Response to consultation on RTS and ITS on the authorisation of credit institutions
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Thus, for legal certainty related to the connection between the provisions of RTS and the provisions that transposed the CRD into national legislation, we consider that RTS should contain a general provision in order to stipulate that its provisions shall not affect the procedure and conditions for authorization of credit institutions established by each Member State, as it is mentioned in Article 8 para.1 of CRD. In this regard, we underline that RTS should be drawn following two distinct levels, respectively: (i) binding documents/information that shall reflect the fulfilment of the requirements provided for in Articles 10-14 of CRD and (ii) documents/information that will be submitted by the applicant credit institution in order to assess the fulfilment of the national conditions of authorization.
Starting from the above mentioned we consider that RTS should contain a definition of the applicant credit institution which shall cover each situation having in view the particular legal framework of Member States without prejudice the Article 8 para.1 of CRD.
In our opinion the list of information should not contain excessive information which may determine a potential breach of provisions of CRD or BRRD.
For instance, in case of start-up credit institution, some required documents are excessive in the process of authorization of a credit institution to the extent that a credit institution may commence the activity during one year after the licence was granted (e.g. documents specified in Article 8 para.1 lett. (a) point (v), Article 10 para.3 and para 4 of RTS). In our opinion, these documents can be submitted by the credit institution after the commencement of activity.
In case of bridge credit institution, it is worth mentioned the following:
- the period of three years of accounting plans forecast (foreseen in Article 9 para. 1 lett. (a) of RTS) is not aligned with the period of two years for the functioning of bridge institution according to Article 41 para.1 of BRRD;
- the Article 9 para. 9 of RTS stipulates the obligation of the applicant credit institution to submit the recovery plan without specify the situation when the institution is parent undertaking or subsidiary. This provision is not correlated with Article 7 para.2 of BRRD where it is mentioned that the competent authorities may require subsidiaries to draw up and submit recovery plans on an individual basis. We underline that the provisions of Article 7 para. 2 of BRRD do not impose an obligation for subsidiaries to draw up and submit recovery plans on an individual basis. In the light of the above mentioned, the provision of Article 9 para. 9 of RTS may prejudice the power of national competent authority confered by Article 7 para. 2 of BRRD as result of exercise of the national option.
Moreover, we consider that the RTS comprises redundant information, such as: information on the applicant credit institution’s governance forseen in Article 9 para. 10 are covered by information on the internal control framework and infrastructure forseen in Article 10; information on IT infrastructure forseen in Article 8 lett.(c) point (ii) are covered by information on the internal control framework and infrastructure forseen in Article 10 para. 5 lett. d)-f).
In addition, the RTS contains notions and concepts that are not defined by CRD and CRR (risk tolerance and risk appetite) and, in our opinion, these notions should be defined by RTS.
Moreover, we consider that the RTS should be correlated with the draft guidelines on the assessment of the suitability of members of the management body and key function holders that are under development within EBA.
Question 1: Do you have any general comments on the draft Regulatory Technical Standards under Article 8(2) of Directive 2013/36/EU or on the draft Implementing Technical Standards under Article 8(3) of Directive 2013/36/EU?
As regards the draft of Regulatory Technical Standards (RTS) under Article 8(2) of Directive 2013/36/EU, we consider that its general approach may enter in conflict with the way in which the current national legal framework related to authorization field of credit institutions was built taking into account that, according to Article 8 para.1 of CRD, the power to establish the requirements for authorization of credit institution has been granted to Member States.Thus, for legal certainty related to the connection between the provisions of RTS and the provisions that transposed the CRD into national legislation, we consider that RTS should contain a general provision in order to stipulate that its provisions shall not affect the procedure and conditions for authorization of credit institutions established by each Member State, as it is mentioned in Article 8 para.1 of CRD. In this regard, we underline that RTS should be drawn following two distinct levels, respectively: (i) binding documents/information that shall reflect the fulfilment of the requirements provided for in Articles 10-14 of CRD and (ii) documents/information that will be submitted by the applicant credit institution in order to assess the fulfilment of the national conditions of authorization.
Question 2: Do you have any comments on the proposed list of information to be provided for the authorisation of credit institutions?
As regards the proposed list of information we consider that RTS should provide the exhaustive information required in process of authorization for each possible three situations mentioned at point 2 of Recital, namely (i) the applicant, legal entity, has previously carried out activities before to apply for an authorization to become a credit institution; (ii) the applicant did not carry out activities before to apply for a credit institution authorization (start-up); (iii) the bridge credit institution which applies for the authorisation, taking into account the particular situation of the credit institution.Starting from the above mentioned we consider that RTS should contain a definition of the applicant credit institution which shall cover each situation having in view the particular legal framework of Member States without prejudice the Article 8 para.1 of CRD.
In our opinion the list of information should not contain excessive information which may determine a potential breach of provisions of CRD or BRRD.
For instance, in case of start-up credit institution, some required documents are excessive in the process of authorization of a credit institution to the extent that a credit institution may commence the activity during one year after the licence was granted (e.g. documents specified in Article 8 para.1 lett. (a) point (v), Article 10 para.3 and para 4 of RTS). In our opinion, these documents can be submitted by the credit institution after the commencement of activity.
In case of bridge credit institution, it is worth mentioned the following:
- the period of three years of accounting plans forecast (foreseen in Article 9 para. 1 lett. (a) of RTS) is not aligned with the period of two years for the functioning of bridge institution according to Article 41 para.1 of BRRD;
- the Article 9 para. 9 of RTS stipulates the obligation of the applicant credit institution to submit the recovery plan without specify the situation when the institution is parent undertaking or subsidiary. This provision is not correlated with Article 7 para.2 of BRRD where it is mentioned that the competent authorities may require subsidiaries to draw up and submit recovery plans on an individual basis. We underline that the provisions of Article 7 para. 2 of BRRD do not impose an obligation for subsidiaries to draw up and submit recovery plans on an individual basis. In the light of the above mentioned, the provision of Article 9 para. 9 of RTS may prejudice the power of national competent authority confered by Article 7 para. 2 of BRRD as result of exercise of the national option.
Moreover, we consider that the RTS comprises redundant information, such as: information on the applicant credit institution’s governance forseen in Article 9 para. 10 are covered by information on the internal control framework and infrastructure forseen in Article 10; information on IT infrastructure forseen in Article 8 lett.(c) point (ii) are covered by information on the internal control framework and infrastructure forseen in Article 10 para. 5 lett. d)-f).
In addition, the RTS contains notions and concepts that are not defined by CRD and CRR (risk tolerance and risk appetite) and, in our opinion, these notions should be defined by RTS.
Question 3: Do you have any comments on the proposed requirements applicable to shareholders and members with qualifying holdings of credit institutions?
NAQuestion 4: Do you have any comments on the proposed list of obstacles which may prevent the effective exercise of supervisory powers?
NAQuestion 5: Do you have any comments on the procedure set out in the draft Implementing Technical Standards?
NAQuestion 6: Do you have any comments on the draft application form for authorisation as a credit institution?
NAQuestion 7: Regarding the assessment of the credit institution’s management, do you believe that, in addition to the members of the management body, information should be provided in respect of (i) the heads of internal control function and chief financial officer, (ii) generally in respect of members of senior management or (iii) in respect of another set of officers (if so, please specify which ones)?
Regarding the assessment of the credit institution’s management, we consider that, in case of the start-up credit institution, the RTS should not contain information on the heads of internal control function and chief financial officer whereas they are not members of management body. Against the backdrop of above mentioned, the submission of information regarding the assessment of the heads of internal control function and chief financial officer may occur as excessive related to Article 13 of CRD.Moreover, we consider that the RTS should be correlated with the draft guidelines on the assessment of the suitability of members of the management body and key function holders that are under development within EBA.