Question ID
2025_7349
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Own funds
Article
36
Paragraph
1
Subparagraph
b
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
NA
Type of submitter
Credit institution
Subject matter
Prudential treatment of goodwill and other intangible assets arising from the acquisition of an asset manager by an insurance undertaking fully owned by a bank
Question

For the purposes of a deduction under Articles 36(1)(b) and 37 of the CRR, should a bank, which owns 100% of an insurance undertaking which acquires a controlling shareholding in an asset manager, deduct goodwill and other intangible assets (Article 4(1)(113) and (115) of the CRR) generated by the acquisition carried out by its insurance undertaking subsidiary?

Background on the question

Assume that:

  1. Bank A, the parent company of a financial conglomerate: (a) owns 100% of the share capital of Insurance Undertaking B, the parent company of an insurance group; (b) has the permission from the competent authority not to deduct its holding of own funds instruments of Insurance Undertaking B in accordance with Article 49(1) of the CRR; and (c) deducts the goodwill generated when Bank A acquired the significant investment in Insurance Undertaking B;

  2. Insurance Undertaking B acquires 100% of Asset Management Group C (consisting of an unregulated holding company and its asset management subsidiaries) for an acquisition cost of 100 and records a goodwill of 80;

  3. the acquisition of Asset Management Group C is financed by the proceeds of an Insurance Undertaking B’s capital increase subscribed for by Bank A for an amount of 100.

Article 36(1)(b) of the CRR provides that “Institutions shall deduct the following from Common Equity Tier 1 items: […] (b) intangible assets […]”. Moreover, Article 37(b) of the CRR clarifies that “Institutions shall determine the amount of intangible assets to be deducted in accordance with the following: […] (b) the amount to be deducted shall include goodwill included in the valuation of significant investments of the institution; […]”.

The above provisions of the CRR do not specifically address whether intangible assets and “goodwill included in the valuation of significant investments” to be deducted by Bank A in the present case should include goodwill and other intangible assets arising at the level of Insurance Undertaking B as a result of the acquisition of Asset Management Group C.

Submission date
Rejected publishing date
Rationale for rejection

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Status
Rejected question