Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council
Date: 2002-12-16
Institutions: Council of the European Union, European Parliament
Subjects: company law, conglomerate, credit institution, financial control, financial solvency, group of companies, insurance company, investment company

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I

(Acts whose publication is obligatory)

DIRECTIVE 2002/87/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 16 December 2002

on the supplementary supervision of credit institutions, insurance undertakings and investment
firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC,
92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the
European Parliament and of the Council

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 47(2) thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of
Committee (2),

the Economic and Social

After consulting the Committee of the Regions,

Having regard to the opinion of the European Central Bank (3),

Acting in accordance with the procedure laid down in Article
251 of the Treaty (4),

Whereas:

(1)

The current Community legislation provides
for a
comprehensive set of rules on the prudential supervision
and
institutions,
credit
of
firms on a stand alone basis and credit
investment
and investment
institutions,
firms
a
respectively
part
banking/investment firm group or an insurance group,
i.e. groups with homogeneous financial activities.

insurance undertakings

insurance undertakings

which

are

of

(2)

New developments in financial markets have led to the
creation of financial groups which provide services and
products in different sectors of the financial markets,

(1) OJ C 213 E, 31.7.2001, p. 227.
(2) OJ C 36, 8.2.2002, p. 1.
(3) OJ C 271, 26.9.2001, p. 10.
(4) Opinion of the European Parliament of 14 March 2002 (not yet
published in the Official Journal), Council Common Position of 12
September 2002 (OJ C 253 E, 22.10.2002, p. 1) and Decision of
the European Parliament of 20 November 2002 (not yet published
in the Official Journal).

the level of

the conglomerate,

called financial conglomerates. Until now,
there has
been no form of prudential supervision on a group-wide
basis of credit institutions, insurance undertakings and
investment firms which are part of such a conglomerate,
in particular as regards the solvency position and risk
concentration at
the
intra-group transactions, the internal risk management
processes at conglomerate level, and the fit and proper
character
these
conglomerates are among the biggest financial groups
which are active in the financial markets and provide
services on a global basis. If such conglomerates, and in
particular credit institutions, insurance undertakings and
investment firms which are part of such a conglomerate,
were to face financial difficulties, these could seriously
individual
destabilise the financial system and affect
depositors, insurance policy holders and investors.

the management.

Some

of

of

(3)

(4)

(5)

of

the

development

The Commission Action Plan for Financial Services
identifies a series of actions which are needed to
complete the Single Market in Financial Services, and
announces
supplementary
prudential legislation for financial conglomerates which
will address loopholes in the present sectoral legislation
and additional prudential
sound
supervisory arrangements with regard to financial
groups with cross-sectoral financial activities. Such an
ambitious objective can only be attained in stages. The
establishment of the supplementary supervision of credit
institutions,
and investment
insurance undertakings
firms in a financial conglomerate is one such stage.

to ensure

risks

Other international forums have also identified the need
for
supervisory
of
concepts with regard to financial conglomerates.

development

appropriate

the

credit

institutions,

insurance undertakings

In order to be effective, the supplementary supervision
of
and
investment firms in a financial conglomerate should be
the cross-sectoral
applied to all such conglomerates,
financial activities of which are significant, which is the
case when certain thresholds are reached, no matter
how they are structured. Supplementary supervision
should cover all
financial activities identified by the
legislation and all entities principally
sectoral financial

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engaged in such activities should be included in the
scope of the supplementary supervision, including asset
management companies.

Decisions not to include a particular entity in the scope
of supplementary supervision should be taken, bearing
in mind inter alia whether or not such entity is included
in the group-wide supervision under sectoral rules.

the

financial

The competent authorities should be able to assess at a
level
credit
group-wide
and investment
institutions,
insurance undertakings
firms which are part of a financial conglomerate,
in
particular as regards solvency (including the elimination
of multiple gearing of own funds instruments), risk
concentration and intra-group transactions.

situation of

conglomerates

are often managed on a
Financial
business-line basis which does not fully coincide with
the conglomerate’s legal structures.
In order to take
account of this trend, the requirements for management
should be further extended, in particular as regards the
management of the mixed financial holding company.

(6)

(7)

(8)

(9)

financial conglomerates subject

All
to supplementary
supervision should have a coordinator appointed from
among the competent authorities involved.

(10)

The tasks of the coordinator should not affect the tasks
and responsibilities of
the competent authorities as
provided for by the sectoral rules.

(14)

(15)

(16)

appropriate

supplementary

regulated entities should also be subject to equivalent
supervisory
and
arrangements which achieve objectives and results
this
similar
Directive. To this end,
rules and
exchange of information with third-country authorities
on all relevant circumstances are of great importance.

to those pursued by the provisions of

transparency of

Equivalent and appropriate supplementary supervisory
arrangements can only be assumed to exist
the
third-country supervisory authorities have agreed to
cooperate with the competent authorities concerned on
the means and objectives of exercising supplementary
the regulated entities of a financial
supervision of
conglomerate.

if

This Directive does not
competent authorities
committee of
obligation of confidentiality under
other sectoral directives.

require the disclosure by
to a financial conglomerates
to an
this Directive or

information which is

subject

credit

institutions,

insurance undertakings

Since the objective of the proposed action, namely the
establishment of rules on the supplementary supervision
and
of
investment firms in a financial conglomerate, cannot be
sufficiently achieved by the Member States and can
therefore, by reason of the scale and the effects of the
the
action, be better achieved at Community level,
Community may adopt measures,
in accordance with
the principle of subsidiarity as set out in Article 5 of the
Treaty.
of
proportionality, as set out in that Article, this Directive
is necessary in order to
does not go beyond what
achieve this objective. Since this Directive defines
minimum standards, Member States may lay down
stricter rules.

accordance with

principle

the

In

(11)

(12)

(13)

The competent authorities involved, and especially the
coordinator, should have the means of obtaining from
the entities within a financial conglomerate, or from
other competent authorities, the information necessary
for the performance of their supplementary supervision.

institutions,

There is a pressing need for increased collaboration
between authorities responsible for the supervision of
credit
and
insurance
investment firms, including the development of ad hoc
cooperation arrangements between the
authorities
involved in the supervision of entities belonging to the
same financial conglomerate.

undertakings

institutions,

Credit
and
insurance
investment firms which have their head office in the
Community can be part of a financial conglomerate, the
head of which is outside the Community. These

undertakings

(17)

This Directive respects
rights and
observes the principles recognised in particular by the
Charter of Fundamental Rights of the European Union.

the fundamental

(18)

(19)

The measures necessary for the implementation of this
Directive should be adopted in accordance with Council
Decision 1999/468/EC of 28 June 1999 laying down
the procedures for the exercise of implementing powers
conferred on the Commission (1).

Technical guidance and implementing measures for the
rules laid down in this Directive may from time to time
be necessary to take account of new developments on
financial markets. The Commission should accordingly
implementing measures,
be
provided that these do not modify the essential elements
of this Directive.

empowered to adopt

(1) OJ L 184, 17.7.1999, p. 23.

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(20)

(21)

for

laws,

credit

existing sectoral

The
institutions,
rules
insurance undertakings and investment firms should be
supplemented to a minimum level, in particular to avoid
regulatory arbitrage between the sectoral rules and those
for
financial conglomerates. Therefore, First Council
Directive 73/239/EEC of 24 July 1973 on the
coordination of
regulations and administrative
provisions relating to the taking up and pursuit of the
business of direct insurance other than life assurance (1),
First Council Directive 79/267/EEC of 5 March 1979 on
the coordination of laws, regulations and administrative
provisions relating to the taking up and pursuit of the
business of direct life assurance (2), Council Directive
92/49/EEC of 18 June 1992 on the coordination of
laws, regulations and administrative provisions relating
than life insurance (third
insurance other
to direct
insurance Directive) (3), Council Directive
non-life
92/96/EEC of 10 November 1992 on the coordination
of
and administrative provisions
life assurance (third life insurance
relating to direct
Directive) (4), Council Directive 93/6/EEC of 15 March
1993 on the capital adequacy of investments firms and
credit institutions (5) and Council Directive 93/22/EEC
of 10 May 1993 on investment services in the securities
field (6), as well as Directive 98/78/EC of the European
Parliament and of the Council of 27 October 1998 on
the
insurance
undertakings in an insurance group (7) and Directive
2000/12/EC of
the
Council of 20 March 2000 relating to the taking up and
pursuit of the business of credit institutions (8) should
be amended accordingly. The objective of
further
harmonisation can, however, only be achieved by stages
and needs to be based on careful analysis.

the European Parliament and of

supplementary

supervision

regulations

laws,

of

In order to assess the need for and prepare any possible
asset
future harmonisation of
management
the
Commission should report on Member States’ practices
in this field,

the
companies under

treatment
sectoral

of
rules,

(1) OJ L 228, 16.8.1973, p. 3. Directive as last amended by Directive
2002/13/EC of the European Parliament and of the Council (OJ L
77, 20.3.2002, p. 17).

(2) OJ L 63, 13.3.1979, p. 1. Directive as last amended by Directive
2002/12/EC of the European Parliament and of the Council (OJ L
77, 20.3.2002, p. 11).

(3) OJ L 228, 11.8.1992, p. 1. Directive as last amended by Directive
2000/64/EC of the European Parliament and of the Council (OJ L
290, 17.11.2000, p. 27).

(4) OJ L 360, 9.12.1992, p. 1. Directive as last amended by Directive

2000/64/EC.

(5) OJ L 141, 11.6.1993, p. 1. Directive as last amended by Directive
98/33/EC of the European Parliament and of the Council (OJ L
204, 21.7.1998, p. 29).

(6) OJ L 141, 11.6.1993, p. 27. Directive as last amended by Directive

2000/64/EC.

HAVE ADOPTED THIS DIRECTIVE:

CHAPTER I

OBJECTIVE AND DEFINITIONS

Article 1

Objective

This Directive lays down rules for supplementary supervision
of regulated entities which have obtained an authorisation
pursuant to Article 6 of Directive 73/239/EEC, Article 6 of
Directive 79/267/EEC, Article 3(1) of Directive 93/22/EEC or
Article 4 of Directive 2000/12/EC, and which are part of a
It also amends the relevant sectoral
financial conglomerate.
regulated by the Directives
rules which apply to entities
referred to above.

Article 2

Definitions

For the purposes of this Directive:

1.

2.

3.

4.

5.

6.

(cid:145)credit institution(cid:146) shall mean a credit institution within the
meaning of the second subparagraph of Article 1(1) of
Directive 2000/12/EC;

undertaking(cid:146)

(cid:145)insurance
insurance
undertaking within the meaning of Article 6 of Directive
73/239/EEC, Article 6 of Directive 79/267/EEC or Article
1(b) of Directive 98/78/EC;

shall mean

an

(cid:145)investment firm(cid:146) shall mean an investment firm within the
meaning of Article 1(2) of Directive 93/22/EEC, including
the undertakings referred to in Article 2(4) of Directive
93/6/EEC;

(cid:145)regulated entity(cid:146)
insurance undertaking or an investment firm;

shall mean a credit

institution, an

laws,

(cid:145)asset management company(cid:146) shall mean a management
company within the meaning of Article 1a(2) of Council
Directive 85/611/EEC of 20 December 1985 on the
and administrative
coordination of
provisions
collective
investment in transferable securities (UCITS) (9), as well as
an undertaking the registered office of which is outside
the Community and which would require authorisation in
accordance with Article 5(1) of that Directive if it had its
registered office within the Community;

undertakings

regulations

relating

for

to

undertaking(cid:146)

(cid:145)reinsurance
reinsurance
undertaking within the meaning of Article 1(c) of
Directive 98/78/EC;

shall mean a

(7) OJ L 330, 5.12.1998, p. 1.
(8) OJ L 126, 26.5.2000, p. 1. Directive as amended by Directive

2000/28/EC (OJ L 275, 27.10.2000, p. 37).

(9) OJ L 375, 31.12.1985, p. 3. Directive as last amended by Directive
2001/108/EC of the European Parliament and of the Council (OJ L
41, 13.2.2002, p. 35).

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7.

rules(cid:146)

(cid:145)sectoral
shall mean the Community legislation
relating to the prudential supervision of regulated entities,
laid down in Directives 73/239/EEC,
in particular
79/267/EEC,
and
98/78/EC,
2000/12/EC;

93/22/EEC

93/6/EEC,

(a)

(cid:145)participation(cid:146), which shall mean the ownership, direct
or by way of control, of 20 % or more of the voting
rights or capital of an undertaking; or

8.

(cid:145)financial sector(cid:146) shall mean a sector composed of one or
more of the following entities:

(b)

(a) a credit

institution, a financial

institution or an
ancillary banking services undertaking within the
meaning of Article 1(5)
and (23) of Directive
2000/12/EC (the banking sector);

(cid:145)control(cid:146), which shall mean the relationship between a
parent undertaking and a subsidiary, in all the cases
referred to in Article 1(1) and (2) of Directive
83/349/EEC, or a similar relationship between any
natural or
legal person and an undertaking; any
subsidiary undertaking of a subsidiary undertaking
the parent
shall also be considered a subsidiary of
undertaking which
those
of
head
undertakings.

the

at

is

(b) an insurance undertaking, a reinsurance undertaking
or an insurance holding company within the meaning
of Article 1(i) of Directive 98/78/EC (the insurance
sector);

(c) an investment firm or a financial institution within the
meaning of Article 2(7) of Directive 93/6/EEC (the
investment services sector);

A situation in which two or more natural or legal persons
are permanently linked to one and the same person by a
control relationship shall also be regarded as constituting a
close link between such persons;

(d) a mixed financial holding company;

14.

(cid:145)financial conglomerate(cid:146) shall mean a group which meets,
subject to Article 3, the following conditions:

9.

10.

11.

12.

(cid:145)parent undertaking(cid:146)
shall mean a parent undertaking
within the meaning of Article 1 of Seventh Council
Directive 83/349/EEC of 13 June 1983 on consolidated
accounts (1) and any undertaking which, in the opinion of
the competent authorities, effectively exercises a dominant
influence over another undertaking;

a

undertaking(cid:146)

shall mean

(cid:145)subsidiary
subsidiary
undertaking within the meaning of Article 1 of Directive
in the
83/349/EEC and any undertaking over which,
parent
a
opinion
undertaking effectively exercises a dominant influence; all
subsidiary undertakings of subsidiary undertakings shall
also be considered as subsidiary undertakings of the parent
undertaking;

authorities,

competent

the

of

shall mean a participation within the
(cid:145)participation(cid:146)
meaning of
the first sentence of Article 17 of Fourth
Council Directive 78/660/EEC of 25 July 1978 on the
annual accounts of certain types of companies (2), or the
direct or indirect ownership of 20 % or more of
the
voting rights or capital of an undertaking;

(cid:145)group(cid:146) shall mean a group of undertakings, which consists
of a parent undertaking, its subsidiaries and the entities in
which the parent undertaking or its subsidiaries hold a
participation, as well as undertakings linked to each other
by a relationship within the meaning of Article 12(1) of
Directive 83/349/EEC;

13.

(cid:145)close links(cid:146) shall mean a situation in which two or more
natural or legal persons are linked by:

(1) OJ L 193, 18.7.1983, p. 1. Directive as last amended by Directive
2001/65/EC of the European Parliament and of the Council (OJ L
283, 27.10.2001, p. 28).

(2) OJ L 222, 14.8.1978, p. 11. Directive as last amended by Directive

2001/65/EC.

(a) a regulated entity within the meaning of Article 1 is at
the head of
the
the group or at
subsidiaries in the group is a regulated entity within
the meaning of Article 1;

least one of

(b) where there is a regulated entity within the meaning
of Article 1 at the head of the group, it is either a
parent undertaking of an entity in the financial sector,
an entity which holds a participation in an entity in
the financial sector, or an entity linked with an entity
in the financial sector by a relationship within the
meaning of Article 12(1) of Directive 83/349/EEC;

(c) where there is no regulated entity within the meaning
of Article 1 at the head of the group, the group’s
activities mainly occur in the financial sector within
the meaning of Article 3(1);

(d) at least one of the entities in the group is within the
insurance sector and at least one is within the banking
or investment services sector;

(e)

the consolidated and/or aggregated activities of
the
entities in the group within the insurance sector and
the consolidated and/or aggregated activities of
the
entities within the banking and investment services
sector are both significant within the meaning of
Article 3(2) or (3).

Any subgroup of a group within the meaning of point 12
which meets the criteria in this point shall be considered
as a financial conglomerate;

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15.

(cid:145)mixed financial holding company(cid:146) shall mean a parent
undertaking, other than a regulated entity, which together
with its subsidiaries, at least one of which is a regulated
entity which has its head office in the Community, and
other entities, constitutes a financial conglomerate;

16.

(cid:145)competent authorities(cid:146) shall mean the national authorities
of the Member States which are empowered by law or
regulation to supervise credit institutions, and/or insurance
firms whether on an
investment
undertakings and/or
individual or a group-wide basis;

17.

(cid:145)relevant competent authorities(cid:146) shall mean:

(a) Member States’ competent authorities responsible for
the sectoral group-wide supervision of any of
the
regulated entities in a financial conglomerate;

(b) the coordinator appointed in accordance with Article
10 if different from the authorities referred to in (a);

(c) other

competent

concerned, where
authorities
relevant, in the opinion of the authorities referred to
in (a) and (b); this opinion shall especially take into
account the market share of the regulated entities of
the conglomerate in other Member States, in particular
if
in the
and the
conglomerate of any regulated entity established in
another Member State;

exceeds 5 %,

importance

it

18.

19.

(cid:145)intra-group transactions(cid:146) shall mean all
transactions by
which regulated entities within a financial conglomerate
rely either directly or indirectly upon other undertakings
within the same group or upon any natural or legal
person linked to the undertakings within that group by
(cid:145)close links(cid:146), for the fulfilment of an obligation, whether or
not contractual, and whether or not for payment;

by

borne

entities within

(cid:145)risk concentration(cid:146) shall mean all exposures with a loss
potential
financial
conglomerate, which are large enough to threaten the
the
solvency or
regulated entities
such
exposures may be caused by counterparty risk/credit risk,
investment risk, insurance risk, market risk, other risks, or
a combination or interaction of these risks.

the financial position in general of

in the financial conglomerate;

a

2.
For the purposes of determining whether activities in
different financial sectors are significant within the meaning of
Article 2(14)(e), for each financial sector the average of the
ratio of the balance sheet total of that financial sector to the
balance sheet total of the financial sector entities in the group
the same
and the ratio of
financial sector to the total solvency requirements of
the
financial sector entities in the group should exceed 10 %.

the solvency requirements of

For the purposes of this Directive, the smallest financial sector
in a financial conglomerate is the sector with the smallest
average and the most important financial sector in a financial
conglomerate is the sector with the highest average. For the
purposes of calculating the average and for the measurement
of the smallest and the most important financial sectors, the
banking sector and the investment services sector shall be
considered together.

If

3.
Cross-sectoral activities shall also be presumed to be
significant within the meaning of Article 2(14)(e) if the balance
sheet total of the smallest financial sector in the group exceeds
the group does not reach the threshold
EUR 6 billion.
referred to in paragraph 2, the relevant competent authorities
may decide by common agreement not to regard the group as
a financial conglomerate, or not to apply the provisions of
Articles 7, 8 or 9, if they are of the opinion that the inclusion
of the group in the scope of this Directive or the application
of such provisions is not necessary or would be inappropriate
or misleading with respect to the objectives of supplementary
supervision, taking into account, for instance, the fact that:

(a)

the relative size of its smallest financial sector does not
exceed 5 %, measured either
the average
referred to in paragraph 2 or in terms of the balance sheet
total or the solvency requirements of such financial sector;
or

in terms of

(b) the market share does not exceed 5 % in any Member
State, measured in terms of the balance sheet total in the
banking or investment services sectors and in terms of
gross premiums written in the insurance sector.

Decisions taken in accordance with this paragraph shall be
notified to the other competent authorities concerned.

For the application of paragraphs 1, 2 and 3, the relevant

4.
competent authorities may by common agreement:

Article 3

Thresholds for identifying a financial conglomerate

(a) exclude an entity when calculating the ratios, in the cases

referred to in Article 6(5);

For the purposes of determining whether the activities of
1.
a group mainly occur in the financial sector, within the
meaning of Article 2(14)(c), the ratio of the balance sheet total
of the regulated and non-regulated financial sector entities in
the group to the balance sheet total of the group as a whole
should exceed 40 %.

(b) take

into account

compliance with the

thresholds
envisaged in paragraphs 1 and 2 for three consecutive
years so as to avoid sudden regime shifts, and disregard
such compliance if there are significant changes in the
group’s structure.

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Where a financial conglomerate has been identified according
to paragraphs 1, 2 and 3, the decisions referred to in the first
subparagraph of this paragraph shall be taken on the basis of a
proposal made
financial
conglomerate.

coordinator

that

the

by

of

For the application of paragraphs 1 and 2, the relevant
5.
competent authorities may,
in exceptional cases and by
common agreement, replace the criterion based on balance
sheet total with one or both of the following parameters or
add one or both of these parameters, if they are of the opinion
that
the
purposes of supplementary supervision under this Directive:
income structure, off-balance-sheet activities.

these parameters are of particular

relevance for

6.
For the application of paragraphs 1 and 2, if the ratios
referred to in those paragraphs fall below 40 % and 10 %
respectively
to
supplementary supervision, a lower ratio of 35 % and 8 %
respectively shall apply for the following three years to avoid
sudden regime shifts.

conglomerates

already

subject

for

Similarly, for the application of paragraph 3,
if the balance
sheet total of the smallest financial sector in the group falls
below EUR 6 billion for conglomerates already subject
to
supplementary supervision, a lower figure of EUR 5 billion
shall apply for the following three years to avoid sudden
regime shifts.

During the period referred to in this paragraph,
the
coordinator may, with the agreement of the other relevant
competent authorities, decide that
the lower ratios or the
lower amount referred to in this paragraph shall cease to
apply.

7.
The calculations referred to in this Article regarding the
balance sheet shall be made on the basis of the aggregated
balance sheet total of the entities of the group, according to
their annual accounts. For the purposes of this calculation,
undertakings in which a participation is held shall be taken
into account as regards the amount of their balance sheet total
corresponding to the aggregated proportional share held by
the group. However, where consolidated accounts are available,
they shall be used instead of aggregated accounts.

(cid:151) if a competent authority is of the opinion that a regulated
entity authorised by that competent authority is a member
of a group which may be a financial conglomerate, which
has not already been identified according to this Directive,
the competent authority shall communicate its view to the
other competent authorities concerned.

2.
The coordinator appointed in accordance with Article 10
shall inform the parent undertaking at the head of a group or,
in the absence of a parent undertaking, the regulated entity
important
with the largest balance sheet total
financial sector in a group, that the group has been identified
as a financial conglomerate and of the appointment of the
coordinator. The coordinator shall also inform the competent
authorities which have authorised regulated entities in the
group and the competent authorities of the Member State in
which the mixed financial holding company has its head
office, as well as the Commission.

in the most

CHAPTER II

SUPPLEMENTARY SUPERVISION

SECTION 1

SCOPE

Article 5

Scope of supplementary supervision of regulated entities
referred to in Article 1

1. Without prejudice to the provisions on supervision
contained in the sectoral rules, Member States shall provide for
the supplementary supervision of the regulated entities referred
to in Article 1, to the extent and in the manner prescribed in
this Directive.

The following regulated entities

2.
supplementary supervision at
conglomerate in accordance with Articles 6 to 17:

level of

the

shall be subject
the

to
financial

The solvency requirements referred to in paragraphs 2 and 3
shall be calculated in accordance with the provisions of the
relevant sectoral rules.

(a) every regulated entity which is at the head of a financial

conglomerate;

Article 4

Identifying a financial conglomerate

1.
Competent authorities which have authorised regulated
entities shall, on the basis of Articles 2, 3 and 5, identify any
group that falls under the scope of this Directive.

For this purpose:

(cid:151) competent authorities which have authorised regulated
entities in the group shall, where necessary, cooperate
closely,

(b) every regulated entity, the parent undertaking of which is a
mixed financial holding company which has its head office
in the Community;

(c) every regulated entity linked with another financial sector
entity by a relationship within the meaning of Article
12(1) of Directive 83/349/EEC.

Where a financial conglomerate is a subgroup of another
financial conglomerate which meets the requirements of the
first subparagraph, Member States may apply Articles 6 to 17
to the regulated entities within the latter group only and any
reference in the Directive to the terms group and financial
conglomerate will then be understood as referring to that latter
group.

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Every

regulated

entity which is not

3.
to
supplementary supervision in accordance with paragraph 2,
the parent undertaking of which is a regulated entity or a
mixed financial holding company, having its head office
outside the Community, shall be subject
to supplementary
supervision at the level of the financial conglomerate to the
extent and in the manner prescribed in Article 18.

subject

4. Where persons hold participations or capital ties in one
or more regulated entities or exercise significant influence over
such entities without holding a participation or capital ties,
other than the cases referred to in paragraphs 2 and 3, the
relevant competent authorities shall, by common agreement
and in conformity with national law, determine whether and
the regulated
to what extent supplementary supervision of
entities is to be carried out, as if they constitute a financial
conglomerate.

In order to apply such supplementary supervision, at least one
of the entities must be a regulated entity as referred to in
Article 1 and the conditions set out in Article 2(14)(d) and (e)
must be met. The relevant competent authorities shall take
the
their decision,
supplementary supervision as provided for by this Directive.

taking into account

the objectives of

The Member States shall also require regulated entities to have
in place adequate capital adequacy policies at the level of the
financial conglomerate.

requirements

and second
referred to in the
The
subparagraphs shall be subject to supervisory overview by the
coordinator in accordance with Section 3.

first

The coordinator shall ensure that the calculation referred to in
the first subparagraph is carried out at least once a year, either
by the regulated entities or by the mixed financial holding
company.

The results of the calculation and the relevant data for the
calculation shall be submitted to the coordinator by the
regulated entity within the meaning of Article 1 which is at
the head of the financial conglomerate, or, where the financial
conglomerate is not headed by a regulated entity within the
meaning of Article 1, by the mixed financial holding company
or by the regulated entity in the financial conglomerate
identified by the coordinator after consultation with the other
financial
relevant
conglomerate.

and with the

competent

authorities

the purposes of applying the first

For
subparagraph to
(cid:145)cooperative groups(cid:146), the competent authorities must take into
account the public financial commitment of these groups with
respect to other financial entities.

3.
For the purposes of calculating the capital adequacy
requirements referred to in the first subparagraph of paragraph
2,
the following entities shall be included in the scope of
supplementary supervision in the manner and to the extent
defined in Annex I:

the

to Article 13,
the

exercise of
5. Without prejudice
financial
supplementary supervision at
conglomerate shall
the competent
authorities are required to play a supervisory role in relation to
mixed financial holding companies,
third-country regulated
entities in a financial conglomerate or unregulated entities in a
financial conglomerate, on a stand-alone basis.

in no way imply that

level of

the

SECTION 2

FINANCIAL POSITION

Article 6

Capital adequacy

1. Without prejudice to the sectoral rules, supplementary
supervision of the capital adequacy of the regulated entities in
a financial conglomerate shall be exercised in accordance with
the rules laid down in Article 9(2) to (5), in Section 3 of this
Chapter, and in Annex I.

2.
The Member States shall require regulated entities in a
financial conglomerate to ensure that own funds are available
at the level of the financial conglomerate which are always at
least equal to the capital adequacy requirements as calculated
in accordance with Annex I.

(a) a credit institution, a financial institution or an ancillary
banking services undertaking within the meaning of Article
1(5) and (23) of Directive 2000/12/EC;

(b) an insurance undertaking, a reinsurance undertaking or an
insurance holding company within the meaning of Article
1(i) of Directive 98/78/EC;

(c) an investment firm or a financial

institution within the

meaning of Article 2(7) of Directive 93/6/EEC;

(d) mixed financial holding companies.

4. When calculating the supplementary capital adequacy
requirements with regard to a financial conglomerate by
applying method 1 (Accounting consolidation) referred to in
Annex I, the own funds and the solvency requirements of the
entities in the group shall be calculated by applying the
corresponding sectoral
rules on the form and extent of
consolidation as laid down in particular in Article 54 of
Directive 2000/12/EC and Annex I.1.B. of Directive 98/78/EC.

When applying methods 2 or 3 (Deduction and aggregation,
Book value/Requirement deduction) referred to in Annex I, the
calculation shall take account of the proportional share held by
the parent undertaking or undertaking which holds
a
participation in another entity of
(cid:145)Proportional
share(cid:146) means the proportion of the subscribed capital which is
held, directly or indirectly, by that undertaking.

the group.

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5.
The coordinator may decide not to include a particular
entity in the scope when calculating the supplementary capital
adequacy requirements in the following cases:

These risk concentrations
overview by the coordinator in accordance with Section 3.

shall be subject

to supervisory

(a)

to the

impediments

if the entity is situated in a third country where there are
the necessary
legal
information, without prejudice
rules
sectoral
regarding the obligation of competent authorities to refuse
authorisation where
their
supervisory functions is prevented;

transfer of
to the

exercise of

effective

the

(b)

if the entity is of negligible interest with respect to the
objectives of the supplementary supervision of regulated
entities in a financial conglomerate;

(c)

if the inclusion of the entity would be inappropriate or
misleading with respect to the objectives of supplementary
supervision.

However, if several entities are to be excluded pursuant to (b)
of the first subparagraph, they must nevertheless be included
when collectively they are of non-negligible interest.

In the case mentioned in (c) of the first subparagraph the
coordinator shall, except in cases of urgency, consult the other
relevant competent authorities before taking a decision.

subparagraph,

When the coordinator does not include a regulated entity in
the scope under one of the cases provided for in (b) and (c) of
the
the first
Member State in which that entity is situated may ask the
entity which is at the head of the financial conglomerate for
information which may facilitate their
the
regulated entity.

the competent authorities of

supervision of

Article 7

Risk concentration

1. Without prejudice to the sectoral rules, supplementary
supervision of the risk concentration of regulated entities in a
financial conglomerate shall be exercised in accordance with
the rules laid down in Article 9(2) to (4), in Section 3 of this
Chapter and in Annex II.

2.
The Member States shall require regulated entities or
mixed financial holding companies to report on a regular basis
and at least annually to the coordinator any significant risk
in
concentration at the level of the financial conglomerate,
accordance with the rules laid down in this Article and in
Annex II. The necessary information shall be submitted to the
coordinator by the regulated entity within the meaning of
Article 1 which is at the head of the financial conglomerate or,
where the financial conglomerate is not headed by a regulated
entity within the meaning of Article 1, by the mixed financial
holding company or by the regulated entity in the financial
conglomerate identified by the coordinator after consultation
with the other relevant competent authorities and with the
financial conglomerate.

3.
Pending further coordination of Community legislation,
Member States may set quantitative limits or allow their
competent authorities to set quantitative limits, or take other
supervisory measures which would achieve the objectives of
supplementary
risk
supervision, with
concentration at the level of a financial conglomerate.

regard

any

to

4. Where a financial conglomerate is headed by a mixed
financial holding company, the sectoral rules regarding risk
concentration of the most important financial sector in the
financial conglomerate, if any, shall apply to that sector as a
whole, including the mixed financial holding company.

Article 8

Intra-group transactions

1. Without prejudice to the sectoral rules, supplementary
supervision of intra-group transactions of regulated entities in
a financial conglomerate shall be exercised in accordance with
the rules laid down in Article 9(2) to (4), in Section 3 of this
Chapter, and in Annex II.

2.
The Member States shall require regulated entities or
mixed financial holding companies to report, on a regular
basis and at least annually, to the coordinator all significant
intra-group transactions of regulated entities within a financial
conglomerate, in accordance with the rules laid down in this
Article and in Annex II.
the
thresholds referred to in the last sentence of the first paragraph
of Annex II has been drawn up, an intra-group transaction
shall be presumed to be significant if its amount exceeds at
least 5 % of the total amount of capital adequacy requirements
at the level of a financial conglomerate.

Insofar as no definition of

information shall be

The necessary
submitted to the
coordinator by the regulated entity within the meaning of
Article 1 which is at the head of the financial conglomerate or,
where the financial conglomerate is not headed by a regulated
entity within the meaning of Article 1, by the mixed financial
holding company or by the regulated entity in the financial
conglomerate identified by the coordinator after consultation
with the other relevant competent authorities and with the
financial conglomerate.

These intra-group transactions shall be subject to supervisory
overview by the coordinator.

3.
Pending further coordination of Community legislation,
Member States may set quantitative limits and qualitative
to set
requirements or allow their competent authorities
quantitative limits and qualitative requirements, or take other
supervisory measures that would achieve the objectives of
intra-group
supplementary
transactions
financial
conglomerate.

supervision, with

entities within

regulated

regard

to

of

a

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4. Where a financial conglomerate is headed by a mixed
regarding
financial holding company,
intra-group transactions of the most important financial sector
in the financial conglomerate shall apply to that sector as a
whole, including the mixed financial holding company.

sectoral

rules

the

The processes and mechanisms referred to in paragraphs
to supervisory overview by the

5.
1 to 4 shall be subject
coordinator.

Article 9

MEASURES TO FACILITATE SUPPLEMENTARY SUPERVISION

SECTION 3

Internal control mechanisms and risk management
processes

Article 10

The Member States shall require regulated entities to
1.
have,
the financial conglomerate,
in place at
adequate risk management processes and internal control
mechanisms,
including sound administrative and accounting
procedures.

the level of

2.

The risk management processes shall include:

(a) sound governance and management with the approval and
periodical review of
the strategies and policies by the
appropriate governing bodies at the level of the financial
conglomerate with respect to all the risks they assume;

(b) adequate capital adequacy policies in order to anticipate
the impact of their business strategy on risk profile and
capital requirements as determined in accordance with
Article 6 and Annex I;

(c) adequate procedures to ensure that their risk monitoring
systems are well integrated into their organisation and that
all measures
systems
taken to ensure
implemented in all the undertakings included in the scope
of supplementary supervision are consistent so that the
risks can be measured, monitored and controlled at the
level of the financial conglomerate.

that

the

are

3.

The internal control mechanisms shall include:

(a) adequate mechanisms as

regards capital adequacy to
identify and measure all material risks incurred and to
appropriately relate own funds to risks;

(b) sound reporting and accounting procedures to identify,
measure, monitor and control the intra-group transactions
and the risk concentration.

4.
The Member States shall ensure that, in all undertakings
included in the scope of supplementary supervision pursuant
to Article 5, there are adequate internal control mechanisms
for the production of any data and information which would
be relevant for the purposes of the supplementary supervision.

Competent authority responsible for exercising
supplementary supervision (the coordinator)

1.
In order to ensure proper supplementary supervision of
the regulated entities in a financial conglomerate, a single
coordinator,
responsible for coordination and exercise of
supplementary supervision, shall be appointed from among the
competent
concerned,
including those of
the Member State in which the mixed
financial holding company has its head office.

the Member States

authorities of

2.

The appointment shall be based on the following criteria:

(a) where a financial conglomerate is headed by a regulated
entity, the task of coordinator shall be exercised by the
competent authority which has authorised that regulated
entity pursuant to the relevant sectoral rules;

(b) where a financial conglomerate is not headed by a
regulated entity, the task of coordinator shall be exercised
by the competent authority identified in accordance with
the following principles:

(i) where the parent of a regulated entity is a mixed
financial holding company,
the task of coordinator
shall be exercised by the competent authority which
has authorised that regulated entity pursuant to the
relevant sectoral rules;

(ii) where more than one regulated entity with a head
office in the Community have as their parent the same
mixed financial holding company, and one of these
entities has been authorised in the Member State in
which the mixed financial holding company has its
head office, the task of coordinator shall be exercised
by the competent authority of
the regulated entity
authorised in that Member State.

Where more than one regulated entity, being active in
different financial sectors, have been authorised in the
Member State in which the mixed financial holding
company has its head office, the task of coordinator
shall be exercised by the competent authority of the
regulated entity active in the most important financial
sector.

Where the financial conglomerate is headed by more
than one mixed financial holding company with a head
office in different Member States and there is a

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regulated entity in each of these States, the task of
shall be exercised by the competent
coordinator
the regulated entity with the largest
authority of
balance sheet total
if these entities are in the same
financial sector, or by the competent authority of the
regulated entity in the most important financial sector;

(iii) where more than one regulated entity with a head
office in the Community have as their parent the same
mixed financial holding company and none of these
entities has been authorised in the Member State in
which the mixed financial holding company has its
head office, the task of coordinator shall be exercised
by the competent authority which authorised the
regulated entity with the largest balance sheet total in
the most important financial sector;

(iv) where the financial conglomerate is a group without a
parent undertaking at the top, or in any other case, the
task of coordinator shall be exercised by the competent
authority which authorised the regulated entity with
the largest balance sheet total in the most important
financial sector.

In particular cases,

3.
the relevant competent authorities
may by common agreement waive the criteria referred to in
paragraph 2 if their application would be inappropriate, taking
into account the structure of the conglomerate and the relative
importance of its activities in different countries, and appoint a
different competent authority as coordinator. In these cases,
before taking their decision, the competent authorities shall
give the conglomerate an opportunity to state its opinion on
that decision.

(e) planning and coordination of

supervisory activities
going concern as well as in emergency situations,
cooperation with the
involved;

in
in
authorities

competent

relevant

(f) other

tasks, measures and decisions assigned to the
coordinator by this Directive or deriving from the
application of this Directive.

In order to facilitate and establish supplementary supervision
on a broad legal basis, the coordinator and the other relevant
competent authorities, and where necessary other competent
authorities concerned, shall have coordination arrangements in
place. The coordination arrangements may entrust additional
tasks to the coordinator and may specify the procedures for
the decision-making process among the relevant competent
authorities as referred to in Articles 3, 4, 5(4), 6, 12(2), 16 and
18, and for cooperation with other competent authorities.

The coordinator

should, when it needs

2.
information
which has already been given to another competent authority
in accordance with the sectoral rules, contact this authority
whenever possible in order to prevent duplication of reporting
to the various authorities involved in supervision.

3. Without prejudice to the possibility of delegating specific
supervisory competences and responsibilities as provided for
the presence of a coordinator
by Community legislation,
entrusted with specific tasks concerning the supplementary
supervision of regulated entities in a financial conglomerate
shall not affect the tasks and responsibilities of the competent
authorities as provided for by the sectoral rules.

Article 11

Tasks of the coordinator

Article 12

The tasks to be carried out by the coordinator with

1.
regard to supplementary supervision shall include:

Cooperation and exchange of information between
competent authorities

(a) coordination of

relevant or essential
emergency situations,
information which is of
authority’s supervisory task under sectoral rules;

the gathering and dissemination of
information in going concern and
including the dissemination of
importance for a competent

(b) supervisory overview and assessment of

the financial

situation of a financial conglomerate;

(c) assessment of compliance with the rules on capital
risk concentration and intra-group

adequacy and of
transactions as set out in Articles 6, 7 and 8;

sectoral

The competent authorities responsible for the supervision
1.
of
regulated entities in a financial conglomerate and the
competent authority appointed as the coordinator for that
financial conglomerate shall cooperate closely with each other.
Without prejudice to their respective responsibilities as defined
under
authorities, whether or not
established in the same Member State, shall provide one
another with any information which is essential or relevant for
the exercise of the other authorities’ supervisory tasks under
the sectoral
the
competent authorities and the coordinator shall communicate
on request all relevant information and shall communicate on
their own initiative all essential information.

rules and this Directive.

In this

regard,

rules,

these

(d) assessment of

financial
organisation and internal control system as set out
Article 9;

conglomerate’s

structure,
in

the

This cooperation shall at least provide for the gathering and
the exchange of
information with regard to the following
items:

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(a)

identification of the group structure of all major entities
belonging to the financial conglomerate, as well as of the
competent authorities of
in the
group;

the regulated entities

(b) the financial conglomerate’s strategic policies;

(c)

the financial situation of
particular on capital adequacy,
risk concentration and profitability;

the financial conglomerate,

in
intra-group transactions,

(d) the

financial
management;

conglomerate’s major

shareholders

and

(e)

the organisation, risk management and internal control
systems at financial conglomerate level;

(f) procedures for the collection of

information from the
entities in a financial conglomerate, and the verification of
that information;

(g) adverse developments in regulated entities or in other
entities of the financial conglomerate which could seriously
affect the regulated entities;

(h) major

sanctions

taken by
competent authorities in accordance with sectoral rules or
this Directive.

and exceptional measures

The competent authorities may also exchange with the
following authorities such information as may be needed for
the performance of their respective tasks, regarding regulated
entities in a financial conglomerate, in line with the provisions
laid down in the sectoral rules: central banks, the European
System of Central Banks and the European Central Bank.

sectoral

2. Without prejudice to their respective responsibilities as
authorities
defined under
concerned shall, prior to their decision, consult each other
with regard to the following items, where these decisions are
of
importance for other competent authorities’ supervisory
tasks:

competent

rules,

the

(a) changes in the shareholder, organisational or management
structure of regulated entities in a financial conglomerate,
which require the approval or authorisation of competent
authorities;

(b) major

sanctions or
competent authorities.

exceptional measures

taken by

A competent authority may decide not to consult in cases of
urgency or where such consultation may jeopardise the
In this case,
effectiveness of
the competent
the decisions.
inform the other competent
authority shall, without delay,
authorities.

3.
The coordinator may invite the competent authorities of
the Member State in which a parent undertaking has its head

do

themselves

and which

office,
the
not
supplementary supervision pursuant to Article 10, to ask the
parent undertaking for any information which would be
relevant for the exercise of its coordination tasks as laid down
in Article 11, and to transmit
information to the
coordinator.

exercise

that

Where the information referred to in Article 14(2) has already
been given to a competent authority in accordance with
for
sectoral
exercising supplementary supervision may apply to the
first-mentioned authority to obtain the information.

responsible

competent

authorities

rules,

the

shall authorise the exchange of

the
4. Member States
information between their competent authorities and between
their competent authorities and other authorities, as referred to
in paragraphs 1, 2 and 3. The collection or possession of
information with regard to an entity within a financial
conglomerate which is not a regulated entity shall not in any
way imply that the competent authorities are required to play
a supervisory role in relation to these entities on a stand-alone
basis.

supplementary
Information received in the framework of
information
supervision, and in particular any exchange of
between competent
and between competent
authorities and other authorities which is provided for in this
Directive, shall be subject to the provisions on professional
secrecy and communication of confidential
information laid
down in the sectoral rules.

authorities

Article 13

Management body of mixed financial holding companies

Member States shall require that persons who effectively direct
the business of a mixed financial holding company are of
sufficiently good repute and have sufficient experience to
perform those duties.

Article 14

Access to information

1. Member States
there are no legal
shall ensure that
impediments within their jurisdiction preventing the natural
and legal persons included within the scope of supplementary
from
supervision, whether or not
exchanging amongst themselves any information which would
be relevant for the purposes of supplementary supervision.

regulated

entity,

a

2. Member States shall provide that, when approaching the
entities in a financial conglomerate, whether or not a regulated
entity, either directly or indirectly, their competent authorities
responsible for exercising supplementary supervision shall have
access to any information which would be relevant for the
purposes of supplementary supervision.

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Article 15

Verification

Where, in applying this Directive, competent authorities wish
in specific cases to verify the information concerning an entity,
whether or not
regulated, which is part of a financial
conglomerate and is situated in another Member State, they
shall ask the competent authorities of that other Member State
to have the verification carried out.

The authorities which receive such a request shall, within the
framework of their competences, act upon it either by carrying
the verification themselves, by allowing an auditor or
out
expert to carry it out, or by allowing the authority which
made the request to carry it out itself.

The competent authority which made the request may, if it so
wishes, participate in the verification when it does not carry
out the verification itself.

Article 16

Enforcement measures

If the regulated entities in a financial conglomerate do not
comply with the requirements referred to in Articles 6 to 9 or
where the requirements are met but solvency may nevertheless
be jeopardised or where the intra-group transactions or the
risk concentrations are a threat
to the regulated entities’
financial position, the necessary measures shall be required in
order to rectify the situation as soon as possible:

(cid:151) by the coordinator with respect

to the mixed financial

holding company,

(cid:151) by the competent authorities with respect to the regulated
inform those

entities; to that end, the coordinator shall
competent authorities of its findings.

Without prejudice to Article 17(2), Member States may
determine what measures may be taken by their competent
authorities with respect to mixed financial holding companies.

The competent authorities involved, including the coordinator,
shall where appropriate coordinate their supervisory actions.

Article 17

Additional powers of the competent authorities

Pending further harmonisation between sectoral rules, the
1.
Member States shall provide that their competent authorities
shall have the power to take any supervisory measure deemed
necessary in order to avoid or to deal with the circumvention
of
financial
regulated
sectoral
conglomerate.

rules by

entities

in a

2. Without prejudice to their criminal
law provisions,
Member States shall ensure that penalties or measures aimed at
ending observed breaches or the causes of such breaches may
be imposed on mixed financial holding companies, or their
effective managers, which infringe
regulations or
administrative provisions enacted to implement this Directive.
In certain cases, such measures may require the intervention of
the courts. The competent authorities shall cooperate closely to
ensure that such penalties or measures produce the desired
results.

laws,

SECTION 4

THIRD COUNTRIES

Article 18

Parent undertakings outside the Community

to that provided for by the provisions of

1. Without prejudice to the sectoral rules,
in the case
referred to in Article 5(3), competent authorities shall verify
whether the regulated entities, the parent undertaking of which
has its head office outside the Community, are subject
to
supervision by a third-country competent authority, which is
this
equivalent
Directive on the supplementary supervision of
regulated
entities referred to in Article 5(2). The verification shall be
carried out by the competent authority which would be the
coordinator if the criteria set out in Article 10(2) were to
apply, on the request of the parent undertaking or of any of
the regulated entities authorised in the Community or on its
the
own initiative. That competent authority shall consult
other
take into
relevant competent authorities, and shall
account any applicable guidance prepared by the Financial
Conglomerates Committee in accordance with Article 21(5).
For this purpose the competent authority shall consult the
Committee before taking a decision.

2.
In the absence of equivalent supervision referred to in
paragraph 1, Member States shall apply to the regulated
entities,
the
supplementary supervision of regulated entities referred to in
Article 5(2). As an alternative, competent authorities may
apply one of the methods set out in paragraph 3.

concerning

provisions

analogy,

the

by

of

the

after

regulated

a
in
agreed by

consultation with the other

3. Member States shall allow their competent authorities to
apply other methods which ensure appropriate supplementary
financial
entities
supervision
the
conglomerate. These methods must be
coordinator,
relevant
competent authorities. The competent authorities may in
particular
require the establishment of a mixed financial
holding company which has its head office in the Community,
and apply this Directive to the regulated entities
in the
financial conglomerate headed by that holding company. The
methods must achieve the objectives of
the supplementary
supervision as defined in this Directive and must be notified to
the other competent authorities involved and the Commission.

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Article 19

Cooperation with third-country competent authorities

Article 25(1) and (2) of Directive 2000/12/EC and Article
1.
10a of Directive 98/78/EC shall apply mutatis mutandis to the
negotiation of agreements with one or more third countries
regarding the means of exercising supplementary supervision
of regulated entities in a financial conglomerate.

The Commission, the Banking Advisory Committee, the
Financial Conglomerates
the negotiations

2.
Insurance Committee
Committee shall examine the outcome of
referred to in paragraph 1 and the resulting situation.

and

the

Article 21

Committee

The Commission shall be
1.
Conglomerates Committee, hereinafter
(cid:145)Committee(cid:146).

assisted by a

referred to as

Financial
the

2. Where reference is made to this paragraph, Articles 5
and 7 of Decision 1999/468/EC shall apply, having regard to
the provisions of Article 8 thereof.

The period laid down in Article 5(6) of Decision 1999/468/EC
shall be set at three months.

CHAPTER III

3.

The Committee shall adopt its rules of procedure.

POWERS CONFERRED ON THE COMMISSION AND
COMMITTEE PROCEDURE

Article 20

Powers conferred on the Commission

The Commission shall adopt,

in accordance with the
1.
procedure
technical
the
adaptations to be made to this Directive in the following areas:

to in Article 21(2),

referred

(a) a more precise formulation of the definitions referred to in
Article 2 in order to take account of developments in
financial markets in the application of this Directive;

(b) a more precise formulation of the definitions referred to in
Article 2 in order to ensure uniform application of this
Directive in the Community;

(c)

alignment of

the
framing of
definitions in the Directive in accordance with subsequent
Community acts on regulated entities and related matters;

terminology

and the

this Directive,

the application of

4. Without prejudice to the implementing measures already
adopted, on the expiry of a four-year period following the
the
entry into force of
provisions thereof requiring the adoption of technical rules
and decisions in accordance with the procedure referred to in
paragraph 2 shall be suspended. On a proposal
from the
Commission, the European Parliament and the Council may
renew the provisions concerned in accordance with the
procedure laid down in Article 251 of the Treaty and, to that
end, they shall review them prior to the expiry of the period
referred to above.

likely to achieve

in third countries are

5.
The Committee may give general guidance as to whether
the supplementary supervision arrangements of competent
authorities
the
objectives of the supplementary supervision as defined in this
Directive,
in relation to the regulated entities in a financial
conglomerate, the head of which has its head office outside the
Community. The Committee shall keep any such guidance
review and take into account any changes to the
under
supplementary supervision carried out by such competent
authorities.

The Committee shall be kept informed by Member States
the principles they apply concerning the supervision of

6.
of
intra-group transactions and risk concentration.

(d) a more precise definition of the calculation methods set
out in Annex I in order to take account of developments
on financial markets and prudential techniques;

CHAPTER IV

AMENDMENTS TO EXISTING DIRECTIVES

(e) coordination of

to
Articles 7 and 8 and Annex II with a view to encouraging
uniform application within the Community.

adopted pursuant

the provisions

2.
The Commission shall inform the public of any proposal
presented in accordance with this Article and will consult
interested parties prior to submitting the draft measures to the
Financial Conglomerates Committee referred to in Article 21.

Article 22

Amendments to Directive 73/239/EEC

Directive 73/239/EEC is amended as follows:

L 35/14

EN

Official Journal of the European Union

11.2.2003

1.

the following Article shall be inserted:

(cid:145)Article 12a

1.
The competent authorities of the other Member State
involved shall be consulted prior to the granting of an
authorisation to an insurance undertaking, which is:

(a) a subsidiary of an insurance undertaking authorised in

another Member State; or

(b) a subsidiary of the parent undertaking of an insurance
undertaking authorised in another Member State; or

(c) controlled by the same person, whether natural or
undertaking

legal, who
controls
authorised in another Member State.

insurance

an

The competent authority of a Member State involved
2.
responsible for the supervision of credit
institutions or
investment firms shall be consulted prior to the granting of
an authorisation to an insurance undertaking which is:

(a) a subsidiary of a credit institution or investment firm

authorised in the Community; or

(b) a subsidiary of
institution or
Community; or

the parent undertaking of a credit
firm authorised in the
investment

(c) controlled by the same person, whether natural or
legal, who controls a credit institution or investment
firm authorised in the Community.

3.
The relevant competent authorities referred to in
paragraphs 1 and 2 shall in particular consult each other
when assessing the suitability of the shareholders and the
reputation and experience of directors involved in the
management of another entity of the same group. They
shall inform each other of any information regarding the
suitability of
reputation and
experience of directors which is of relevance to the other
competent authorities involved for the granting of an
authorisation as well as for the ongoing assessment of
compliance with operating conditions.(cid:146)

shareholders

and

the

2.

the following subparagraphs shall be added to Article
16(2):

(cid:145)The available solvency margin shall also be reduced by the
following items:

(a) participations which the insurance undertaking holds

in

(cid:151) insurance undertakings within the meaning of
this Directive, Article 6 of First

Article 6 of

of

Directive 79/267/EEC of 5 March 1979 on the
and
laws,
coordination
administrative provisions relating to the taking up
and pursuit of
life
assurance (*), or Article 1(b) of Directive 98/78/EC
of the European Parliament and of the Council (**),

business of

regulations

direct

the

(cid:151) reinsurance undertakings within the meaning of

Article 1(c) of Directive 98/78/EC,

(cid:151) insurance holding companies within the meaning

of Article 1(i) of Directive 98/78/EC,

(cid:151) credit institutions and financial institutions within
the meaning of Article 1(1) and (5) of Directive
2000/12/EC of the European Parliament and of the
Council (***),

(cid:151) investment firms and financial

institutions within
the meaning
of Directive
93/22/EEC (****) and of Article 2(4) and (7) of
Directive 93/6/EEC (*****);

of Article

1(2)

(b) each of

the following items which the insurance
undertaking holds in respect of the entities defined in
(a) in which it holds a participation:

(cid:151) instruments referred to in paragraph 3,

(cid:151) instruments referred to in Article 18(3) of Directive

79/267/EEC,

(cid:151) subordinated claims and instruments referred to in
of Directive

and Article

36(3)

Article
35
2000/12/EC.

Where shares in another credit institution, investment firm,
financial institution, insurance or reinsurance undertaking
or insurance holding company are held temporarily for the
purposes of a financial assistance operation designed to
reorganise and save that entity, the competent authority
may waive the provisions on deduction referred to under
(a) and (b) of the fourth subparagraph.

in

credit

undertaking

As an alternative to the deduction of the items referred to
the fourth subparagraph which the
in (a) and (b) of
insurance
institutions,
holds
investment firms and financial institutions, Member States
may allow their insurance undertakings to apply mutatis
to Directive
mutandis methods 1, 2, or 3 of Annex I
the
2002/87/EC of
Council of 16 December 2002 on the supplementary
supervision of credit institutions,
insurance undertakings
and investment firms in a financial conglomerate (******).
Method 1 (Accounting consolidation) shall only be applied
if the competent authority is confident about the level of

the European Parliament and of

11.2.2003

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Official Journal of the European Union

L 35/15

integrated management and internal control regarding the
scope of
entities which would be
consolidation. The method chosen shall be applied in a
consistent manner overtime.

included in the

(c) controlled by the same person, whether natural or
undertaking

controls
legal, who
authorised in another Member State.

insurance

an

to

subject

undertakings

Member States may provide that, for the calculation of the
solvency margin as provided for by this Directive,
insurance
supplementary
supervision in accordance with Directive 98/78/EC or to
supplementary supervision in accordance with Directive
2002/87/EC, need not deduct the items referred to in (a)
and (b) of the fourth subparagraph which are held in credit
institutions,
institutions,
firms,
insurance or reinsurance undertakings or insurance holding
companies which are included in the supplementary
supervision.

investment

financial

For the purposes of the deduction of participations referred
in this paragraph, participation shall mean a
to
participation within the meaning of Article 1(f) of
Directive 98/78/EC.

(*)

(**)
(***)

(****)

by Directive

last
OJ L 63, 13.3.1979, p. 1. Directive as
amended
the
2002/12/EC of
European Parliament and of the Council (OJ L 77,
20.3.2002, p. 11).
OJ L 330, 5.12.1998, p. 1.
OJ L 126, 26.5.2000, p. 1. Directive as amended
by Directive 2000/28/EEC (OJ L 275, 27.10.2000,
p. 37).
OJ L 141, 11.6.1993, p. 27. Directive as last
the
amended
(OJ L
European Parliament and of
290, 17.11.2000, p. 27).

2000/64/EC of
the Council

by Directive

(*****) OJ L 141, 11.6.1993, p. 1. Directive as last
amended by Directive 98/33/EC of the European
(OJ L 204,
Parliament
21.7.1998, p. 29).

the Council

and of

The competent authority of a Member State involved,
2.
responsible for the supervision of credit
institutions or
investment firms, shall be consulted prior to the granting
of an authorisation to a life assurance undertaking, which
is:

(a) a subsidiary of a credit institution or investment firm

authorised in the Community; or

(b) a subsidiary of
institution or
Community; or

the parent undertaking of a credit
firm authorised in the
investment

(c) controlled by the same person, whether natural or
legal, who controls a credit institution or investment
firm authorised in the Community.

3.
The relevant competent authorities referred to in
paragraphs 1 and 2 shall in particular consult each other
when assessing the suitability of the shareholders and the
reputation and experience of directors involved in the
management of another entity of the same group. They
shall inform each other of any information regarding the
reputation and
suitability of
experience of directors which is of relevance to the other
competent authorities involved for the granting of an
authorisation as well as for the ongoing assessment of
compliance with operating conditions.(cid:146)

shareholders

and

the

(******) OJ L 35, 11.2.2003.(cid:146)

Article 23

2.

the following subparagraphs shall be added to Article
18(2):

Amendments to Directive 79/267/EEC

(cid:145)The available solvency margin shall also be reduced by the
following items:

Directive 79/267/EC is amended as follows:

1.

the following Article shall be inserted:

(cid:145)Article 12a

1.
The competent authorities of the other Member State
involved shall be consulted prior to the granting of an
authorisation to a life assurance undertaking, which is:

(a) a subsidiary of an insurance undertaking authorised in

another Member State; or

(a) participations which the assurance undertaking holds,

in

(cid:151) insurance undertakings within the meaning of
Article 6 of this Directive, Article 6 of Directive
73/239/EEC (*),
of Directive
or Article 1(b)
98/78/EC of the European Parliament and of the
Council (**),

(cid:151) reinsurance undertakings within the meaning of

Article 1(c) of Directive 98/78/EC,

(b) a subsidiary of the parent undertaking of an insurance
undertaking authorised in another Member State; or

(cid:151) insurance holding companies within the meaning

of Article 1(i) of Directive 98/78/EC,

L 35/16

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Official Journal of the European Union

11.2.2003

(cid:151) credit institutions and financial institutions within
the meaning of Article 1(1) and (5) of Directive
2000/12/EC of the European Parliament and of the
Council (***),

For the purposes of the deduction of participations referred
in this paragraph, participation shall mean a
to
participation within the meaning of Article 1(f) of
Directive 98/78/EC.

(cid:151) investment firms and financial

institutions within
the meaning
of Directive
93/22/EEC (****) and of Articles 2(4) and 2(7) of
Directive 93/6/EEC (*****);

of Article

1(2)

(b) each of

the following items which the assurance
undertaking holds in respect of the entities defined in
(a) in which it holds a participation:

(cid:151) instruments referred to in paragraph 3,

(cid:151) instruments referred to in Article 16(3) of Directive

73/239/EEC,

(cid:151) subordinated claims and instruments referred to in
of Directive

and Article

36(3)

35
Article
2000/12/EC.

Where shares in another credit institution, investment firm,
financial institution, insurance or reinsurance undertaking
or insurance holding company are held temporarily for the
purposes of a financial assistance operation designed to
reorganise and save that entity, the competent authority
may waive the provisions on deduction referred to under
(a) and (b) of the third subparagraph.

in

credit

undertaking

the European Parliament and of

As an alternative to the deduction of the items referred to
the third subparagraph which the
in (a) and (b) of
insurance
institutions,
holds
investment firms and financial institutions, Member States
may allow their insurance undertakings to apply mutatis
to Directive
mutandis methods 1, 2, or 3 of Annex I
2002/87/EC of
the
Council of 16 December 2002 on the supplementary
supervision of credit institutions,
insurance undertakings
and investment firms in a financial conglomerate (******).
Method 1 (Accounting consolidation) shall only be applied
if the competent authority is confident about the level of
integrated management and internal control regarding the
entities which would be
scope of
consolidation. The method chosen shall be applied in a
consistent manner over time.

included in the

to

subject

undertakings

Member States may provide that, for the calculation of the
solvency margin as provided for by this Directive,
insurance
supplementary
supervision in accordance with Directive 98/78/EC or to
supplementary supervision in accordance with Directive
2002/87/EC, need not deduct the items referred to in (a)
and (b) of the third subparagraph which are held in credit
institutions,
institutions,
firms,
insurance or reinsurance undertakings or insurance holding
companies which are included in the supplementary
supervision.

investment

financial

(*)

(**)
(***)

(****)

by Directive

2002/13/EC of

OJ L 228, 16.8.1973, p. 3. Directive as last
amended
the
European Parliament and of the Council (OJ L 77,
20.3.2002, p. 17).
OJ L 330, 5.12.1998, p. 1.
OJ L 126, 26.5.2000, p. 1. Directive as last
amended by Directive 2000/28/EC (OJ L 275,
27.10.2000, p. 37).
OJ L 141, 11.6.1993, p. 27. Directive as last
the
amended
(OJ L
European Parliament and of
290, 17.11.2000, p. 27).

2000/64/EC of
the Council

by Directive

(*****) OJ L 141, 11.6.1993, p. 1. Directive as last
amended by Directive 98/33/EC of the European
(OJ L 204,
Parliament
21.7.1998, p. 29).

the Council

and of

(******) OJ L 35, 11.2.2003.(cid:146)

Article 24

Amendments to Directive 92/49/EEC

Directive 92/49/EEC is amended as follows:

1.

the following paragraph shall be inserted in Article 15:

the holdings

the acquirer of

an insurance undertaking,

referred to in
(cid:145)1a.
If
credit
a
paragraph 1 is
institution or an investment
firm authorised in another
Member State, or the parent undertaking of such an entity,
or a natural or legal person controlling such an entity, and
if, as a result of that acquisition, the undertaking in which
the acquirer proposes to hold a holding would become a
subsidiary or subject to the control of the acquirer, the
assessment of the acquisition must be subject to the prior
consultation referred to in Article 12a of Directive
73/239/EEC.(cid:146)

2. Article 16(5c) shall be replaced by the following:

This Article shall not prevent a competent authority

(cid:145)5c.
from transmitting

(cid:151) to central banks and other bodies with a similar
function in their capacity as monetary authorities,

(cid:151) where

appropriate,

to

other

public

authorities

responsible for overseeing payment systems,

it prevent

information intended for the performance of their task, nor
from
such authorities
shall
bodies
or
authorities
communicating
such
competent
to
information as
the purposes of
they may need for
paragraph 4. Information received in this context shall be
subject to the conditions of professional secrecy imposed
in this Article.(cid:146)

the

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Article 25

Amendments to Directive 92/96/EEC

(cid:151) (cid:147)mixed-activity holding company(cid:148) shall mean a parent
undertaking, other than a financial holding company or an
firm or a mixed financial holding company
investment
within the meaning of Directive 2002/87/EC,
the
subsidiaries of which include at least one investment firm.

Directive 92/96/EEC is amended as follows:

(*) OJ L 35, 11.2.2003.(cid:146)

1.

the following paragraph shall be inserted in Article 14:

the holdings

the acquirer of

an insurance undertaking,

referred to in
(cid:145)1a.
If
credit
a
paragraph 1 is
institution or an investment
firm authorised in another
Member State, or the parent undertaking of such an entity,
or a natural or legal person controlling such an entity, and
if, as a result of that acquisition, the undertaking in which
the acquirer proposes to hold a holding would become a
subsidiary or subject to the control of the acquirer, the
assessment of the acquisition must be subject to the prior
consultation referred to in Article 12a of Directive
79/267/EEC.(cid:146)

2. Article 15(5c) shall be replaced by the following:

This Article shall not prevent a competent authority

(cid:145)5c.
from transmitting

(cid:151) to central banks and other bodies with a similar
function in their capacity as monetary authorities,

(cid:151) where

appropriate,

to

other

public

authorities

responsible for overseeing payment systems,

Article 27

Amendments to Directive 93/22/EEC

Directive 93/22/EEC is amended as follows:

1.

in Article 6 the following paragraphs shall be added:

(cid:145)The competent authority of a Member State involved,
responsible for the supervision of credit
institutions or
insurance undertakings, shall be consulted prior to the
granting of an authorisation to an investment firm which
is:

(a) a subsidiary of a credit

institution or

insurance

undertaking authorised in the Community; or

(b) a subsidiary of

the parent undertaking of a credit
institution or insurance undertaking authorised in the
Community; or

(c) controlled by the same person, whether natural or
legal, who controls a credit institution or insurance
undertaking authorised in the Community.

it prevent

information intended for the performance of their task, nor
from
such authorities
shall
or
bodies
authorities
to
communicating
such
competent
information as
the purposes of
they may need for
paragraph 4. Information received in this context shall be
subject to the conditions of professional secrecy imposed
in this Article.(cid:146)

the

Article 26

Amendments to Directive 93/6/EEC

In Article 7(3) of Directive 93/6/EEC the first and the second
indents shall be replaced by the following:

(cid:145)(cid:151) (cid:147)financial holding company(cid:148)

shall mean a

financial
institution, the subsidiary undertakings of which are either
exclusively or mainly investment firms or other financial
institutions, at least one of which is an investment firm,
and which is not a mixed financial holding company
within the meaning of Directive 2002/87/EC of
the
European Parliament and of the Council of 16 December
2002 on the
credit
institutions,
insurance undertakings and investment firms
in a financial conglomerate (*),

supervision of

supplementary

The relevant competent authorities referred to in the first
and second paragraphs shall
in particular consult each
other when assessing the suitability of the shareholders and
the reputation and experience of directors involved in the
management of another entity of the same group. They
shall inform each other of any information regarding the
suitability of
reputation and
experience of directors which is of relevance to the other
competent authorities involved for the granting of an
authorisation as well as for the ongoing assessment of
compliance with operating conditions.(cid:146)

shareholders

and

the

2. Article 9(2) shall be replaced by the following:

If

the acquirer of

(cid:145)2.
the holding referred to in
paragraph 1 is an investment firm, a credit institution or
an insurance undertaking authorised in another Member
State, or the parent undertaking of an investment firm,
credit institution or insurance undertaking authorised in
legal person
another Member State, or a natural or
controlling an investment
institution or
insurance undertaking authorised in another Member State,
and if, as a result of that acquisition, the undertaking in
which the acquirer proposes to acquire a holding would
become the acquirer’s
subsidiary or come under his
control, the assessment of the acquisition must be subject
to the prior consultation provided for in Article 6.(cid:146)

credit

firm,

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Article 28

Amendments to Directive 98/78/EC

Directive 98/78/EC is amended as follows:

transactions as provided for

monitor and control
in
shall also
paragraph 1 appropriately. Member States
require at least annual reporting by insurance undertakings
transactions.
to the competent authorities of significant
These processes and mechanisms
to
overview by the competent authorities.(cid:146)

shall be subject

1.

in Article 1 points (g), (h), (i) and (j) shall be replaced by
the following:

4.

the following Articles shall be inserted:

(cid:145)(g) (cid:147)participating undertaking(cid:148) shall mean an undertaking
a parent undertaking or other
which is
either
undertaking which holds
an
undertaking linked with another undertaking by a
relationship within the meaning of Article 12(1) of
Directive 83/349/EEC;

a participation, or

(h) (cid:147)related undertaking(cid:148) shall mean either a subsidiary or
other undertaking in which a participation is held, or
an undertaking linked with another undertaking by a
relationship within the meaning of Article 12(1) of
Directive 83/349/EEC;

(i)

(j)

insurance
or
at

undertakings,
non-member-country
such

(cid:147)insurance holding company(cid:148)
shall mean a parent
undertaking, the main business of which is to acquire
and hold participations
in subsidiary undertakings,
where those subsidiary undertakings are exclusively or
reinsurance
mainly
insurance
undertakings,
undertakings,
subsidiary
undertakings being an insurance undertaking, and
which is not a mixed financial holding company
within the meaning of Directive 2002/87/EC of the
European Parliament
the Council of 16
and of
December 2002 on the supplementary supervision of
credit
and
undertakings
insurance
investment firms in a financial conglomerate (*);

institutions,

least

one

of

(cid:147)mixed-activity insurance holding company(cid:148) shall mean
than an insurance
a parent undertaking, other
insurance
country
non-member
a
undertaking,
undertaking, a reinsurance undertaking, an insurance
holding company or
a mixed financial holding
company within the meaning of Directive 2002/87/EC,
which includes at
least one insurance undertaking
among its subsidiary undertakings.

(*) OJ L 35, 11.2.2003.(cid:146)

2.

in Article 6(3) the following sentence shall be added:

(cid:145)The competent authority which made the request may, if
it so wishes, participate in the verification when it does
not carry out the verification itself.(cid:146)

(cid:145)Article 10a

Cooperation with third countries’ competent
authorities

The Commission may submit proposals

1.
to the
Council, either at the request of a Member State or on its
own initiative, for the negotiation of agreements with one
or more third countries regarding the means of exercising
supplementary supervision over:

(a)

insurance undertakings which have, as participating
undertakings, undertakings within the meaning of
Article 2 which have their head office situated in a
third country; and

(b) non-member country insurance undertakings which
have,
undertakings
within the meaning of Article 2 which have their head
office in the Community.

as participating

undertakings,

The agreements referred to in paragraph 1 shall in

2.
particular seek to ensure both:

(a)

that the competent authorities of the Member States
are able to obtain the information necessary for the
supplementary supervision of
insurance undertakings
which have their head office in the Community and
in
which have subsidiaries or hold participations
undertakings outside the Community; and

(b) that the competent authorities of third countries are
the
able to obtain the information necessary for
supplementary supervision of
insurance undertakings
which have their head office in their territories and
which have subsidiaries or hold participations
in
undertakings in one or more Member States.

3.
The Commission and the Insurance Committee shall
examine the outcome of the negotiations referred to in
paragraph 1 and the resulting situation.

3.

in Article 8(2) the first subparagraph shall be replaced by
the following:

Article 10b

Management body of insurance holding companies

(cid:145)Member States shall require insurance undertakings to
have in place adequate risk management processes and
internal control mechanisms,
including sound reporting
and accounting procedures, in order to identify, measure,

The Member States
effectively direct

that persons who
the business of an insurance holding

require

shall

11.2.2003

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Official Journal of the European Union

L 35/19

company are of sufficiently good repute and have sufficient
experience to perform these duties.(cid:146)

5.

in Annex I.1.B. the following paragraph shall be added:

the
(cid:145)Where there are no capital
undertakings
competent
authority shall determine which proportional share will
have to be taken account of.(cid:146)

in an insurance group,

ties between some of

the

6.

in Annex I.2. the following point shall be added:

(cid:145)2.4a. Related credit institutions, investment firms and
financial institutions

rules

When calculating the adjusted solvency of an insurance
undertaking which is a participating undertaking in a
credit institution, investment firm or financial institution,
the
laid down in Article 16(1) of Directive
73/239/EEC and in Article 18 of Directive 79/267/EEC on
the deduction of such participations shall apply mutatis
mutandis, as well as the provisions on the ability of
Member
allow
certain
alternative methods and to allow such participations not to
be deducted.(cid:146)

conditions

under

States

to

22.

(cid:147)mixed-activity holding company(cid:148) shall mean a
parent undertaking, other than a financial holding
company or a credit
institution or a mixed
financial holding company within the meaning of
Directive 2002/87/EC, the subsidiaries of which
include at least one credit institution;

(*) OJ L 35, 11.2.2003.(cid:146)

2.

in Article 12 the following paragraphs shall be added:

(cid:145)The competent authority of a Member State involved,
responsible for the supervision of insurance undertakings
or
to the
granting of an authorisation to a credit institution which
is:

shall be consulted prior

investment

firms,

(a) a subsidiary of an insurance undertaking or investment

firm authorised in the Community; or

(b) a subsidiary of the parent undertaking of an insurance
firm authorised in the

investment

undertaking or
Community; or

Article 29

Amendments to Directive 2000/12/EC

(c) controlled by the same person, whether natural or
legal, who controls an insurance undertaking or
investment firm authorised in the Community.

Directive 2000/12/EC is amended as follows:

1. Article 1 shall be amended as follows:

(a) Point (9) shall be replaced by the following:

(cid:145)9.

(cid:147)participation for the purposes of supervision on
a consolidated basis and for the purposes of
points 15 and 16 of Article 34(2)(cid:148) shall mean
participation within the meaning of
the first
sentence of Article 17 of Directive 78/660/EEC,
or the ownership, direct or indirect, of 20 % or
more of
the voting rights or capital of an
undertaking;(cid:146)

(b) Points (21) and (22) shall be replaced by the following:

(cid:145)21.

company(cid:148)

shall mean a
(cid:147)financial holding
institution, the subsidiary undertakings
financial
of which are either exclusively or mainly credit
institutions or financial institutions, at least one
of such subsidiaries being a credit institution, and
which is not a mixed financial holding company
within the meaning of Directive 2002/87/EC of
the European Parliament and of the Council of
supplementary
16 December 2002 on the
supervision of
insurance
undertakings and investment firms in a financial
conglomerate (*);

institutions,

credit

The relevant competent authorities referred to in the first
in particular consult each
and second paragraphs shall
other when assessing the suitability of the shareholders and
the reputation and experience of directors involved in the
management of another entity of the same group. They
shall inform each other of any information regarding the
reputation and
suitability of
experience of directors which is of relevance to the other
competent authorities involved for the granting of an
authorisation as well as for the ongoing assessment of
compliance with operating conditions.(cid:146)

shareholders

and

the

3. Article 16(2) shall be replaced by the following:

If

investment

the holdings

the acquirer of

(cid:145)2.
referred to in
paragraph 1 is a credit institution, insurance undertaking
or investment firm authorised in another Member State or
the parent undertaking of a credit institution,
insurance
undertaking or
firm authorised in another
Member State or a natural or legal person controlling a
credit institution, insurance undertaking or investment firm
authorised in another Member State, and if, as a result of
that acquisition,
the institution in which the acquirer
proposes to hold a holding would become a subsidiary or
subject to the control of the acquirer, the assessment of the
acquisition must be subject
to the prior consultation
referred to in Article 12.(cid:146)

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4. Article 34(2) shall be amended as follows:

(b) the second subparagraph shall be replaced by the

following:

(a)

in the first subparagraph points 12 and 13 shall be
replaced by the following:

(cid:145)12. holdings in other credit and financial institutions

amounting to more than 10 % of their capital;

13.

14.

subordinated claims and instruments referred to
in Article 35 and Article 36(3) which a credit
institution holds in respect of credit and financial
institutions in which it has holdings exceeding
10 % of the capital in each case;

in

of

respect

holdings in other credit and financial institutions
of up to 10 % of their capital, the subordinated
claims and the instruments referred to in Article
35 and Article 36(3) which a credit institution
holds
financial
institutions other than those referred to in points
12 and 13 of this subparagraph in respect of the
amount
holdings,
of
such
and instruments which
subordinated claims
exceed 10 % of
institution’s own
that credit
funds calculated before the deduction of items in
points 12 to 16 of this subparagraph;

credit

total

and

the

of

15.

participations within the meaning of Article 1(9)
which a credit institution holds in

(cid:151) insurance undertakings within the meaning
of Article 6 of Directive 73/239/EEC, Article
6 of Directive 79/267/EEC or Article 1(b) of
Directive
European
the
98/78/EC
Parliament and of the Council (*),

of

(cid:145)Where shares in another credit institution,
financial
insurance or reinsurance undertaking or
institution,
insurance holding company are held temporarily for
assistance operation
the purposes of
financial
designed to reorganise and save that entity,
the
competent authority may waive the provisions on
deduction referred to in points 12 to 16.

a

As an alternative to the deduction of the items referred
to in points 15 and 16, Member States may allow their
credit institutions to apply mutatis mutandis methods 1,
2, or 3 of Annex I to Directive 2002/87/EC. Method 1
(Accounting consolidation) shall only be applied if the
the level of
competent authority is confident about
integrated management and internal control regarding
the entities which would be included in the scope of
consolidation. The method chosen shall be applied in a
consistent manner over time.

to supervision on a consolidated basis

Member States may provide that for the calculation of
own funds on a stand-alone basis, credit institutions
in
subject
accordance with Chapter 3 or
to supplementary
supervision in accordance with Directive 2002/87/EC,
need not deduct the items referred to in points 12 to
16 which are held in credit
financial
insurance or reinsurance undertakings or
institutions,
insurance holding companies, which are included in
the
supplementary
scope
supervision.

consolidated

institutions,

or

of

This provision shall apply to all the prudential rules
harmonised by Community acts.(cid:146)

(cid:151) reinsurance undertakings within the meaning

of Article 1(c) of Directive 98/78/EC,

5. Article 51(3) shall be replaced by the following:

(cid:151) insurance holding companies within the
of Directive

of Article

1(i)

meaning
98/78/EC;

16.

each of
the following items which the credit
institution holds in respect of the entities defined
in point (15) in which it holds a participation:

(cid:151) instruments referred to in Article 16(3) of

Directive 73/239/EEC,

(cid:145)3.
The Member States need not apply the limits laid
down in paragraphs 1 and 2 to holdings in insurance
companies
as defined in Directive 73/239/EEC and
Directive 79/267/EEC, or in reinsurance companies as
defined in Directive 98/78/EC.(cid:146)

6.

the last sentence in Article 52(2) shall be replaced by the
following:

(cid:151) instruments referred to in Article 18(3) of

Directive 79/267/EEC;

(*) OJ L 330, 5.12.1998, p. 1.(cid:146)

(cid:145)Without prejudice to Article 54a, the consolidation of the
financial situation of the financial holding company shall
not in any way imply that the competent authorities are
required to play a supervisory role in relation to the
financial holding company on a stand-alone basis.(cid:146)

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7. Article 54 shall be amended as follows:

10. in Article 56(7) the following sentence shall be added:

(a)

in paragraph 1 the following subparagraph shall be
added:

(cid:145)In the case where undertakings are linked by a
relationship within the meaning of Article 12 (1) of
Directive 83/349/EEC, the competent authorities shall
determine how consolidation is to be carried out.(cid:146)

(cid:145)The competent authority which made the request may, if
it so wishes, participate in the verification when it does
not carry out the verification itself.(cid:146)

11. the following Article shall be inserted:

(cid:145)Article 56a

(b)

in paragraph 4,
shall be deleted;

first subparagraph, the third indent

Third-country parent undertakings

8.

the following Article shall be inserted:

(cid:145)Article 54a

Management body of financial holding companies

shall

that persons who
The Member States
effectively direct
the business of a financial holding
company are of sufficiently good repute and have sufficient
experience to perform those duties.(cid:146)

require

9.

the following Article shall be inserted:

(cid:145)Article 55a

Intra-group transactions with mixed-activity holding
companies

Without prejudice to the provisions of Title V, Chapter 2,
Section 3, of this Directive, Member States shall provide
that, where the parent undertaking of one or more credit
the
institutions
competent authorities responsible for the supervision of
these credit institutions shall exercise general supervision
over transactions between the credit institution and the
mixed-activity holding company and its subsidiaries.

is a mixed-activity holding company,

Competent authorities shall require credit institutions to
have in place adequate risk management processes and
internal control mechanisms,
including sound reporting
and accounting procedures, in order to identify, measure,
transactions with their parent
monitor
and control
subsidiaries
and its
mixed-activity holding
company
appropriately. Competent authorities
require the
shall
institution of any significant
reporting by the credit
transaction with these entities other than the one referred
to in Article 48. These procedures
and significant
transactions shall be subject to overview by the competent
authorities.

institution’s

to a
Where these intra-group transactions are a threat
credit
competent
authority responsible for the supervision of the institution
shall take appropriate measures.(cid:146)

financial position,

the

shall verify whether

Where a credit institution, the parent undertaking of which
is a credit institution or a financial holding company, the
head office of which is outside the Community,
is not
subject to consolidated supervision under Article 52, the
the credit
competent authorities
institution is subject
to consolidated supervision by a
third-country competent authority which is equivalent to
that governed by the principles laid down in Article 52.
The verification shall be carried out by the competent
authority which would be responsible for consolidated
supervision if the fourth subparagraph were to apply, at
the request of the parent undertaking or of any of the
regulated entities authorised in the Community or on its
own initiative. That competent authority shall consult the
other competent authorities involved.

to whether

likely to achieve

The Banking Advisory Committee may give general
the consolidated supervision
guidance as
arrangements of competent authorities in third countries
are
consolidated
supervision as defined in this Chapter, in relation to credit
institutions, the parent undertaking of which has its head
office outside the Community. The Committee shall keep
any such guidance under review and take into account any
changes
to the consolidated supervision arrangements
applied by such competent authorities.

the objectives of

the verification
The competent authority carrying out
take into
specified in the second subparagraph shall
account
the
such guidance.
competent authority shall consult the Committee before
taking a decision.

this purpose

any

For

In the absence of such equivalent supervision, Member
States shall apply the provisions of Article 52 to the credit
institution by analogy.

to

apply

authorities

shall
other

an alternative, Member States

allow their
As
appropriate
competent
supervisory techniques which achieve the objectives of the
supervision on a consolidated basis of credit institutions.
Those methods must be agreed upon by the competent
authority which would be responsible for consolidated
supervision, after consultation with the other competent
authorities
in
particular require the establishment of a financial holding
company which has its head office in the Community, and
apply the provisions on consolidated supervision to the
consolidated position of that financial holding company.

involved. Competent

authorities may

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The methods must achieve the objectives of consolidated
supervision as defined in this Chapter and must be notified
to the other competent authorities
involved and the
Commission.(cid:146)

CHAPTER VI

TRANSITIONAL AND FINAL PROVISIONS

CHAPTER V

ASSET MANAGEMENT COMPANIES

Article 30

Article 31

Report by the Commission

1.
By 11 August 2007, the Commission shall submit to the
Financial Conglomerates Committee referred to in Article 21 a
report on Member States’ practices, and, if necessary, on the
need for further harmonisation, with regard to

Asset management companies

(cid:151) the

inclusion

of

asset management

companies

in

group-wide supervision,

Pending further coordination of sectoral rules, Member States
shall provide
asset management
companies:

inclusion of

the

for

(a)

scope of

consolidated supervision of

in the
credit
institutions and investment firms, and/or in the scope of
supplementary supervision of insurance undertakings in an
insurance group; and

(b) where the group is a financial conglomerate, in the scope
of supplementary supervision within the meaning of this
Directive.

or

sector

sector)

services

For the application of the first paragraph, Member States shall
provide, or give their competent authorities the power to
decide, according to which sectoral rules (banking sector,
insurance
asset
investment
management companies shall be included in the consolidated
and/or supplementary supervision referred to in (a) of the first
paragraph. For the purposes of this provision, the relevant
sectoral rules regarding the form and extent of the inclusion of
financial institutions (where asset management companies are
included in the scope of consolidated supervision of credit
institutions
reinsurance
undertakings (where asset management companies are included
in the scope of
insurance
undertakings) shall apply mutatis mutandis to asset management
companies. For the purposes of supplementary supervision
referred to in (b) of the first paragraph, the asset management
company shall be treated as part of whichever sector it is
included in by virtue of (a) of the first paragraph.

supplementary supervision of

investment

firms)

and

and

of

Where an asset management company is part of a financial
conglomerate, any reference to the notion of regulated entity
and any reference to the notion of competent authorities and
relevant competent authorities shall therefore, for the purposes
of this Directive, be understood as including, respectively, asset
and
management
authorities
responsible
asset management
supervision
companies. This applies mutatis mutandis as regards groups
referred to in (a) of the first paragraph.

competent
of

companies
the

the

for

(cid:151) the choice and the application of

the capital adequacy

methods set out in Annex I,

(cid:151) the definition of significant intra-group transactions and
significant
risk concentration and the supervision of
intra-group transactions and risk concentration referred to
in particular regarding the introduction of
in Annex II,
quantitative limits and qualitative requirements for this
purpose,

(cid:151) the intervals at which financial conglomerates shall carry
out the calculations of capital adequacy requirements as set
out
to the coordinator on
significant risk concentration as set out in Article 7(2).

in Article 6(2) and report

The Commission shall consult the Committee before making
its proposals.

year of

agreement being reached at
2. Within one
international
level on the rules for eliminating the double
gearing of own funds in financial groups, the Commission
shall examine how to bring the provisions of this Directive
into line with those international agreements and, if necessary,
make appropriate proposals.

Article 32

Transposition

Member States shall bring into force the laws, regulations and
administrative provisions necessary to comply with this
Directive before 11 August 2004. They shall forthwith inform
the Commission thereof.

Member States shall provide that the provisions referred to in
the first subparagraph shall first apply to the supervision of
accounts for the financial year beginning on 1 January 2005
or during that calendar year.

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When Member States adopt these measures, they shall contain
a reference to this Directive or shall be accompanied by such
reference on the occasion of
their official publication. The
methods of making such reference shall be laid down by
Member States.

Article 34

Addressees

This Directive is addressed to the Member States.

Article 33

Entry into force

This Directive shall enter
publication in the Official Journal of the European Union.

into force on the day of

its

Done at Brussels, 16 December 2002.

For the European Parliament

The President

P. COX

For the Council

The President

M. FISCHER BOEL

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ANNEX I

CAPITAL ADEQUACY

The calculation of the supplementary capital adequacy requirements of the regulated entities in a financial conglomerate
referred to in Article 6(1) shall be carried out in accordance with the technical principles and one of the methods
described in this Annex.

Without prejudice to the provisions of the next paragraph, Member States shall allow their competent authorities,
where they assume the role of coordinator with regard to a particular financial conglomerate,
to decide, after
consultation with the other relevant competent authorities and the conglomerate itself, which method shall be applied
by that financial conglomerate.

Member States may require that the calculation be carried out according to one particular method among those
described in this Annex if a financial conglomerate is headed by a regulated entity which has been authorised in that
Member State. Where a financial conglomerate is not headed by a regulated entity within the meaning of Article 1,
Member States shall authorise the application of any of the methods described in this Annex, except in situations where
the relevant competent authorities are located in the same Member State, in which case that Member State may require
the application of one of the methods.

I.

Technical principles

1.

Extent and form of the supplementary capital adequacy requirements calculation

Whichever method is used, when the entity is a subsidiary undertaking and has a solvency deficit, or, in the
case of a non-regulated financial sector entity, a notional solvency deficit, the total solvency deficit of the
the
subsidiary has to be taken into account. Where in this case,
responsibility of the parent undertaking owning a share of the capital is limited strictly and unambiguously to
that share of the capital, the coordinator may give permission for the solvency deficit of the subsidiary
undertaking to be taken into account on a proportional basis.

in the opinion of

the coordinator,

Where there are no capital ties between entities in a financial conglomerate, the coordinator, after consultation
with the other relevant competent authorities, shall determine which proportional share will have to be taken
into account, bearing in mind the liability to which the existing relationship gives rise.

2. Other technical principles

Regardless of the method used for the calculation of the supplementary capital adequacy requirements of
regulated entities in a financial conglomerate as laid down in Section II of this Annex, the coordinator, and
where necessary other competent authorities concerned, shall ensure that the following principles will apply:

(i)

the multiple use of elements eligible for the calculation of own funds at the level of the financial
conglomerate (multiple gearing) as well as any inappropriate intra-group creation of own funds must be
eliminated; in order to ensure the elimination of multiple gearing and the intra-group creation of own
funds, competent authorities shall apply by analogy the relevant principles laid down in the relevant
sectoral rules;

(ii) pending further harmonisation of sectoral rules, the solvency requirements for each different financial
sector represented in a financial conglomerate shall be covered by own funds elements in accordance with
the corresponding sectoral rules; when there is a deficit of own funds at the financial conglomerate level,
only own funds elements which are eligible according to each of the sectoral rules (cross-sector capital)
shall qualify for verification of compliance with the additional solvency requirements;

where sectoral rules provide for limits on the eligibility of certain own funds instruments, which would
qualify as cross-sector capital, these limits would apply mutatis mutandis when calculating own funds at the
level of the financial conglomerate;

when calculating own funds at the level of the financial conglomerate, competent authorities shall also
take into account the effectiveness of the transferability and availability of the own funds across the
different legal entities in the group, given the objectives of the capital adequacy rules;

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where, in the case of a non-regulated financial sector entity, a notional solvency requirement is calculated
in accordance with section II of this Annex, notional solvency requirement means the capital requirement
with which such an entity would have to comply under the relevant sectoral rules as if it were a regulated
entity of that particular financial sector; in the case of asset management companies, solvency requirement
means the capital requirement set out in Article 5a(1)(a) of Directive 85/611/EEC; the notional solvency
requirement of a mixed financial holding company shall be calculated according to the sectoral rules of
the most important financial sector in the financial conglomerate.

II. Technical calculation methods

Method 1: (cid:145)Accounting consolidation(cid:146) method

The calculation of
the supplementary capital adequacy requirements of
conglomerate shall be carried out on the basis of the consolidated accounts.

the regulated entities in a financial

The supplementary capital adequacy requirements shall be calculated as the difference between:

(i)

the own funds of the financial conglomerate calculated on the basis of the consolidated position of the group;
the elements eligible are those that qualify in accordance with the relevant sectoral rules;

and

(ii)

the sum of the solvency requirements for each different financial sector represented in the group; the solvency
requirements for each different financial sector are calculated in accordance with the corresponding sectoral
rules.

The sectoral rules referred to are in particular Directives 2000/12/EC, Title V, Chapter 3, as regards credit
institutions and
institutions, 98/78/EC as regards insurance undertakings, and 93/6/EEC as regards credit
investment firms.

In the case of non-regulated financial sector entities which are not included in the aforementioned sectoral
solvency requirement calculations, a notional solvency requirement shall be calculated.

The difference shall not be negative.

Method 2: (cid:145)Deduction and aggregation(cid:146) method

The calculation of
the supplementary capital adequacy requirements of
conglomerate shall be carried out on the basis of the accounts of each of the entities in the group.

the regulated entities in a financial

The supplementary capital adequacy requirements shall be calculated as the difference between:

(i)

the sum of
conglomerate; the elements eligible are those which qualify in accordance with the relevant sectoral rules;

the own funds of each regulated and non-regulated financial sector entity in the financial

and

(ii)

the sum of

(cid:151) the solvency requirements for each regulated and non-regulated financial sector entity in the group; the

solvency requirements shall be calculated in accordance with the relevant sectoral rules, and

(cid:151) the book value of the participations in other entities of the group.

In the case of non-regulated financial sector entities, a notional solvency requirement shall be calculated. Own
funds and solvency requirements shall be taken into account for their proportional share as provided for in
Article 6(4) and in accordance with Section I of this Annex.

The difference shall not be negative.

Method 3: (cid:145)Book value/Requirement deduction(cid:146) method

The calculation of
the supplementary capital adequacy requirements of
conglomerate shall be carried out on the basis of the accounts of each of the entities in the group.

the regulated entities in a financial

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The supplementary capital adequacy requirements shall be calculated as the difference between:

(i)

the own funds of the parent undertaking or the entity at the head of the financial conglomerate; the elements
eligible are those which qualify in accordance with the relevant sectoral rules;

and

(ii)

the sum of

(cid:151) the solvency requirement of the parent undertaking or the head referred to in (i), and

(cid:151) the higher of the book value of the former’s participation in other entities in the group and these entities’
solvency requirements; the solvency requirements of the latter shall be taken into account for their
proportional share as provided for in Article 6(4) and in accordance with Section I of this Annex.

In the case of non-regulated financial sector entities, a notional solvency requirement shall be calculated.
When valuing the elements eligible for
the supplementary capital adequacy
requirements, participations may be valued by the equity method in accordance with the option set out in
Article 59(2)(b) of Directive 78/660/EEC.

the calculation of

The difference shall not be negative.

Method 4: Combination of methods 1, 2 and 3

Competent authorities may allow a combination of methods 1, 2 and 3, or a combination of two of these
methods.

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ANNEX II

TECHNICAL APPLICATION OF THE PROVISIONS ON INTRA-GROUP TRANSACTIONS AND RISK
CONCENTRATION

The coordinator, after consultation with the other relevant competent authorities, shall identify the type of transactions
and risks regulated entities in a particular financial conglomerate shall report in accordance with the provisions of
Article 7(2) and Article 8(2) on the reporting of intra-group transactions and risk concentration. When defining or
giving their opinion about the type of transactions and risks, the coordinator and the relevant competent authorities
shall take into account the specific group and risk management structure of the financial conglomerate. In order to
identify significant intra-group transactions and significant risk concentration to be reported in accordance with the
provisions of Articles 7 and 8, the coordinator, after consultation with the other relevant competent authorities and the
conglomerate itself, shall define appropriate thresholds based on regulatory own funds and/or technical provisions.

When overviewing the intra-group transactions and risk concentrations, the coordinator shall in particular monitor the
possible risk of contagion in the financial conglomerate, the risk of a conflict of interests, the risk of circumvention of
sectoral rules, and the level or volume of risks.

Member States may allow their competent authorities to apply at the level of the financial conglomerate the provisions
of the sectoral rules on intra-group transactions and risk concentration, in particular to avoid circumvention of the
sectoral rules.