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The Financial Conglomerates
Directive
from the Basel
ii Compliance Professionals Association (BCPA)
the largest Association
of Sarbanes Oxley professionals in the
world
Article 29
Amendments to Directive 2000/12/EC
Directive 2000/12/EC is amended as
follows:
1. Article 1 shall be amended as
follows:
(a) Point (9) shall be replaced by the
following:
‘9. “participation for the purposes of supervision on
a consolidated basis and for the purposes of points 15 and 16 of
Article 34(2)” shall mean participation within the meaning of the
first sentence of Article 17 of Directive 78/660/EEC, or the
ownership, direct or indirect, of 20 % or more of the voting rights
or capital of an undertaking;’
(b) Points (21) and (22) shall be replaced by the
following:
‘21. “financial holding company” shall mean a
financial institution, the subsidiary undertakings of which are
either exclusively or mainly credit institutions or financial
institutions, at least one of such subsidiaries being a credit
institution, and which is not a mixed financial holding company
within the meaning of Directive 2002/87/EC of the European
Parliament and of the Council of 16 December 2002 on
the supplementary
supervision of credit institutions, insurance
undertakings and investment firms in a financial conglomerate
(*);
22. “mixed-activity holding company” shall mean a
parent undertaking, other than a financial holding company or a
credit institution or a mixed financial holding company within the
meaning of Directive 2002/87/EC, the subsidiaries of which include
at least one credit institution;
(*) OJ L 35, 11.2.2003.’
2. in Article 12 the following paragraphs shall be
added:
‘The competent authority of a Member State
involved, responsible for the supervision of insurance
undertakings or investment firms, shall be consulted prior to the
granting of an authorisation to a credit institution which
is:
(a) a subsidiary of an insurance undertaking or
investment firm authorised in the Community;
or
(b) a subsidiary of the parent undertaking of an
insurance undertaking or investment firm authorised in the
Community; or
(c) controlled by the same person, whether natural or
legal, who controls an insurance undertaking or investment firm
authorised in the Community.
The relevant competent authorities referred to in the
first and second paragraphs shall in particular consult each other
when assessing the suitability of the shareholders and the
reputation and experience of directors involved in the management of
another entity of the same group.
They shall inform each other of any information
regarding the suitability of shareholders and the reputation and
experience of directors which is of relevance to the other competent
authorities involved for the granting of an authorisation as well as
for the ongoing assessment of compliance with operating
conditions.’
3. Article 16(2) shall be replaced by the
following:
‘2. If the acquirer of the holdings referred to in
paragraph 1 is a credit institution, insurance
undertaking or investment firm authorised in another Member State
or the
parent undertaking of a credit institution, insurance undertaking or
investment firm authorised in another Member State or a
natural or legal person controlling a
credit institution, insurance undertaking or
investment firm authorised in another Member State, and if, as a
result of that acquisition, the institution in which the
acquirer proposes to hold a holding would become a subsidiary or
subject to the control of the acquirer, the assessment of the
acquisition must be subject to the prior consultation referred to in
Article 12.’4.
Article 34(2) shall be amended as
follows:
(a) in the first subparagraph points 12 and 13 shall
be replaced by the following:
‘12. holdings in other credit and financial
institutions amounting to more than 10 % of their
capital;
13. subordinated claims and instruments referred to in
Article 35 and Article 36(3) which a credit institution holds in
respect of credit and financial institutions in which it has
holdings exceeding 10 % of the capital in each
case;
14. holdings in other credit and financial
institutions of up to 10 % of their capital, the subordinated claims
and the instruments referred to in Article 35 and Article 36(3)
which a credit institution holds in respect of credit and financial
institutions other than those referred to in points 12 and 13 of
this subparagraph in respect of the amount of the total of such
holdings, subordinated claims and instruments which exceed 10 % of
that credit institution's own funds calculated before the deduction
of items in points 12 to 16 of this
subparagraph;
15. participations within the meaning of Article 1(9)
which a credit institution holds in
— insurance undertakings within the meaning of Article
6 of Directive 73/239/EEC, Article 6 of Directive 79/267/EEC or
Article 1(b) of Directive 98/78/EC of the European Parliament and of
the Council (*),
— reinsurance undertakings within the meaning of
Article 1(c) of Directive 98/78/EC,
— insurance holding companies within the meaning of
Article 1(i) of Directive 98/78/EC;
16. each of the following items which the credit
institution holds in respect of the entities defined in point (15)
in which it holds a participation:
— instruments referred to in Article 16(3) of
Directive 73/239/EEC,
— instruments referred to in Article 18(3) of
Directive 79/267/EEC;(b) the second subparagraph shall be replaced
by the following:
‘Where shares in another credit institution, financial
institution, insurance or reinsurance undertaking or insurance
holding company are held temporarily for the purposes of a financial
assistance operation designed to reorganise and save that entity,
the competent authority may waive the provisions on deduction
referred to in points 12 to 16.
As an alternative to the deduction of the items
referred to in points 15 and 16, Member States may allow their
credit institutions to apply mutatis mutandis methods 1, 2, or 3 of
Annex I to Directive 2002/87/EC. Method 1 (Accounting consolidation)
shall only be applied if the competent authority is confident about
the level of integrated management and internal control regarding
the entities which would be included in the scope of consolidation.
The method chosen shall be applied in a consistent
manner over time.
Member States may provide that for the calculation of
own funds on a stand-alone basis, credit institutions subject to
supervision on a consolidated basis in accordance with Chapter 3 or
to supplementary supervision in accordance with Directive
2002/87/EC, need not deduct the items referred to in points 12 to 16
which are held in credit institutions, financial institutions,
insurance or reinsurance undertakings or insurance holding
companies, which are included in the scope of consolidated or
supplementary supervision.
This provision shall apply to all the prudential rules
harmonised by Community acts.’
5. Article 51(3) shall be replaced by the
following:
‘3. The Member States need not apply the limits laid
down in paragraphs 1 and 2 to holdings in insurance companies as
defined in Directive 73/239/EEC and Directive 79/267/EEC, or in
reinsurance companies as defined in Directive
98/78/EC.’
6. the last sentence in Article 52(2) shall be
replaced by the following:
‘Without prejudice to Article 54a, the consolidation
of the financial situation of the financial holding company shall
not in any way imply that the competent authorities are required to
play a supervisory role in relation to the financial holding company
on a stand-alone basis.’
7. Article 54 shall be amended as
follows:
(a) in paragraph 1 the following subparagraph shall be
added:
‘In the case where undertakings are linked by a
relationship within the meaning of Article 12 (1) of Directive
83/349/EEC, the competent authorities shall determine how
consolidation is to be carried out.’
(b) in paragraph 4, first subparagraph, the third
indent shall be deleted;
8. the following Article shall be
inserted:
‘Article 54a
Management body of financial holding companies
The Member States shall require that persons who
effectively direct the business of a financial holding company are
of sufficiently good repute and have sufficient experience to
perform those duties.’
9. the following Article shall be
inserted:
‘Article 55a
Intra-group transactions with mixed-activity holding
companies
Without prejudice to the provisions of Title V,
Chapter 2, Section 3, of this Directive, Member States shall provide
that, where the parent undertaking of one or more credit
institutions is a mixed-activity holding company, the competent
authorities responsible for the supervision of these credit
institutions shall exercise general supervision over transactions
between the credit institution and the mixed-activity holding
company and its subsidiaries.
Competent authorities shall require credit
institutions to have in place adequate risk management processes and
internal control mechanisms, including sound reporting and
accounting procedures, in order to identify, measure, monitor and
control transactions with their parent mixed-activity holding
company and its subsidiaries
appropriately.
Competent authorities shall require the reporting by
the credit institution of any significant transaction with these
entities other than the one referred to in Article
48.
These procedures and significant transactions shall be
subject to overview by the competent
authorities.
Where these intra-group transactions are a threat to a
credit institution's financial position, the competent authority
responsible for the supervision of the institution shall take
appropriate measures.
10. in Article 56(7) the following sentence shall be
added:
‘The competent authority which made the request may,
if it so wishes, participate in the verification when it does not
carry out the verification itself.’
11. the following Article shall be
inserted:
‘Article 56a
Third-country parent
undertakings
Where a credit institution, the parent undertaking of
which is a credit institution or a financial holding company, the
head office of which is outside the Community, is not subject to
consolidated supervision under Article 52, the competent authorities
shall verify whether the credit institution is subject to
consolidated supervision by a
third-country competent authority which is equivalent
to that governed by the principles laid down in Article
52.
The verification shall be carried out by the competent
authority which would be responsible for consolidated supervision if
the fourth subparagraph were to apply, at the request of the parent
undertaking or of any of the regulated entities authorised in the
Community or on its own initiative.
That competent authority shall consult the other
competent authorities involved.
The Banking Advisory Committee may give general
guidance as to whether the consolidated supervision arrangements of
competent authorities in third countries are likely to achieve the
objectives of consolidated supervision as defined in this Chapter,
in relation to credit institutions, the parent undertaking of which
has its head office outside the Community.
The Committee shall keep any such guidance under
review and take into account any changes to the consolidated
supervision arrangements applied by such competent
authorities.
The competent authority carrying out the verification
specified in the second subparagraph shall take into account any
such guidance. For this purpose the competent authority shall
consult the Committee before taking a
decision.
In the absence of such equivalent supervision, Member
States shall apply the provisions of Article 52 to the credit
institution by analogy.
As an alternative, Member States shall allow their
competent authorities to apply other appropriate supervisory
techniques which achieve the objectives of the supervision on a
consolidated basis of credit institutions.
Those methods must be agreed upon by the competent
authority which would be responsible for consolidated supervision,
after consultation with the other competent authorities involved.
Competent authorities may in particular require the
establishment of a financial holding company which has its head
office in the Community, and apply the provisions on consolidated
supervision to the consolidated position of that financial holding
company.
The methods must achieve the objectives of
consolidated supervision as defined in this Chapter and must be
notified to the other competent authorities involved and
the Commission.’
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MORE
INFORMATION ABOUT THE OFFICIAL PRESENTATIONS
We will
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The first email (704 slides) covers all
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questions of the exam are based on these slides.
You can find
the course synopsis at:
www.basel-ii-association.com/Certified_Basel_ii_Professional.htm
We also cover the Enhancements to
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- The Financial Conglomerates
Directive (183 slides)
QUESTION:
Why in a Basel ii
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Conglomerates Directive?
ANSWER:
Because we have a very
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A. The bank is the regulated entity at the head of
the group
B. The bank is under a mixed financial holding company
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C. The bank is under a financial holding company
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D. The bank is under an insurance holding company
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Only the first 704 slides (first email), that cover the
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To find more:
www.basel-ii-association.com/Distance_Learning_Online_Certification.htm |
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