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Document 52022HB0013
Recommendation of the European Central Bank of 25 March 2022 amending Recommendation ECB/2017/10 on common specifications for the exercise of some options and discretions available in Union law by national competent authorities in relation to less significant institutions (ECB/2022/13) 2022/C 142/01
Recommendation of the European Central Bank of 25 March 2022 amending Recommendation ECB/2017/10 on common specifications for the exercise of some options and discretions available in Union law by national competent authorities in relation to less significant institutions (ECB/2022/13) 2022/C 142/01
Recommendation of the European Central Bank of 25 March 2022 amending Recommendation ECB/2017/10 on common specifications for the exercise of some options and discretions available in Union law by national competent authorities in relation to less significant institutions (ECB/2022/13) 2022/C 142/01
ECB/2022/13
OJ C 142, 30.3.2022, p. 1–9
(BG, ES, CS, DA, DE, ET, EL, EN, FR, GA, HR, IT, LV, LT, HU, MT, NL, PL, PT, RO, SK, SL, FI, SV)
30.3.2022 |
EN |
Official Journal of the European Union |
C 142/1 |
RECOMMENDATION OF THE EUROPEAN CENTRAL BANK
of 25 March 2022
amending Recommendation ECB/2017/10 on common specifications for the exercise of some options and discretions available in Union law by national competent authorities in relation to less significant institutions
(ECB/2022/13)
(2022/C 142/01)
THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (1), and in particular Article 4(3) and Article 6(1) and (5)(c) thereof,
Whereas:
(1) |
On 4 April 2017 the European Central Bank (ECB) adopted Recommendation ECB/2017/10 of the European Central Bank (2) (hereinafter the ‘O&D Recommendation’), in which it established common specifications for the exercise of certain options and discretions available in Union law by national competent authorities (NCAs) in relation to less significant institutions. Legislation introduced since the adoption of the O&D Recommendation has amended or deleted some of the options and discretions provided in Union law that were included in the O&D Recommendation, and the ECB Guide on options and discretions available in Union law of November 2016 (hereinafter the ‘ECB Guide’) has also been updated. Therefore, certain consequential amendments to the O&D Recommendation are necessary. |
(2) |
With respect to the options and discretions related to consolidated supervision and waivers of prudential requirements, in line with the specifications contained in Chapter 1 of Section II of the ECB Guide, NCAs should be encouraged to adopt a prudent approach when granting such waivers on an individual basis. Rules on the identification of the consolidating supervisor and the methods and scope of consolidation and sub-consolidation should also be applied in a manner consistent with the ECB Guide. |
(3) |
With regard to liquidity waivers at the cross-border level, the ECB recommends a specific approach for less significant institutions given that not all the specifications for the assessment of applications included in the ECB Guide are relevant for these institutions. |
(4) |
The ECB recommends a consistent and prudent approach with respect to options and discretions related to own funds requirements, in line with the specifications contained in Chapter 2 of Section II of the ECB Guide. To reflect specificities of less significant institutions in relation to the excess capital margin requirement for reductions of own funds, certain adjustments of those specifications are necessary. |
(5) |
The ECB recommends a consistent and prudent approach with respect to the options and discretions related to liquidity requirements, which should follow the specifications set out in Chapter 6 of Section II of the ECB Guide, as these options and discretions have an impact on the calculation of liquidity coverage ratio requirements, for example by specifying the treatment of specific inflows and outflows. |
(6) |
As regards outflows from trade finance off-balance-sheet related products, specifications have been added to the ECB Guide to take account of the new ECB policy which allows additional flexibility in the determination of outflow rates. Therefore, to ensure consistency in the application of outflow rates to trade finance off-balance-sheet exposures amongst significant and less significant institutions, NCAs should follow the specifications included in the ECB Guide. |
(7) |
As regards the outflow rates to be applied to stable retail deposits, certain factors have impeded the practical application of the discretion addressed in Article 13 of Regulation (EU) 2016/445 of the European Central Bank (ECB/2016/4) (3) whereby competent authorities may authorise institutions to apply a 3 % outflow rate to stable retail deposits covered by a deposit guarantee scheme (DGS), subject to the prior approval of the European Commission in accordance with Article 24(4) and (5) of Commission Delegated Regulation (EU) 2015/61 (4). Further evidence and analysis are necessary in order to demonstrate that the run-off rates for stable retail deposits covered by a DGS as referred to in Article 24(5) of Delegated Regulation (EU) 2015/61 would be below 3 % during any stress period experienced consistent with the scenarios referred to in Article 5 of Delegated Regulation (EU) 2015/61. In the absence of such evidence and analysis, the general specification of a 3 % outflow rate has been removed from Guideline ECB/2017/9 of the European Central Bank (5) concerning the exercise of options and discretions available in Union law by national competent authorities in relation to less significant institutions. The ECB’s position towards this option has been set out in Section III of the ECB Guide. To ensure consistency in the exercise of options and discretions in relation to significant and less significant institutions, NCAs should adopt the same position. |
(8) |
With respect to the options and discretions related to the leverage ratio, the ECB recommends a consistent and prudent approach, in common with the specifications set out in Chapter 3 of Section I of the ECB Guide and Chapter 7 of Section II thereof. |
(9) |
With respect to the options and discretions related to intermediate parent undertakings and the possibility for competent authorities to allow two or more institutions in the Union which are part of the same third-country group to have two intermediate EU parent undertakings pursuant to Article 21b(2) of Directive 2013/36/EU of the European Parliament and of the Council (6), and to the relevance of such possibility in the case of less significant institutions, the ECB recommends that NCAs adopt an approach consistent with that set out in Chapter 9 of Section II of the ECB Guide, in order to ensure a level playing field. |
(10) |
With respect to the options and discretions related to reporting requirements for institutions, in particular concerning valuation of assets and off-balance-sheet items and concerning reporting waivers, the ECB recommends that NCAs follow the approach set out in Chapter 8 of Section II of the ECB Guide, so as to ensure both a consistent application of policy standards across the Single Supervisory Mechanism and a level playing field. |
(11) |
With respect to the options and discretions related to governance, the O&D Recommendation should be amended to reflect legislative changes concerning the supervisory treatment of (mixed) financial holding companies. |
(12) |
Therefore, Recommendation ECB/2017/10 should be amended accordingly, |
HAS ADOPTED THIS RECOMMENDATION:
PART ONE
Amendments
Recommendation ECB/2017/10 is amended as follows:
1. |
in Part One, paragraph 2 in Section I is replaced by:
(*1) Commission Delegated Regulation (EU) 2015/61 of 10 October 2014 to supplement Regulation (EU) No 575/2013 of the European Parliament and the Council with regard to liquidity coverage requirement for credit institutions (OJ L 11, 17.1.2015, p. 1)." (*2) Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012 of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190).’;" |
2. |
in Part Two, the following Section IIa is inserted: ‘IIa. Own funds requirements
|
PART TWO
Addressees
This Recommendation is addressed to the NCAs of participating Member States.
NCAs are recommended to apply this Recommendation as of the date of its adoption.
Done at Frankfurt am Main, 25 March 2022.
The President of the ECB
Christine LAGARDE
(1) OJ L 287, 29.10.2013, p.63.
(2) Recommendation of the European Central Bank of 4 April 2017 on common specifications for the exercise of some options and discretions available in Union law by national competent authorities in relation to less significant institutions (ECB/2017/10) (OJ C 120, 13.4.2017, p. 2).
(3) Regulation (EU) 2016/445 of the European Central Bank of 14 March 2016 on the exercise of options and discretions available in Union law (ECB/2016/4) (OJ L 78, 24.3.2016, p. 60).
(4) Commission Delegated Regulation (EU) 2015/61 of 10 October 2014 to supplement Regulation (EU) No 575/2013 of the European Parliament and the Council with regard to liquidity coverage requirement for Credit Institutions (OJ L 11, 17.1.2015, p. 1).
(5) Guideline (EU) 2017/697 of the European Central Bank of 4 April 2017 on the exercise of the options and discretions available in Union law by national competent authorities in relation to less significant institutions (ECB/2017/9) (OJ L 101, 13.4.2017, p. 156).
(6) 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, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).
ANNEX
The Annex to Recommendation ECB/2017/10 is replaced by the following:
‘ANNEX
Legal basis of the option and/or discretion |
Approach recommended: consistency with the policy on options and discretions for significant institutions |
Consolidated supervision and waivers of prudential requirements |
|
Article 7(1) to (3) of Regulation (EU) No 575/2013: capital waivers |
Section II, Chapter 1 paragraph 3 of the ECB Guide |
Article 8(1) and (2) of Regulation (EU) No 575/2013: liquidity waivers |
Section II, Chapter 1 paragraph 4 of the ECB Guide |
Article 9 of Regulation (EU) No 575/2013: individual consolidation method |
Section II, Chapter 1 paragraph 5 of the ECB Guide |
Article 10(1) and (2) of Regulation (EU) No 575/2013: waivers for credit institutions permanently affiliated to a central body |
Section II, Chapter 1 paragraph 6 of the ECB Guide |
Article 18(3) of Regulation (EU) No 575/2013: methods for consolidation in the case of undertakings related within the meaning of Article 22(7) of Directive 2013/34/EU |
Section III, Chapter 1 paragraph 1 of the ECB Guide |
Article 18(5) of Regulation (EU) No 575/2013: methods for consolidation in the case of participations or capital ties other than those referred to in Article 18(1) and (4) |
Section III, Chapter 1 paragraph 2 of the ECB Guide |
Article 18(6) of Regulation (EU) No 575/2013: consolidation in the cases of significant influence and common management |
Section III, Chapter 1 paragraph 3 of the ECB Guide |
Article 18(7) of Regulation (EU) No 575/2013: consolidation |
Section II, Chapter 1 paragraph 8 of the ECB Guide |
Article 18(8) of Regulation (EU) No 575/2013: consolidation |
Section III, Chapter 1 paragraph 4 of the ECB Guide |
Article 19(2) of Regulation (EU) No 575/2013: exclusion of consolidation |
Section II, Chapter 1 paragraph 9 of the ECB Guide |
Article 24(2) of Regulation (EU) No 575/2013: valuation of assets and off-balance sheet items – use of International Financial Reporting Standards for prudential purposes |
Section II, Chapter 1 paragraph 10 of the ECB Guide |
Own funds |
|
Article 26(3) of Regulation (EU) No 575/2013: classification as CET1 instruments of subsequent issuances |
Section II, Chapter 2 paragraph 3 of the ECB Guide |
Article 49(1) of Regulation (EU) No 575/2013: deduction of insurance holdings |
Section II, Chapter 2 paragraph 5 of the ECB Guide |
Article 49(2) of Regulation (EU) No 575/2013: deduction of holdings of financial sector entities |
Section II, Chapter 2 paragraph 6 of the ECB Guide |
Article 54(1)(e) of Regulation (EU) No 575/2013: calculation of the trigger for additional Tier 1 instruments issued by subsidiary undertakings established in third countries |
Section II, Chapter 2 paragraph 7 of the ECB Guide |
Article 78(3) of Regulation (EU) No 575/2013: reduction of own funds – mutuals, savings and cooperatives |
Section II, Chapter 2 paragraph 10 of the ECB Guide |
Article 78(4) of Regulation (EU) No 575/2013: reduction of additional Tier 1 or Tier 2 instruments |
Section II, Chapter 2 paragraph 11 of the ECB Guide |
Article 79(1) of Regulation (EU) No 575/2013: reduction of additional Tier 1 or Tier 2 instruments |
Section II, Chapter 2 paragraph 12 of the ECB Guide |
Article 83(1) of Regulation (EU) No 575/2013: waiver for additional Tier 1 and Tier 2 instruments issued by a special purpose entity |
Section II, Chapter 2 paragraph 13 of the ECB Guide |
Article 84(5) of Regulation (EU) No 575/2013: minority interests included in consolidated Common Equity Tier 1 capital |
Section II, Chapter 2 paragraph 14 of the ECB Guide |
Article 142(1) of Directive 2013/36/EU: failure to meet combined buffer requirement or leverage ratio buffer requirement |
Section II, Chapter 11 paragraph 12 of the ECB Guide |
Capital requirements |
|
Article 113(6) of Regulation (EU) No 575/2013: calculation of risk weighted exposure amounts – intra-group exposures |
Section II, Chapter 3 paragraph 3 of the ECB Guide |
Article 162(1) of Regulation (EU) No 575/2013: maturity of exposures |
Section II, Chapter 3 paragraph 5 of the ECB Guide |
Article 225(2) of Regulation (EU) No 575/2013: own estimates of volatility adjustments |
Section II, Chapter 3 paragraph 6 of the ECB Guide |
Article 244(2) and the second subparagraph of Article 245(2) of Regulation (EU) No 575/2013: significant risk transfer |
Section II, Chapter 3 paragraph 9 of the ECB Guide |
Article 283(3) of Regulation (EU) No 575/2013: implementation of the internal model method |
Section II, Chapter 3 paragraph 8 of the ECB Guide |
Article 284(4) and (9) of Regulation (EU) No 575/2013: calculation of the exposure value for counterparty credit risk |
Section II, Chapter 3 paragraph 9 of the ECB Guide |
Article 366(4) of Regulation (EU) No 575/2013: calculation of the value-at-risk number |
Section II, Chapter 3 paragraph 13 of the ECB Guide |
Institutional protection schemes |
|
Article 8(4) of Regulation (EU) No 575/2013: liquidity waiver for members of institutional protection schemes |
Section II, Chapter 4 paragraph 3 of the ECB Guide |
Large exposures |
|
Article 396(1) of Regulation (EU) No 575/2013: compliance with large exposures requirements |
Section II, Chapter 5 paragraph 3 of the ECB Guide |
Article 400(2)(c) of Regulation (EU) No 575/2013: compliance with large exposures requirements |
Section II, Chapter 5 paragraph 4 of the ECB Guide |
Liquidity |
|
Article 414 of Regulation (EU) No 575/2013: compliance with liquidity requirements |
Section II, Chapter 6 paragraph 3 of the ECB Guide |
Article 422(8) of Regulation (EU) No 575/2013 and Article 29 of Delegated Regulation (EU) 2015/61: intragroup liquidity outflows |
Section II, Chapter 6 paragraph 10 of the ECB Guide |
Article 425(4) of Regulation (EU) No 575/2013 and Article 34 of Delegated Regulation (EU) 2015/61: intragroup liquidity inflows |
Section II, Chapter 6, paragraph 14 of the ECB Guide |
Article 8(1) of Delegated Regulation (EU) 2015/61: diversification of holdings of liquid assets |
Section II, Chapter 6 paragraph 5 of the ECB Guide |
Article 8(3)(c) of Delegated Regulation (EU) 2015/61: management of liquid assets |
Section II, Chapter 6 paragraph 6 of the ECB Guide |
Article 8(6) of Delegated Regulation (EU) 2015/61: currency mismatches |
Section II, Chapter 6 paragraph 4 of the ECB Guide |
Article 17(4) of Delegated Regulation (EU) 2015/61: waiver of the unwind mechanism |
Section I, Chapter 3 paragraph 1 of the ECB Guide |
Article 23(2) of Delegated Regulation (EU) 2015/61: outflows from other products and services |
Section II, Chapter 6 paragraph 7 of the ECB Guide |
Article 24(4) and (5) of Delegated Regulation (EU) 2015/61 outflows from stable retail deposits |
Section III, Chapter 3 paragraph 1 of the ECB Guide |
Article 24(6) of Delegated Regulation (EU) 2015/61: multiplier for retail deposits covered by a deposit guarantee scheme |
Section III, Chapter 3 paragraph 3 of the ECB Guide |
Article 25(3) of Delegated Regulation (EU) 2015/61: higher outflow rates |
Section II, Chapter 6 paragraph 8 of the ECB Guide |
Article 26 of Delegated Regulation (EU) 2015/61: outflows with inter-dependent inflows |
Section II, Chapter 6 paragraph 9 of the ECB Guide |
Article 29 of Delegated Regulation (EU) 2015/61: preferential treatment within a group or an institutional protection scheme (IPS) |
Section II, Chapter 6 paragraph 10 of the ECB Guide |
Article 30(2) of Delegated Regulation (EU) 2015/61: additional collateral outflows from downgrade triggers |
Section II, Chapter 6 paragraph 11 of the ECB Guide |
Article 33(2) of Delegated Regulation (EU) 2015/61: cap on inflows |
Section II, Chapter 6 paragraph 12 of the ECB Guide |
Article 33(3) to (5) of Delegated Regulation (EU) 2015/61: specialised credit institutions |
Section II, Chapter 6 paragraph 13 of the ECB Guide |
Article 34 of Delegated Regulation (EU) 2015/61: inflows within a group or an institutional protection scheme |
Section II, Chapter 6 paragraph 14 of the ECB Guide |
Article 428b(5) of Regulation (EU) No 575/2013: net stable funding requirement (NSFR) - restriction of currency mismatches |
Section II, Chapter 6 paragraph 15 of the ECB Guide |
Article 428f(1) of Regulation (EU) No 575/2013: NSFR - interdependent assets and liabilities |
Section II, Chapter 6 paragraph 16 of the ECB Guide |
Article 428h of Regulation (EU) No 575/2013: NSFR - Preferential treatment within a group or an IPS |
Section II, Chapter 6 paragraph 17 of the ECB Guide. |
Article 428p(7) of Regulation (EU) No 575/2013: NSFR - treatment of non-standard central bank operations |
Section I, Chapter 3 paragraph 1 of the ECB Guide |
Article 428ai of Regulation (EU) No 575/2013: NSFR - application of the simplified net stable funding requirement (sNSFR) |
Section II, Chapter 6 paragraph 18 of the ECB Guide |
Article 428aq(7) of Regulation (EU) No 575/2013 - NSFR - treatment of non-standard central bank operations (sNSFR) |
Section I, Chapter 3 paragraph 1 of the ECB Guide |
Article 8 of Regulation (EU) No 575/2013: liquidity waivers |
Section II, Chapter 4 paragraph 3 of the ECB Guide |
Leverage |
|
Article 429a(2) of Regulation (EU) No 575/2013: preferential treatment in favour of public development banks |
Section II, Chapter 7 paragraph 3 of the ECB Guide |
Article 429a(5) of Regulation (EU) No 575/2013: exemption of central bank reserves from calculation of leverage ratio |
Section I, Chapter 3 paragraph 1 of the ECB Guide |
Article 429b(3) of Regulation (EU) No 575/2013: preferential treatment for notional cash pooling arrangements |
Section II, Chapter 7 paragraph 4 of the ECB Guide |
Reporting requirements |
|
Article 430(11) of Regulation (EU) No 575/2013: reporting on prudential requirements and financial information |
Section II, Chapter 8 paragraph 1 of the ECB Guide |
General requirements for access to the activity of credit institutions |
|
Article 21(1) of Directive 2013/36/EU: waiver for credit institutions permanently affiliated to a central body |
Section II, Chapter 9 paragraph 1 of the ECB Guide |
Article 21b(2) of Directive 2013/36/EU: intermediate parent undertaking |
Section II, Chapter 9 paragraph 2 of the ECB Guide |
Governance arrangements and prudential supervision |
|
Article 88(1)(e) of Directive 2013/36/EU: combining the functions of the chairman and CEO |
Section II, Chapter 11 paragraph 4 of the ECB Guide |
Article 91(6) of Directive 2013/36/EU: additional non-executive directorship |
Section II, Chapter 11 paragraph 5 of the ECB Guide |
Article 108(1) of Directive 2013/36/EU: internal capital adequacy assessment process for credit institutions permanently affiliated to a central body |
Section II, Chapter 11 paragraph 6 of the ECB Guide |
Articles 117 and 118 of Directive 2013/36/EU: cooperation obligations |
Section II, Chapter 11 paragraph 9 of the ECB Guide |
Article 142 of Directive 2013/36/EU: capital conservation plans |
Section II, Chapter 11 paragraph 12 of the ECB Guide |