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Verband der Auslandsbanken in Deutschland e.V. | Association of Foreign Banks in Germany

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Dear Sir or Madam,

We highly appreciate the opportunity to provide input to the referenced consultation paper EBA/CP/2016/22 dated 16 November 2016 regarding draft Implementing Technical Standards (ITS) amending the Commission’s Implementing Regulation (EU) No. 680/2014 dated 16 April 2014 (so-called ITS on supervisory reporting) with regards to the additional monitoring metrics for liquidity reporting (ALMM).

The Association of Foreign Banks in Germany represents the interests of currently more than 200 foreign banks and other financial services in¬stitutions which operate in Germany via subsidiary or branch. Almost all member institutions are therefore part of a cross-border banking group. Those banking groups benefit from the regulatory level playing field arising from the harmonisation of financial sector regulations within the European Union.

Although the transposition of the freedom of establishment (Article 49 TFEU) in EU banking regulation (CRD IV) is mostly focusing on the setup of branches across Member States, there are also banking groups operating via several legal entities (subsidiaries) across Member States. Before this background, the evaluation of the first of the three criteria that enable a quarterly ALMM reporting are of high interest for our Association.

Since the entry into force of ALMM reporting as it has been set out by the Commission’s Implementing Regulation (EU) No. 680/2014 as amended by the Commission’s Implementing Regulation (EU) 2016/313 of 1 March 2016, experience from many of our member institutions revealed that there have been ambiguities and deviating interpretations across many Member States, especially with respect to the following criteria in Art. 16b para. 2 lit. a of Implementing Regulation 680/2014:
• the definition of the group with subsidiaries or parent institutions,
• the definition of a jurisdiction other than that of the competent authority as well as
• the definition of the competent authority.

As it is also stated in the consultation paper, there has been ambiguity that may have arisen with respect to the wording of Art. 16b para. 2 lit. a of Implementing Regulation 680/2014. We therefore acknowledge EBA’s interest to review the wording and answer to the sixth question of the consultation paper.


Question 6: “Do respondents have substantiated views on the effectiveness and clarity of the proportionality threshold of subparagraph (a) of paragraph 16b (2) of the ITS on reporting? Would they see alternative workable solutions?”

The overall intention of the proportionality criteria unfortunately denies the application of the quarterly reporting to cross-border banking groups. Although the proposed draft does not contain an alternative proposal for this wording and seems to stick to this intended objective (i.e. proportionality allowed only for entities which “do not form part of a group with subsidiaries or parent institutions located in jurisdictions other than the one of its competent authority”), we nevertheless would like to express our serious concerns about this – from our point of view – unjustified discrimination of cross-border banking groups.

Starting point for this differentiation between domestic and international banking groups seems to be the assumption that domestic banking groups would necessarily be less prone to liquidity risk than cross-border banking groups. A possible exploitation of different national liquidity requirements (regulatory arbitrage) should not be the foundation for this assumption as the a regulatory level playing field is given within the European Union due to the uniform application of the CRR requirements, especially LCR, throughout all Member States. With respect to the supervision of liquidity, the responsibility lies now with home Member States since the detailed criteria for the liquidity coverage requirement applies.

As already said, also international banking groups benefit from the freedom of establishment. As the regulatory reporting costs for cross-border groups (monthly reporting) are presumably higher than for domestic groups (quarterly reporting), it can be said that cross-border banking groups are impaired in their activities. Therefore, there might be an open discrimination for cross-border banking groups because of more severe ALMM reporting burdens. Although EU secondary law can limit fundamental freedoms, the ALMM are implemented as Implementing Acts according to Art. 291 TFEU. In opposition to Delegated Acts (Art. 290 TFEU), that may limit a fundamental freedom if an empowerment basis is given in the respective secondary law (here: CRR), a limitation by Implementing Acts should not be possible. Article 415 para. 3 lit. a CRR itself gives no hint of a higher liquidity risk in international banking groups. From our point of view, it would be best to dismiss this criteria (“the institution does not form part of a group with subsidiaries or parent institutions located in jurisdictions other than that of its competent authority”) and therefore to delete Art. 16b para. 2 lit. a of Implementing Regulation 680/2014.
As this is nevertheless not intended by EBA, we would like to provide proposals to amend the actual legal basis:

• Regarding the definition of the group with subsidiaries or parent institutions, it should be clarified if groups only consisting of those institutions are exclusively covered by the criteria of Art. 16b para. 2 lit. a of Implementing Regulation 680/2014. The provision could be interpreted like this, but what if, for example, a financial holding company is also involved? It could be assumed that a cross-border banking group of a financial holding company and several credit institutions should then not be covered by the provision. Especially with regard to this point, we would like to highlight the importance of a consistent application across all EU Member States.

• Regarding the definition of a jurisdiction other than that of the competent authority, the European Economic Area (EEA) should be considered as one single jurisdiction with respect to the respective EU secondary legislation that is the basis for the ALMM reporting: CRR and LCR.

• Regarding the definition of the competent authority, the following should be regarded: If the EEA should not be considered as one single jurisdiction and instead every Member States is to be seen as single jurisdiction, then – with respect to credit institutions resident in Eurozone countries – the European Central Bank (ECB) should be considered as the one competent authority due to the Single Supervisory Mechanism (SSM).

Besides this, the threshold in Art. 16b para. 2 lit. a of Implementing Regulation 680/2014 should be set to 5% of the total assets of the entire consolidated group.

We hope to give constructive input for an amendment of the ITS that will reflect a higher grade on proportionality. We have no objections to the disclosure of our comments.


Kind regards



Dr. Oliver Wagner Andreas Kastl
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Andreas Kastl
0049 69 97585020