Recommendation of the European Central Bank of 15 July 2025 amending Recommendation ECB/2017/10 on common specifications for the exercise of some options and discretions available in Union law by national competent authorities in relation to less significant institutions (ECB/2025/26)
Date: 2025-07-15
Institutions: European Central Bank
Subjects: EU law, competence of the institution, credit institution, financial control, financial legislation, financial requirements, market supervision, private-sector liquidity




C_202504190EN.000101.fmx.xml












Official Journal of the European Union


EN
C series













C/2025/4190


28.7.2025







            RECOMMENDATION OF THE EUROPEAN CENTRAL BANK
         
of 15 July 2025
         
amending Recommendation ECB/2017/10 on common specifications for the exercise of some options and discretions available in Union law by national competent authorities in relation to less significant institutions
(ECB/2025/26)
(C/2025/4190)


THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,

Having regard to the Treaty on the Functioning of the European Union,


Having regard to Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (1), and in particular Article 4(3) and Article 6(1) and (5)(c) thereof,

Whereas:







(1)


Recommendation ECB/2017/10 of the European Central Bank (2) (hereinafter the ‘O&D Recommendation’) establishes common specifications for the exercise of certain options and discretions available in Union law by national competent authorities (NCAs) in relation to less significant institutions.The O&D Recommendation was amended by Recommendation ECB/2022/13 of the European Central Bank (3) to take account of legislative changes introduced since its adoption.












(2)


New options and discretions have since been introduced in Union law, and existing options and discretions have also since been amended or deleted, including options and discretions that are included in the O&D Recommendation. It is therefore appropriate to align the O&D Recommendation accordingly.












(3)


With regard to the option for a competent authority to decide that an institution is not to be considered a small and non-complex institution on the basis of an analysis of its size, interconnectedness, complexity or risk profile, the ECB considers it necessary to encourage a harmonised approach by setting out circumstances in which NCAs should assess whether a credit institution should not be considered a small and non-complex institution.












(4)


Therefore, Recommendation ECB/2017/10 should be amended accordingly,





HAS ADOPTED THIS RECOMMENDATION:


PART ONE

Amendments

Recommendation ECB/2017/10 is amended as follows:






(1)


in PART TWO, the following Section Ia is inserted:

                                    ‘
                                    Ia.


Small and non-complex institutions

1.   Article 4(1)(145)(i) of Regulation (EU) No 575/2013: small and non-complex institutions

When a less significant institution (LSI) has been identified as a High Risk LSI (*1) for more than four quarters in a row, the NCA should carry out an assessment on whether or not that institution should be considered a small and non-complex institution on the basis of an analysis of its risk profile.

(*1)  LSIs are classified as high risk based on a risk assessment carried out by the relevant NCA and on their compliance with capital and leverage requirements.’;"
                        










(2)


the Annex is replaced by the Annex to this Recommendation.




PART TWO

Addressees









1.


This Recommendation is addressed to the NCAs of participating Member States.












2.


NCAs are recommended to apply this Recommendation as of the date of its adoption.







Done at Frankfurt am Main, 15 July 2025.


The President of the ECB

Christine LAGARDE
            





(1)  
            OJ L 287, 29.10.2013, p. 63, ELI: http://data.europa.eu/eli/reg/2013/1024/oj.

(2)  Recommendation of the European Central Bank of 4 April 2017 on common specifications for the exercise of some options and discretions available in Union law by national competent authorities in relation to less significant institutions (ECB/2017/10) (OJ C 120, 13.4.2017, p. 2).

(3)  Recommendation of the European Central Bank of 25 March 2022 amending Recommendation ECB/2017/10 on common specifications for the exercise of some options and discretions available in Union law by national competent authorities in relation to less significant institutions (ECB/2022/13) (OJ C 142, 30.3.2022, p. 1).




ANNEX
The Annex to Recommendation ECB/2017/10 is replaced by the following:



‘ANNEX






Legal basis of the option and/or discretion


Approach recommended: consistency with the policy on options and discretions for significant institutions






Consolidated supervision and waivers of prudential requirements






Article 4(1), point (20) of Regulation (EU) No 575/2013: discretion to exclude entities from the financial holding company definition


Section II, Chapter 1 paragraph 3 of the ECB Guide




Article 7(1) to (3) of Regulation (EU) No 575/2013: capital waivers


Section II, Chapter 1 paragraph 4 of the ECB Guide




Article 8(1) and (2) of Regulation (EU) No 575/2013: liquidity waivers


Section II, Chapter 1 paragraph 5 of the ECB Guide




Article 9 of Regulation (EU) No 575/2013: individual consolidation method


Section II, Chapter 1 paragraph 6 of the ECB Guide




Article 10(1) and (2) of Regulation (EU) No 575/2013: waivers for credit institutions permanently affiliated to a central body


Section II, Chapter 1 paragraph 7 of the ECB Guide




Article 18(3) of Regulation (EU) No 575/2013 in conjunction with Article 2 of Delegated Regulation (EU) 2022/676 (*1): methods for consolidation in the case of undertakings related within the meaning of Article 22(7) of Directive 2013/34/EU


Section II, Chapter 1 paragraph 9 of the ECB Guide




Article 18(5) of Regulation (EU) No 575/2013 in conjunction with Article 4 of Delegated Regulation (EU) 2022/676: methods for consolidation in the case of participations or capital ties other than those referred to in Article 18(1) and (4)


Section II, Chapter 1 paragraph 10 of the ECB Guide




Article 18(6) of Regulation (EU) No 575/2013, in conjunction with Articles 5 and 6 of Delegated Regulation (EU) 2022/676: consolidation in the cases of significant influence and common management


Section II, Chapter 1 paragraph 11 of the ECB Guide




Article 18(7) of Regulation (EU) No 575/2013: consolidation


Section II, Chapter 1 paragraph 12 of the ECB Guide




Article 18(8) of Regulation (EU) No 575/2013, in conjunction with Article 7 of Delegated Regulation (EU) 2022/676: consolidation


Section II, Chapter 1 paragraph 13 of the ECB Guide




Article 19(2) of Regulation (EU) No 575/2013: exclusion of consolidation


Section II, Chapter 1 paragraph 14 of the ECB Guide




Article 24(2) of Regulation (EU) No 575/2013: valuation of assets and off-balance sheet items – use of International Financial Reporting Standards for prudential purposes


Section II, Chapter 1 paragraph 15 of the ECB Guide




Article 21a(4a) of Directive 2013/36/EU: Discretion to exclude an exempted financial holding company and mixed financial holding company from prudential consolidation


Section II, Chapter 1 paragraph 16 of the ECB Guide






Own funds






Article 26(3) of Regulation (EU) No 575/2013: classification as CET1 instruments of subsequent issuances


Section II, Chapter 2 paragraph 3 of the ECB Guide




Article 49(1) of Regulation (EU) No 575/2013: deduction of insurance holdings


Section II, Chapter 2 paragraph 5 of the ECB Guide




Article 49(2) of Regulation (EU) No 575/2013: deduction of holdings of financial sector entities


Section II, Chapter 2 paragraph 6 of the ECB Guide




Article 54(1), point (e) of Regulation (EU) No 575/2013: calculation of the trigger for additional Tier 1 instruments issued by subsidiary undertakings established in third countries


Section II, Chapter 2 paragraph 7 of the ECB Guide




Article 78(1)(b) of Regulation (EU) No 575/2013: reduction of own funds – excess capital margin requirement


Section II, Chapter 2 paragraph 8 of the ECB Guide




Article 78(3) of Regulation (EU) No 575/2013: reduction of own funds – mutuals, savings and cooperatives


Section II, Chapter 2 paragraph 10 of the ECB Guide




Article 78(4) of Regulation (EU) No 575/2013: reduction of additional Tier 1 or Tier 2 instruments and/or related share premium accounts


Section II, Chapter 2 paragraph 11 of the ECB Guide




Article 79(1) of Regulation (EU) No 575/2013: reduction of additional Tier 1 or Tier 2 instruments


Section II, Chapter 2 paragraph 12 of the ECB Guide




Article 83(1) of Regulation (EU) No 575/2013: waiver for additional Tier 1 and Tier 2 instruments issued by a special purpose entity


Section II, Chapter 2 paragraph 13 of the ECB Guide




Article 84(5) of Regulation (EU) No 575/2013: minority interests included in consolidated Common Equity Tier 1 capital


Section II, Chapter 2 paragraph 14 of the ECB Guide




Articles 84(1), point (a), 85(1), point (a), and 87(1), point (a) of Regulation (EU) No 575/2013: derogation from the “lower of the two requirements” criterion applicable to calculate minority interests and qualifying tier 1 and tier 2


Section II, Chapter 2 paragraph 15 of the ECB Guide




Article 142(1) of Directive 2013/36/EU: failure to meet combined buffer requirement or leverage ratio buffer requirement


Section II, Chapter 10 paragraph 11 of the ECB Guide






Capital requirements






Article 104(4) of Regulation (EU) No 575/2013: trading book classification exemption


Section II, Chapter 3 paragraph 3 of the ECB Guide




Article 104(5) of Regulation (EU) No 575/2013: non-trading book classification exemption


Section II, Chapter 3 paragraph 4 of the ECB Guide




Article 113(6) of Regulation (EU) No 575/2013: calculation of risk weighted exposure amounts – intra-group exposures


Section II, Chapter 3 paragraph 5 of the ECB Guide




Article 244(2) and (3) and Article 245(2) and (3) of Regulation (EU) No 575/2013: significant risk transfer


Section II, Chapter 3 paragraph 7 of the ECB Guide




Article 283(3) of Regulation (EU) No 575/2013: implementation of the internal model method


Section II, Chapter 3 paragraph 8 of the ECB Guide




Article 284(4) and (9) of Regulation (EU) No 575/2013: calculation of the exposure value for counterparty credit risk


Section II, Chapter 3 paragraph 9 of the ECB Guide




Article 314(3) of Regulation (EU) No 575/2013: derogation to calculate a separate interest, leases and dividends component for specific subsidiaries


Section II, Chapter 3 paragraph 10 of the ECB Guide




Article 314(5) of Regulation (EU) No 575/2013: calculation of the services component for institutional protection scheme


Section III, Chapter 2 paragraph 2 of the ECB Guide




Article 325c of Regulation (EU) No 575/2013: internal review of alternative standardised approach usage to the satisfaction of the competent authority and frequency of such review


Section II, Chapter 3 paragraph 11 of the ECB Guide




Article 325t(5) and (6) of Regulation (EU) No 575/2013: permission for using the alternative definition of sensitivities (delta and vega)


Section II, Chapter 3 paragraph 12 of the ECB Guide




Article 366(4) of Regulation (EU) No 575/2013: calculation of the value-at-risk number


Section II, Chapter 3 paragraph 13 of the ECB Guide




Article 383b(2) of Regulation (EU) No 575/2013: own funds requirements for delta and vega risks (alternative sensitivities)


Section II, Chapter 3 paragraph 14 of the ECB Guide




Articles 383p, 383s and 384(2) of Regulation (EU) No 575/2013: use of internal ratings to determine credit quality steps for standardised approach credit valuation adjustments and basic approach credit valuation adjustments


Section II, Chapter 3 paragraph 15 of the ECB Guide






Institutional protection schemes






Article 8(4) of Regulation (EU) No 575/2013: liquidity waiver for members of institutional protection schemes


Section II, Chapter 4 paragraph 3 of the ECB Guide






Large exposures






Article 396(1) of Regulation (EU) No 575/2013: compliance with large exposures requirements


Section II, Chapter 5 paragraph 3 of the ECB Guide




Article 400(2)(c) of Regulation (EU) No 575/2013: compliance with large exposures requirements


Section II, Chapter 5 paragraph 4 of the ECB Guide






Liquidity






Article 414 of Regulation (EU) No 575/2013: compliance with liquidity requirements


Section II, Chapter 6 paragraph 3 of the ECB Guide




Article 422(8) of Regulation (EU) No 575/2013 and Article 29 of Delegated Regulation (EU) 2015/61: intragroup liquidity outflows


Section II, Chapter 6 paragraph 10 of the ECB Guide




Article 425(4) of Regulation (EU) No 575/2013 and Article 34 of Delegated Regulation (EU) 2015/61: intragroup liquidity inflows


Section II, Chapter 6, paragraph 14 of the ECB Guide




Article 8(1) of Delegated Regulation (EU) 2015/61: diversification of holdings of liquid assets


Section II, Chapter 6 paragraph 5 of the ECB Guide




Article 8(3)(c) of Delegated Regulation (EU) 2015/61: management of liquid assets


Section II, Chapter 6 paragraph 6 of the ECB Guide




Article 8(6) of Delegated Regulation (EU) 2015/61: currency mismatches


Section II, Chapter 6 paragraph 4 of the ECB Guide




Article 17(4) of Delegated Regulation (EU) 2015/61: waiver of the unwind mechanism


Section I, Chapter 5 paragraph 1 of the ECB Guide




Article 23(2) of Delegated Regulation (EU) 2015/61: outflows from other products and services


Section II, Chapter 6 paragraph 7 of the ECB Guide




Article 24(4) and (5) of Delegated Regulation (EU) 2015/61 outflows from stable retail deposits


Section III, Chapter 3 paragraph 1 of the ECB Guide




Article 24(6) of Delegated Regulation (EU) 2015/61: multiplier for retail deposits covered by a deposit guarantee scheme


Section III, Chapter 3 paragraph 3 of the ECB Guide




Article 25(3) of Delegated Regulation (EU) 2015/61: higher outflow rates


Section II, Chapter 6 paragraph 8 of the ECB Guide




Article 26 of Delegated Regulation (EU) 2015/61: outflows with inter-dependent inflows


Section II, Chapter 6 paragraph 9 of the ECB Guide




Article 29 of Delegated Regulation (EU) 2015/61: preferential treatment within a group or an institutional protection scheme (IPS)


Section II, Chapter 6 paragraph 10 of the ECB Guide




Article 30(2) of Delegated Regulation (EU) 2015/61: additional collateral outflows from downgrade triggers


Section II, Chapter 6 paragraph 11 of the ECB Guide




Article 33(2) of Delegated Regulation (EU) 2015/61: cap on inflows


Section II, Chapter 6 paragraph 12 of the ECB Guide




Article 33(3) to (5) of Delegated Regulation (EU) 2015/61: specialised credit institutions


Section II, Chapter 6 paragraph 13 of the ECB Guide




Article 34 of Delegated Regulation (EU) 2015/61: inflows within a group or an IPS


Section II, Chapter 6 paragraph 14 of the ECB Guide




Article 428b(5) of Regulation (EU) No 575/2013: net stable funding requirement (NSFR) – restriction of currency mismatches


Section II, Chapter 6 paragraph 15 of the ECB Guide




Article 428f(1) of Regulation (EU) No 575/2013: NSFR – interdependent assets and liabilities


Section II, Chapter 6 paragraph 16 of the ECB Guide




Article 428h of Regulation (EU) No 575/2013: NSFR – Preferential treatment within a group or an IPS


Section II, Chapter 6 paragraph 17 of the ECB Guide.




Article 428p(7) of Regulation (EU) No 575/2013: NSFR – treatment of non-standard central bank operations


Section I, Chapter 5 paragraph 1 of the ECB Guide




Article 428ai of Regulation (EU) No 575/2013: NSFR – application of the simplified net stable funding requirement (sNSFR)


Section II, Chapter 6 paragraph 18 of the ECB Guide




Article 428aq(7) of Regulation (EU) No 575/2013 – NSFR – treatment of non-standard central bank operations (sNSFR)


Section I, Chapter 5 paragraph 1 of the ECB Guide




Article 8 of Regulation (EU) No 575/2013: liquidity waivers


Section II, Chapter 4 paragraph 3 of the ECB Guide






Leverage






Article 429a(2) of Regulation (EU) No 575/2013: preferential treatment in favour of public development banks


Section II, Chapter 7 paragraph 3 of the ECB Guide




Article 429a(5) of Regulation (EU) No 575/2013: exemption of central bank reserves from calculation of leverage ratio


Section I, Chapter 5 paragraph 1 of the ECB Guide




Article 429b(3) of Regulation (EU) No 575/2013: preferential treatment for notional cash pooling arrangements


Section II, Chapter 7 paragraph 4 of the ECB Guide






Reporting requirements






Article 430(11) of Regulation (EU) No 575/2013: reporting on prudential requirements and financial information


Section II, Chapter 8 paragraph 1 of the ECB Guide






General requirements for access to the activity of credit institutions






Article 21(1) of Directive 2013/36/EU: waiver for credit institutions permanently affiliated to a central body


Section II, Chapter 9 paragraph 1 of the ECB Guide




Article 21b(2) of Directive 2013/36/EU: intermediate parent undertaking


Section II, Chapter 9 paragraph 3 of the ECB Guide






Governance arrangements and prudential supervision






Article 91(6) of Directive 2013/36/EU: additional non-executive directorship


Section II, Chapter 10 paragraph 4 of the ECB Guide




Article 108(1) of Directive 2013/36/EU: internal capital adequacy assessment process for credit institutions permanently affiliated to a central body


Section II, Chapter 10 paragraph 5 of the ECB Guide




Articles 117 and 118 of Directive 2013/36/EU: cooperation obligations


Section II, Chapter 10 paragraph 8 of the ECB Guide




Article 142 of Directive 2013/36/EU: capital conservation plans


Section II, Chapter 10 paragraph 11 of the ECB Guide






            ’.


(*1)  Commission Delegated Regulation (EU) 2022/676 of 3 December 2021 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards specifying the conditions in accordance with which consolidation is to be carried out in the cases referred to in Article 18(3) to (6) and Article 18(8) of that Regulation (OJ L 123, 26.4.2022, p. 1, ELI: http://data.europa.eu/eli/reg_del/2022/676/oj).



ELI: http://data.europa.eu/eli/C/2025/4190/oj
ISSN 1977-091X (electronic edition)