Changes from plenary report to adopted text

Removed(w) an institution fails to meet the requirements in relation to its large exposures to a client or group of connected clients set out in Part Four of Regulation (EU) No 575/2013;

Removed(x) an institution fails to meet the requirements in relation to the calculation of the leverage ratio, including the application of derogations set out in Part Seven of Regulation (EU) No 575/2013;

Removed(y) an institution fails to report information or provides incomplete or inaccurate information to the competent authorities in relation to the data referred to in Articles 430(1), (2) and (3) and in Articles430a and 430b of Regulation (EU) No 575/2013;

Removed(z) an institution fails to comply with the data collection and governance requirements set out in Part Three, Title III, Chapter 2 of Regulation (EU) No 575/2013.

Removed(aa) an institution fails to meet the requirements in relation to the calculation of the risk-weighted exposure amounts or own funds requirements or fails to have in place the governance arrangements set out in Part Three, Title II to VI of Regulation (EU) No 575/2013;

Removed(ab) an institution fails to meet the requirements in relation to the calculation of the liquidity coverage ratio or the net stable funding ratio as set out in Part Six, Title I and Title IV of Regulation (EU) No 575/2013 and the delegated act referred to in Article 460(1) of that Regulation.’;

Removed(b) paragraph 2 is replaced by the following:

Removed‘2. Member States shall ensure that in the cases referred to in paragraph 1, the measures than can be applied include at least the following:

Removed(a) administrative penalties:

Removed(i) in the case of a legal person, administrative pecuniary penalties of up to 10 % of the total annual net turnover of the undertaking;

Removed(ii) in the case of a natural person, administrative pecuniary penalties of up to EUR 5 000 000, or in the Member States whose currency is not the euro, the corresponding value in the national currency on 17 July 2013;

Removed(iii) administrative pecuniary penalties of up to twice the profits gained or losses avoided because of the breach where those can be determined;

Removed(b) periodic penalty payments:

Removed(i) in the case of a legal person, periodic penalty payments of up to 5 % of the average daily turnover which, in the case of an ongoing infringement, the legal person shall be obliged to pay per day of infringement until compliance with an obligation is restored. The periodic penalty payment may be imposed for a period of up to six months from the date stipulated in the decision requiring the termination of a breach and imposing the periodic penalty payment. The average daily turnover referred to in this paragraph shall be the total annual net turnover divided by 365.

Removed(ii) in the case of a natural person, periodic penalty payments of up to EUR 500 000 which, in the case of an ongoing infringement, the natural person shall be obliged to pay per day of infringement until compliance with an obligation is restored, and which may be imposed for a period up to six months from the date stipulated in the decision requiring the termination of a breach and imposing the periodic penalty payment;

Removed(c) other administrative measures:

Removed(i) a public statement which identifies the natural person, institution, financial holding company or mixed financial holding company, intermediate parent undertaking responsible and the nature of the breach;

Removed(ii) an order requiring the natural or legal person responsible to cease the conduct and to desist from a repetition of that conduct;

Removed(iii) in the case of an institution, withdrawal of the authorisation of the institution in accordance with Article 18;

Removed(iv) subject to Article 65(2), a temporary ▌ ban of a member of the institution's management body or any other natural person who is held responsible for the infringement from exercising functions in the institution;

Removed(v) suspension of the voting rights of the shareholder or shareholders held responsible for the breaches referred to in paragraph 1.’;

Removed(c) the following paragraphs 3 and 4 are added:

Removed‘3. The total annual net turnover referred to in paragraph 2, points (a)(i) and (b)(i), of this Article shall be equal to the business indicator set out in Article 314 of Regulation (EU) No 575/2013. For the purpose of this Article, the business indicator shall be calculated on the basis of the most recent available yearly supervisory financial information, unless the result is zero or negative. If the result is zero or negative, the basis for the calculation shall be the most recent earlier yearly supervisory financial information, which produces an indicator above zero. Where the undertaking concerned is part of a group the relevant total annual net turnover shall be the total annual net turnover resulting from the consolidated account of the ultimate parent undertaking.

Removed4. The average daily turnover referred to in paragraph (2), point (b)(i), shall be the total annual net turnover referred to in paragraph 3 divided by 365.’

Removed(11) Article 70 is replaced by the following:

Removed‘Article 70 Effective application of administrative penalties and exercise of powers to impose penalties by competent authorities

Removed1. Member States shall ensure that, when determining the type and level of administrative penalties or other administrative measures, the competent authorities shall take into account all relevant circumstances, including where appropriate:

Removed(a) the gravity and the duration of the breach;

Removed(b) the degree of responsibility of the natural or legal person responsible for the breach;

Removed(c) the financial strength of the natural or legal person responsible for the breach, as indicated, including by the total turnover of a legal person or the annual income of a natural person;

Removed(d) the importance of profits gained or losses avoided by the natural or legal person responsible for the breach, insofar as they can be determined;

Removed(e) the losses for third parties caused by the breach, insofar as they can be determined;

Removed(f) the level of cooperation of the natural or legal person responsible for the breach with the competent authority;

Removed(g) previous breaches by the natural or legal person responsible for the breach;

Removed(h) any potential systemic consequences of the breach.

Removed(i) previous application of criminal penalties to the same natural or legal person responsible for the same breach.

Removed2. In the exercise of their powers to impose penalties, competent authorities shall cooperate closely to ensure that penalties produce the results pursued by this Directive. They shall also coordinate their actions to prevent accumulation and overlap when applying penalties and administrative measures to cross-border cases. Competent authorities shall cooperate closely with judicial authorities when dealing with same cases.

Removed3. Competent authorities may apply penalties in relation to the same natural or legal person responsible for the same acts or omissions in the case of an accumulation of administrative and criminal proceedings and penalties is punishing the same breach. However, such accumulation of proceedings and penalties shall be strictly necessary and proportionate to pursue different and complementary objectives of general interest. The severity of all the penalties and other administrative measures imposed in case of accumulation of administrative and criminal proceedings shall be limited to what is necessary in the view of the seriousness of the breach concerned. Member States shall lay down clear and precise rules regarding the circumstances in which acts or and omissions may be subject to such accumulation of administrative and criminal proceedings and penalties.

Removed4. Member States shall lay down rules providing for full cooperation between competent authorities and judicial authorities to ensure a sufficiently close connection in substance and time between administrative and criminal proceedings.

Removed5. By 18 July 2029, EBA shall submit a report to the Commission on the cooperation between competent authorities and judicial authorities in the context of application of administrative penalties. In addition, EBA shall assess any divergences in the application of penalties between competent authorities in this respect. In particular, EBA shall assess:

Removed(a) the level of cooperation between competent authorities and judicial authorities in the context of application of penalties;

Removed(b) the level of cooperation between competent authorities in the context of penalties applicable to cross-border cases or in case of accumulation of administrative and criminal proceedings;

Removed(c) the application and the level of protection of ne bis in idem principle with regards to administrative and criminal penalties by Member States;

Removed(d) the application of the principle of proportionality when both penalties are imposed in case of accumulation of administrative and criminal proceedings;

Removed(e) the exchange of information between competent authorities when dealing with cross border cases.’;

Removed(12) in Article 73, the first subparagraph is replaced by the following:

Removed‘Institutions shall have in place sound, effective and comprehensive strategies and processes to assess and maintain on an ongoing basis the amounts, types and distribution of internal capital that they consider adequate to cover the nature and level of the risks to which they are or might be exposed. For environmental, social and governance risks institutions shall explicitly take into account the short, medium and long term time horizon when assessing the possible materialisation of those risks.’;”

Removed(13) in Article 74, paragraph 1 is replaced by the following:

Removed‘1. Institutions shall have robust governance arrangements, which include:

Removed(a) a clear organisational structure with well-defined, transparent and consistent lines of responsibility;

Removed(b) effective processes to identify, manage, monitor and report the risks they are or might be exposed to in the short, medium and long term time horizon, including environmental, social and governance risks;

Removed(c) adequate internal control mechanisms, including sound administration and accounting procedures;

Removed(d) remuneration policies and practices that are consistent with and promote sound and effective risk management, including by taking into account the institution’s risk appetite in terms of environmental, social and governance risks.

RemovedThe remuneration policies and practices referred to in the first subparagraph shall be gender neutral.’;

Removed(14) Article 76 is amended as follows:

Removed(a) paragraph 1 is replaced by the following:

Removed‘1. Member States shall ensure that the management body approves and at least annually reviews the strategies and policies for taking up, managing, monitoring and mitigating the risks the institution is or might be exposed to, including those posed by the macroeconomic environment in which it operates in relation to the status of the business cycle, and those relating to impacts of environmental, social and governance factors.

RemovedBy way of derogation from paragraph 1, the management body of small and non-complex institutions shall be subject to reviews every two years.’;

Removed(b) in paragraph 2 the following subparagraphs are added:

Removed‘Member States shall ensure that the management body develops specific plans, quantifiable targets and processes to monitor and address the risks arising from the short, medium and long-term ESG factors, including those arising from the transition and the process of adjustment to the applicable regulatory objectives towards a sustainable economy in relation to environmental, social and governance factors, in particular with the objective to achieve climate neutrality by 2050 as set out in Regulation (EU) 2021/1119.