EBA publishes its final Guidelines on the monitoring of the threshold for establishing an intermediate EU parent undertaking

The European Banking Authority (EBA) published today its final Guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate EU parent undertakings (IPU) as laid down in the Capital Requirements Directive (CRD). The Guidelines specify how third country groups should calculate and monitor the total value of their assets in the Union in order to ensure timely application of the IPU requirement.

The CRD introduced a requirement for institutions that are part of third-country groups to have an IPU established in the Union, where the total value of assets in the Union of the third-country group is equal to or greater than EUR 40 billion.

These Guidelines clarify the relevant data for the calculation of the total value of the assets in the Union, taking into account the fluctuation in the value of assets. In particular, the Guidelines specify that for the purpose of the application of the IPU requirement, the total value of assets in the Union of the third-country group should be calculated as an average over the last four quarters. This value should be monitored on a quarterly basis and communicated to relevant competent authorities.

To meet the IPU requirement in a timely manner, institutions belonging to third-country groups must apply a forward-looking approach. The Guidelines specify that they should assess at least annually whether the threshold is expected to be reached within the three-year horizon, based on the strategic planning of the third-country group and the forecast of assets.

In addition, these Guidelines specify certain procedural aspects related to the monitoring of the threshold by competent authorities and the establishment of the IPU where necessary. In particular, clarification is provided on the notifications, to be provided to the EBA on an annual basis.

Legal basis, background

These draft Guidelines have been developed in accordance with Article 16 of Regulation (EU) No 1093/2010 with a view to establishing consistent, efficient and effective supervisory practices and to ensuring the common, uniform and consistent application of Union law.

In January 2021, the EBA published a Consultation Paper on which these Guidelines are based. During the consultation period, the EBA received feedback from stakeholders, which led to amendments being introduced to clarify some specific provisions.