Response to consultation on Joint ESMA EBA Guidelines on suitability of management body

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Question 1: Are there any conflicts between the responsibilities assigned by national company law to a specific function of the management body and the responsibilities assigned by the Guidelines to either the management or supervisory function?

It must be considered, that in some cases the institutions have no influence on the occupation of the management body in its supervisory function and its committees. Within public institutions like Savings Banks representatives of the municipal trustees are by law members of the management body in its supervisory function. This also leads to the institutions have no influence to the adequate knowledge, skills, experience and diversity.

Question 2: Are the subject matter, scope and definitions sufficiently clear?

NA

Question 3: Is the scope of assessments of key function holders by CRD-institutions appropriate and sufficiently clear?

NA

Question 4: Do you agree with this approach to the proportionality principle and consider that it will help in the practical implementation of the guidelines? Which aspects are not practical and the reasons why? Institutions are asked to provide quantitative and qualitative information about the size, internal organisation and the nature, scale and complexity of the activities of their institution to support their answers.

NA

Question 5: Do you consider that a more proportionate application of the guidelines regarding any aspect of the guidelines could be introduced? When providing your answer please specify which aspects and the reasons why. In this respect, institutions are asked to provide quantitative and qualitative information about the size, internal organisation and the nature, scale and complexity of the activities of their institution to support their answers.

NA

Question 6: Are the guidelines with respect to the calculation of the number of directorships appropriate and sufficiently clear?

NA

Question 7: Are the guidelines within Title II regarding the notions of suitability appropriate and sufficiently clear?

The draft says in Article 77 lit. f) political influence of the members of an institutions management body can create conflict of interests. This leaves out of consideration that within public institutions like Savings Banks the management body in its supervisory function is democratically legitimized.

Savings Banks in Germany do not have members; instead they operate under “municipal trusteeship” (Trägerschaft"). The elected mayor of the town, district etc. is by law member of the management body in its supervisory function. The municipal trustee (town, city, districts or special-purpose associations) can - mediated through its representatives in the supervisory board - safeguard that the Savings Bank fulfills its public mandate for the population of the municipality.
Since the representatives (e.g. mayor) have political influence, it is very important to withdraw point (f.) or at least to add an exception for representatives of municipal trustees ("Träger"), as these persons are not shareholder representatives."

Question 8: Are the guidelines within Title III regarding the Human and financial resources for training of members of the management body appropriate and sufficiently clear?

NA

Question 9: Are the guidelines within Title IV regarding diversity appropriate and sufficiently clear?

NA

Question 10: Are the guidelines within Title V regarding the suitability policy and governance arrangements appropriate and sufficiently clear?

NA

Question 11: Are the guidelines within Title VI regarding the assessment of suitability by institutions appropriate and sufficiently clear?

NA

Question 12: Are the guidelines with regard to the timing (ex-ante) of the competent authority’s assessment process appropriate and sufficiently clear?

An assessment procedure by competent authorities before the appointment of the member (Article 159) is not compatible with the principles of public sector banks in Germany. In Savings Banks a number of members of the management body in its supervisory function are elected by the local parliament and the head of the municipality’s administration (e.g. the mayor) usually – by act of law – chairs the management body in its supervisory function. A previous assessment therefore is not possible in these cases.

In addition, a few months long lasting assessment before the appointment makes the membership less attractive for potential applicants. An ex –ante assessment with a duration of 4 months would prevent that members of the management body change or apply for positions in Management bodies of other institutions. That is counterproductive.

We prefer an open handling and ask for clarification, that an assessment after appointment is sufficient.

Question 13: Which other costs or impediments and benefits would be caused by an ex-ante assessment by the competent authority?

NA

Question 14: Which other costs or impediments and benefits would be caused by an ex-post assessment by the competent authority?

NA

Question 15: Are the guidelines within Title VII regarding the suitability assessment by competent authorities appropriate and sufficiently clear?

NA

Question 16: Is the template for a matrix to assess the collective competence of members of the management body appropriate and sufficiently clear?

NA

Question 17: Are the descriptions of skills appropriate and sufficiently clear?

NA

Question 18: Are the documentation requirements for initial appointments appropriate and sufficiently clear?

NA

Question 19: What level of resource (financial and other) would be required to implement and comply with the Guidelines (IT costs, training costs, staff costs, etc., differentiated between one off and ongoing costs)? If possible please specify the respective costs/resources separately for the assessment of suitability and related policies and procedures, the implementation of a diversity policy and the guidelines regarding induction and training. When answering this question, please also provide information about the size, internal organisation and the nature, scale and complexity of the activities of your institution, where relevant.

NA

Name of organisation

Deutscher Städtetag