Changes from plenary report to adopted text

Removed‘(a) managerial responsibility and internal control functions;’;

Removed(c) in paragraph 3, point (a) is replaced by the following:

Removed‘(a) an institution that is not a large institution and the value of the assets of which is on average and on an individual basis in accordance with this Directive and Regulation (EU) No 575/2013 equal to or less than EUR 5 billion over the four-year period immediately preceding the current financial year;’;

Removed(23a) in Article 97(4), the second subparagraph is replaced by the following:

Removed‘When conducting the review and evaluation referred to in paragraph 1 of this Article, competent authorities shall apply the principle of proportionality in accordance with the criteria disclosed pursuant to point (c) of Article 143(1). In particular, competent authorities shall take into account the following elements:

Removed(a) whether the entity is not a G-SII according to point 133 of Article 4, paragraph 1, of Regulation (EU) 575/2013;

Removed(b) whether the entity and its subsidiaries are linked according to Article 22, paragraph 7, of Directive 2013/34/EU and applicable national laws require affiliated undertakings to allocate profits mainly to the common interests of members;

Removed(c) whether the subsidiaries are small and non-complex institutions according to point 145 of Article 4, paragraph 1, of Regulation (EU) 575/2013, or less significant institutions according to Article 6, paragraph 4, of Regulation (EU) 1024/2013.’;

Removed(23b) in Article 98(1), the following point is added:

Removed‘(ia) the extent to which the institutions have put in place appropriate policies and operational actions related to the targets and milestones defined in the plans referred to in Article 76(2).’;

Removed(24) in Article 98, the following paragraph 9 is added:

Removed‘9. The review and evaluation performed by competent authorities shall include the assessment of institutions’ governance and risk management processes for dealing with environmental, social and governance risks, as well as of the institutions’ exposures to environmental, social and governance risks. In determining the adequacy of institutions’ processes and exposures, competent authorities shall take into account the business models of those institutions.

RemovedInstitution’s exposures to environmental, social and governance risks shall be assessed also on the basis of institutions’ plans as defined in Article 76(2). Institutions’ governance and risk management processes with regard to environmental, social and governance risks shall be brought into line with the objectives set out in those plans.

RemovedThe review and evaluation performed by competent authorities shall include the assessment of the institutions’ plans and targets, as referred to in Article 76(2), as well as the progress made towards addressing the environmental, social and governance risks arising from the process of adjustment towards climate neutrality by 2050, as set out in Regulation (EU) 2021/1119, as well as towards other relevant Union policy objectives in relation to environmental, social and governance factors.’;

Removed(25) in Article 100 the following paragraphs 3 and 4 are added:

Removed‘3. Institutions and any third parties acting in a consulting capacity to institutions shall refrain from activities that can impair a stress test, such as benchmarking, exchange of information among themselves, agreements on common behaviour, or optimisation of their submissions in stress tests. Without prejudice to other relevant provisions laid down in this Directive and in Regulation (EU) No 575/2013, competent authorities shall have all information gathering and investigatory powers that are necessary to detect those actions.

Removed4. EBA, EIOPA and ESMA shall, through the Joint Committee referred to in Article 54 of Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010, develop guidelines to ensure that consistency, long-term considerations and common standards for assessment methodologies are integrated into the stress testing of environmental, social and governance risks. The Joint Committee shall publish those guidelines by ... [12 months from the date of entry into force of this amending Directive]. EBA, EIOPA and ESMA shall, through the Joint Committee referred to in Article 54 of Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010, explore how social and governance related risks can be integrated into stress testing.’;

Removed(26) Article 104 is amended as follows:

Removed(a) paragraph 1 is amended as follows:

Removed(i) the introductory sentence is replaced by the following:

Removed‘For the purposes of Article 97, Article 98(4) and (5) and (9), Article 101(4) and Article 102 of this Directive and of the application of Regulation (EU) No 575/2013, competent authorities shall have at least the power to:’

Removed(ii) the following point (m) is added:

Removed‘(m) require institutions to reduce the risks arising from the institutions’ misalignment with relevant policy objectives of the Union and broader transition trends relating to environmental, social and governance factors over the short, medium and long term, including through adjustments to their business models, governance strategies and risk management.’;

Removed(iia) the following point (ma) is added:

Removed‘(ma) require the reinforcement of the targets, measures, and actions included in the plans to be prepared in accordance with Article 76(2) where it is considered that the maintenance of the existing targets, measures, and actions poses material risks to the prudential soundness of an institution in the short, medium and long term time horizon.’;

Removed(b) the following paragraph 3 is added:

Removed‘3. EBA shall issue guidelines, in accordance with Article 16 of Regulation (EU) No 1093/2010, to specify how competent authorities may identify that the credit valuation adjustment (CVA) risks of institutions, referred to in Article 381 of Regulation (EU) No 575/2013, pose excessive risks to the soundness of those institutions.’;

Removed(27) Article 104a is amended as follows:

Removed(a) in paragraph 3, the second subparagraph is replaced by the following:

Removed‘Where additional own funds are required to address the risk of excessive leverage not sufficiently covered by Article 92(1), point (d), of Regulation (EU) No 575/2013, competent authorities shall determine the level of the additional own funds required under paragraph 1, point (a), of this Article as the difference between the capital considered adequate pursuant to paragraph 2 of this Article, except for the fifth subparagraph thereof, and the relevant own funds requirements set out in Parts Three and Seven of Regulation (EU) No 575/2013.’;

Removed(b) the following paragraphs 6 and 7 are added:

Removed‘6. Where an institution becomes bound by the output floor, the following shall apply to avoid the double counting of risks in pillar II:

Removed(a) the nominal amount of additional own funds required by the institution’s competent authority in accordance with Article 104(1), point (a), to address risks other than the risk of excessive leverage shall not increase as a result of the institutions’ becoming bound by the output floor;

Removed(b) the institution’s competent authority shall, without undue delay, and no later than 6 months before the end date of the next review and evaluation process, review the additional own funds it required from the institution in accordance with Article 104(1), point (a), and remove any parts thereof that would double-count the risks that are already fully covered by the fact that the institution is bound by the output floor.

RemovedAs soon as the competent authority has completed the review in point (b), point (a) shall no longer apply.

RemovedIn subsequent years, competent authorities shall take the above into account in the context of the regular supervisory review and evaluation process.

RemovedFor the purposes of this Article and Articles 131 and 133 of this Directive, an institution shall be considered as bound by the output floor when the institution’s total risk exposure amount calculated in accordance with Article 92(3), point (a), of Regulation (EU) No 575/2013 exceeds its un-floored total risk exposure amount calculated in accordance with Article 92(4) of that Regulation.

Removed6a. EBA shall, by 30 June 2023, issue guidelines complementing its guidelines of 19 December 2014 on common procedures and methodology for the supervisory review and evaluation process, which shall further specify how to operationalise the requirements set out in paragraph 6, and in particular:

Removed(a) how competent authorities shall reflect in their supervisory review and evaluation process the fact that an institution has become bound by the output floor;

Removed(b) how competent authorities and institutions shall communicate and disclose the impact on supervisory requirements of an institution becoming bound by the output floor.

Removed7. For the purposes of paragraph 2, as long as an institution is bound by the output floor, the institution’s competent authority shall not impose an additional own funds requirement that would double-count the risks that are already fully covered by the fact that the institution is bound by the output floor.’;

Removed(27a) in Article 104b, the following paragraph is inserted:

Removed‘4a. Where an institution becomes bound by the output floor, its competent authority may review its guidance on additional funds communicated to the respective institution to make sure that its calibration remains appropriate.’

Removed(28) in Article 106, paragraph 1 is replaced by the following:

Removed‘1. Member States shall empower the competent authorities to require institutions:

Removed(a) to publish information referred to in Part Eight of Regulation (EU) No 575/2013 more than once per year▌;

Removed(aa) to set deadlines for the submission of disclosure information by institutions other than small and non-complex institutions to EBA for its publication on a centralised EBA website;

Removed(b) to use specific media and locations for publications other than the EBA website for centralised disclosures or the financial statements of institutions.;

RemovedEBA shall, taking into consideration the provisions included in Part Eight of Regulation (EU) No 575/2013, issue guidelines in accordance with Article 16 of Regulation (EU) No 1093/2010, to specify the requirements set out in paragraph 1 of this Article. The EBA shall issue those guidelines by ... [12 months from the date of entry into force of this amending Directive].’;

Removed(29) Article 121 is replaced by the following:

Removed‘Without prejudice to provisions applicable to financial holding company or mixed financial holding approved in accordance with Article 21a(1), Member States shall require that the members of the management body of a financial holding company or mixed financial holding, be of sufficiently good repute and possess sufficient knowledge, skills and experience as referred to in Article 91(1) to perform those duties, taking into account the specific role of a financial holding company or mixed financial holding company’.

Removed(30) In Title VII, Chapter 3, the following Section 0 is inserted:

Removed‘Section 0

RemovedApplication of this Chapter to investment firm groups

RemovedScope of application to investment firm groups

RemovedThis Chapter applies to investment firm groups, as defined in Article 4(1), point (25) of Regulation (EU) 2019/2033 of the European Parliament and of the Council*, where at least one investment firm in that group is subject to Regulation (EU) No 575/2013 pursuant to Article 1(2) of Regulation (EU) 2019/2033*14.

RemovedThis Chapter does not apply to investment firm groups where no investment firm in that group is subject to Regulation (EU) No 575/2013 pursuant to Article 1(2) of Regulation (EU) 2019/2033.’;

Removed______

Removed*14 Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).’;

Removed(31) Article 131 is amended as follows: