extent possible their external communications.
2
For the purpose of coordinating external communication, the consolidating supervisor and the members of the college shall agree on the following elements:
a
the allocation of responsibilities for coordinating external communication at the different stages of the emergency situation;
b
the level of information to be disclosed taking into account the need to maintain market confidence and any other additional disclosure obligations where financial instruments issued by group entities affected or likely to be affected by the emergency situation are publicly traded in one or more regulated markets in the Union;
c
the coordination of public statements, including those made by only one member of the college, in particular where these are likely to have consequences for group entities supervised by other members of the college;
d
the allocation of responsibilities and appropriate timing for contacting group entities;
e
the allocation of responsibilities and actions to be taken for communicating externally the coordinated actions taken to address the emergency situation;
f
a description of possible coordination with another group or college that may be involved in dealing with an emergency situation affecting the group, such as a crisis management group or a resolution college.
Commission Implementing Regulation (EU) 2016/99 of 16 October 2015 laying down implementing technical standards with regard to determining the operational functioning of the colleges of supervisors according to Directive 2013/36/EU of the European Parliament and of the Council (see page 21 of this Official Journal).
Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).
Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC (OJ L 145, 30.4.2004, p. 1).
Commission Implementing Regulation (EU) 2016/100 of 16 October 2015 laying down implementing technical standards specifying the joint decision process with regard to the application for certain prudential permissions pursuant to Regulation (EU) No 575/2013 of the European Parliament and of the Council (see page 45 of this Official Journal).