European Union (Capital Requirements) (Amendment) Regulations 2020.
Statutory Instruments
Source: Statutory Instruments

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paragraphs: (1) These Regulations may be cited as the European Union (Capital Requirements) (Amendment) Regulations 2020.
(2) Subject to paragraphs (3) and (4), these Regulations come into operation on 29 December 2020.
(3) Regulation 18 and paragraphs (b), (c) and (d) of Regulation 26 come into operation on 28 June 2021.
(4) Regulations 53 (in so far as it relates to the insertion of Regulations 129B and 129C into the Principal Regulations) and 54 come into operation on 1 January 2022.
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paragraphs: In these Regulations, “Principal Regulations” means the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ).
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paragraphs: Regulation 2 of the Principal Regulations is amended—
(a) in paragraph (5)—
(i) in subparagraph (a), by the substitution of “Directive 2014/65/EU” for “Directive 2004/39/EC”,
(ii) in paragraph (d), by the substitution of “friendly societies;” for “friendly societies.”, and
(iii) by the insertion of the following paragraph after paragraph (d):
“(e) the Strategic Banking Corporation of Ireland.”, and
(b) in paragraph (6), by the substitution of “paragraph (5)(a), (c), (d) and (e)” for “paragraph (5)(a), (c) and (d)”,
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paragraphs: Regulation 3 of the Principal Regulations is amended—
(a) in paragraph (1)—
(i) by the insertion of the following definitions:
“ ‘gender neutral remuneration policy’ means a remuneration policy based on equal pay for male and female workers for equal work or work of equal value;
‘group’ has the meaning assigned to it in point (138) of Article 4(1) of the Capital Requirements Regulation;
‘non-EU G-SII’ has the meaning assigned to it in point (134) of Article 4(1) of the Capital Requirements Regulation;
‘resolution authority’ has the meaning assigned to it in the European Union (Bank Recovery and Resolution) Regulations 2015 ( S.I. No. 289 of 2015 );
‘third-country group’ means a group of which the parent undertaking is established in a third country;”,
(ii) by the substitution of the following definition for the definition of “authorisation”:
“ ‘authorisation’, in relation to a credit institution in the State, means an authorisation or licence by the Bank or the ECB to carry on the business of a credit institution in accordance with the provisions of any financial services legislation, other than an authorisation granted under section 9A of the Act of 1971;”,
(iii) by the substitution of the following definition for the definition of “Capital Requirements Directive”:
“‘Capital Requirements Directive’ means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 20133 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, as amended by—
(a) Directive 2014/17/EU of the European Parliament and of the Council of 4 February 20144 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010,
(b) Directive 2014/59/EU of the European Parliament and of the Council of 15 May 20145 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council,
(c) Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 20156 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC,
(d) Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 20187 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU, and
(e) Directive (EU) 2019/878 of the European Parliament and of the Council of 20 May 20198 amending Directive 2013/36/EU as regards exempted entities, financial holding companies, mixed financial holding companies, remuneration, supervisory measures and powers and capital conservation measures;”, and
(iv) by the substitution of the following definition for the definition of “G-SII”:
“ ‘G-SII’ has the meaning assigned to it in point (133) of Article 4(1) of the Capital Requirements Regulation;”, and
(b) by the insertion of the following paragraph after paragraph (2):
“(3) A reference in these Regulations to ‘institution’, ‘parent institution in a Member State’, ‘EU parent institution’ or ‘parent undertaking’ shall include a reference to the following:
(a) financial holding companies and mixed financial holding companies that have been granted approval in accordance with Chapter 1A of Part 3 or the law of a Member State other than the State giving effect to Article 21a of the Capital Requirements Directive;
(b) designated institutions controlled by an EU parent financial holding company, an EU parent mixed financial holding company, a parent financial holding company in a Member State or a parent mixed financial holding company in a Member State where the relevant parent is not subject to approval in accordance with Regulation 9D or the law of a Member State other than the State giving effect to Article 21a(4) of the Capital Requirements Directive;
(c) financial holding companies, mixed financial holding companies or institutions designated pursuant to Regulation 9F or the law of a Member State other than the State giving effect to point (d) of Article 21a(6) of the Capital Requirements Directive.”.
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paragraphs: Part 3 of the Principal Regulations is amended by the insertion of the following Chapters after Chapter 1:
9A. (1) Subject to Regulation 9D, the following shall make an application for approval in accordance with this Chapter:
(a) a parent financial holding company established in the State;
(b) a parent mixed financial holding company established in the State;
(c) an EU parent financial holding company established in the State;
(d) an EU parent mixed financial holding company established in the State.
(2) Subject to Regulation 9D, where a financial holding company or mixed financial holding company established in the State that is not referred to in paragraph (1) is required to comply with these Regulations or the Capital Requirements Regulation on a sub-consolidated basis, it shall seek approval in accordance with this Chapter.
(3) A financial holding company or mixed financial holding company making an application for approval in accordance with this Chapter shall provide the consolidating supervisor and, where different, the Bank with the following information when making the application:
(a) the structural organisation of the group of which the financial holding company or the mixed financial holding company, as the case may be, is part, with a clear indication of its subsidiaries and, where applicable, parent undertakings, and the location and type of activity undertaken by each of the entities within the group;
(b) information regarding—
(i) the nomination of at least two persons effectively directing the financial holding company or mixed financial holding company, as the case may be, and
(ii) compliance with the requirements under Regulation 109 in relation to the qualification of directors;
(c) information regarding compliance with the criteria specified in Regulation 9C(3), where the financial holding company or mixed financial holding company has a credit institution as its subsidiary;
(d) the internal organisation and distribution of tasks within the group;
(e) any other information that may be necessary to carry out the assessments referred to in Regulations 9C and 9D.
9B. (1) Where—
(a) the approval of a financial holding company or mixed financial holding company takes place concurrently with an assessment by the Bank under Regulation 15 of an acquisition by that financial holding company or mixed financial holding company, as the case may be, and
(b) the Bank is neither—
(i) the consolidating supervisor in respect of the financial holding company or the mixed financial holding company, as the case may be, nor
(ii) the competent authority in the Member State in which the financial holding company or the mixed financial holding company, as the case may be, is established,
the Bank shall coordinate, as appropriate, with the consolidating supervisor and, where different, the competent authority in the Member State where the financial holding company or mixed financial holding company, as the case may be, is established.
(2) Where paragraph (1) applies, the assessment period referred to in Regulation 14(3) shall be suspended until the later of—
(a) the date that is 20 working days from the date on which paragraph (1) first applies, and
(b) the date on which the procedure for approval under this Chapter is complete.
9C. (1) The Bank may grant approval to a financial holding company or mixed financial holding company only where all of the following conditions are satisfied:
(a) the internal arrangements and distribution of tasks within the group of which the financial holding company or mixed financial holding company, as the case may be, is part are adequate for the purpose of complying with the requirements under these Regulations and the Capital Requirements Regulation on a consolidated or sub-consolidated basis and, in particular, are effective to—
(i) coordinate all the subsidiaries of the financial holding company or mixed financial holding company, as the case may be, including, where necessary, through an adequate distribution of tasks among subsidiary institutions,
(ii) prevent or manage intra-group conflicts, and
(iii) enforce the group-wide policies set by the parent financial holding company or parent mixed financial holding company, as the case may be, throughout the group;
(b) the structural organisation of the group does not obstruct or otherwise prevent the effective supervision of the subsidiary institutions or parent institutions as concerns the individual, consolidated and, where appropriate, sub-consolidated obligations under these Regulations and the Capital Requirements Regulation to which they are subject;
(c) the Bank is satisfied, having regard to the criteria specified in paragraph (3), as to the suitability of the shareholders or members of the financial holding company or mixed financial holding company, as the case may be;
(d) the obligations under Regulation 109 are complied with.
(2) In assessing whether the condition specified in paragraph (1)(b) is satisfied, the Bank shall take into account, in particular—
(a) the position of the financial holding company or mixed financial holding company in a multi-layered group,
(b) the shareholding structure of the group, and
(c) the role of the financial holding company or mixed financial holding company, as the case may be, within the group.
(3) The criteria referred to in paragraph (1)(c) are as follows:
(a) the reputation of the shareholders or members of the financial holding company or mixed financial holding company, as the case may be;
(b) the reputation, knowledge, skills and experience, as specified in Regulation 79, of any member of the management body who will direct the business of the shareholders or members of the financial holding company or mixed financial holding company, as the case may be;
(c) the financial soundness of the financial holding company or mixed financial holding company, as the case may be, in particular in relation to the type of business pursued and envisaged in the financial holding company or mixed financial holding company, as the case may be;
(d) whether the financial holding company or mixed financial holding company, as the case may be, will be able to comply and continue to comply with the prudential requirements of these Regulations and the Capital Requirements Regulation, and where applicable, other European Union law, in particular Directive 2002/87/EC of the European Parliament and of the Council of 16 December 20029 and Directive 2009/110/EC of the European Parliament and of the Council of 16 September 200910 , including, where applicable, whether the group of which it is a part has a structure that makes it possible to exercise effective supervision, effectively exchange information among the competent authorities of relevant Member States and determine the allocation of responsibilities among the competent authorities of relevant Member States;
(e) whether there are reasonable grounds to suspect that, in connection with the proposed authorisation, 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 200511 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, is being or has been committed or attempted, or that the proposed authorisation could increase the risk thereof.
(4) Where the Bank grants approval to a financial holding company or mixed financial holding company pursuant to this Regulation, that financial holding company or mixed financial holding company, as the case may be, shall comply with the conditions specified in paragraph (1) on an ongoing basis.
(5) Where approval of a financial holding company or mixed financial holding company pursuant to this Regulation is refused, and the Bank is the consolidating supervisor, the Bank shall notify the applicant of the decision and the reasons therefor within four months of receipt of the application, or where the application is incomplete, within four months of receipt of the complete information required for the decision.
(6) A decision under this Regulation to grant or refuse approval shall be taken within six months of receipt of the application for approval.
(7) Where an application for approval is refused, the Bank may impose a supervisory measure referred to in Regulation 9F.
Exemption
9D. (1) The Bank shall exempt a financial holding company or mixed financial holding company from the requirement to make an application for approval under this Chapter where all of the following conditions are satisfied:
(a) the financial holding company’s principal activity is the acquisition of holdings in subsidiaries or, in the case of a mixed financial holding company, its principal activity with respect to institutions or financial institutions is to acquire holdings in subsidiaries;
(b) the financial holding company or mixed financial holding company, as the case may be, has not been designated as a resolution entity in any of the resolution groups of the group concerned in accordance with the resolution strategy determined by the relevant resolution authority in accordance with Directive 2014/59/EU;
(c) a subsidiary credit institution is designated as responsible for ensuring the group’s compliance with prudential requirements on a consolidated basis and is given all the necessary means and legal authority to discharge those obligations in an effective manner;
(d) the financial holding company or mixed financial holding company, as the case may be, does not engage in taking management, operational or financial decisions affecting the group or its subsidiaries that are institutions or financial institutions;
(e) there is no impediment to the effective supervision of the group on a consolidated basis.
(2) Where the Bank exempts a financial holding company or mixed financial holding company from the requirement to make an application for approval under this Regulation, that financial holding company or mixed financial holding company, as the case may be, shall comply with the conditions specified in paragraph (1) on an ongoing basis.
(3) The exemption of a financial holding company or mixed financial holding company from the requirement to make an application for approval in accordance with paragraph (1), shall not exclude it from consolidation in accordance with these Regulations and the Capital Requirements Regulation.
(4) Where the Bank is the consolidating supervisor in respect of a financial holding company or mixed financial holding company and has established that the conditions set out in paragraph (1) are no longer satisfied by that financial holding company or mixed financial holding company, as the case may be—
(a) the Bank shall notify the financial holding company or mixed financial holding company, as the case may be, that the Bank has so established, and
(b) the financial holding company or mixed financial holding company, as the case may be, shall seek approval in accordance with this Chapter.
Monitoring
9E. (1) Where the Bank is the consolidating supervisor in respect of a financial holding company or mixed financial holding company, it shall monitor compliance by that financial holding company or mixed financial holding company, as the case may be, with the conditions specified in Regulation 9C(1) or, where applicable, Regulation 9D(1) on an ongoing basis.
(2) Financial holding companies and mixed financial holding companies shall provide the consolidating supervisor with the information required to monitor on an ongoing basis the structural organisation of the group and compliance with the conditions specified in Regulation 9C(1) or, where applicable, Regulation 9D(1).
(3) Where the Bank is the consolidating supervisor in respect of a financial holding company or mixed financial holding company that is not established in the State, the Bank shall share information provided to it in accordance with the law of a Member State giving effect to Article 21a(5) of the Capital Requirements Directive with the competent authority in the Member State where the financial holding company or the mixed financial holding company is established.
Supervisory measures
9F. (1) Where the Bank is the consolidating supervisor in respect of a financial holding company or mixed financial holding company and has established that the conditions specified in Regulation 9C(1) are not satisfied or have ceased to be satisfied, the Bank may impose on the financial holding company or mixed financial holding company, as the case may be, supervisory measures, as specified in paragraph (3) for the purpose of this paragraph, appropriate to—
(a) ensure or restore, as the case may be, the continuity and integrity of consolidated supervision, and
(b) ensure compliance with the requirements under these Regulations and the Capital Requirements Regulation on a consolidated basis.
(2) In the case of a mixed financial holding company, the Bank, when determining the supervisory measures to impose under paragraph (3), shall, in particular, take into account the effects those measures would, if imposed, have on the financial conglomerate concerned.
(3) The following supervisory measures are specified for the purpose of paragraph (1):
(a) suspending the exercise of voting rights attached to the shares of the subsidiary institutions held by the financial holding company or mixed financial holding company;
(b) giving instructions or directions to the financial holding company or mixed financial holding company, as the case may be, to transfer to its shareholders the participations in its subsidiary institutions;
(c) designating on a temporary basis another financial holding company, mixed financial holding company, as the case may be, or institution within the group as responsible for ensuring compliance with the requirements under these Regulations and in the Capital Requirements Regulation on a consolidated basis;
(d) restricting or prohibiting distributions or interest payments to shareholders;
(e) requiring the financial holding company or mixed financial holding company, as the case may be, to divest from or reduce holdings in institutions or other financial sector entities;
(f) requiring the financial holding company or mixed financial holding company, as the case may be, to submit a plan on return, without delay, to compliance with the conditions specified in Regulation 9C(1).
Cooperation with other authorities: non-financial conglomerates
9G. (1) This paragraph applies where—
(a) the consolidating supervisor in respect of a financial holding company or a mixed financial holding company is different from the competent authority in the Member State where the financial holding company or the mixed financial holding company, as the case may be, is established,
(b) the Bank is that consolidating supervisor or competent authority, and
(c) a decision is required in respect of the financial holding company or a mixed financial holding company, as the case may be, under Regulation 9C(1), Regulation 9D(1) or (4) or Regulation 9F(1).
(2) Where paragraph (1) applies, the Bank shall work together in full consultation with the other relevant authority, for the purpose of taking a decision under Regulation 9C(1), Regulation 9D(1) or (4) or Regulation 9F(1), as the case may be.
(3) Where paragraph (1) applies and the Bank is the consolidating supervisor, the Bank shall prepare an assessment on the matter referred to in Regulation 9C(1), Regulation 9D(1) or (4) or Regulation 9F(1), as the case may be, and shall send that assessment to the other relevant authority.
(4) Where paragraph (1) applies, the Bank and the other relevant authority shall do everything within their powers to reach a joint decision on the matter referred to in Regulation 9C(1), Regulation 9D(1) or (4) or Regulation 9F(1), as the case may be, within two months of receipt by the competent authority of the assessment referred to in paragraph (3), or where the Bank is the competent authority, receipt by it of an equivalent assessment prepared under the law of the Member State in which the consolidating supervisor is established giving effect to the second sentence of Article 8 of the Capital Requirements Directive.
(5) A joint decision referred to in paragraph (4) shall be duly documented and reasoned.
(6) Where paragraph (1) applies and the Bank is the consolidating supervisor, the Bank shall communicate the joint decision on the matter referred to in Regulation 9C(1), Regulation 9D(1) or (4) or Regulation 9F(1), as the case may be, to the financial holding company or mixed financial holding company, as the case may be.
(7) Where paragraph (1) applies and there is disagreement between the Bank and the other relevant authority on the matter referred to in Regulation 9C(1), Regulation 9D(1) or (4) or Regulation 9F(1), as the case may be, they shall refrain from taking a decision and shall refer the matter to EBA in accordance with Article 19 of Regulation (EU) No 1093/2010.
(8) The Bank and the other relevant authority shall adopt a joint decision in conformity with the decision of EBA.
(9) A disagreement shall not be referred to EBA under paragraph (7) after the end of the 2-month period referred to in point (b) of point (ii) of paragraph (1a) of Article 19 of Regulation (EU) No 1093/2010 or after a joint decision has been reached between the Bank and the other relevant authority.
(10) In this Regulation, “relevant authority” means the consolidating supervisor in respect of a financial holding company or a mixed financial holding company or the competent authority in the Member State where the financial holding company or the mixed financial holding company, as the case may be, is established.
Cooperation: financial conglomerates
9H. (1) This paragraph applies where—
(a) the consolidating supervisor in respect of a mixed financial holding company or the competent authority in the Member State where the mixed financial holding company is established is different from the coordinator determined in accordance with Article 10 of Directive 2002/87/EC (in this Regulation referred to as the “coordinator”), and
(b) the Bank is that consolidating supervisor, competent authority or coordinator.
(2) Where paragraph (1) applies, the agreement of the coordinator shall be required for the purposes of decisions or joint decisions referred to in Regulation 9C(1), Regulation 9D(1) or (4), Regulation 9F(1) and Regulation 9G(4).
(3) In the event of a disagreement in relation to a decision or joint decision referred to in Regulation 9C(1), Regulation 9D(1) or (4), Regulation 9F(1) or Regulation 9G(4) between the Bank and the consolidating supervisor, competent authority or coordinator, as the case may be, the matter shall be referred to the relevant European Supervisory Authority, namely, EBA or the European Supervisory Authority (European Insurance and Occupational Pensions Authority) (EIOPA), established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 201012 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC.
(4) Any decision taken in accordance with paragraph (2) shall be without prejudice to obligations under Directive 2002/87/EC or 2009/138/EC.
Intermediate EU parent undertakings
9I. (1) Subject to paragraphs (2) and (9), where—
(a) two or more institutions established in the European Union are part of the same third-country group, and
(b) one or more of those institutions is established in the State,
the institutions referred to in paragraph (a) shall have a single intermediate EU parent undertaking that is established in the European Union.
(2) Where the Bank, as competent authority for the institutions referred to in paragraph (1)(a) and the other competent authorities, if any, for such institutions, determine that the establishment of a single intermediate EU parent undertaking would—
(a) be incompatible with a mandatory requirement for the separation of activities imposed by the rules or supervisory authorities of the third country where the ultimate parent undertaking of the third-country group has its head office, or
(b) render resolvability less efficient than in the case of two intermediate EU parent undertakings according to an assessment carried out by the competent resolution authority of the intermediate EU parent undertaking,
those institutions may have two intermediate EU parent undertakings where so permitted by the Bank and those other competent authorities, if any.
(3) Subject to paragraph (4), an intermediate EU parent undertaking shall be—
(a) a credit institution authorised in accordance with section 9 of the Act of 1971, section 17 of the Act of 1989 or the law of a Member State other than the State giving effect to Article 8 of the Capital Requirements Directive,
(b) a financial holding company that has been granted approval in accordance with Chapter 1A or the law of a Member State other than the State giving effect to Article 21a of the Capital Requirements Directive, or
(c) a mixed financial holding company that has been granted approval in accordance with Chapter 1A or the law of a Member State other than the State giving effect to Article 21a of the Capital Requirements Directive.
(4) Where—
(a) the institutions referred to in paragraph (1) are not credit institutions, or
(b) a second intermediate EU parent undertaking must be set up in connection with investment activities to comply with a mandatory requirement referred to in paragraph (2),
the intermediate EU parent undertaking or the second intermediate EU parent undertaking, as the case may be, may be an investment firm authorised in accordance with Article 5(1) of Directive 2014/65/EU that is subject to the Bank Recovery and Resolution Directive.
(5) Paragraphs (1), (2), (3) and (4) shall not apply where the total value of assets in the European Union of the third-country group is less than €40,000,000,000.
(6) For the purposes of this Regulation, the total value of assets in the European Union of a third-country group shall be the sum of—
(a) the total value of assets of each institution in the European Union in the third-country group, as resulting from its consolidated balance sheet or as resulting from their individual balance sheet, where an institution’s balance sheet is not consolidated, and
(b) the total value of assets of each branch of the third-country group authorised in the European Union in accordance with the Capital Requirements Directive, Directive 2014/65/EU or Regulation (EU) No 600/2014.
(7) The Bank shall notify the following information in respect of each third-country group operating in the State to the EBA:
(a) the names and the total value of assets of supervised institutions belonging to the third-country group;
(b) the names of, and the total value of assets corresponding to, branches authorised in the State in accordance with section 9A of the Act of 1971, Regulation 50 of the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No. 375 of 2017) or Regulation (EU) No 600/2014, and the types of activities that they are authorised to carry out;
(c) the name and the type, as referred to in paragraph (3), of any intermediate EU parent undertaking established in the State and the name of the third-country group of which it is part.
(8) An institution established in the State which is part of a third-country group shall meet one of the following conditions:
(a) the institution has an intermediate EU parent undertaking;
(b) the institution is an intermediate EU parent undertaking;
(c) the institution is the only institution established in the European Union which is part of the third-country group;
(d) the third-country group has a total value of assets in the European Union of less than €40,000,000,000.
(9) Where a third-country group operating through more than one institution in the European Union has a total value of assets in the Union equal to or greater than €40,000,000,000 on 27 June 2019, the institutions in that group shall not be required to have—
(a) an intermediate EU parent undertaking, or
(b) in a case in which paragraph (2) applies, two intermediate EU parent undertakings,
until 30 December 2023.
(10) In this Regulation, “Regulation (EU) No 600/2014” means Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 201413 on markets in financial instruments and amending Regulation (EU) No 648/2012 as amended by—
(a) Regulation (EU) 2016/1033 of the European Parliament and of the Council of 23 June 201614 amending Regulation (EU) No 600/2014 on markets in financial instruments, Regulation (EU) No 596/2014 on market abuse and Regulation (EU) No 909/2014 on improving securities settlement in the European Union and on central securities depositories, and
(b) Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 201915 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014.”.
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paragraphs: Regulation 15(2)(b) of the Principal Regulations is amended by the substitution of the following clause for clause (ii):
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paragraphs: Regulation 24 of the Principal Regulations is amended by the deletion of paragraph (3).
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paragraphs: Regulation 33 of the Principal Regulations is amended by the deletion of paragraph (7).
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paragraphs: Regulation 40 of the Principal Regulations is amended by the deletion of paragraph (6).
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paragraphs: Regulation 42 of the Principal Regulations is amended by the deletion of paragraph (8).
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paragraphs: The Principal Regulations are amended by the insertion of the following Regulations after Regulation 50:
50A. (1) Notwithstanding section 33AK of the Act of 1942, the Bank and the authorities described in paragraph (2) may exchange information, subject to the conditions set out in paragraph (3).
(2) The authorities referred to in paragraph (1) are the authorities responsible in the State for the oversight of—
(a) persons involved in the liquidation, examinership, receivership or bankruptcy of institutions,
(b) contractual or institutional protection schemes, as referred to in Article 113(7) of the Capital Requirements Regulation, or
(c) auditors of institutions, insurance undertakings and financial institutions.
(3) The Bank and an authority described in paragraph (2) may only exchange information where the following conditions are satisfied:
(a) the information is exchanged for the purpose of an oversight function referred to in paragraph (2);
(b) the information received is subject to professional secrecy requirements at least equivalent to those referred to in Article 53(1) of the Capital Requirements Directive;
(c) where the information originates in another Member State, that it is not disclosed without the express agreement of the competent authorities which have disclosed it and, where appropriate, solely for the purposes for which those authorities gave their agreement.
(4) Notwithstanding section 33AK of the Act of 1942, the Bank, the Director of Corporate Enforcement and an officer of the Director may exchange information, subject to the conditions set out in paragraph (5).
(5) The Bank, the Director of Corporate Enforcement and an officer of the Director may only exchange information where the following conditions are satisfied:
(a) the information is exchanged for the purpose of detecting and investigating breaches of company law;
(b) the information received is subject to professional secrecy requirements at least equivalent to those referred to in Article 53(1) of the Capital Requirements Directive;
(c) where the information originates in another Member State, that it is not disclosed without the express agreement of the competent authorities which have disclosed it and, where appropriate, solely for the purposes for which those authorities gave their agreement.
(6) The Bank shall communicate to the European Banking Authority the names of the authorities and bodies which may receive information under this Regulation.
50B. (1) Notwithstanding section 33AK of the Act of 1942, the Bank may, subject to the conditions set out in paragraphs (2), (3) and (4), disclose information to—
(a) the International Monetary Fund and the World Bank, for the purposes of assessments for the Financial Sector Assessment Program,
(b) the Bank for International Settlements, for the purposes of quantitative impact studies, and
(c) the Financial Stability Board, for the purposes of its surveillance function.
(2) The Bank may only disclose confidential information following an explicit request by a body referred to in paragraph (1), where the following conditions are satisfied:
(a) the request is duly justified in light of the specific tasks performed by the requesting body in accordance with its statutory mandate;
(b) the request is sufficiently precise as to the nature, scope, and format of the required information, and the means of its disclosure;
(c) the requested information is strictly necessary for the performance of the specific tasks of the requesting body and does not go beyond the statutory tasks conferred on the requesting body;
(d) the information is disclosed exclusively to the persons directly involved in the performance of the specific task;
(e) the persons having access to the information are subject to professional secrecy requirements at least equivalent to those referred to in Article 53(1) of the Capital Requirements Directive.
(3) Where a request is made by a body referred to in paragraph (1), the Bank may only disclose information that is not aggregate or anonymised information at the premises of the Bank.
(4) To the extent that the disclosure of information involves processing of personal data, any processing of personal data by the requesting body shall comply with the requirements laid down in Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 201616 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC.”.
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paragraphs: The Principal Regulations are amended by the insertion of the following Regulations after Regulation 52:
52A. (1) Where the Bank has formed the view that an auditor of an institution, financial holding company or mixed financial holding company has failed to comply with paragraph (1) or (2) of Regulation 52, the Bank may issue a notice (in this Part referred to as a ‘removal notice’).
(2) A removal notice shall—
(a) be in writing,
(b) set out the grounds on which the Bank has formed the view that the auditor has failed to comply with paragraph (1) or (2) of Regulation 52,
(c) invite submissions from the auditor within 21 days of the date on which the notice is served on the auditor,
(d) include such additional matters (if any) as the Bank considers appropriate, and
(e) be served on the auditor and the institution, financial holding company or mixed financial holding company concerned.
(3) A removal notice may be served by the Bank on an auditor and on the institution, financial holding company or mixed financial holding company concerned—
(a) by delivering it to the auditor, institution, financial holding company or mixed financial holding company, as the case may be,
(b) by leaving it at the address at which the auditor ordinarily resides or, in a case in which an address for service has been furnished by the auditor, institution, financial holding company or mixed financial holding company, as the case may be, at that address,
(c) by sending it by post in a prepaid letter to the address at which the auditor ordinarily resides or, in a case in which an address for service has been furnished by the auditor, institution, financial holding company or mixed financial holding company, as the case may be, to that address, or
(d) electronically—
(i) by electronic mail to an email address, or
(ii) by facsimile to a facsimile number,
furnished by the auditor, institution, financial holding company or mixed financial holding company, as the case may be, to, or otherwise known to, the Bank.
(4) The Bank shall consider the submissions (if any) made to it on foot of the removal notice issued under paragraph (1), and any other relevant factual information, prior to determining whether to apply to the court for a removal order under Regulation 52B.
52B. (1) The Bank may apply to the court for an order (in this Regulation and Regulation 52C referred to as a ‘removal order’) requiring the institution, financial holding company or mixed financial holding company to—
(a) remove the auditor concerned, and
(b) appoint a replacement auditor.
(2) The application for a removal order referred to in paragraph (1) shall be made on notice to the auditor concerned and the institution, financial holding company or mixed financial holding company concerned.
(3) Where the court makes a removal order referred to in paragraph 1, the removal order—
(a) shall have effect without the need for any meeting being called, resolution being passed or consent being obtained, and
(b) may be expressed to take effect immediately and, if so expressed, has that effect.
52C. Nothing in Regulation 52A or 52B deprives an auditor of any right to claim compensation or damages from the institution, financial holding company or mixed financial holding company concerned for the loss of the auditor’s appointment.
52D. Where the Bank exercises a power under—
(a) Regulation 9F,
(b) Regulation 90,
(c) Regulation 92,
(d) Regulation 93, or
(e) section 45(1) of the Act of 2013,
in relation to an institution, the Bank shall notify the institution concerned of the reasons for the exercise by the Bank of that power.”.
num: 13
paragraphs: Regulation 54(2) of the Principal Regulations is amended—
(a) in paragraph (d), by the substitution of “without notifying in writing the Bank;” for “without notifying in writing the Bank.”, and
(b) by the insertion of the following subparagraph after subparagraph (d):
“(e) failing to comply with the requirement to apply for approval under Regulation 9A(1) or otherwise failing to comply with a requirement under Chapter 1A of Part 3.”.
num: 14
paragraphs: Regulation 55(3) of the Principal Regulations is amended—
(a) in paragraph (n), by the substitution of “Articles 28, 52 or 63” for “Articles 28, 51 or 63”,
(b) in paragraph (p), by the substitution of “a member of the management body;” for “a member of the management body.”, and
(c) by the insertion of the following subparagraph after subparagraph (p):
“(q) a parent institution, a parent financial holding company or a parent mixed financial holding company fails to take any action that may be required to ensure compliance with the prudential requirements set out in Part Three, Four, Six or Seven of the Capital Requirements Regulation or imposed under Regulation 92(2)(a) or Regulation 93 on a consolidated or sub-consolidated basis.”.
num: 15
paragraphs: The Principal Regulations are amended by the insertion of the following Regulation after Regulation 59:
59A. A decision by the Bank under these Regulations is an appealable decision for the purposes of Part VIIA of the Act of 1942.”.
num: 16
paragraphs: Regulation 61 of the Principal Regulations is amended by the insertion of the following paragraph after paragraph (1):
num: 17
paragraphs: Regulation 63 of the Principal Regulations is amended by the substitution of the following for paragraph (1):
(a) information disclosed in accordance with the criteria for disclosure established in subparagraphs (g), (h), (i) and (k) of Article 450(1) of the Capital Requirements Regulation;
(b) information provided by institutions on the gender pay gap.”.
num: 18
paragraphs: The Principal Regulations are amended by the substitution of the following Regulation for Regulation 72:
“72. (1) Institutions shall—
(a) implement internal systems,
(b) use the standardised methodology, or
(c) use the simplified standardised methodology,
to identify, evaluate, manage and mitigate the risks arising from potential changes in interest rates that affect both the economic value of equity and the net interest income of an institution’s non-trading book activities.
(2) Institutions shall implement systems to assess and monitor the risks arising from potential changes in credit spreads that affect both the economic value of equity and the net interest income of an institution’s non-trading book activities.
(3) The Bank may require an institution to use the standardised methodology referred to in paragraph (1) where the internal systems implemented by that institution for the purpose of evaluating the risks referred to in that paragraph are not satisfactory.
(4) The Bank may require a small and non-complex institution, as defined in point (145) of Article 4(1) of the Capital Requirements Regulation, to use the standardised methodology where it considers that the simplified standardised methodology is not adequate to capture interest rate risk arising from non-trading book activities of that institution.”.
num: 19
paragraphs: Regulation 73 of the Principal Regulations is amended by the substitution of the following paragraph for paragraph (1):
(a) evaluate and manage the exposures to operational risk, including model risk and risks resulting from outsourcing, and
(b) cover low-frequency high-severity events.”.
num: 20
paragraphs: Regulation 76 of the Principal Regulations is amended by the insertion of the following paragraphs after paragraph (6):
(a) a spouse, a registered partner (in accordance with the law of a Member State), a child or a parent of the member of the management body of the institution concerned, and
(b) a commercial entity—
(i) in which—
(I) the member of the management body of the institution concerned, or
(II) a person having a relationship described in subparagraph (a) with that member,
has a qualifying holding of 10 per cent or more of capital or of voting rights,
(ii) over which—
(I) the member of the management body of the institution concerned,
(II) a person having a relationship described in subparagraph (a) with that member, or
(III) the member of the management body of the institution concerned together with a person having a relationship described in subparagraph (a) with that member,
can exercise significant influence,
(iii) of which—
(I) a member of the management body of the institution concerned, or
(II) a person having a relationship described in subparagraph (a) with that member,
is a member of the management body, or
(iv) in which—
(I) a member of the management body of the institution concerned, or
(II) a person having a relationship described in subparagraph (a) with that member,
holds a senior management position.”.
num: 21
paragraphs: Regulation 79 of the Principal Regulations is amended—
(a) by the substitution of the following paragraph for paragraph (1):
“(1) Institutions, financial holding companies and mixed financial holding companies shall ensure that members of their management body are at all times of sufficiently good repute and possess sufficient knowledge, skills and experience to perform their duties.”,
(b) in paragraph (2), by the substitution of “Institutions, financial holding companies and mixed financial holding companies shall ensure that the members of their management body” for “Institutions shall ensure that the members of its management body”,
(c) by the substitution of the following paragraph for paragraph (3):
“(3) Institutions, financial holding companies and mixed financial holding companies shall ensure that all members of their management bodies shall commit sufficient time to perform their functions in the institution, financial holding company or mixed financial holding company, as the case may be.”,
(d) by the substitution of the following paragraph for paragraph (4):
“(4) Subject to paragraph (7), institutions, financial holding companies and mixed financial holding companies shall ensure that the number of directorships which may be held by a member of the management body in that institution, financial holding company or mixed financial holding company, as the case may be, at the same time shall take into account individual circumstances and the nature, scale and complexity of the activities of the institution, financial holding company or mixed financial holding company, as the case may be.”,
(e) by the substitution of the following paragraph for paragraph (5):
“(5) Institutions, financial holding companies and mixed financial holding companies shall ensure that the members of their management body shall possess adequate collective knowledge, skills and experience to be able to understand the activities of the institution, financial holding company or mixed financial holding company, as the case may be, including the main risks.”,
(f) by the insertion of the following paragraph after paragraph (5):
“(5A) Institutions, financial holding companies and mixed financial holding companies shall ensure that the overall composition of their management body shall reflect a sufficiently broad range of experience.”,
(g) in paragraph (6), by the substitution of “Institutions, financial holding companies and mixed financial holding companies shall ensure that each member of their management body” for “Institutions shall ensure that each member of its management body”,
(h) by the insertion of the following paragraph after paragraph (6):
“(6A) For the purposes of paragraph (6), membership of an affiliated company or an affiliated entity shall not, in itself, constitute an obstacle to a member of a management body acting with independence of mind.”,
(i) in paragraph (12), by the substitution of “Institutions, financial holding companies and mixed financial holding companies” for “Institutions”,
(j) in paragraph (13), by the substitution of “Institutions, financial holding companies and mixed financial holding companies” for “Institutions”,
(k) in paragraph (15), by the substitution of “institutions, financial holding companies and mixed financial holding companies” for “institutions”,
(l) in paragraph (17), by the substitution of “institutions, financial holding companies and mixed financial holding companies” for “institutions”, and
(m) by the insertion of the following paragraph after paragraph (17):
“(18) Where the Bank has reasonable grounds to suspect that money laundering or terrorist financing is being or has been committed or attempted, or there is increased risk thereof in connection with an institution, financial holding company or mixed financial holding company, the Bank shall verify whether the requirements specified in paragraphs (1) to (7) are still fulfilled by the institution, financial holding company or mixed financial holding company, as the case may be.”.
num: 22
paragraphs: The Principal Regulations are amended by the insertion of the following Regulations after Regulation 79:
79A. (1) Where a member of a management body of an institution, financial holding company or mixed financial holding company fails to fulfil the requirements set out in paragraphs (1) to (7) of Regulation 79, the Bank may remove the member from the management body concerned in accordance with this Regulation and Regulations 79B to 79F.
(2) Subject to paragraph (3), nothing in paragraph (1) deprives a person of any right to claim compensation or damages from the institution, financial holding company or mixed financial holding company concerned for the loss of the person’s office or appointment.
(3) A court, tribunal or rights commissioner may not—
(a) grant any remedy that would have the effect of preventing or restraining the Bank from exercising its functions under this Regulation and Regulations 79B to 79F, or
(b) make an order under the Unfair Dismissals Acts 1977 to 2007 for the reinstatement or re-engagement of a person removed in accordance with this Regulation and Regulations 79B to 79F.
79B. (1) Where the Bank proposes to remove a person from the management body of an institution, financial holding company or mixed financial holding company, the Bank shall issue a notice (in this Regulation and Regulations 79C to 79F referred to as a ‘removal notice’) in relation to the person.
(2) A removal notice shall—
(a) be in writing,
(b) set out the grounds on which the Bank has formed the view that the person to whom the notice relates fails to fulfil one or more of the requirements set out in Regulation 79(1) to (7),
(c) require the person concerned to show cause, in writing, not later than 5 days after the service of the removal notice on them, why the period of effect of the notice should not be extended in accordance with Regulation 79D,
(d) include such additional matters (if any) as the Bank considers appropriate, and
(e) be signed and dated by a person duly authorised by the Bank to do so.
(3) The Bank shall serve a removal notice on—
(a) the person to whom the notice relates, and
(b) the institution, financial holding company or mixed financial holding company from the management body of which the person is being removed as a member.
(4) A removal notice may be served on a person, institution, financial holding company or mixed financial holding company, referred to in paragraph (3)—
(a) by delivering it to the person, institution, financial holding company or mixed financial holding company, as the case may be,
(b) by leaving it at the address at which the person ordinarily resides or, in a case in which an address for service has been furnished by the person, institution, financial holding company or mixed financial holding company, as the case may be, at that address,
(c) by sending it by post in a prepaid letter to the address at which the person ordinarily resides or, in a case in which an address for service has been furnished by the person, institution, financial holding company or mixed financial holding company, as the case may be, to that address, or
(d) electronically—
(i) by electronic mail to an email address, or
(ii) by facsimile to a facsimile number,
furnished by the person, institution, financial holding company or mixed financial holding company, as the case may be, to, or otherwise known to, the Bank.
(5) An institution, financial holding company or mixed financial holding company referred to in paragraph (3)(b) on which a removal notice is served shall without delay—
(a) give a copy of the notice to the person to whom the removal notice relates (unless it is impracticable to do so), and
(b) after it has given a copy of the notice in accordance with subparagraph (a), certify in writing to the Bank that it has done so.
(6) A person to whom a removal notice relates may, within the period mentioned in paragraph (2)(c), make a written submission to the Bank in relation to the reasons why the period of effect of the notice should not be extended in accordance with Regulation 79D.
79C. (1) A person to whom a removal notice relates shall stand removed from the management body of the institution, financial holding company or mixed financial holding company concerned for so long as the removal notice has effect.
(2) A removal notice—
(a) takes effect on its service on the institution, financial holding company or mixed financial holding company from the management body of which the person to whom the notice relates is being removed as a member, and
(b) ceases to have effect, subject to Regulations 79D and 79F, at the end of the period of 10 days from the date of that service.
79D. (1) Where, having considered the submissions (if any) made to it under Regulation 79B(2)(c), the Bank is satisfied that the person to whom a removal notice relates fails to fulfil the requirements set out in paragraph (1) to (7) of Regulation 79, the Bank may, within the period referred to in Regulation 79C(2)(b), confirm the validity of the removal notice.
(2) The Bank may confirm the validity of a removal notice under paragraph (1) whether or not the person concerned has made a submission under Regulation 79B(2)(c).
(3) Where a person to whom a removal notice relates makes a submission in relation to a removal notice after the end of the period mentioned in Regulation 79B(2)(c) and the Bank is satisfied that there was good reason why the submission could not have been made within that period, or that it is necessary to do so in the interests of justice, the Bank shall—
(a) consider the submission, and
(b) where, after doing so, the Bank is satisfied that the person meets the requirements set out in paragraphs (1) to (7) of Regulation 79, revoke the removal notice.
(4) Subject to paragraph (5) and Regulation 79F, where the validity of a removal notice has been confirmed under paragraph (1), the notice shall cease to have effect at the end of the period of 3 months from the date that is 10 days from the date of service of the notice.
(5) Where a removal notice is revoked in accordance with paragraph (3), it shall cease to have effect on revocation.
(6) Where the validity of a removal notice has been confirmed in accordance with paragraph (1) or revoked in accordance with paragraph (3), the Bank shall so notify the person to whom the removal notice relates and the institution, financial holding company or mixed financial holding company, as the case may be, on whom the removal notice was served.
79E. Where—
(a) a removal notice has effect and—
(b) either—
(i) the person to whom the notice relates performs any function as a member of the management body in contravention of the removal notice, or
(ii) an institution, financial holding company or mixed financial holding company on which the removal notice was served permits the person to whom the removal notice relates to perform any function as a member of the management body in contravention of a removal notice,
the Bank may apply ex parte to the court for an order directing the person or institution, financial holding company or mixed financial holding company, as the case may be, to comply with the notice.
79F. (1) Where the validity of a removal notice has been confirmed by the Bank under paragraph (1) of Regulation 79D, the Bank may apply to the court during the period of 3 months referred to in paragraph (4) of that Regulation, on notice to the person to whom the removal notice relates and the institution, financial holding company or mixed financial holding company, as the case may be, on which the removal notice was served, for an order extending the period for which the removal notice has effect.
(2) Where the court is satisfied, having regard to the reasons for the issue and confirmation of the notice stated by the Bank, that there are sufficient grounds to extend the period for which the removal notice has effect, the court may extend the effect of the notice for such further period as the court orders.
(3) An order under paragraph (2) may be expressed to extend the effect of the notice concerned—
(a) for a particular period that the court thinks appropriate,
(b) indefinitely, or
(c) until further order of the court.
79G. An institution, financial holding company or mixed financial holding company on which a removal notice is served shall not permit the person to whom the removal notice relates to perform any function as a member of their management body for so long as the removal notice has effect.”.
num: 23
paragraphs: Regulation 80 of the Principal Regulations is amended—
(a) by the deletion of paragraph (1),
(b) by the substitution of the following paragraph for paragraph (2):
“(2) Institutions shall comply with the requirements specified in paragraph (3) in a manner that is appropriate to their size, internal organisation and the nature, scope and complexity of their activities, when establishing and applying the total remuneration policies, inclusive of salaries and discretionary pension benefits, for categories of staff whose professional activities have a material impact on the risk profile of that institution.”,
(c) in paragraph (3)—
(i) by the substitution of “requirements specified in paragraph (2)” for “principles referred to in paragraph (2)”, and
(ii) by the insertion of the following subparagraph after subparagraph (a):
“(aa) the institution’s remuneration policy is a gender neutral remuneration policy;”, and
(d) by the insertion of the following paragraph after paragraph (4):
“(5) For the purposes of paragraphs (2) and (3), categories of staff whose professional activities have a material impact on the institution’s risk profile include—
(a) all members of the management body and senior management,
(b) staff members with managerial responsibility over the institution’s control functions or material business units, and
(c) staff members entitled to significant remuneration in the preceding financial year where—
(i) the staff member’s remuneration is equal to or greater than—
(I) €500,000, and
(II) the average remuneration awarded to the members of the institution’s management body and senior management referred to in subparagraph (a), and
(ii) the staff member performs the professional activity within a material business unit, and the activity is of a kind that has a significant impact on the relevant business unit’s risk profile.”.
num: 24
paragraphs: Regulation 82 of the Principal Regulations is amended—
(a) in paragraph (1)—
(i) by the substitution of “the following principles shall apply in addition to, and under the same conditions as, the requirements specified in Regulation 80(3)” for “the following principles shall apply in addition to, and under the same conditions as, those set out in Regulation 80(3)”,
(ii) in subparagraph (l), by the substitution of the following clause for clause (i):
“(i) (I) shares or, subject to the legal structure of the institution concerned, equivalent ownership interests, or
(II) share-linked instruments or, subject to the legal structure of the institution concerned, equivalent non-cash instruments;”, and
(iii) by the substitution of the following subparagraph for subparagraph (m)—
“(m) subject to paragraphs (4) and (4A), a substantial portion, and in any event not less than 40 per cent, of the variable remuneration component is deferred over a period which is not less than 4 to 5 years and is correctly aligned with the nature of the business, its risks and the activities of the staff member concerned.”,
(b) in paragraph (4), by the substitution of “the staff member concerned” for “the member of staff in question”,
(c) by the insertion of the following paragraph after paragraph (4):
“(4A) For members of the management body and senior management of institutions that are significant in terms of their size, internal organisation and the nature, scope and complexity of their activities, the deferral period referred to in paragraph (1)(m) shall be not less than five years.”,
(d) in paragraph (9), by the substitution of “1 January 2014” for “31 December 2013”, and
(e) by the insertion of the following paragraphs after paragraph (9):
“(10) Subparagraphs (l) and (m) of paragraph (1) and paragraphs (3), (4), (4A) and (8) shall not apply to—
(a) an institution—
(i) that is not a large institution as defined in point (146) of Article 4(1) of the Capital Requirements Regulation, and
(ii) the value of the assets of which is on average and on an individual basis in accordance with these Regulations and the Capital Requirements Regulation equal to or less than the threshold for the institution, as specified in paragraph (11) or, where applicable, under paragraph (12), over the four-year period immediately preceding the current financial year, or
(b) a staff member whose annual variable remuneration does not exceed €50,000 and does not represent more than one third of the staff member’s total annual remuneration.
(11) Subject to paragraph (12), the threshold for an institution, for the purposes of paragraph (10)(a)(ii), shall be €5,000,000,000.
(12) Where the Bank is satisfied that it is appropriate, taking into account the nature, scope and complexity of an institution’s activities, the internal organisation of the institution or, if applicable, the characteristics of the group to which the institution belongs, the Bank may specify a threshold for the institution, for the purposes of paragraph (10)(a)(ii)—
(a) in a case in which the institution meets the criteria specified in points (145)(c), (d) and (e) of Article 4(1) of the Capital Requirements Regulation, that is greater than €5,000,000,000 but less than or equal to €15,000,000,000, and
(b) in any other case, that is less than €5,000,000,000.
(13) Where the Bank specifies a threshold for an institution, for the purposes of paragraph (10)(a)(ii), under paragraph (12), the Bank shall notify the institution concerned of the threshold so specified.”.
num: 25
paragraphs: Regulation 85 of the Principal Regulations is amended—
(a) in paragraph (1), by the deletion of subparagraph (b),
(b) by the insertion of the following paragraphs after paragraph (5):
“(5A) When conducting the review and evaluation, the Bank shall apply the principle of proportionality in accordance with the criteria published in accordance with Regulation 131(1)(c).
(5B) The Bank may tailor the methodologies for the application of the review and evaluation to take into account institutions with a similar risk profile, including having a similar business model or geographical location of exposures.
(5C) A tailored methodology referred to in paragraph (5B)—
(a) may include risk-oriented benchmarks and quantitative indicators,
(b) shall allow for due consideration of the specific risks that each institution may be exposed to, and
(c) shall not affect the institution-specific nature of measures imposed in accordance with Regulation 92.
(5D) Where the Bank uses a tailored methodology referred to in paragraph (5B), it shall notify the EBA.”, and
(c) by the insertion of the following paragraphs after paragraph (6):
“(6A) Where a review and evaluation (including the evaluation of the governance arrangements, the business model, or the activities of an institution) gives the Bank reasonable grounds to suspect that, in connection with an institution, money laundering or terrorist financing is being or has been committed or attempted, or there is increased risk thereof, the Bank shall immediately notify the EBA.
(6B) Where the Bank (following liaison with the authority or body that supervises the institution in accordance with the Directive (EU) 2015/849 and is competent for ensuring compliance with that Directive, in a case in which that authority or body is not the Bank) has reasonable grounds to suspect that, in connection with an institution, there is an increased risk of money laundering or terrorist financing—
(a) the Bank (together with the authority or body referred to above, where applicable) shall notify its assessment immediately to the EBA, and
(b) the Bank shall take, as appropriate, measures in accordance with these Regulations or other financial services legislation.”.
num: 26
paragraphs: Regulation 86 of the Principal Regulations is amended—
(a) in paragraph (1)—
(i) in subparagraph (i), by the substitution of “concerned.” for “concerned;”, and
(ii) by the deletion of subparagraph (j),
(b) in paragraph (6), by the substitution of “non-trading book activities” for “non-trading activities”,
(c) by the substitution of the following paragraph for paragraph (7):
“(7) Subject to paragraph (7A), the Bank shall exercise supervisory powers, at a minimum, in the following cases:
(a) where an institution’s economic value of equity as referred to in Regulation 72(1) declines by more than 15 per cent of its Tier 1 capital as a result of a sudden and unexpected change in interest rates as set out in any of the six supervisory shock scenarios applied to interest rates;
(b) where an institution’s net interest income, as referred to in Regulation 72(1), experiences a large decline as a result of a sudden and unexpected change in interest rates as set out in any of the two supervisory shock scenarios applied to interest rates.”, and
(d) by the insertion of the following paragraphs after paragraph (7) (as substituted by the preceding subparagraph):
“(7A) The Bank shall not be obliged to exercise supervisory powers where it considers, based on the review and evaluation performed by the Bank pursuant to Regulation 85, that—
(a) the institution’s management of interest rate risk arising from non-trading book activities is adequate, and
(b) the institution is not excessively exposed to interest rate risk arising from non-trading book activities.
(7B) For the purposes of paragraphs (7) and (7A), ‘supervisory powers’ means—
(a) the powers referred to in Regulation 92(1) and (2), or
(b) the power to specify modelling and parametric assumptions, other than those identified by the EBA pursuant to point (b) of paragraph 5a of Article 98 of the Capital Requirements Directive, to be reflected by institutions in their calculation of the economic value of equity under Regulation 72(1).”.
num: 27
paragraphs: Regulation 87 of the Principal Regulations is amended, in paragraph (3), by the deletion of subparagraph (b).
num: 28
paragraphs: Regulation 90 of the Principal Regulations is amended by the substitution of the following paragraph for paragraph (1):
“(1) The Bank shall require an institution, financial holding company or mixed financial holding company to take the necessary measures at an early stage to address relevant problems in the following circumstances:
(a) the institution, financial holding company or mixed financial holding company, as the case may be, does not meet the requirements of these Regulations or of the Capital Requirements Regulation;
(b) the Bank has evidence that the institution, financial holding company or mixed financial holding company, as the case may be, is likely to breach the requirements of these Regulations, or of the Capital Requirements Regulation, within the subsequent 12 months.”.
num: 29
paragraphs: The Principal Regulations are amended by the deletion of Regulation 91.
num: 30
paragraphs: Regulation 92 of the Principal Regulations is amended—
(a) by the substitution of the following paragraph for paragraph (1):
“(1) For the purposes of—
(a) Regulation 85,
(b) Regulation 86(5), (6), (7) and (7A),
(c) Regulation 89(3) to (5),
(d) Regulation 90, and
(e) the application of the Capital Requirements Regulation,
the Bank shall have, without limitation to the Bank’s powers under other financial services legislation, the powers specified in paragraph (2).”,
(b) in paragraph (2)—
(i) by the substitution of the following for subparagraph (a):
“(a) to require institutions to have additional own funds in excess of the requirements set out in the Capital Requirements Regulation, under the conditions set out in Regulation 92A;”,
(ii) in subparagraph (b), by the substitution of “Regulations 60 and 61” for “Regulations 60 to 62”,
(iii) in subparagraph (c), by the substitution of “submit a plan” for “present a plan”,
(iv) in subparagraph (f), by the substitution of “systems of institutions, including outsourced activities;” for “systems of institutions;”, and
(v) in subparagraph (j), by the substitution of “reporting on own funds, liquidity and leverage;” for “reporting on capital and liquidity positions;”,
(c) by the deletion of paragraphs (3) and (4), and
(d) by the insertion of the following paragraphs after paragraph (5):
“(6) The Bank may only impose additional or more frequent reporting requirements on institutions under paragraph (2)(j) where—
(a) the relevant requirement is appropriate and proportionate with regard to the purpose for which the information is required, and
(b) the information requested is not duplicative.
(7) Where the power under paragraph (2)(j) is being exercised for the purposes of Regulations 85 to 90, any additional information that may be required from institutions shall be deemed to be duplicative where the same or substantially the same information has already been otherwise reported to the Bank or may be produced by the Bank.
(8) The Bank shall not require an institution to report additional information where it has previously received the information in a different format or level of granularity and that different format or granularity does not prevent the Bank from producing information of the same quality and reliability as that which would be produced on the basis of the additional information.”.
num: 31
paragraphs: The Principal Regulations are amended by the insertion of the following Regulations after Regulation 92:
92A. (1) The Bank shall impose the additional own funds requirement referred to in Regulation 92(2)(a) where, on the basis of the reviews carried out in accordance with Regulations 85 and 89, it determines in respect of an individual institution that—
(a) the institution is exposed to risks or elements of risk that are not covered or not sufficiently covered by the own funds requirements set out in Parts Three, Four and Seven of the Capital Requirements Regulation,
(b) the institution does not meet the requirements set out in Regulation 60 and 61 or in Article 393 of the Capital Requirements Regulation and it is unlikely that other supervisory measures would be sufficient to ensure that those requirements can be met within an appropriate timeframe,
(c) the adjustments referred to in Regulation 86(5) are deemed to be insufficient to enable the institution to sell or hedge out its positions within a short period without incurring material losses under normal market conditions,
(d) the evaluation carried out in accordance with paragraphs (3) to (5) of Regulation 89 reveals that the non-compliance with the requirements for the application of the permitted approach will likely lead to inadequate own funds requirements,
(e) the institution repeatedly fails to establish or maintain an adequate level of additional own funds to cover the guidance communicated in accordance with Regulation 92B(4), or
(f) there are other institution-specific situations deemed by the Bank to raise material supervisory concerns.
(2) The Bank shall only impose the additional own funds requirement referred to in Regulation 92(2)(a) to cover the risks incurred by individual institutions due to their activities, including those reflecting the impact of certain economic and market developments on the risk profile of an individual institution.
(3) For the purposes of paragraph (1)(a), risks or elements of risk shall only be considered as not covered or not sufficiently covered by the own funds requirements set out in Parts Three, Four and Seven of the Capital Requirements Regulation and in Chapter 2 of Regulation (EU) 2017/2402 where the amounts, types and distribution of capital considered adequate by the Bank, taking into account the supervisory review of the assessment carried out by institutions in accordance with Regulation 60(1), are higher than the own funds requirements set out in Parts Three, Four and Seven of the Capital Requirements Regulation and in Chapter 2 of Regulation (EU) 2017/2402.
(4) For the purposes of paragraph (3), the Bank shall assess, taking into account the risk profile of each individual institution, the risks to which the institution is exposed, including—
(a) institution-specific risks or elements of such risks that are explicitly excluded from or not explicitly addressed by the own funds requirements set out in Parts Three, Four and Seven of the Capital Requirements Regulation and in Chapter 2 of Regulation (EU) 2017/2402, and
(b) institution-specific risks or elements of such risks likely to be underestimated despite compliance with the applicable requirements set out in Parts Three, Four and Seven of the Capital Requirements Regulation and in Chapter 2 of Regulation (EU) 2017/2402.
(5) For the purposes of paragraph (4)(b), to the extent that risks or elements of risk are subject to transitional arrangements or grandfathering provisions laid down in these Regulations or in the Capital Requirements Regulation, they shall not be considered risks or elements of such risks likely to be underestimated despite compliance with the applicable requirements set out in Parts Three, Four and Seven of the Capital Requirements Regulation and in Chapter 2 of Regulation (EU) 2017/2402.
(6) For the purposes of paragraph (3), the capital considered adequate shall cover all risks or elements of risks identified as material pursuant to the assessment laid down in paragraph (4) that are not covered or not sufficiently covered by the own funds requirements set out in Parts Three, Four and Seven of the Capital Requirements Regulation and in Chapter 2 of Regulation (EU) 2017/2402.
(7) Interest rate risk arising from non-trading book positions may be considered material at least in the cases referred to in Regulation 86(7), unless the Bank, in performing the review and evaluation, comes to the conclusion that the institution’s management of interest rate risk arising from non-trading book activities is adequate and that the institution is not excessively exposed to interest rate risk arising from non-trading book activities.
(8) Where additional own funds are required to address risks, other than the risk of excessive leverage not sufficiently covered by point (d) of Article 92(1) of the Capital Requirements Regulation, the Bank shall determine the level of the additional own funds required under paragraph (1)(a) as the difference between the capital considered adequate pursuant to paragraph (3) and the relevant own funds requirements set out in Parts Three and Four of the Capital Requirements Regulation and in Chapter 2 of Regulation (EU) 2017/2402.
(9) Where additional own funds are required to address the risk of excessive leverage not sufficiently covered by point (d) of Article 92(1) of the Capital Requirements Regulation, the Bank shall determine the level of the additional own funds required under paragraph (1)(a) as the difference between the capital considered adequate pursuant to paragraph (3) and the relevant own funds requirements set out in Parts Three and Seven of the Capital Requirements Regulation.
(10) Subject to paragraph (12), an institution shall meet the additional own funds requirement, imposed by the Bank under Regulation 92(2)(a) to address risks other than the risk of excessive leverage, with own funds that satisfy the following conditions:
(a) at least three quarters of the additional own funds requirement shall be met with Tier 1 capital;
(b) at least three quarters of the Tier 1 capital referred to in subparagraph (a) shall be composed of Common Equity Tier 1 capital.
(11) Subject to paragraph (12), an institution shall meet the additional own funds requirement, imposed by the Bank under Regulation 92(2)(a) to address the risk of excessive leverage, with Tier 1 capital.
(12) The Bank may require an institution to meet its additional own funds requirement with a higher portion of Tier 1 capital or Common Equity Tier 1 capital than that required under paragraph (10), where necessary, and having regard to the specific circumstances of the institution.
(13) Own funds that are used to meet the additional own funds requirement referred to in Regulation 92(2)(a) imposed by the Bank to address risks other than the risk of excessive leverage shall not be used to meet any of the following:
(a) own funds requirements set out in points (a), (b) and (c) of Article 92(1) of the Capital Requirements Regulation;
(b) the combined buffer requirement;
(c) the guidance on additional own funds referred to in Regulation 92B(4) where that guidance addresses risks other than the risk of excessive leverage.
(14) Own funds that are used to meet the additional own funds requirement referred to in Regulation 92(2)(a) imposed by the Bank to address the risk of excessive leverage not sufficiently covered by point (d) of Article 92(1) of the Capital Requirements Regulation shall not be used to meet any of the following:
(a) the own funds requirement set out in point (d) of Article 92(1) of the Capital Requirements Regulation;
(b) the leverage ratio buffer requirement referred to in Article 92(1a) of the Capital Requirements Regulation;
(c) the guidance on additional own funds referred to in Regulation 92B(4), where that guidance addresses risks of excessive leverage.
(15) The Bank shall duly justify in writing to each institution the decision to impose an additional own funds requirement under Regulation 92(2)(a), at a minimum by giving a clear account of the full assessment of the elements referred to in paragraphs (1) to (13).
(16) The justification referred to in paragraph (15) shall include, in the case set out in paragraph (1)(e), a specific statement of the reasons for which the imposition of guidance on additional own funds is no longer considered sufficient.
92B. (1) Pursuant to the strategies and processes referred to in Regulation 60, institutions shall set their internal capital at an adequate level of own funds that is sufficient—
(a) to cover all the risks that an institution is exposed to, and
(b) to ensure that the institution’s own funds can absorb potential losses resulting from stress scenarios, including those identified under the supervisory stress test referred to in Regulation 88.
(2) The Bank shall regularly review the level of the internal capital set by each institution in accordance with paragraph (1) as part of the reviews and evaluations performed in accordance with Regulations 85 and 89, including the results of the stress tests referred to in Regulation 88.
(3) The Bank shall, pursuant to the review referred to in paragraph (2), determine for each institution the overall level of own funds it considers appropriate.
(4) The Bank shall communicate its guidance on additional own funds to institutions.
(5) The guidance on additional own funds referred to in paragraph (4) shall be the own funds exceeding the relevant amount of own funds required pursuant to Parts Three, Four and Seven of the Capital Requirements Regulation, Chapter 2 of Regulation (EU) 2017/2402, Regulation 92(2)(a) and Regulation 115(g) or pursuant to Article 92(1a) of the Capital Requirements Regulation, as relevant, which are needed to reach the overall level of own funds considered appropriate by the Bank pursuant to paragraph (2).
(6) The Bank’s guidance on additional own funds pursuant to paragraph (4) shall be institution-specific.
(7) The guidance referred to in paragraph (4) may cover risks addressed by the additional own funds requirement imposed pursuant to Regulation 92(2)(a) only to the extent that it covers aspects of those risks that are not already covered under that requirement.
(8) Own funds that are used to meet the guidance on additional own funds communicated in accordance with paragraph (4) to address risks other than the risk of excessive leverage shall not be used to meet any of the following:
(a) the own funds requirements set out in points (a), (b) and (c) of Article 92(1) of the Capital Requirements Regulation;
(b) the requirement laid down in Regulation 92A imposed by the Bank to address risks other than the risk of excessive leverage and the combined buffer requirement.
(9) Own funds that are used to meet the guidance on additional own funds communicated in accordance with paragraph (4) to address the risk of excessive leverage shall not be used to meet—
(a) the own funds requirement set out in point (d) of Article 92(1) of the Capital Requirements Regulation,
(b) the requirement laid down in Regulation 92A imposed by the Bank to address the risk of excessive leverage, or
(c) the leverage ratio buffer requirement referred to in Article 92(1a) of the Capital Requirements Regulation.
(10) Failure to meet the guidance referred to in paragraph (4) shall not trigger the restrictions referred to in Regulation 129 or 129B where an institution meets—
(a) the relevant own funds requirements set out in Parts Three, Four and Seven of the Capital Requirements Regulation and in Chapter 2 of Regulation (EU) 2017/2402,
(b) the relevant additional own funds requirement referred to in Regulation 92(2)(a), and
(c) where relevant, the combined buffer requirement or the leverage ratio buffer requirement referred to in Article 92(1a) of the Capital Requirements Regulation.
92C. The Bank shall notify the relevant resolution authorities of—
(a) the additional own funds requirement imposed on institutions pursuant to Regulation 92(2)(a), and
(b) any guidance on additional own funds communicated to institutions in accordance with Regulation 92B(4).”.
num: 32
paragraphs: Regulation 93(1) of the Principal Regulations is amended—
(a) in subparagraph (c), by the substitution of “with Regulation 85.” for “with Regulation 85;”, and
(b) by the deletion of subparagraph (d).
num: 33
paragraphs: Regulation 96 of the Principal Regulations is amended by the deletion of paragraphs (5) and (6).
num: 34
paragraphs: Regulation 97 of the Principal Regulations is amended—
(a) in paragraph (2), by the substitution of “ensure that the arrangements” for “ensure that their arrangements”,
(b) in paragraph (3), by the substitution of “in their subsidiaries, including those established in offshore financial centres,” for “in their subsidiaries,”,
(c) by the insertion of the following paragraph after paragraph (3):
“(3A) Subsidiary undertakings that are not themselves subject to this Regulation shall comply with their sector-specific requirements on an individual basis.”,
(d) by the substitution of the following paragraph for paragraph (5):
“(5) The obligations contained in Regulations 61 to 84 concerning subsidiary undertakings, that are not themselves subject to these Regulations, shall not apply where the EU parent institution can demonstrate to the Bank that the application of those Regulations is unlawful under the laws of the third country where the subsidiary is established.”, and
(e) by the insertion of the following paragraphs after paragraph (5):
“(6) Subject to paragraph (7), the remuneration requirements specified in Regulations 80, 82 and 83 shall not apply on a consolidated basis to either of the following:
(a) subsidiary undertakings established in the European Union, where they are subject to specific remuneration requirements in accordance with European Union legal acts other than the Capital Requirements Directive;
(b) subsidiary undertakings established in a third country where they would be subject to specific remuneration requirements in accordance with other Union legal acts if they were established in the Union.
(7) Regulations 80, 82 and 83 apply to members of staff of subsidiaries that are not subject to these Regulations on an individual basis where—