Proposition de DIRECTIVE DU PARLEMENT EUROPÉEN ET DU CONSEIL modifiant les directives 98/78/CE, 2002/87/CE et 2006/48/CE en ce qui concerne la surveillance complémentaire des entités financières des conglomérats financiers
Date: 2010-08-16
Institutions: European Commission
Subjects: EU control, credit institution, financial control, financial solvency, holding company, investment company, provision of services, right of establishment

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EUROPEAN COMMISSION 

Brussels, 16.8.2010 
COM(2010) 433 final 

2010/0232 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  

amending Directives 98/78/EC, 2002/87/EC and 2006/48/EC as regards the 
supplementary supervision of financial entities in a financial conglomerate 

SEC(2010) 981 
 SEC(2010) 979 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

About  20  years  ago,  financial  groups  with  business  models  that  combine  the  provision  of 
services  and  products  in  different  sectors  of  financial  markets  began  to  develop.  These 
became  known  as  financial  conglomerates.  Conglomerates  may  include  banks,  insurance 
undertakings, investment firms and possibly asset management companies. For several years, 
different expert groups at international and  European level discussed how to supervise such 
conglomerates appropriately. This resulted in the Joint Forum's1 'Principles for the supervision 
of  financial  conglomerates'  in  19992.  Against  this  background,  Directive  2002/87/EC  of  the 
European Parliament and of the Council of 16 December 20023 ('FICOD') introduced group-
wide  supplementary  supervision.  The  objective  of  this  supplementary  supervision  was  to 
control potential risks arising from double gearing (i.e. multiple use of capital) and so-called 
group  risks,  that  is  the  risks  of  contagion,  management  complexity,  concentration,  and 
conflicts  of  interest,  which  could  arise  when  several  licenses  for  different  financial  services 
are combined.  

Whilst the banking and insurance directives aim at calculating sufficient capital buffers for the 
protection of  customers and policyholders, FICOD,  regulates the supplementary supervision 
of  group  risks.  This  implies  that  financial  entities  which  have  a  mutual  relationship  that 
affects  the  risk  profiles  of  both  of  them  must  be  included  in  the  supervisory  scope.  In  this 
way, FICOD supplements the sectoral directives, the Banking Directive 2006/48/EC4 ('CRD') 
and  various  insurance  directives,  all  of  which  can  be  applied  on  a  solo  level,  per  licensed 
entity,  and  on  a  consolidated  level,  where  all  licensed  legal  entities  subject  to  the  same 
directive are aggregated. 

A review of FICOD was envisaged some years after its implementation. The revision of the 
1988  Basel  Accord  in  2004,  the  European  implementation  into  the  CRD  in  2006,  and  the 
introduction  of  a  comprehensive  set  of  new  rules  for  insurance  companies  in  Solvency  II5 
reflect recent developments, as far as legal entities of a group are active in the same sector, 
banking  or  insurance.  Until  Solvency  II  is  implemented,  the  FICOD  supplements  the 
insurance directives presently in place, especially the Insurance Group Directive6 ('IGD'). 

The Commission intends to proceed in two steps. With the present proposal, the most urgent 
technical issues identified during the review, as analysed by the Joint Committee on Financial 

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5 

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Joint  G10  Committee  of  Basel  Committee  of  Banking  Supervisors,  International  Association  of 
Insurance Supervisors, and International Organisation of Securities Commissions. 
Supervision of Financial Conglomerates, 19 February 1999, see http://www.bis.org/publ/bcbs47.pdf?noframes=1. 
OJ L 35, 11.2.2003, p. 1. 
CRD consists of two directives: Directive 2006/48/EC of the European Parliament and of the Council of 
14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast), OJ L 
177,  30.6.2006,  p.  1  and  Directive  2006/49/EC  of  the  European  Parliament  and  of  the  Council  of  14 
June  2006  on  the  capital  adequacy  of  investment  firms  and  credit  institutions  (recast),  OJ  L  177, 
30.6.2006, p. 201. 
Directive  2009/138/EC  of  the  European  Parliament  and  of  the  Council  of  25  November  2009  on  the 
taking-up  and  pursuit  of  the  business  of  Insurance  and  Reinsurance  (Solvency  II)  (recast),  OJ  L  335, 
17.12.2009, p. 1. 
Directive 98/78/EC of the European Parliament and of the Council of 27.10.1998 on the supplementary 
supervision of insurance and reinsurance undertakings in an insurance of reinsurance group, OJ L 330, 
5.12.1998, p. 1. 

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Conglomerates7  ('JCFC'),  are  addressed,  including  the  technical  issues  detected  in  earlier 
review exercises. Calls for advice and a consultation were issued to assess the impact of these 
potential changes8. Later in 2010, a more fundamental debate will take place in the context of 
G20  developments  regarding  supplementary  supervision.  This  debate  is  likely  to  focus  on 
supervisory scope and capital related issues. 

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

The review of the FICOD effectively started in 2008 and formed the basis of this legislative 
proposal.  Certain  technical  issues  were  included  in  the  Commission's  proposal  for  an 
Omnibus  Directive9  in  October  2009,  accompanying  the  Regulations  establishing  the  new 
European Supervisory Authorities. 

During  the  financial  crisis,  so-called  group  risks  have  materialized  all  across  the  financial 
sector,  emphasising  the  importance  of  supplementary  supervision  of  inter-linkages  within 
financial  groups  and  among  financial  institutions.  Initiatives  similar  to  the  current  review 
were undertaken in the U.S. and Australia10, based on the Joint Forum's principles.  

The aim of this legislative proposal is to amend the IGD, the FICOD and the CRD in order to 
eliminate  unintended  consequences  and  technical  omissions  in  the  sectoral  directives  and 
ensure that the objectives of the FICOD are effectively achieved. 

2.1. 

Results of the Consultations 

Calls for Advice to the Joint Committee on Financial Conglomerates 'JCFC'  

The JCFC presented their findings in response to the Commission's Third Call for Advice to 
the  Finance  Ministries  represented  in  the  European  Financial  Conglomerates  Committee 
(EFCC)  in  January  2009.  The  main  issues  identified  relate  to  supervision  at  top  level,  risk 
based identification, clear inclusion  in  the scope of the directive and in the identification of 
conglomerates, and clear supervisory treatment of participations.  

Commission working group meetings and JCFC public hearing 

Commission  working  group  meetings  with  Member  States  were  held  on  18  June  and  23 
November 2009, and 21 January 2010. A public hearing was organized by the JCFC on 8 July 
2009.  These  discussions  with  stakeholders  confirmed  the  relevance  of  the  identified  issues 

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JCFC is the level 3 committee for financial conglomerates within the so-called 'Lamfalussy' structure; 
while the European Financial Conglomerates Committee (EFCC) is the (level 2) committee according 
to FICOD. 
See  the  Conglomerates  website  for  further  details,  http://ec.europa.eu/internal_market/financial-
conglomerates/supervision_en.htm. 
COM(2009) 576 final, proposal for a directive of the European Parliament and of the Council amending 
Directives 1998/26/EC, 2002/87/EC, 2003/6/EC, 2003/41/EC, 2003/71/EC, 2004/39/EC, 2004/109/EC, 
2005/60/EC,  2006/48/EC,  2006/49/EC,  and  2009/65/EC  in  respect  of  the  powers  of  the  European 
Banking  Authority,  the  European  Insurance  and  Occupational  Pensions  Authority  and  the  European 
Securities and Markets Authority 
The  Australian  Prudential  Regulation  Authority  is  considering  how  to  supervise  and  control  the 
potential 
see 
non-regulated 
http://www.apra.gov.au/media-releases/10_06.cfm . 

contagion 

financial 

groups; 

coming 

entities 

from 

of 

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and revealed that effective supervision of conglomerates might require discussing even more 
issues,  e.g.  differences  in  eligible  capital  across  sectors,  as  well  as  potential  distortions  of 
using different capital calculation methods. Also, the Commission initiatives with respect to 
alternative  investment  fund  managers  raised  questions  as  to  the  inclusion  of  not  only  asset 
management  companies  but  also  other  related  undertakings  in  the  scope  of  supplementary 
supervision on the group risks of large complex financial institutions. 

The Targeted Consultation on the review of the FICOD 

The responses to the targeted consultation launched in November 2009 included the view of 
18 conglomerates, one authority, two associations, one union, and one research centre11 which 
was in line with the limited number of its main target groups, and the technical nature of the 
questions.  The  initiative  was  broadly  welcomed,  and  respondents  recognized  the  major 
problems, as listed below, as well as the Commission Services suggestions to solve them:  

–  the applicability of sectoral top level provisions of the banking and insurance directives at 

the level of Mixed Financial Holding Companies (MFHCs); 

–  clarity about the inclusion of asset management companies in the scope of supplementary 

supervision; 

–  allowing a more risk-based identification of conglomerates,  

–  clarity about the treatment of participations in supplementary supervision. 

However,  diverging  views  were  expressed  in  relation  to  the  cross-sectoral  alignment  in  the 
definition of capital, which has been s under consideration since the Capital Advice delivered 
by the JCFC in April 2008. Member States participating in the EFCC indicated a preference 
for  a  deferral  of  these  proposals  until  the  sectoral  debates  on  banking  and  insurance  issues 
were  finalised.  Respondents  also  pointed  to  the  difficulties  of  making  further  distinctions 
between  proprietary  trading  and  non-proprietary  trading  of  financial  conglomerates’  asset 
treatment  of 
management  companies.  Finally, 
participations in supplementary supervision was not a problem that needed to be solved in full 
at this stage. 

the  consultation  confirmed 

that 

the 

With regard to issues that could be subject of a future review, the responses broadly rejected 
the  idea  to  consider  remuneration  policies  in  a  cross-sectoral  manner12  but  supported 
initiatives  in  the  areas  of  capital,  i.e.  regarding  the  consistency  of  eligibility  provisions,  as 
well as the taking into account of non-regulated entities affecting the risk profiles of financial 
groups.  

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The (non-confidential) stakeholder responses are available at 
http://ec.europa.eu/internal_market/consultations/2009/fcd_review_en.htm 
Remuneration  policies  in  the  banking  sector  were  treated  by  the  Proposal  for  a  Directive  amending 
Directives 2006/48/EC and 2006/49/EC as regards capital requirements for the trading book and for re-
securitisations,  and  the  supervisory  review  of  remuneration  policies  (COM/2009/362).  A  similar 
proposal is envisaged with regard to remuneration policies the insurance sector. 

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2.2. 

Result of the Impact Assessment 

In  the  Impact  Assessment,  17  policy  options  have  been  developed,  assessed  and  compared 
with  a  view  to  addressing  the  issues  identified  in  the  analysis.  This  section  describes  the 
expected impacts of preferred policy measures in each area. 

Supplementary supervision on holding company level and supervisory coordination 

In order to align supervisory powers at the top level of a conglomerate, to prevent the loss of 
powers  when  a  group  structure  changes  as  well  as  the  duplication  of  supervision  at  the 
conglomerate  level,  and  to  facilitate  coordination  by  the  most  relevant  supervisors,  the 
following amendments were positively assessed: 

–  include top level holding companies of a banking or an insurance group that are classified 
as a MFHC, so that provisions and powers that are applied to the former Financial Holding 
Company  (FHC)  or  Insurance  Holding  Company  (IHC)  do  not  disappear  when  the 
classification of a group and its holding company changes as a result of an acquisition in 
the other sector;  

–  limit the definition of 'relevant competent authority' so that it only includes the supervisors 
of  ultimate  parent  entities  within  individual  sectors  and  other  competent  authorities, 
considered relevant by the supervisors of the ultimate parent entities. 

Identification of financial conglomerates 

–  The  inclusion  under  all  circumstances  of  asset  management  companies  in  the  scope  of 
supplementary  supervision  complemented  with  guidance  on  indicators  for  this  inclusion 
was considered useful.  

–  In  order  to  tackle  the  ambiguity  regarding  parameters  and  the  lack  of  a  risk-based 
identification  of  conglomerates,  guidelines  on  the  application  of  the  existing  'waiver 
option' for larger groups in Article 3(3) of the FICOD was positively assessed. This should 
be  combined  with  an  option  to  waive  supplementary  supervision  for  groups  where  the 
assets held by the smallest sector are below the absolute threshold of €6 billion. 

Participations 

The problem of the day-to-day treatment of participations under supplementary supervision, 
which  is  aggravated  by  the  fact  that  company  law  may  prohibit  a  minority  owner  from 
accessing information which is not accessible to other shareholders, should be addressed by 
guidelines on the treatment of participations in various situations. 

Impact of preferred policy options 

The  positively  assessed  policy  changes  were  expected  to  render  the  supplementary 
supervision  framework  more  robust,  leading  to  more  effective  risk  management  incentives 
and  practices.  This  should  be  beneficial  to  the  international  competitiveness  position  of  EU 
financial  groups.  These  options  should  contribute  positively  to  containing  the  risks  to 
financial  stability  and  the  possible  costs  to  society.  With  regard  to  individual  stakeholder 
groups and systemic concerns, expected impacts were evaluated as follows: 

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–  Certain  smaller  EU  financial  groups  with  a  simple  structure  and  not  more  than  a  few 
licenses  in  both  sectors  may  be  excluded  from  supplementary  supervision  and  would 
therefore  benefit  from  reduced  compliance  costs.  This  may  be  available  to  about  ten 
smaller financial groups with combined assets of approximately €69  billion. On the other 
hand, compliance costs for bigger groups with more than hundred licenses, being active in 
both  sectors  could  increase  as  such  groups,  representing  up  to  €9  trillion  assets  in  the 
financial sector, may be included in the scope of the supplementary supervision. Increased 
compliance costs could also be incurred by those financial groups whose structures include 
asset management business and that will be identified as financial conglomerates following 
the  proposed  changes  to  the  conglomerate  identification  process.  Compliance  costs  for 
financial  groups  that  are  newly  included  in  the  scope  of  the  supplementary  supervision 
should, given their overall size, be non-substantial.  

–  In any event, compliance costs are expected to be set off against benefits arising from more 
effective  risk  management  practices.  Another  positive  impact  can  be  expected  from  a 
greater  visibility  and  trust  in  the  markets  that  should  result  from  the  identification  as  a 
conglomerate. These benefits should enhance the international competitiveness of large EU 
groups.  

–  The positively assessed changes to the conglomerate identification process will render the 
scope  of  the  supplementary  supervision  more  appropriate  and  should  enhance  the 
effectiveness of supervisors' monitoring of the risks to which financial groups are exposed. 
Combined  with  a  more  streamlined  supervision  at  the  top  level  of  conglomerates  and 
improved  supervisory  measures  for  detection  of  contagion,  concentration,  complexity 
issues  and  conflicts  of  interests  in  firms  connected  to  a  conglomerate  through 
participations, this should make a positive contribution to financial stability. 

–  Enhanced clarity of provisions governing the inclusion of asset management companies in 
the  identification  and  supplementary  supervision  should  provide  a  level  playing  field  in 
this area. 

–  As  regards  clients  of  the  financial  groups  concerned,  the  cost  impact  is  expected  to  be 
negligible  given  the  overall  low  level  of  materiality  of  the  net  incremental  effect  of  the 
identified options.  

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

An amending Directive is the most appropriate instrument because the required changes need 
to be introduced to several existing Directives. This amending Directive should have the same 
legal  basis  as  the  Directives  it  amends.  Therefore,  the  proposal  is  based  on  Article  53(1) 
TFEU, which is the appropriate legal basis for the harmonisation of rules relating to financial 
institutions and financial conglomerates. In accordance with the principles of proportionality 
and subsidiarity as set out in Article 5 TEU, the objectives of the proposed action cannot be 
sufficiently achieved by the Member States but be more efficiently achieved by the European 
Union. Only European Union legislation can ensure that financial conglomerates operating in 
more  than  one  Member  State  are  subject  to  the  same  requirements  and  supervision,  in  this 
case  by  ensuring  that  provisions  are  clarified  and  supervisory  gaps  inadvertently  created  by 
earlier amendments of sectoral Directives are closed. The provisions of this proposal do not 
go beyond of what is necessary to achieve the objectives pursued. 

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4. 

BUDGETARY IMPLICATION 

The proposal has no implication for the budget of the European Union13.  

5. 

DETAILED EXPLANATION OF THE PROPOSAL 

5.1. 

Top  level  supervision  -  Articles  1  (IGD)  and  3  (CRD)  of  this  Proposal 
Articles  1,  2(2),  3(1),  4(2),  10(2)  and  several  instances  of  Annex  I  and  II  IGD 
Articles 4, 71, 72, 84, 105, 125, 126, 127, 129, 141, 142 and 143 CRD 

The  focus  and  primary  aim  of  this  proposal  is  to  ensure  appropriate  supplementary 
supervision,  i.e.  to  fix  the  unintended  gaps  that  have  evolved  in  supplementary  supervision 
due  to  definitions  in  the  sectoral  directives,  namely  the  CRD  and  the  insurance  directives. 
Given  that  the  consolidated/group  supervision  in  the  sectoral  directives  is  applied  only  to 
financial/insurance  holding  companies  and  the  sectoral  provisions  do  not  refer  to  mixed 
financial  holding  companies,  a  financial/insurance  holding  company  changing  structure  and 
becoming  a  mixed  financial  holding  company  will  only  be  subject  to  supplementary 
supervision according to FICOD and the consolidated/group supervision at the ultimate parent 
level is lost. Thus, supervisory authorities have to choose (in terms of applying – or not – a 
waiver in determining whether a group is a financial conglomerate) if they wish to continue to 
classify  companies  as 
to  keep 
consolidated/group  supervision,  or  if  they  want  to  apply  'only'  supplementary  supervision 
according to FICOD. Keeping consolidated/group supervision means that the additional risk 
resulting  from  the  combination  with  another  sector  could  not  be  covered.  However, 
supplementary  supervision 
insight  resulting  from 
consolidated/group  supervision  is  lost.  Consequently,  the  continued  application  of  sectoral 
supervision  may  not  adequately  address  the  additional  prudential  risks  that  arise  from  the 
increased size and complexity of the group. The current regime may also result in differences 
in  supervisory  treatment  (based  on  the  structure  rather  than  on  the  risk  profile)  of 
conglomerates. 

financial/insurance  holding  companies 

the  supervisory 

in  order 

that  all 

implies 

In order to ensure that all necessary supervisory tools can be applied, this proposal introduces 
the term 'mixed financial holding company' into the relevant provisions on consolidated/group 
supervision in the sectoral directives.  

5.2. 

Articles 3 and 30 FICOD - Identification of a conglomerate 

Provisions  governing  the  identification  of  financial  conglomerates  give  rise  to  three  sub-
problems.  

–  First, the directive does not require the inclusion of 'asset management companies' in the 
threshold  tests.  Asset  management  companies  are  managers  of  UCITS  (undertakings  for 
collective  investments  in  transferable  securities),  as  regulated  by  the  UCITS  Directive14. 

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Tasks assigned to the Joint Committee of the European Supervisory Authorities in regard to guidelines 
are  covered  by  its  proposed  mandate  and  do  not  lead  to  any  specific  or  additional  budgetary 
implications. 
Council  Directive  85/611/EEC  of  20  December  1985  on  the  coordination  of  laws,  regulations  and 
administrative  provisions  relating  to  undertakings  for  collective  investment  in  transferable  securities 
(UCITS);  OJ  L  375,  31.12.1985,  p.  3,  repealed  by  Directive  2009/65/EC  of  the  European  Parliament 
and  of  the  Council  of  13  July  2009  on  the  coordination  of  laws,  regulations  and  administrative 

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UCITS and their managers are at present not covered by the sectoral prudential supervision 
in  FICOD,  although  FICOD  does  contain  a  possibility  to  include  asset  management 
companies in the scope of supplementary supervision (Article 30).  

–  Second, the threshold tests can be based on different parameters with respect to assets and 
capital requirements. The provisions are ambiguous as regards the calculation of the tests 
arising from, for example, different accounting treatments of assets (see below point (i) on 
Article 3(5)).  

–  Third,  the  threshold  conditions,  given  their  fixed  amounts,  are  not  risk-based,  and  the 
notion of expected group risks is not addressed by the threshold test. This implies that very 
small groups with a few licenses in each sector are subject to supplementary supervision, 
while  the  largest  most  complex  groups  can  technically  be  identified  as  not  being  a 
conglomerate.  As  a  result,  the  current  provisions  on  identification  may  undermine  the 
effective achievement of the underlying objectives of the directive. 

In order to tackle these deficiencies, this proposal introduces the following changes: 

(i)  Asset  management  companies  are  included  in  Article  3(2)  and  Article  30  point 
(c);  'total  assets  under  management'  is  introduced  as  an  alternative  indicator  in 
Article 3(5); and a possibility to adopt guidelines on the application of Articles 3(2) 
and 3(5) is introduced. 

(ii)  A  waiver  for  smaller  groups  in  a  new  Article  3(3a)  is  introduced,  allowing  for 
guidelines for the application of the waiver to smaller groups. 

(iii)  Article  3(3)  is  re-worded  to  properly  distinguish  the  applicable  conditions  for 
groups  below  and  above  the  EUR  6  billion  threshold  and  adds  requirements  as  to 
possible guidelines for the application of the waiver to larger groups and thus ensures 
a level playing field. 

5.3. 

Article 3(4) FICOD - Treatment of participations 

The  consistent  treatment  of  participations  in  day-to-day  supplementary  supervision  is 
hampered by the lack of relevant information to properly assess group risks. For example, if 
information about risks with respect to participations in insurance and reinsurance companies 
cannot be obtained by bank-led conglomerates, they cannot provide their supervisors with the 
evidence of a satisfactory level of integration of management and internal control with these 
entities  that  is  necessary  for  consolidation.  In  that  case,  the  group  needs  to  deduct  such 
participations from their capital.  

While the issue of information on minority participations is not yet fully examined, a first step 
contained  in  this  proposal  is  the  introduction  of  a  waiver  where  participation  is  the  only 
trigger  for  identification  (Article  3(5)  new  point  (c)).  As  long  as  national  company  law 
provisions  may  hamper  the  fulfilment  of  requirements,  specific  treatment  in  view  of  risk 
concentration and intra group transaction requirements is allowed in Articles 7 and 8 which 
may  be  specified  via  guidelines.  Guidelines  may  support  also  the  consistent  application  of 

provisions  relating  to  undertakings  for  collective  investment  in  transferable  securities  (UCITS),  OJ  L 
302, 17.11.2009, p. 32.  

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supervisory review processes, including specific treatment of participations, as provided for in 
Article 9 FICOD, Article 124 CRD and Article 36 Solvency II. 

5.4. 

Other issues 

Articles 1 and 2 FICOD – Update of the definitions 

Articles 1 and 2 have to be updated in light of repealed and recast directives. However, as in 
particular  the  recast  of  the  insurance  directive  (Solvency  II)  repeals  the  previous  directives 
only with effect from 1 November 2012, references to the initial insurance directives – which 
are thus still in force – were maintained.  

Article  2(17)  FICOD  –  Amendment  of  the  definition  of  relevant  competent  authority  and 
supervisory coordination 

FICOD supplements the CRD and insurance directives as regards additional supervision at the 
top level of a group. To that end, it also contains provisions for coordination among different 
supervisors  of  a  group.  FICOD  defines  the  relevant  competent  authority  and  requires  the 
coordinator (the top level supervisor) to consult this authority as regards certain supervisory 
questions. However, the current provisions leave room for different interpretations as regards 
the identification of the relevant competent authorities. An extensive interpretation results in a 
high  number  of  authorities  that  must  be  consulted  by  the  coordinator  at  the  financial 
conglomerate level. This may undermine the effective and efficient coordination of the work 
to be carried out by the "college" of a coordinator and relevant competent authorities. 

Article 6(4) and Annex I FICOD – Deletion of the third calculation method, 

Part II of Annex I FICOD list three methods for calculating capital at the conglomerate level. 
An  analysis  by  the  JCFC  in  2008  showed  that  the  third  eligible  capital  calculation  method 
always results in outcomes that are significantly different from methods 1 (consolidation) and 
2 (deduction and aggregation). Therefore, the third method should be deleted. By restricting 
the  eligible  calculation  methods  to  the  consolidation  and  the  deduction  and  aggregation 
method, FICOD is also aligned to the sectoral directives it supplements. 

Article 2 FICOD – Inclusion of reinsurance undertakings,  

With  the  introduction  of  authorisation  and  supervision  of  reinsurance  undertakings  in 
Directive  2005/68/EC,  reinsurance  undertakings  were  included  in  the  scope  of  regulated 
entities that can be part of a financial conglomerate. Consequently, a reference to reinsurance 
undertakings has to be included in FICOD. References are added in Articles 2(4), 2(7), 2(8), 
2(14) and 2(16). 

Articles 3(8), 7(5), 8(5), 9(6), 11(4) and 11(5) FICOD – Introduction of provisions regarding 
guidelines in certain areas 

In  order  to  allow  for  further  convergence  of  supervisory  practices,  a  possibility  for  the 
European  Banking  Authority  and  the  European  Insurance  and  Occupational  Pensions 
Authority to issue guidelines in line with Chapter IV Section 2 of the Regulation establishing 

EN 

9 

   EN 

a  European  Banking  Authority15  and  Chapter  IV  Section  2  of  the  Regulation  establishing  a 
European  Insurance  and  Occupational  Pensions  Authority16  ("Joint  Committee  of  European 
Supervisory Authorities") to issue guidelines is introduced.  

These  guidelines  should  reflect  the  supplementary  nature  of  this  Directive.  By  way  of 
example,  when  assessing  risk  concentrations  on  a  group  wide  basis  relating  to  several  risk 
types potentially materializing throughout the group (interest rate risk, market risk, etc.), this 
assessment  should  complement  the  specific  supervision  of  for  example  large  exposures  as 
provided  for  in  the  CRD.  Guidelines  may  also  support  the  consistent  application  of  the 
different  supervisory  review  processes,  including  specific  treatment  of  participations,  as 
provided for in Article 9 FICOD, Article 124 CRD and Article 36 Solvency II. 

Update of references in various Articles 

Articles 1, 2, 6(3), 6(4), 19, 21(2) of the FICOD, and Article 143(3) CRD have been amended 
in order to update references and wording. 

15 

16 

Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  a  European 
Banking  Authority  {COM(2009)  499  final}  {COM(2009)  500  final}  {COM(2009)  502  final} 
{COM(2009) 503 final} {SEC(2009) 1233} {SEC(2009) 1234} {SEC(2009) 1235} /* COM/2009/0501 
final - COD 2009/0142 */ 
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  a  European 
Insurance  and  Occupational  Pensions  Authority  {COM(2009)  499  final}  {COM(2009)  500  final} 
{COM(2009) 501 final} {COM(2009) 503 final} {SEC(2009) 1233} {SEC(2009) 1234} {SEC(2009) 
1235} /* COM/2009/0502 final - COD 2009/0143 */ 

EN 

10 

   EN 

                                                 
2010/0232 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  

amending Directives 98/78/EC, 2002/87/EC and 2006/48/EC as regards the 
supplementary supervision of financial entities in a financial conglomerate 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 53(1) thereof, 

Having regard to the proposal from the European Commission, 

Having regard to the opinion of the European Central Bank,17 

After transmission of the draft legislative act to the national Parliaments, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

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 provides competent authorities in the 
financial sector with supplementary powers and tools for the supervision of groups of 
many regulated entities, which are active in different sectors of the financial markets. 
These  groups,  called  financial  conglomerates,  are  thus  exposed  to  risks  related  to 
controlling  a  group,  which  are  called  group  risks,  and  which  include  the  risks  of 
contagion, which involves the spreading of risks from one end of the group to another 
end,  the  concentration  of  risks,  where  the  same  type  of  risk  materializes  in  various 
parts of the group at the same time, the complexity of managing many different legal 
entities,  and  potential  conflicts  of  interest,  as  well  as  the  challenge  of  allocating 
regulatory  capital  to  all  its  regulated  entities,  thereby  avoiding  the  multiple  use  of 
capital. Supplementary supervision should be applied to conglomerates on top of the 
supervision  on  a  stand  alone,  consolidated  or  group  basis,  without  duplicating  or 
affecting the group, regardless of the legal structure of the group. 

(2) 

It  is  appropriate  to  ensure  consistency  with  the  aim  of  Directive  2002/87/EC  and 
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  Council18,  to  enable  supervision  of  insurance  groups  as  well  as  appropriate 

17 
18 

OJ C […] 
OJ L 35, 11.2.2003, p. 1. 

EN 

11 

   EN 

                                                 
supplementary  supervision  of  insurance  and  other  entities  within  a  mixed  financial 
holding structure. For this reason, Directive 98/78/EC of the European Parliament and 
of the Council of 27 October 1998 on the supplementary supervision of insurance and 
reinsurance undertakings in an insurance or reinsurance group19 should be amended to 
define  and  include  mixed  financial  holding  companies.  In  order  to  ensure  timely 
coherent  supervision,  Directive  98/78/EC  should  be  amended,  notwithstanding  the 
imminent application of Directive 2009/138/EC of the European Parliament and of the 
Council  of  25  November  2009  on  the  taking-up  and  pursuit  of  the  business  of 
Insurance and Reinsurance (Solvency II) (recast)20. 

It  is  necessary  that  financial  conglomerates  are  identified  throughout  the  European 
Union  according  to  the  extent  to  which  they  are  exposed  to  group  risks,  based  on 
common  guidelines  issued  by  the  European  Banking  Authority  and  the  European 
Insurance  and Occupational Pensions Authority in accordance with Article 42  of the 
Regulation (EU) No ../.. establishing a European Banking Authority21 and Article 42 
of  the  Regulation  (EU)  No  ../..  establishing  a  European  Insurance  and  Occupational 
Pensions Authority22, following cooperation within the Joint Committee of European 
Supervisory  Authorities..  It  is  also  important  that  the  requirements  regarding  the 
waiving  of  the  application  of  supplementary  supervision  are  applied  in  a  risk-based 
manner according to these guidelines. This is of particular importance in the case of 
the larger, internationally operating conglomerates. 

The  comprehensive  and  adequate  monitoring  of  group  risks  in  large,  complex, 
internationally operating conglomerates, as well as the supervision of the group-wide 
capital  policies  of  these  groups,  is  only  possible  when  competent  authorities  gather 
supervisory information and plan supervisory measures beyond the national scope of 
their  mandate.  It  is  therefore  necessary  that  competent  authorities  coordinate 
supplementary  supervision  on  international  conglomerates  among  the  competent 
authorities which are regarded as most relevant for the supplementary supervision of a 
conglomerate. The college of a financial conglomerate's relevant competent authorities 
should  reflect  the  supplementary  nature  of  this  Directive,  and  as  such  it  should  add 
value to existing colleges for the banking subgroup and the insurance subgroup in the 
conglomerate, without replicating, duplicating or replacing them. 

large,  complex, 

internationally  operating 
The  supplementary  supervision  of 
conglomerates  requires  coordination  throughout  the  European  Union,  in  order  to 
contribute  to  the  stability  of  the  internal  market  for  financial  services.  To  this  end, 
competent authorities need to agree upon the supervisory approaches applied to these 
conglomerates.  The  European  Banking  Authority  and  the  European  Insurance  and 
Occupational  Pensions  Authority  should  issue,  in  accordance  with  Article  42  of  the 

OJ L 330, 5.12.1998, p.1. 
OJ L 335, 17.12.2009, p. 1. 
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  a  European 
Banking  Authority  {COM(2009)  499  final}  {COM(2009)  500  final}  {COM(2009)  502  final} 
{COM(2009) 503 final} {SEC(2009) 1233} {SEC(2009) 1234} {SEC(2009) 1235} /* COM/2009/0501 
final - COD 2009/0142 */ 
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  a  European 
Insurance  and  Occupational  Pensions  Authority  {COM(2009)  499  final}  {COM(2009)  500  final} 
{COM(2009) 501 final} {COM(2009) 503 final} {SEC(2009) 1233} {SEC(2009) 1234} {SEC(2009) 
1235} /* COM/2009/0502 final - COD 2009/0143 */ 

(3) 

(4) 

(5) 

19 
20 
21 

22 

EN 

12 

   EN 

                                                 
Regulation (EU) No ../.. establishing a European Banking Authority23 and Article 42 
of  the  Regulation  (EU)  No  ../..  establishing  a  European  Insurance  and  Occupational 
Pensions Authority24, following cooperation within the Joint Committee of European 
Supervisory  Authorities,  common  guidelines  for  these  common  approaches,  thus 
ensuring a comprehensive prudential framework of the supervisory tools and powers 
available  in  the  banking,  insurance  and  financial  conglomerates  directives.  The 
guidelines  which  will  be  issued  as  provided  for  in  this  Directive  must  reflect  the 
supplementary  nature  of 
the  sector-specific 
supervision  as  provided  for  by  Directives  73/239/EEC,  79/267/EEC,  92/49/EEC, 
92/96/EEC, 93/6/EEC, 93/22/EEC, 98/78/EC, 2000/12/EC, 2004/39/EC, 2006/48/EC, 
2006/49/EC and 2009/138/EC. 

this  Directive,  and  complement 

(6) 

There  is  a  genuine  need  to  monitor  and  control  potential  group  risks,  posed  to  the 
conglomerate, coming from participations in other companies. For those cases where 
the  specific  supervisory  powers  provided  by  this  Directive  appear  to  be  insufficient, 
the  supervisory  community  should  develop  alternative  methods  to  address  and 
appropriately  take  into  account  these  risks,  preferably  by  work  conducted  by  the 
European Banking Authority and the European Insurance and Occupational Pensions 
Authority  in  the  forum  of  the  Joint  Committee  of  the  European  Supervisory 
Authorities.  If  a  participation  is  the  only  element  of  identification  of  a  financial 
conglomerate, supervisors should be allowed to assess whether the group is exposed to 
group risks and waive the group from supplementary supervision, if appropriate. 

(7)  With  regard  to  certain  group  structures,  supervisors  were  left  without  powers  in  the 
current  crisis  since  the  combination  of  directives  had  forced  them  to  choose  either 
sector-specific  or  supplementary  supervision.  While  a  complete  review  of  the 
Directive should be undertaken in the context of the G20 work on conglomerates, the 
necessary supervisory powers should be restored as soon as possible. 

(8) 

(9) 

23 

24 

25 

It  is  appropriate  to  ensure  consistency  with  the  aim  of  Directive  2002/87/EC  and 
Council  Directive  2006/48/EC  of  the  European  Parliament  and  of  the  Council  of  14 
June  2006  relating  to  the  taking  up  and  pursuit  of  the  business  of  credit  institutions 
(recast)25.  For  this  reason,  Directive  2006/48/EC  should  be  amended  to  define  and 
include mixed financial holding companies. 

In accordance with the principles of subsidiarity as set out in Article 5 of the Treaty on 
European  Union,  the  objectives  of  the  action  to  be  taken,  namely  improving  the 
supplementary  supervision  of  financial  entities  in  a  financial  conglomerate,  can  be 
only  achieved  at  Union  level.  In  accordance  with  the  principle  of  proportionality,  as 
set out in that Article, this Directive does not go beyond what is necessary in order to 
achieve those objectives. 

Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  a  European 
Banking  Authority  {COM(2009)  499  final}  {COM(2009)  500  final}  {COM(2009)  502  final} 
{COM(2009) 503 final} {SEC(2009) 1233} {SEC(2009) 1234} {SEC(2009) 1235} /* COM/2009/0501 
final - COD 2009/0142 */ 
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  a  European 
Insurance  and  Occupational  Pensions  Authority  {COM(2009)  499  final}  {COM(2009)  500  final} 
{COM(2009) 501 final} {COM(2009) 503 final} {SEC(2009) 1233} {SEC(2009) 1234} {SEC(2009) 
1235} /* COM/2009/0502 final - COD 2009/0143 */ 
OJ L 177, 30.6.2006, p. 1. 

EN 

13 

   EN 

                                                 
(10)  Directives  98/78/EC,  2002/87/EC  and  2006/48/EC  should  therefore  be  amended 

accordingly,  

HAVE ADOPTED THIS DIRECTIVE: 

Article 1 

Amendments to Directive 98/78/EC 

Directive 98/78/EC is amended as follows: 

(1) 

The following point is added to Article 1: 

“(m) mixed financial holding company means a mixed financial holding company as 
defined in Article 2 (15) of Directive 2002/87/EC;” 

(2) 

Article 2(2) is replaced by the following: 

“2. Every insurance undertaking or reinsurance undertaking the parent undertaking of 
which is an insurance holding company, a mixed financial holding company, a non-
member-country  insurance  or  a  non-member  country  reinsurance  undertaking  shall 
be  subject  to  supplementary  supervision  in  the  manner  prescribed  in  Articles  5(2), 
and Articles 6, 8 and 10.” 

(3) 

Article 3(1) is replaced by the following: 

“1. The exercise of supplementary supervision in accordance with Article 2 shall in 
no way imply that the competent authorities are required to play a supervisory role in 
relation to the non-member-country insurance undertaking, the non-member country 
reinsurance  undertaking,  insurance  holding  company,  mixed  financial  holding 
company or mixed-activity insurance holding company taken individually.” 

(4) 

Article 4(2) is replaced by the following: 

“2.  Where  insurance  undertakings  or  reinsurance undertakings authorised in  two or 
more  Member  States  have  as  their  parent  undertaking  the  same  insurance  holding 
company,  non-member-country 
insurance  undertaking,  non-member  country 
reinsurance  undertaking,  mixed  financial  holding  company  or  mixed-activity 
insurance  holding  company,  the  competent  authorities  of  the  Member  States 
concerned  may  reach  an  agreement  as  to  which  of  them  shall  be  responsible  for 
exercising supplementary supervision.” 

(5) 

Article 10(2) is replaced by the following: 

“2.  In  the  case  referred  to  in  Article  2(2),  the  calculation  shall  include  all  related 
undertakings  of  the  insurance  holding  company,  the  mixed  financial  holding 
company,  the  non-member-country  insurance  undertaking  or  the  non-member 
country reinsurance undertaking, in the manner provided for in Annex II.” 

(6) 

Annexes  I  and  II  are  amended  in  accordance  with  Annex  I  to  this  Directive.

EN 

14 

   EN 

Article 2 

Amendments to Directive 2002/87/EC 

Directive 2002/87/EC is amended as follows: 

(1) 

Articles 1 and 2 are replaced by the following: 

“Article 1 

Subject matter  

This  Directive  lays  down  rules  for  supplementary  supervision  of  regulated  entities 
which  have  obtained  an  authorisation  in  accordance  with  Article  6  of  Directive 
73/239/EEC, Article 6 of Directive 79/267/EEC, Article 5 of Directive 2004/39/EC 
of the European Parliament and of the Council26, Article 6 of Directive 2006/48/EC 
of  the  European  Parliament  and  of  the  Council27  or  Article  14  of  Directive 
2009/138/EC of the European Parliament and of the Council28 and which are part of 
a financial conglomerate.  

This  Directive  also  amends  the  relevant  sectoral  rules  which  apply  to  entities 
regulated by those Directives. 

Article 2 

Definitions 

For the purposes of this Directive: 

(1) ‘credit institution’ means a credit institution within the meaning of Article 4(1) of 
Directive 2006/48/EC; 

(2)  ‘insurance  undertaking  means  an  insurance  undertaking  within  the  meaning  of 
Article 13(1) and (2) of Directive 2009/138/EC; 

(3)  ‘investment  firm’  means  an  investment firm  within  the  meaning  of  Article  4(1) 
(1) of Directive 2004/39/EC, including the undertakings referred to in Article 3(1)(d) 
of Directive 2006/49/EC; 

(4)  ‘regulated  entity’  means  a  credit  institution,  an  insurance  undertaking,  an 
investment firm or a reinsurance undertaking; 

(5) ‘asset management company’ means a management company within the meaning 
of Article 2(1)(b) of Directive 2009/65/EC, as well as an undertaking the registered 
office of which is outside the European Union and which would require authorisation 
if it had its registered office within the European Union; 

26 
27 
28 

OJ L 145, 30.4.2004, p. 1. 
OJ L 177, 30.6.2006, p. 1. 
OJ L 335, 17.12.2009, p. 1. 

EN 

15 

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(6) ‘reinsurance undertaking’ means a reinsurance undertaking within the meaning of 
Article 13(4) and (5) of Directive 2009/138/EC; 

(7) ‘sectoral rules’ means Union legislation relating to the prudential supervision of 
regulated  entities,  in  particular  laid  down  in  Directives  2004/39/EC,  2006/48/EC, 
2006/49/EC, and 2009/138/EC; 

(8)  ‘financial  sector’  means  a  sector  composed  of  one  or  more  of  the  following 
entities: 

(a) 

(b) 

a  credit  institution,  a  financial  institution  or  an  ancillary  services 
undertaking within the meaning of Article 4(1), (5) and (21) of Directive 
2006/48/EC; 

an  insurance  undertaking,  a  reinsurance  undertaking  or  an  insurance 
holding company within the meaning of Articles 13(1) and (2), 13(4) and 
(5) and 212(1)(f) of Directive 2009/138/EC;  

(c) 

an  investment  firm  within  the  meaning  of  Article  3(1)(b)  of  Directive 
2006/49/EC; 

(9)  ‘parent  undertaking’  means  a  parent  undertaking  as  defined  in  Article  1  of 
seventh  Council  Directive  83/349/EEC  of  13  June  1983  on  consolidated 
accounts29and  any  undertaking  which,  in  the  opinion  of  the  competent  authorities, 
effectively exercises a dominant influence over another undertaking; 

(10) ‘subsidiary undertaking’ means a subsidiary undertaking as defined in Article 1 
of  Directive  83/349/EEC  and  any  undertaking  over  which,  in  the  opinion  of  the 
competent  authorities,  a  parent  undertaking  effectively  exercises  a  dominant 
influence;  all  subsidiaries  of  subsidiary  undertakings  shall  also  be  considered 
subsidiaries of the undertaking that is their original parent; 

(11) ‘participation’ means a participation within the meaning of the first sentence of 
Article 17 of Council Directive 78/660/EEC of 25 July 1978 on the annual accounts 
of certain types of companies30, or the direct or indirect ownership of 20% or more or 
the voting rights or capital of an undertaking; 

(12) ‘group’ means 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,  and  includes  any 
subgroup thereof; 

(13) ‘close links’ means a situation in which two or more natural or legal persons are 
linked  by  participation  or  control  (meaning  the  relationship  between  a  parent 
undertaking  and  a  subsidiary  undertaking  as  set  out  in  Article  1  of  Directive 
83/349/EEC,  or  a  similar  relationship  between  any  natural  or  legal  person  and  an 

29 
30 

OJ L 193, 18.7.1983, p. 1. 
OJ L 222, 14.8.1978, p. 11. 

EN 

16 

   EN 

                                                 
undertaking), or the fact that both or all are permanently linked to one and the same 
person by a control relationship; 

(14)  ‘financial  conglomerate’  means  a  group  or  subgroup  within  the  meaning  of 
point (12), which, subject to Article 3, meets the following conditions: 

(a) 

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

(b)  where there is a regulated entity within the meaning of Article 1 of this 
Directive 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) 

(e) 

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; 

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

(15)  ‘mixed  financial  holding  company’  means  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 European Union, and other entities, 
constitutes a financial conglomerate; 

(16)  ‘competent  authorities’  means  the  national  authorities  of  the  Member  States 
which  are  empowered  by  law  or  regulation  to  supervise  credit  institutions,  or 
insurance undertakings, or reinsurance undertakings, or investment firms whether on 
an individual or group-wide basis; 

(17) ‘relevant competent authorities’ means: 

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

(b) 

(c) 

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

other competent authorities concerned, where relevant, in the opinion of 
the authorities referred to in points (a) and (b); 

EN 

17 

   EN 

(18)  ‘intra-group  transactions’  means  all  transactions  by  which  regulated  entities 
within  a  financial  conglomerate  rely  either  directly  or  indirectly  on  other 
undertakings  within  the  same  group  or  on  any  natural  or  legal  person  linked  to  the 
undertakings  within  that  group  by  close  links,  for  the  fulfilment  of  an  obligation, 
whether or not contractual, and whether or not for payment; 

(19) ‘risk concentration’ means all risk exposures with a loss potential which is large 
enough to threaten the solvency or the financial position in general of the regulated 
entities in the financial conglomerate; 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.” 

(2) 

Article 3 is amended as follows: 

(a) The following third subparagraph is added to paragraph 2: 

“Asset  management  companies  within  the  meaning  of  Article  30  are  added  to  the 
sector they belong to within the group; if they do not belong exclusively to one sector 
within the group, they are added to the smallest financial sector.” 

(b) Paragraph 3 is replaced by the following: 

“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 EUR 6 billion.  

If  the  group  does  not  reach  the  threshold  referred  to  in  paragraph  2,  the  relevant 
competent authorities may decide by common agreement not to regard the group as a 
financial conglomerate. They may also decide 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.  

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

(c) The following paragraph 3a is added to Article 3: 

“3.a  If  the  group  reaches  the  threshold  referred  to  in  paragraph  2,  but  the  smallest 
sector does not exceed EUR 6 billion, the relevant competent authorities may decide 
by  common  agreement  not  to  regard  the  group  as  a  financial  conglomerate.  They 
may also decide 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. 

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

(d) The following point (c) is added to paragraph 4: 

EN 

18 

   EN 

“(c) exclude a minority participation in the smaller sector if such participation is the 
only element for the identification of a financial conglomerate.” 

(e) Paragraph 5 is replaced by the following: 

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

(f) The following paragraph 8 is added: 

“8. The European Banking Authority and the European Insurance and Occupational 
Pensions  Authority  shall  issue  common  guidelines  aimed  at  the  convergence  of 
supervisory practices with regard to the application of paragraphs 2, 3, 3a, 4 and 5 of 
this Article.” 

(3) 

Article 6 (3) and (4) are replaced by the following: 

“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:  

(a) a credit institution, a financial institution or an ancillary services undertaking; 

(b)  an  insurance  undertaking,  a  reinsurance  undertaking  or  an  insurance  holding 
company; 

(c) an investment firm; 

(d) a mixed financial holding company. 

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 of this Directive, 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 Articles 133 and 
134 of Directive 2006/48/EC and Article 221 of Directive 2009/138/EC. 

When  applying  method  2  (Deduction  and  aggregation)  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 the group. 
‘Proportional share’ means the proportion of the subscribed capital which is directly 
or indirectly held by that undertaking.” 

(4) 

The following paragraph 5 is added to Article 7: 

“5. The European Banking Authority and the European Insurance and Occupational 
Pensions  Authority  shall  issue  common  guidelines  aimed  at  the  convergence  of 

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19 

   EN 

supervisory practices with regard to the application of supplementary supervision of 
risk  concentration  as  provided  for  in  paragraphs  1  to  4.  They  shall  issue  specific 
common  guidelines  on  the  application  of  paragraphs  1  to  4  to  participations  of  the 
financial conglomerate in cases where national company law provisions obstruct the 
application of Article 14(2).” 

(5) 

The following paragraph 5 is added to Article 8: 

“5. The European Banking Authority and the European Insurance and Occupational 
Pensions  Authority  shall  issue  common  guidelines  aimed  at  the  convergence  of 
supervisory practices with regard to the application of supplementary supervision of 
intra-group  transactions  as  provided  for  in  paragraphs  1  to  4..  They  shall  issue 
specific common guidelines on the application of paragraphs 1 to 4 to participations 
of  the  financial  conglomerate  in  cases  where  national  company  law  provisions 
obstruct the application of Article 14(2).” 

(6) 

The following paragraph 6 is added to Article 9: 

“6.  Competent  authorities  shall  align  the  application  of  the  supplementary 
supervision  of  internal  control  mechanisms  and  risk  management  processes  as 
provided for in this Article with the supervisory review processes as provided for by 
Article  124  of  Directive  2006/48/EC  and  Article  36  of  Directive  2009/138/EC.  To 
this  end,  the  European  Banking  Authority  and  the  European  Insurance  and 
Occupational  Pensions  Authority  shall  issue  common  guidelines  aimed  at  the 
convergence of supervisory practices with regard to the application of supplementary 
supervision  of  internal  control  mechanisms  and  risk  management  processes  as 
provided for in this Article, as well as on the consistency with the supervisory review 
processes as provided for by Article 124 of Directive 2006/48/EC and Article 36 of 
Directive  2009/138/EC.  They  shall  issue  specific  common  guidelines  for  the 
application  of  this  Article  to  participations  of  the  financial  conglomerate,  in  cases 
where national company law provisions obstruct the application of Article 14(2).” 

(7) 

The following paragraphs 4 and 5 are added to Article 11: 

“4. The coordinator shall establish a college of the relevant competent authorities to 
facilitate  the  required  cooperation  under  this  section  and  the  exercise  of  the  tasks 
listed  in  paragraphs  1,  2  and  3  and  Article  12  and,  subject  to  the  confidentiality 
requirements  and  compatibility  with  Union 
legislation,  ensure  appropriate 
coordination  and  cooperation  with  relevant  third-country  competent  authorities 
where appropriate. 

The  establishment  and  functioning  of  that  college  shall  be  based  on  a  written 
coordination arrangement within the meaning of paragraph 1. The coordinator shall 
decide which other competent authorities participate in a meeting or in any activity 
of that college. 

5.  The  European  Banking  Authority  and  the  European  Insurance  and  Occupational 
Pensions  Authority  shall  issue  common  guidelines  aimed  at  the  consistency  of 
supervisory  coordination  arrangements  according  to  Article  131a  of  Directive 
2006/48/EC and Article 248(4) of Directive 2009/138/EC.” 

(8) 

Article 19 is replaced by the following: 

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20 

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“Article 19 

Cooperation with third-country competent authorities 

1. Article 39(1) and (2) of Directive 2006/48/EC, Article 10a of Directive 98/78/EC 
and  Article  264  of  Directive  2009/138/EC  shall  apply  mutatis  mutandis  to  the 
negotiation  of  agreements  with  one  or  more  third  countries  regarding  the  means  of 
exercising  supplementary  supervision  of 
financial 
conglomerate. 

regulated  entities 

in  a 

2. Without prejudice to the procedures provided for in Article 218 of the Treaty on 
the Functioning of the European Union, the Commission shall, with the assistance of 
the  European  Banking  Committee,  the  European  Insurance  and  Occupational 
Pensions  Committee  and  the  Financial  Conglomerates  Committee,  examine  the 
outcome of the negotiations referred to in paragraph 1 and the resulting situation.” 

(9) 

The title of Chapter III is replaced by the following: 

"POWERS CONFERRED ON THE COMMISSION, COMMITTEE PROCEDURE 
AND ADOPTION OF COMMON GUIDELINES" 

(10)  The following Article 21b is inserted: 

"Article 21b 

Common Guidelines 

The  European  Banking  Authority  and  the  European  Insurance  and  Occupational 
Pensions  Authority  shall  issue  the  common  guidelines  referred  to  in  Article  3(3), 
Article  7(5),  Article  8(5),  Article  9(6)  and  Article  11(5)  in  accordance  with  the 
procedure  laid  down  in  Article  42  of  the  Regulation  (EU)  No  ../..  establishing  the 
European  Banking  Authority,  and  in  Article  42  of  the  Regulation  (EU)  No  ../.. 
establishing the European Insurance and Occupational Pensions Authority, following 
cooperation within the Joint Committee of the European Supervisory Authorities." 

(11)  The following point (c) is added to the first paragraph of Article 30: 

“(c) in the identification process within the meaning of Article 3(2).” 

(12)  Annex I is amended in accordance with Annex II to this Directive. 

Article 3 

Amendments to Directive 2006/48/EC 

Directive 2006/48/EC is amended as follows: 

(1) 

The following point (49) is added to Article 4: 

“(49) 'mixed financial holding company' means a mixed financial holding company 
as defined in Article 2(15) of Directive 2002/87/EC of the European Parliament and 

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21 

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of  the  Council  on  the  supplementary  supervision  of  credit  institutions,  insurance 
undertakings and investment firms in a financial conglomerate31;” 

(2) 

Article 71(2) is replaced by the following: 

“2.  Without  prejudice  to  Articles  68,  69  and  70,  credit  institutions  controlled  by  a 
parent  financial  holding  company  in  a  Member  State  or  a  parent  mixed  financial 
holding  company in a  Member State  shall comply, to the extent and in the manner 
prescribed in Article 133, with the obligations laid down in Articles 75, 120, 123 and 
Section 5 on the basis of the consolidated financial situation of that financial holding 
company or mixed financial holding company.” 

(3) 

Article 72(2) is replaced by the following: 

“2.  Credit  institutions  controlled  by  an  EU  parent  financial  holding  company  or  an 
EU  parent  mixed  financial  holding  company  shall  comply  with  the  obligations  laid 
down  in  Chapter  5  on  the  basis  of  the  consolidated  financial  situation  of  that 
financial holding company or mixed financial holding company. 

Significant  subsidiaries  of  EU  parent  financial  holding  companies  or  EU  parent 
mixed financial holding companies shall disclose the information specified in Annex 
XII, Part 1, point 5, on an individual or sub-consolidated basis.” 

(4) 

Article 84(6) is replaced by the following: 

“6. When the IRB Approach is intended to be used by the EU parent credit institution 
and  its  subsidiaries,  or  by  the  EU  parent  financial  holding  company  and  its 
subsidiaries, or the EU parent mixed financial holding company and its subsidiaries, 
the  competent  authorities  of  the  different  legal  entities  shall  cooperate  closely  as 
provided for in Articles 129 to 132.” 

(5) 

Article 105(3) and (4) are replaced by the following: 

“3.  When  an  Advanced  Measurement  Approach  is  intended  to  be  used  by  an  EU 
parent  credit  institution  and  its  subsidiaries  or  by  the  subsidiaries  of  an  EU  parent 
financial  holding  company  or  an  EU  parent  mixed  financial  holding  company,  the 
competent  authorities  of  the  different  legal  entities  shall  cooperate  closely  as 
provided for in Articles 129 to 132. The application shall include the elements listed 
in Annex X, Part 3. 

4. Where an EU parent credit institution and its subsidiaries or the subsidiaries of an 
EU  parent  financial  holding  company  or  an  EU  parent  mixed  financial  holding 
company use an Advanced Measurement Approach on a unified basis, the competent 
authorities may allow the qualifying criteria set out in Annex X, Part 3 to be met by 
the parent and its subsidiaries considered together.” 

(6) 

Article 125(2) is replaced by the following: 

31 

OJ L 35, 11.2.2003, p. 1. 

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22 

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“2. Where the parent of a credit institution is a parent financial holding company in a 
Member  State  or  an  EU  parent  financial  holding  company  or  an  EU  parent  mixed 
financial holding company, supervision on a consolidated basis shall be exercised by 
the competent authorities that authorised that credit institution under Article 6.” 

(7) 

Article 126 is replaced by the following: 

“Article 126 

1. Where credit institutions authorised in two or more Member States have as their 
parent the same parent financial holding company in a Member State or the same EU 
parent  financial  holding  company  or  the  same  mixed  financial  holding  company, 
supervision on a consolidated basis shall be exercised by the competent authorities of 
the credit institution authorised in the Member State in which the financial holding 
company or mixed financial holding company was set up. 

Where  the  parents  of  credit  institutions  authorised  in  two  or  more  Member  States 
comprise  more  than  one  financial  holding  company  with  head  offices  in  different 
Member States and there is a credit institution in each of these States, supervision on 
a  consolidated  basis  shall  be  exercised  by  the  competent  authority  of  the  credit 
institution with the largest balance sheet total. 

2. Where more than one credit institution authorised in the European Union has as its 
parent  the  same  financial  holding  company  or  the  same  mixed  financial  holding 
company  and  none  of  these  credit  institutions  has  been  authorised  in  the  Member 
State  in  which  the  financial  holding  company  or  the  mixed  financial  holding 
company  was  set  up,  supervision  on  a  consolidated  basis  shall  be  exercised  by  the 
competent  authority  that  authorised  the  credit  institution  with  the  largest  balance 
sheet total, which shall be considered, for the purposes of this Directive, as the credit 
institution  controlled  by  an  EU  parent  financial  holding  company  or  an  EU  parent 
mixed financial holding company. 

3.  In  particular  cases,  the  competent  authorities  may  by  common  agreement  waive 
the  criteria  referred  to  in  paragraphs  1  and  2  if  their  application  would  be 
inappropriate, taking into account the credit institutions and the relative importance 
of their activities in different countries, and appoint a different competent authority 
to  exercise  supervision  on  a  consolidated  basis.  In  these  cases,  before  taking  their 
decision, the competent authorities shall give the EU parent credit institution, or EU 
parent  financial  holding  company,  or  the  EU  parent  mixed  financial  holding 
company, or credit institution with the largest balance sheet total, as appropriate, an 
opportunity to state its opinion on that decision. 

4.  The  competent  authorities  shall  notify  the  Commission  of  any  agreement  falling 
within paragraph 3.” 

(8) 

Article 127 is amended as follows: 

(a)  Paragraph 1 is replaced by the following: 

“1.  Member  States  shall  adopt  any  measures  necessary,  where  appropriate,  to 
include  financial  holding  companies  or  mixed  financial  holding  companies  in 
consolidated supervision. Without prejudice to Article 135, the consolidation of the 

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23 

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financial  situation  of  the  financial  holding  company  or  the  mixed  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.” 

(b)  Paragraph 3 is replaced by the following: 

“3.  Member  States  shall  provide  that  their  competent  authorities  responsible  for 
exercising  supervision  on  a  consolidated  basis  may  ask  the  subsidiaries  of  a  credit 
institution  or  a  financial  holding  company  or  a  mixed  financial  holding  company, 
which  are  not  included  within  the  scope  of  supervision  on  a  consolidated  basis  for 
the  information  referred  to  in  Article  137.  In  such  a  case,  the  procedures  for 
transmitting and verifying the information laid down in that Article shall apply.” 

(9) 

The first subparagraph of Article 129(1) is replaced by the following: 

“In  addition  to  the  obligations  imposed  by  the  provisions  of  this  Directive,  the 
competent  authority  responsible  for  the  exercise  of  supervision  on  a  consolidated 
basis of EU parent credit institutions and credit institutions controlled by EU parent 
financial  holding  companies  or  EU  parent  mixed  financial  holding  companies  shall 
carry out the following tasks:” 

(10)  The first subparagraph of Article 129(2) is replaced by the following: 

“In  the  case  of  applications  for  the  permissions  referred  to  in  Articles  84(1),  87(9) 
and  105  and  in  Annex  III,  Part  6,  respectively,  submitted  by  an  EU  parent  credit 
institution and its subsidiaries, or jointly by the subsidiaries of an EU parent financial 
holding company or an EU parent mixed financial holding company, the competent 
authorities shall work together, in full consultation, to decide whether or not to grant 
the  permission  sought  and  to  determine  the  terms  and  conditions,  if  any,  to  which 
such permission should be subject.” 

(11)  Article 141 and 142 are replaced by the following: 

“Article 141 

Where,  in  applying  this  Directive,  the  competent  authorities  of  one  Member  State 
wish  in  specific  cases  to  verify  the  information  concerning  a  credit  institution,  a 
financial holding company, a financial institution, an ancillary services undertaking, 
a mixed activity holding company, a mixed financial holding company, a subsidiary 
of  the  kind  covered  in  Article  137  or  a  subsidiary  of  the  kind  covered  in  Article 
127(3), situated in another Member State, they shall ask the competent authorities of 
that other Member State to have that verification carried out. The authorities which 
receive such a request shall, within the framework of their competence, act upon it 
either  by  carrying  out  the  verification  themselves,  by  allowing  the  authorities  who 
made the request to carry it out, or by allowing an auditor or expert to carry it out. 
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. 

EN 

Article 142 

24 

   EN 

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  financial  holding  companies,  mixed  financial  holding 
companies  and  mixed  activity  holding  companies,  or  their  effective  managers,  that 
infringe laws, regulation or administrative provisions enacted to implement Articles 
124  to  141  and  this  Article.  The  competent  authorities  shall  cooperate  closely  to 
ensure that those penalties or measures produce the desired results, especially when 
the central administration or main establishment of a financial holding company or of 
a  mixed  financial  holding  company  or  of  a  mixed  activity  holding  company  is  not 
located at its head office.” 

(12)  Article 143(1) is replaced by the following: 

“1.  Where  a  credit  institution,  the  parent  undertaking  of  which  is  a  credit 
institution  or  a  financial  holding  company,  or  a  mixed  financial  holding  company, 
the  head  office  of  which  is  in  a  third  country,  is  not  subject  to  consolidated 
supervision  under  Articles  125  and  126,  the  competent  authorities  shall  verify 
whether the credit institution is subject to consolidated supervision by a third country 
competent authority which is equivalent to that governed by the principles laid down 
in this Directive. 

The  verification  shall  be  carried  out  by  the  competent  authority  which  would  be 
responsible for consolidated supervision if paragraph 3 were to apply, at the request 
of  the  parent  undertaking  or  of  any  of  the  regulated  entities  authorised  in  the 
European  Union  or  on  its  own  initiative.  The  competent  authority  shall  consult  the 
other competent authorities involved.” 

(13)  Annex X is amended in accordance with Annex III to this Directive. 

Article 4 

Transposition 

1. 

Member  States  shall  adopt  and  publish,  by  [30  April  2011]  at  the  latest,  the  laws, 
regulations  and  administrative  provisions  necessary  to  comply  with  this  Directive. 
They  shall  forthwith  communicate  to  the  Commission  the  text  of  those  provisions 
and a correlation table between those provisions and this Directive. 

They shall apply those provisions from [1 July 2011]. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 

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25 

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This Directive shall enter into force on the [20th] day following that of its publication in the 
Official Journal of the European Union. 

Article 5 

Article 6 

This Directive is addressed to the Member States. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

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26 

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Annexes I and II to Directive 98/78/EC are amended as follows: 

ANNEX I 

A. Annex I is amended as follows: 

(14)  Section 2.1. is amended as follows: 

(a) the second indent is replaced by the following: 

“- 
if  the  insurance  undertaking  or  the  reinsurance  undertaking  is  a  related 
undertaking  of  an  insurance  holding  company  or  of  a  mixed  financial  holding 
company which has its registered office in the same Member State as the insurance 
undertaking or the reinsurance undertaking, and both the insurance holding company 
or  mixed  financial  holding  company  and  the  related  insurance  undertaking  or  the 
related reinsurance undertaking are taken into account in the calculation carried out.” 

(b) the fifth sub-paragraph is replaced by the following: 

“Member States may also waive calculation of the adjusted solvency of an insurance 
undertaking  or  reinsurance  undertaking  if  it  is  a  related  insurance  undertaking  or  a 
related  reinsurance  undertaking  of  another  insurance  undertaking,  a  reinsurance 
undertaking or an insurance holding company or a mixed financial holding company 
which  has  its  registered  office  in  another  Member  State,  and  if  the  competent 
authorities  of  the  Member  States  concerned  have  agreed  to  grant  exercise  of  the 
supplementary supervision to the competent authority of the latter Member State.” 

(15)  Section 2.2. is replaced by the following: 

“2.2 Intermediate insurance holding companies 

When calculating the adjusted solvency of an insurance undertaking or a reinsurance 
undertaking which holds a participation in a related insurance undertaking, a related 
reinsurance  undertaking,  a  non-member  country  insurance  undertaking  or  a  non-
member country reinsurance undertaking, through an insurance holding company or 
a  mixed  financial  holding  company,  the  situation  of  the  intermediate  insurance 
holding company or the intermediate mixed financial holding company is taken into 
account. For the sole purpose of this calculation, to be undertaken in accordance with 
the  general  principles  and  methods  described  in  this  Annex,  this  insurance  holding 
company  or  mixed  financial  holding  company  shall  be  treated  as  if  it  were  an 
insurance  undertaking  or  reinsurance  undertaking  subject  to  a  zero  solvency 
requirement and were subject to the same conditions as are laid down in Article 16 of 
Directive  73/239/EEC,  in  Article  27  of  Directive  2002/83/EC  of  the  European 
Parliament  and  of  the  Council32or  in  Article  36  of  Directive  2005/68/EC  of  the 
European  Parliament  and  of  the  Council33  in  respect  of  elements  eligible  for  the 
solvency margin.” 

B. Annex II is amended as follows: 

32 
33 

OJ L 345, 19.12.2002, p. 1. 
OJ L 323, 9.12.2005, p. 1. 

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27 

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(16)  The title of Annex II shall be replaced by: 

“SUPPLEMENTARY SUPERVISION FOR INSURANCE AND 
REINSURANCE UNDERTAKINGS THAT ARE SUBSIDIARIES OF AN 
INSURANCE HOLDING COMPANY, A MIXED FINANCIAL HOLDING 
COMPANY, A NON-MEMBER-COUNTRY INSURANCE UNDERTAKING 
OR A NON-MEMBER COUNTRY REINSURANCE UNDERTAKING” 

(17)  The first subparagraph of paragraph 1. is replaced by the following: 

“1.  In  the  case  of  two  or  more  insurance  undertakings  referred  to  in  Article  2(2) 
which  are  the  subsidiaries  of  an  insurance  holding  company,  a  mixed  financial 
holding  company,  a  non-member-country  insurance  undertaking  or  a  non-member-
country  re-insurance  undertaking  and  which  are  established  in  different  Member 
States, the competent authorities shall ensure that the method described in this Annex 
is applied in a consistent manner.” 

(18)  The  second  and  third  indents  and  the  subparagraph  following  the  third  indent  are 

replaced by the following: 

“- 
if that insurance undertaking or re-insurance undertaking and one or more other 
insurance undertakings or re-insurance undertakings authorised in the same Member 
State have as their parent undertaking the  same insurance holding company, mixed 
financial  holding  company,  non-member-country  insurance  undertaking  or  non-
member-country  re-insurance  undertaking,  and  the  insurance  undertaking  or  re-
insurance  undertaking  is  taken  into  account  in  the  calculation  provided  for  in  this 
Annex carried out for one of these other undertakings, 

– 

if that insurance undertaking or re-insurance undertaking and one or more other 
insurance  undertakings  or  re-insurance  undertakings  authorised  in  other 
Member  States  have  as  their  parent  undertaking  the  same  insurance  holding 
company,  mixed  financial  holding  company,  non-member-country  insurance 
undertaking  or  non-member-country  re-insurance  undertaking,  and  an 
agreement granting exercise of the supplementary supervision covered by this 
Annex  to  the  supervisory  authority  of  another  Member  State  has  been 
concluded in accordance with Article 4(2). 

Where  other  insurance  holding  companies  or  non-member  country  insurance  or 
reinsurance  undertakings  hold  successive  participations  in  the  insurance  holding 
company  or  non-member  country  insurance  or  reinsurance  undertaking,  Member 
States may apply the calculations provided for in this Annex only at the level of the 
ultimate parent undertaking of the insurance undertaking or re-insurance undertaking 
which is an insurance holding company, a mixed financial holding company, a non-
member-country  insurance  undertaking  or  a  non-member-country  re-insurance 
undertaking.” 

(19)  Paragraph 3 is replaced by the following: 

“3.  The  competent  authorities  shall  ensure  that  calculations  analogous  to  those 
described in Annex I are carried out at the level of the insurance holding company, or 
mixed financial holding company. 

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The analogy shall consist in applying the general principles and methods described in 
Annex  I  at  the  level  of  the  insurance  holding  company,  mixed  financial  holding 
company,  non-member-country  insurance  undertaking  or  non-member-country  re-
insurance undertaking. 

For the sole purpose of this calculation, the parent undertaking shall be treated as if it 
were an insurance undertaking subject to the following conditions: 

– 

– 

– 

a  zero  solvency  requirement  where  it  is  an  insurance  holding  company  or 
mixed financial holding company, 

a solvency requirement determined in accordance with the principles of section 
2.3 of Annex I, where it is a non-member-country insurance undertaking or a 
non-member-country reinsurance undertaking, 

the same conditions as laid down in Article 16(1) of Directive 73/239/EEC or 
in Article 18 of Directive 79/267/EEC as regards the elements eligible for the 
solvency margin.” 

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29 

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ANNEX II 

In Annex I to Directive 2002/87/EC, under 'II. Technical Calculation Methods', Method 3 and 
Method 4 are replaced by the following: 

“Method 3: ‘Combination method’ 

Competent authorities may allow a combination of method 1 and method 2.” 

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30 

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ANNEX III 

In Directive 2006/48/EC, paragraph 30 of section 3 of part 3 of Annex X is replaced by the 
following:  

“30.  When an Advanced Measurement Approach is intended to be used by the EU parent 
credit institution and its subsidiaries, or by the subsidiaries of an EU parent financial holding 
company  or  an  EU  parent  mixed  financial  holding  company,  the  application  shall  include  a 
description  of  the  methodology  used  for  allocating  operational  risk  capital  between  the 
different entities of the group.”  

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31 

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