Guidelines on the assessment of the suitability of members of the management body and key function holders (EBA/GL/2012/06)

22 November 2012

The European Banking Authority (EBA) published today its guidelines on the assessment of the suitability of members of the management body and key function holders. These Guidelines set out the process, criteria and minimum requirements for assessing the suitability of those persons and are ultimately aimed at ensuring robust governance arrangements and appropriate oversight.

The Guidelines contain provisions to be followed by both credit institutions and competent authorities when assessing the suitability of all members of the management body and extend also to key function holders. Moreover, as financial and mixed financial holding companies have significant influence on their credit institutions, they are also included in the scope of the Guidelines.

The Guidelines set out the criteria for the assessment of experience and reputation and documentation requirements for credit institutions. They also contain a notification requirement and provide that in cases where a member of the management body is not suitable, the credit institution and, if necessary, the competent authority shall take appropriate action.

The EBA publicly consulted on the draft proposal contained in this paper and the responses received during the public consultation have been considered in the current text.

Next steps

These Guidelines are a first important step in achieving a high level of harmonisation in an area which has been governed so far by national rules. With a view of reaching a greater level of harmonisation, the EBA will review these Guidelines in light of the final Capital Requirements Directive text (CRD IV). During this review, the EBA will also identify those situations where a higher level of harmonisation would allow supervisors to rely strongly on assessments made by other national competent authorities.

Notes to editors

  1. Article 11 of the Directive 2006/48/EC (CRD) asks the EBA to develop guidelines for the assessment of the suitability of the persons who effectively direct the business of a credit institution. Weak governance arrangements - namely inadequate oversight by and challenge from the supervisory function of the management body - are widely acknowledged to have been underlying causes of the financial crisis. For this reason, and to ensure robust governance arrangements, the EBA extended the scope of the Guidelines to the supervisory function and to key function holders.

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