EBA issues opinion on a structural measure impacting limits to intra-group large exposures notified by France

The European Banking Authority (EBA) published its Opinion on a draft structural measure of banking separation impacting the limits to intra-group large exposures that France intends to implement at national level. The EBA Opinion assessed the measures laid down in the French legal framework and found that such measure is consistent with the general principles governing the EU internal market.

France notified to the EBA the intention of implementing a structural measure of banking separation aimed at reducing group risk profiles, which would be introduced through an order in application of French national law 2013-672 (loi 2013-672 du 26 Juillet 2013 de separation et regulation des activités bancaires). This measure concerns new obligations on credit institutions that aim to restrict the exercise of speculative activities, while providing banking and market supervisory authorities with new control powers. In particular, it introduces a specific limit to intra-group large exposures between a group and its segregated subsidiary.

In its opinion on the matter, the EBA said that the measure did not aim at ring-fencing institutions alongside their national borders, but rather at restricting proprietary trading activities, regardless of their geographical location. On the basis of the information received, the EBA concluded that no evidence was found suggesting that this measure would be inconsistent with the general principles governing the EU internal market.

Legal framework

The Opinion was developed in accordance with Article 395(8) of Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms (CRR), under which the EBA is required to provide an Opinion to the Council, the Commission and the Member State concerned when it is notified by the competent authority of such Member State in relation to an envisaged structural measure setting limits to large exposures.

In accordance with Article 14(5) of its Rules of Procedure, the EBA's Board of Supervisors adopted its Opinion on the notification from France on 17 July 2014.