EBA consults on technical standards on the identification of a group of connected clients

The European Banking Authority (EBA) launched today a public consultation on draft Regulatory Technical Standards (RTS) on the identification of a group of connected clients (GCC). The draft RTS, in conjunction with the EBA Guidelines on connected clients, provide the complete framework for the identification of the GCC. The consultation runs until 8 September 2022.

The objective of the definition of a GCC is to identify two or more natural or legal persons who are so closely linked by idiosyncratic risk factors that it is prudent to treat them as a single risk.

These draft RTS aim at setting out clear circumstances where interconnections by means of a control and/or an economic dependency relationship can lead to a single risk and thus a grouping requirement. In addition, the draft RTS set out rebuttable provisions for the assessment of situations where control and economic dependencies coexist and thus one overall GCC, as opposed to two or more separate GCC, needs to be formed.

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 8 September 2022.

A public hearing will take place via conference call on 13 July 2022 from 13:30 to 15:30 CEST.

Legal basis and background

Article 4(4) of the CRR mandates the EBA to develop draft RTS specifying in which circumstances the conditions set out in Article 4(1) (39) of the CRR are met. The conditions set out therein refer to cases in which two or more natural or legal persons:

a) are directly or indirectly interconnected by a control relationship as defined in Article 4 paragraph 1 number 37 of the CRR;

b) are interconnected by some form of economic dependency, so that, if one of them were to experience financial problems, in particular funding or repayment difficulties, the other or all of the others would also be likely to encounter funding or repayment difficulties.

These draft RTS revise and partially replace the EBA Guidelines (EBA/GL/2017/15) on connected clients under Article 4 paragraph 1 number 39 of Regulation (EU) No 575/2013 (CRR). They concentrate on a clear and harmonised specification of the circumstances in which the conditions set out in point (39) of Article 4 paragraph 1 of the CRR to form a GCC are met.