Response to consultation on Regulatory Technical Standards specifying the minimum list of information to be provided to the competent authorities at the time of the notification
Question 1: Do you agree with the information request laid down in Article 1 and with the granularity envisaged for the information to be provided by proposed acquirers that are trusts, AIF or UCITS management companies or sovereign wealth funds?
The German Banking Industry Committee welcomes the opportunity to comment on the draft RTS specifying the minimum list of information to be provided to the competent authority at the time of the notification under Article 23(6) of Directive 2013/36/EU published by the EBA. The comments address requirements that are too broad, impractical to implement or leave questions unanswered. They also address the need for clarification of terms that are not defined in detail. We have assigned our comments on Article 2 and 3 to the first question.
From an industry perspective, clarification on the following points would be desirable:
- Art. 3 para. 1 (a) (i), 2 para. 1 (a) (iv) refers to relevant administrative sanctions or measures being imposed because of a breach of law or regulation. It is unclear what is to be considered relevant. There needs to be some guidance what would be considered relevant.
- Art. 3 para. 1 (a) (i), 2 para. 1 (a) (ix) refers to civil, commercial and administrative decisions relevant for the assessment of the acquisition. It is unclear what is to be considered relevant. “Administrative decisions” is a very broad term, so there needs to be some guidance to narrow down the requirement.
Some requirements in the draft RTS are very extensive and, in some cases, unreasonable, resulting in unnecessary effort. In our view, the following requirements need to be adjusted.
- As regards Art. 3 para. 1 (a) (ii) and Art. 3 para. 1 (a) (iii) the proposed acquirer is not always able – due to legal restrictions – to receive the relevant information from undertakings controlled by him. Therefore, a disclaimer should be incorporated that information regarding controlled entities only need to be provided as far as legally possible.
- According to Art. 3 para. 1 (a) (iv), Art. 2 para. 1 (c) the acquirer has to provide information on the current financial position of the members of the board of managing directors including income or sources of revenues, assets and liabilities and their breakdown, pledges and guarantees, granted or received. This information request is not appropriate and far too extensive. The financial status of a member of the board of managing directors is not relevant if the proposed acquirer is a legal entity and the acquisition is financed by that entity. Accordingly, Art. 23 CRD only refers to the financial soundness of the proposed acquirer.
- With regard to Art 3 para. 1 (a) (vi), 2 para. (1) (e) it should be sufficient to provide financial information in relation to the proposed acquirer and to the group but not in relation to every entity controlled by the proposed acquirer. This leads to an enormous administrative burden.
Question 2: With regard to the information for the assessment of the sound and prudent management of the target institution, do you agree with the proportionate approach set out in Articles 8, 9 and 10 that reflect the envisaged influence that will be exercised by the proposed acquirer on the target institution?
Due to the early notification time the proposed acquirer might not have enough information on the target institution in certain circumstances (e.g. target institution is not publicly listed or no coordinated acquisition process between the acquirer and the target or prohibition to share certain data) to calculate the relevant forecast plans or ratios (Art. 10 para. 4). The RTS does not provide a regulation as to what would be sufficient to submit in this case. Also, information required in Art. 10 para. 5 b) can often only be provided at a much later point in time, e.g. the integration process.
Question 3: a) Do you agree with the proportionate approach set out in Article 11, relating to the submission of reduced information where the proposed acquirer has already been assessed for the acquisition of qualifying holdings or is a supervised entity under Union financial sector law?
It would be a significant relief for supervised entities (credit institutions) if Art. 11 contained an explicit list of the sections that would not apply. Otherwise, these entities are still burdened with a substantial examination burden on what has been provided to the supervisory authority.
It is also unclear what would be considered as in the possession of the competent authority. For example, the competent authority has financial statements and detailed information on the business model of supervised credit institutions. Would it still be necessary to provide a description of the activities that generated the funds or a description of the origin of assets which will be used for the acquisition (Art. 7 para. 1 a, b).
The same applies for the declaration referred to in Art. 11 para. 4. It would require a substantial effort to provide such a statement and to prevent a false declaration. Furthermore, it is unclear what is exactly to be outlined as “true, accurate and up-to-date”.
Question 4: Do you agree with the simplification in the case of complex acquisition structures described in Article 12?
The simplification should also apply when there are several (direct and indirect) entities in a group required to make a notification. If the parent company (as indirect acquirer) provides the required information the subsidiary as the direct acquirer or any other entity in the chain of acquirers should only be obliged to provide information not provided by the parent company.
In addition, consideration could be given to requiring the documents to be submitted only at the request of the supervisory authority in order to avoid excessive bureaucracy.
Question 5: Do you find the provisions of this draft Regulation sufficiently clear and comprehensive?
Please see answers above.
As regards Art. 5 para. c) (iv) and the determination of the “market value” the reference point in time should be specified more clearly. It should be made clear that this point is only required for listed target institutions.
As regards Art. 5 (f), the ratio behind this requirement is not clear. It is highly unlikely that a listed target institution can be acquired with a relevant discount. Privately owned target institutions do not have an objective market value, so that this question cannot be sensibly answered. Therefore, we suggest that this requirement should be deleted.
As regards Art. 9 para. 1 c) (iii) the term “cost-benefit ratio” does not have a standard interpretation. Therefore, some guidance is needed on how to determine the cost-benefit ratio.