European Union (Capital Requirements) Regulations 2014
Source: Iris Oifigiúl 2014-04-04

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paragraphs: (1) These Regulations may be cited as the European Union (Capital Requirements) Regulations 2014.
(2) Regulations 39, 40, 42, 45, 46 and 47 to 49 come into operation, and Part 8 is revoked on the date on which the liquidity coverage requirement becomes applicable in accordance with a delegated act adopted pursuant to Article 460 of the Capital Requirements Regulation.
(3) By way of derogation from Article 162(1) of the Capital Requirements Directive Regulations 115 to 130 (other than Regulation 119), shall apply from 1 January 2016.
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paragraphs: (1) These Regulations apply to institutions.
(2) Regulation 28 applies to local firms.
(3) Regulation 29 applies to the firms referred to in point (2)(c) of Article 4(1) of the Capital Requirements Regulation.
(4) Regulation 32(3) to (8) and Chapter 3 of Part 6 apply to financial holding companies, mixed-financial holding companies and mixed-activity holding companies which have their head offices in the Union.
(5) These Regulations do not apply to the following:
(a) access to the activity of investment firms in so far as it is regulated by Directive 2004/39/EC;
(b) central banks;
(c) post office giro institutions;
(d) credit unions and friendly societies.
(6) The entities referred to in paragraph (5)(a), (c) and (d) shall be treated as financial institutions for the purposes of—
(a) Regulation 32(3) to (8), and
(b) Chapter 3 of Part 6.
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paragraphs: (1) In these Regulations—
(a) internal ratings based approach referred to in Article 143(1),
(b) internal models approach referred to in Article 221,
(c) own estimates approach referred to in Article 225,
(d) advanced measurement approaches referred to in Article 312(2),
(e) internal models method referred to in Articles 283 and 363, and
(f) internal assessment approach referred to in Article 259(3),
(a) EU parent institution,
(b) EU parent financial holding company,
(c) EU parent mixed-financial holding company, or
(d) Institution,
(2) A word or expression which is used in these Regulations and is also used in the Capital Requirements Directive has, unless the context otherwise requires, the same meaning in these Regulations as it has in the Capital Requirements Directive.
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paragraphs: (1) The Bank is designated as the competent authority that carries out the functions and duties provided for in the Capital Requirements Directive and the Capital Requirements Regulation.
(2) Institutions shall provide the Bank with all the information necessary for the assessment of their compliance with these Regulations and the Capital Requirements Regulation.
(3) Institutions shall at all times have—
(a) internal control mechanisms, and
(b) administrative and accounting procedures,
(4) Institutions shall—
(a) register all their transactions, and
(b) document systems and processes,
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paragraphs: (1) In the exercise of its duties as competent authority, the Bank shall take into account the convergence in respect of supervisory tools and supervisory practices in the application of the laws, regulations and administrative requirements adopted pursuant to the Capital Requirements Directive and the Capital Requirement Regulation.
(2) For the purposes of paragraph (1), the Bank shall—
(a) as a party to the ESFS, cooperate with the competent authorities of other Member States with trust and full mutual respect, in particular when ensuring the flow of appropriate and reliable information between it and other parties to the ESFS, in accordance with the principle of sincere cooperation set out in Article 4(3) of the Treaty on European Union,
(b) participate in the activities of the EBA and, as appropriate, in the colleges of supervisors,
(c) make every effort to comply with those guidelines and recommendations issued by the EBA in accordance with Article 16 of Regulation (EU) No 1093/2010 and to respond to the warnings and recommendations issued by the ESRB pursuant to Article 16 of Regulation (EU) No 1092/2010, and
(d) cooperate closely with the ESRB.
(3) In this Regulation, “ESFS” means European System of Financial Supervision.
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paragraphs: The Bank shall, in the exercise of its general duties as competent authority, duly consider the potential impact of its decisions on the stability of the financial system in the other Member States concerned and, in particular, in emergency situations, based on the information available at the relevant time.
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paragraphs: (1) Any provision of financial services legislation or any other enactment which has the effect of requiring a credit institution to seek, or to hold, an authorisation from the Bank, or to hold endowment capital, in order to establish or carry on business in the State, shall not apply to a branch of such a credit institution where—
(a) the credit institution is authorised to carry on such business in another Member State, and
(b) the authorisation is in accordance with the Capital Requirements Directive and the Capital Requirements Regulation.
(2) The establishment and supervision of branches referred to in paragraph (1) shall be effected in accordance with—
(a) Regulations 34(1) and (2) and 35,
(b) Regulation 37,
(c) Chapter 4 of Part 5,
(d) Regulation 45, and
(e) Regulations 61 to 63.
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paragraphs: (1) For the purposes of exercising their activities in the State, credit institutions may, notwithstanding the provisions of any enactment concerning the use of the words “bank”, “savings bank” or other banking names, use in the State the same name that they use in the Member State in which their head office is situated.
(2) In the event of there being any danger of confusion, the Bank may, for the purposes of clarification, require that the name of the credit institution be accompanied by certain explanatory particulars, and the credit institution shall comply with every such requirement.
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paragraphs: Where the Bank acts as consolidating supervisor, it shall provide the competent authorities concerned and the EBA with all information regarding the group of credit institutions, in accordance with—
(a) section 9G(7) of the Act of 1971 and section 17D(7) of the Act of 1989, and
(b) Regulations 61(1) and 97(2),
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paragraphs: (1) A proposed acquirer shall not, directly or indirectly, acquire a qualifying holding in a credit institution without having previously notified the Bank in writing of the information in paragraph (3).
(2) A proposed acquirer who has a qualifying holding in a credit institution shall not, without having previously notified the Bank in writing of the information in paragraph (3), directly or indirectly increase the size of the holding where, as a result of the increase—
(a) the percentage of the capital of, or the voting rights in, the credit institution that the proposed acquirer holds would reach or exceed a prescribed percentage, or
(b) in the case of a proposed acquirer that is a company or other body corporate, the credit institution would become the proposed acquirer’s subsidiary.
(3) A notification under paragraph (1) or (2) shall include the following information:
(a) the size of the intended holding;
(b) sufficient information to enable the Bank to consider the proposed acquisition concerned against the criteria in paragraphs (1) and (2) of Regulation 15, and in particular information regarding—
(i) the identity of the proposed acquirer,
(ii) the individuals to be responsible for the management of the proposed acquisition,
(iii) how the proposed acquisition is to be financed (including details of any proposed issue of financial instruments), and
(iv) the structure of the resulting group;
(c) the information referred to in paragraph (4).
(4) A notification under paragraph (1) or (2) shall include the information, and any document, required by the form of notification published by the Bank on 25 May 2009 entitled “Acquiring Transaction Notification Form”, as amended or updated from time to time by the Bank and which shall be made available on the official website of the Bank.
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paragraphs: (1) A person who concludes an acquisition to which Regulation 10 applies without having notified the Bank in accordance with that Regulation may make an application to the court under this Regulation and the court may, if it is satisfied that the failure was inadvertent and that it is in the interests of justice to do so, make an order—
(a) requiring the person to provide the Bank with the information required under Regulation 10, and
(b) requiring the Bank to carry out an assessment in accordance with Regulations 15 and 16.
(2) An application under paragraph (1) shall be on notice to the Bank and the Bank shall be entitled to appear, be heard and adduce evidence at the hearing of the application.
(3) Notice of an application under paragraph (1) shall be served on the Bank at least 14 days before the date of hearing of the application.
(4) An affidavit giving the names and addresses of, and the places and dates of service on, all persons who have been served with the notice of application, grounding affidavit and exhibits (if any) shall be filed by the applicant at least 4 days before the application is heard.
(5) Where any person who ought under this Regulation to have been served has not been so served, the affidavit shall state that fact and the reason for it.
(6) Where the Bank carries out an assessment on foot of an order under paragraph (1) and it is satisfied that no grounds exist to oppose the application in accordance with Regulation 18 it may—
(a) lift a suspension of voting rights under Regulation 21(2), and
(b) retrospectively validate the exercise of voting rights during such a suspension.
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paragraphs: (1) A person shall not, directly or indirectly, dispose of a qualifying holding in a credit institution without having previously notified the Bank in writing of the intended size of the holding.
(2) A person shall not, without having previously notified the Bank in writing, directly or indirectly dispose of part of a qualifying holding in a credit institution if, as a result of the disposal—
(a) the percentage of the capital of, or the voting rights in, the credit institution that the person holds would fall to, or below, a prescribed percentage, or
(b) in the case of a person that is a company or other body corporate, the credit institution would cease to be the person’s subsidiary.
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paragraphs: (1) If a credit institution becomes aware of the acquisition of a qualifying holding in it, or an increase in the size of such a holding that results in the holding reaching or exceeding a prescribed percentage, the credit institution shall inform the Bank in writing of the acquisition or increase without delay.
(2) If a credit institution becomes aware of a disposal of, or a reduction in the size of, a holding in it that results in the holding ceasing to be a qualifying holding or falling to, or below, a prescribed percentage, the credit institution shall inform the Bank in writing of the disposal or reduction without delay.
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paragraphs: (1) Within 2 working days after receiving a completed notification under paragraph (1) or (2) of Regulation 10, the Bank shall acknowledge receipt of the notification in writing.
(2) For the purposes of paragraph (1), a notification is completed if it gives all the information (whether in the notification itself or as an attachment) required by Regulation 10(3) and (4) to be provided for the assessment of the proposed acquisition concerned.
(3) Within 60 working days after the date of the written acknowledgement referred to in paragraph (1), the Bank shall carry out the assessment of the proposed acquisition (in these Regulations referred to as the “assessment period”) concerned in accordance with Regulation 15.
(4) In its acknowledgement of receipt of a notification referred to in paragraph (1), the Bank shall inform the proposed acquirer concerned of the date on which the assessment period will end.
(5) During the assessment period in relation to a proposed acquisition, but no later than the 50th working day of that period, the Bank may request any further information necessary to complete the assessment of the acquisition.
(6) Where the Bank makes such a request it shall acknowledge the receipt of any information received in response to the request within 2 working days.
(7) A request under paragraph (5) shall be made in writing and shall specify or describe the additional information needed.
(8) Subject to paragraph (10), where the Bank makes a request under paragraph (5) the assessment period is to be taken to be interrupted for the shorter of—
(a) the period between the date of the request and the date of the receipt of a response from the proposed acquirer concerned, and
(b)20 working days.
(9) The Bank may make further requests for further information to complete or clarify information already supplied but such a further request does not interrupt the assessment period.
(10) The Bank may, by written notice to the proposed acquirer concerned, extend to 30 working days the interruption, referred to in paragraph (8), in relation to a proposed acquisition if the proposed acquirer—
(a) is situated or regulated in a third country; or
(b) is a natural or legal person not subject to supervision under—
(i) Directive 2004/39/EC,
(ii) Directive 2009/65/EC,
(iii) Directive 2009/138/EC, or
(iv) the Capital Requirements Directive.
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paragraphs: (1) The objective of the assessment of a proposed acquisition is to ensure the sound and prudent management of the credit institution concerned.
(2) In assessing a proposed acquisition, the Bank shall—
(a) have regard to the likely influence of the proposed acquirer on the credit institution concerned, and
(b) assess the suitability of the proposed acquirer and the financial soundness of the proposed acquisition concerned against all of the following criteria:
(i) the reputation of the proposed acquirer;
(ii) the reputation, knowledge, skills and experience, as set out in Regulation 79, of any member of the management body and any member of senior management who will direct the business of the credit institution as a result of the proposed acquisition;
(iii) the financial soundness of the proposed acquirer, in particular in relation to the type of business pursued and envisaged in the credit institution in which the acquisition is proposed;
(iv) whether the credit institution will be able to comply and continue to comply with the prudential requirements of these Regulations, the Capital Requirements Regulation and where applicable other European Union law, in particular—
(I) Directive 2002/87/EC, and
(II) Directive 2009/110/EC of the European Parliament and of the Council of 16 September 200915 ;
(v) whether the group of which it will become a part has a structure that makes it possible to exercise effective supervision, effectively exchange information among the competent authorities and determine the allocation of responsibilities among the competent authorities;
(vi) whether there are reasonable grounds to suspect that, in connection with the proposed acquisition, money laundering or terrorist financing (within the meaning of Article 1 of Directive 2005/60/EC of the European Parliament and of the Council of 26 October 200516 ) is being or has been committed or attempted, or that the proposed acquisition could increase the risk of money laundering or terrorist financing.
(3) The Bank shall neither impose any prior conditions in respect of the level of holding that must be acquired nor examine a proposed acquisition in terms of the economic needs of the market.
(4) Where 2 or more proposals to acquire or increase qualifying holdings in the same credit institution have been notified to the Bank, the Bank shall treat the proposed acquirers concerned in a non-discriminatory manner.
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paragraphs: (1) In carrying out its assessment of a proposed acquisition, the Bank shall consult with the competent authorities of other relevant Member States if the proposed acquirer concerned is—
(a) a credit institution, insurance undertaking, reinsurance undertaking, investment firm, or a management company within the meaning of Article 2(1)(b) of Directive 2009/65/EC (in these Regulations referred to as a "UCITS management company") authorised in another Member State or in a sector other than that in which the acquisition is proposed,
(b) the parent undertaking of a credit institution, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or in a sector other than that in which the acquisition is proposed, or
(c) a natural or legal person controlling a credit institution, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or in a sector other than that in which the acquisition is proposed.
(2) The Bank shall, without undue delay, provide competent authorities in other Member States with any information that is essential or relevant for the assessment of a proposed acquisition. The Bank shall communicate all relevant information upon request and all essential information on its own initiative.
(3) A decision by the Bank, in the case of a proposed acquisition in a credit institution authorised by the Bank, shall indicate any views or reservations expressed by the competent authorities responsible for the proposed acquirer concerned.
(4) In this Regulation, “reinsurance undertaking” has the meaning assigned to it in point (6) of Article 4(1) of the Capital Requirements Regulation.
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paragraphs: The Bank may fix a maximum period within which a proposed acquisition shall be concluded, and may extend such period where appropriate.
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paragraphs: (1) Where, on completing the assessment of a proposed acquisition, the Bank decides to oppose it, the Bank shall, within 2 working days, but before the end of the assessment period, so inform the proposed acquirer concerned in writing and give reasons for that decision.
(2) Subject to any other law, the Bank shall publish an appropriate statement of the reasons for the decision if the proposed acquirer concerned so requests. The Bank may in its discretion publish such a statement even without any request by the proposed acquirer.
(3) Where the Bank does not give notice in writing within the assessment period in relation to a proposed acquisition that it opposes the acquisition, the acquisition is deemed to have been approved.
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paragraphs: The Bank may oppose a proposed acquisition only if—
(a) there are reasonable grounds for doing so on the basis of the criteria in paragraphs (1) and (2) of Regulation 15,
(b) the information provided by the proposed acquirer concerned in its notification under paragraph (1) or (2) of Regulation 10 is incomplete, or
(c) the proposed acquirer has not provided information in response to a request under paragraph (5) or (9) of Regulation 14.
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paragraphs: A decision by the Bank to oppose a proposed acquisition is an appealable decision for the purposes of Part VIIA of the Act of 1942.
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paragraphs: (1) The proposed acquirer may conclude a proposed acquisition only where—
(a) the proposed acquirer has notified the Bank of the acquisition in accordance with paragraph (1) or (2) of Regulation 10,
(b) the Bank has acknowledged that notification, in accordance with Regulation 14(1), and
(c) either—
(i) the assessment period in relation to the acquisition has ended and the Bank has not notified the proposed acquirer that it opposes the acquisition, or
(ii) the Bank has notified the proposed acquirer that it does not oppose the acquisition.
(2) Where an acquisition is made other than in accordance with paragraph (1) any exercise of voting rights based on the acquisition of the holding concerned is suspended.
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paragraphs: If a transaction is both a proposed acquisition and a compromise or arrangement for the purposes of sections 201 and 202 of the Companies Act 1963 (No. 33 of 1963), the court shall not make an order under section 201 of that Act in relation to the transaction until after the end of the period of assessment in relation to the transaction under Regulation 14.
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paragraphs: A credit institution admitted to trading on a regulated market shall, at times specified by the Bank and at least once a year, notify the Bank of the names of shareholders or members who have qualifying holdings and the size of each such holding.
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paragraphs: (1) Where the Bank has reason to believe that a proposed acquirer is exercising an influence on the direction of the affairs of the credit institution which is, or is likely to be, detrimental to the prudent and sound management of the credit institution, it shall, subject to paragraph (2), notify the persons that it so believes and direct the persons in writing to take specified measures to bring that influence to an end within a specified period.
(2) Before issuing a direction under paragraph (1), the Bank shall notify the persons concerned of its intention to issue the direction and shall give the persons an opportunity to make such representations on the matter as they may wish to make within a period specified by the Bank in the notification.
(3) A direction issued under paragraph (1) is an appealable decision for the purposes of Part VIIA of the Act of 1942.
(4) Where the Bank is of the opinion that a direction under paragraph (1) has not been complied with by the persons concerned, or has not been complied with within the specified period of time, the Bank may, without prejudice to any of its other functions, do any one or more of the following:
(a) issue a direction to the credit institution concerned under section 21 (as amended by the Central Bank and Financial Services Authority of Ireland Act 2004 (No. 21 of 2004)) of the Act of 1971 (and for that purpose the references in that section to ‘holder of a licence’ and ‘holder’ shall be read as a reference to a credit institution and the references to ‘banking business’ and ‘banking’ shall be read as references to the taking of deposits or granting of credit by a credit institution) or section 45 of the Act of 2013;
(b) apply to the court in a summary manner—
(i) for an injunction prohibiting the persons concerned from issuing directions to directors or to any manager, secretary, officer or staff of, or persons engaged by, the credit institution and prohibiting any director, manager, secretary, officer or staff, or any other person acting on behalf of the credit institution from seeking directions from, or consulting, the persons concerned, or from acting on such directions without the consent of the Bank,
(ii) to suspend the exercise by the persons concerned of any interest in or voting rights attaching to shares held by those persons in the credit institution concerned,
(iii) for an order from the court requiring the persons concerned to dispose of some or all of their shareholdings, interests or rights in the credit institution within a period specified by the court, or
(iv) for such other order as the court considers appropriate.
(5) Where the court is satisfied that it is desirable, because of the nature or the circumstances of the case, or having regard to the interests of justice, then the whole or any part of proceedings before it under this Regulation may be heard otherwise than in public.
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paragraphs: (1) In determining whether the criteria for a qualifying holding as referred to in—
(a) Regulation 10(1) and (2),
(b) Regulation 12,
(c) Regulation 13, and
(d) Regulation 23,
(2) In determining whether the criteria for a qualifying holding as referred to in Regulations 13 and 23 are fulfilled, voting rights or shares which institutions may hold as a result of providing the underwriting of financial instruments or placing of financial instruments on a firm commitment basis included under point 6 of Section A of Annex I to Directive 2004/39/EC shall not be taken into account, provided that those rights are not exercised or otherwise used to intervene in the management of the issuer and are disposed of within one year of acquisition.
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paragraphs: (1) Initial capital, in respect of—
(a) investment firms,
(b) local firms, and
(c) firms referred to in subparagraph (2)(c) of Article 4(1) of the Capital Requirements Regulation,
(2) Investment firms, other than those referred to in Regulation 27, shall have initial capital of €730,000.
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paragraphs: (1) Where an investment firm does not deal in any financial instruments for its own account or underwrite issues of financial instruments on a firm commitment basis, but—
(a) holds client moneys or securities, and
(b) offers one or more of the services in paragraph (3),
(2) Where an investment firm is not authorised in respect of one, or more, of the following:
(a) to hold client money or securities;
(b) to deal for its own account;
(c) to underwrite issues on a firm commitment basis;
(3) The services referred to in paragraph (1)(b) are the following:
(a) the reception and transmission of investors’ orders for financial instruments;
(b) the execution of investors’ orders for financial instruments;
(c) the management of individual portfolios of investments in financial instruments.
(4) The Bank may allow an investment firm which executes investors’ orders for financial instruments to hold such instruments for its own account where the following conditions are met:
(a) such positions arise only as a result of the firms failure to match investors’ orders precisely;
(b) the total market value of all such positions is subject to a maximum holding of 15 per cent of the firms initial capital;
(c) the firm meets the requirements in Articles 92 to 95, and Part 4, of the Capital Requirements Regulation;
(d) such positions are incidental and provisional in nature and strictly limited to the time required to carry out the relevant transaction.
(5) The holding of non-trading-book positions in financial instruments in order to invest own funds shall not be considered as dealing for its own account for the purposes of paragraphs (1) and (2).
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paragraphs: Local firms shall have initial capital of €50,000 where they benefit from—
(a) the freedom to provide services or activities, or
(b) the freedom of establishment,
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paragraphs: (1) Firms referred to in subparagraph (2)(c) of Article 4(1) of the Capital Requirements Regulation shall hold one of the following:
(a) initial capital of €50,000;
(b) professional indemnity insurance covering the whole territory of the European Union or some other comparable guarantee against liability arising from professional negligence, with minimum cover of not less than €1,000,000 in respect of each such claim and, in the aggregate, of not less than €1,500,000 for all such claims in any calendar year;
(c) a combination of initial capital and professional indemnity insurance in a form resulting in a level of coverage equivalent to that referred to in subparagraph (a) or (b).
(2) Where a firm referred to in subparagraph (2)(c) of Article 4(1) of the Capital Requirements Regulation is also registered under the European Communities (Insurance Mediation) Regulations 2005 ( S.I. No. 13 of 2005 ), it shall comply with Regulation 17 of those Regulations, and have coverage in one of the following forms:
(a) initial capital of €25,000;
(b) professional indemnity insurance covering the whole territory of the European Union or some other comparable guarantee against liability arising from professional negligence of not less than €500,000 in respect of each such claim and, in the aggregate, of not less than €750,000 for all such claims in any year;
(c) a combination of initial capital and professional indemnity insurance in a form resulting in a level of coverage equivalent to that referred to in subparagraph (a) or (b).
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paragraphs: The own funds of investment firms and firms covered by Regulation 28 shall not fall below the levels specified in Regulation 26, 27 (1) or (2), 28 or 31(2) or (5), as applicable.
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paragraphs: (1) Notwithstanding Regulations 26(2), 27(1) and (2), and 28, existing investment firms, and firms referred to in Regulation 28, which were in existence on or before 31 December 1995 which have own funds, subject to paragraph (2), less than the initial capital levels specified for them in Regulations 26(2), 27(1) or (2) or 28 shall continue to be authorised.
(2) The own funds of firms referred to in paragraph (1), shall not fall below the highest reference level calculated after 23 March 1993 where that reference level shall be the average daily level of own funds calculated over a six-month period preceding the date of calculation, which shall be calculated every 6 months in respect of the corresponding preceding period.
(3) Where control of an investment firm, or a firm referred to in Regulation 28, is taken by a person other than the person who controlled it on or before 31 December 1995, the own funds of that investment firm, or firm referred to in Regulation 28, shall attain at least the level specified for them in Regulation 26(2), 27(1) or (2), or 28, except in the case of a first transfer by inheritance made after 31 December 1995, subject to the approval of the Bank and for a period of not more than 10 years from the date of that transfer.
(4) Where there is a merger of—
(a)2 or more investment firms,
(b)2 or more firms of the type referred to in Regulation 28, or
(c) a combination of investment firms and firms referred to in Regulation 28,
(5) Where, during any period, the level specified in Regulation 26(2), 27(1) or (2), or 28 has not been attained, the own funds of the firm resulting from a merger specified in paragraph (4) shall not fall below the total own funds of the merged firms at the time of the merger.
(6) Where the Bank considers it necessary to ensure the solvency of firms referred to in paragraph (1), that such firms should have own funds of not less than the initial capital levels specified for them in Regulations 26(2), 27(1) or (2), or 28, paragraphs (1) to (5) shall not apply.
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paragraphs: (1) A credit institution authorised and supervised by the competent authorities of another Member State may carry on business within the State by establishing a branch or any other means in any one or more of the activities set out in the Schedule provided that the undertaking or provision of these activities is in accordance with the authorisation of the credit institution in that Member State and the requirements of—
(a) Regulation 34(1) and (2),
(b) Regulation 35,
(c) Regulation 38(1) and (2), and
(d) Chapter 4 of Part 5,