The Breach of Union Law Panel of the European Banking Authority (EBA) decided to close the breach of Union Law investigation (BUL) on Dutch supervisory regime governing proprietary traders it had opened against the Dutch Central Bank (DNB). The BUL panel's conclusion followed the decision taken by the DNB on 13 November 2017 to redress the breach of Union law by terminating the current national prudential framework for traders for own account. The DNB will notify the EBA on capital conservation plans adopted by the firms concerned and the EBA will monitor the application of these transitional measures.
According to the DNB's decision, the relevant firms will have until 31 March 2018 to meet the applicable capital requirements as laid down in the Capital Requirements Regulation (CRR). In case a firm cannot meet these requirements, it must draw up a capital conservation plan to be achieved by 31 December 2019, at the latest.
However, the EBA has reminded the DNB of the need to:
• assess such capital conservation plans on a case by case basis and to restrict their use only to those cases which are strictly necessary
• keep to a minimum the period for increasing own funds to the required level.
In addition, the DNB should consider whether to use its supervisory powers to take additional measures in relation to investment firms to which a capital conservation plan is applied (e.g. limiting the ability of firms to expand their business).
Finally, the Panel noted that the DNB, together with the Authority for the Financial Markets, in accordance with the national division of supervisory responsibilities, should pay due attention to the provisions concerning remuneration policies. In particular, the restrictions laid down under Article 141 of the Capital Requirements Directive (CRD) on distribution of capital instruments and variable remuneration would need to be applied by firms which do not hold the appropriate level of own funds.
The EBA has asked the DNB to provide information by 30 April 2018 about the number of traders on own account with capital restoration plans together with their implementation timeframe.
Notes to the editors
The EBA's BUL panel is made up of six representatives of the national competent authorities and is chaired by the EBA Chairperson.
On 3 November 2017, the EBA Chairperson opened a BUL investigation in accordance with Article 17 of EBA's Founding Regulation, into a possible breach of Union law by DNB related to the application by the DNB of the exception provided in Article 4 (1), subparagraph (4) of Regulation (EU) No 575/2013 of 26 June 2013, on prudential requirements for credit institutions and investment firms (CRR).