Changes from report parliamentary committee draft to plenary report

Added5. Member States shall require third country branches to monitor and manage their outsourcing arrangements, and to ensure that their competent authorities have full access to all information they need to fulfil their supervisory function.

Added6. Member States shall require third country branches that engage in back-to-back or intragroup operations to have adequate resources to identify and properly manage their counterparty credit risk where material risks associated with assets booked by the third country branch are transferred to the counterparty.

Added7. Where critical or important functions are delegated to the head undertaking, competent authorities in charge of the supervision of third country branches shall have access to all information they need to fulfil their supervisory function.

Added8. Competent authorities shall periodically require that an independent third party assesses the implementation of and on-going compliance with the requirements laid down in this Article and addresses a report to the competent authority with its findings and conclusions.

Added9. EBA shall issue guidelines, in accordance with Article 16 of Regulation (EU) No 1093/2010, on the application to third country branches of the arrangements, processes and mechanisms referred to in Article 74(1), taking into account Article 74(2), and on the application to third country branches of Article 75 and Article 76(5), by [OP please insert the date = 6 months from date of entry into force of this amending Directive].

Added1. Member States shall require third country branches to maintain a registry book enabling those branches to track and keep a comprehensive and precise record of all the assets and liabilities originated by and associated with the activities of the third country branch in the Member State and to manage those assets and liabilities autonomously within the branch. The registry book shall provide all necessary and sufficient information on the risks generated by the third country branch and on how they are managed.

Added2. Member States shall require third country branches to develop policies on booking arrangements for the management of the registry book referred to in paragraph 1 for the purposes laid down therein. Those policies shall be documented and validated by the relevant governing body of the third country branch’s head undertaking. The policy document referred to in this paragraph shall provide a clear rationale for the booking arrangements and set out how those arrangements align with the third country branch’s business strategy.

Added3. Competent authorities shall require that an independent written and reasoned opinion on the implementation of and on-going compliance with the requirements laid down in this Article be regularly prepared and addressed to the competent authority with its findings and conclusions.

Added4. EBA shall develop draft regulatory technical standards to specify the booking arrangements that third country branches shall apply for the purposes of this Article, in particular as regards:

Added(a) the methodology to be used by the third country branch to identify and keep a comprehensive and precise track record of the assets and liabilities associated with the third country branch’s activities in the Member State; and

Added(b) the specific treatment to identify and keep a record of the assets and liabilities originated by the third country branch and booked or held remotely in other branches or subsidiaries of the same group on behalf of or for the benefit of the originating third country branch.

AddedEBA shall submit those draft regulatory technical standards to the Commission by [OP please insert the date = 6 months from the date of entry into force of this amending Directive].

AddedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

AddedSub-section 3 Power to require authorisation under Title III and requirements on systemic branches

Added1. Member States shall ensure that competent authorities have the power to require third country branches to apply for authorisation under Title III, Chapter 1, at least where:

Added(a) the third country branch has engaged in the past or is currently engaged in the performance of activities referred to in Article 47(1) with customers or counterparties in other Member States or with other third country branches or subsidiary institutions of the same group ▌in contravention of Article 48c(2)(d); or

Added(b) the third country branch meets the systemic importance indicators referred to in Article 131(3) or poses ▌significant ▌financial stability risks ,; or

Added(ba) the aggregate amount of assets that a third country branch or branches in the Union that belong to the same group hold on their books in the Union as reported in accordance with Sub-section 4 is equal or higher to EUR 40 billion.

Added2. Before making the decision referred to in paragraph 1, competent authorities shall consult the competent authorities of the Member States where the relevant third country group has established other third country branches or subsidiary institutions.

AddedWhere they disagree, the competent authorities of the third country group in other Member States may refer the matter to the EBA for mediation in accordance with Article 19 of Regulation (EU) No 1093/2010. EBA shall take its decision within one month of matter being referred and the competent authority of the relevant third country branch shall refrain from taking its decision during that time.

AddedThe competent authority of the relevant third country branch shall adopt the decision referred to in paragraph 1 in conformity with the decision of EBA.

Added▌

Added4. EBA shall develop draft regulatory technical standards to specify the systemic importance indicators referred to in Article 131(3) as regards third country branches for the purposes of paragraph 1, point (b), of this Article and Article 48k. EBA shall have regard to the following items:

Added(-a) the size of the third country branch;

Added(a) the types of activities and services provided and the operations being conducted by the third country branch and, in particular, whether the third country branch provides those activities and services and conducts those operations with a very narrow set of customers or counterparts;

Added(b) the complexity of the third country branch’s structure, organisation and business model;

Added(c) the degree of interconnectedness of the third country branch with the financial system of the Union and of the Member State where it is established;

Added(d) the substitutability of the activities, services or operations conducted or of the financial infrastructure provided by the third country branch;

Added(e) the market share of the third country branch in the Union and in the Member States where it is established as regards total banking assets and in relation the activities and services it provides and the operations that it conducts;

Added(f) the likely impact that a suspension or closure of the third country branch’s operations or business could have on systemic liquidity or the payment, clearing and settlement systems in the Union and in the Member State where it is established;

Added(g) the likely impact that a suspension or closure of the third country branch’s operations could have on intragroup financing agreements or intragroup services covering critical functions in the Union and in the Member States where it is established;

Added(h) the cross-border activity of the third country branch with its head undertaking and with counterparts in other third countries;

Added(i) the role and importance of the third country branch for the activities, services and operations of the third country group in the Union and in the Member State where it is established;

Added(j) the volume of the third country group’s business being conducted through third country branches, relative to the business of that same group conducted through subsidiary institutions authorised in the Union and in the Member State where the third country branches are established;

Added(k) whether the third country branch is a qualifying third country branch in accordance with Article 48b.

AddedEBA shall submit those draft regulatory technical standards to the Commission by [OP please insert the date = 12 months from the date of entry into force of this amending Directive].

AddedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

Added1. The joint assessment laid down in this Article shall be performed on the third country ▌branches of the same third country group where they are established in two or more Member States and hold assets in an aggregate amount ▌as reported in accordance with Sub-section 4 equal to or higher than EUR 40 billion, either:

Added(a) on average for the immediately preceding three annual reporting periods; or

Added(b) in absolute terms for at least three annual reporting periods during the immediately preceding five annual reporting periods.

AddedThe asset threshold referred to in the first subparagraph shall not include the assets held by the third country branch in connection with central bank market operations entered into with ESCB central banks.

Added2. Competent authorities shall assess whether ▌third country branches ▌have systemic importance and pose significant risks for the financial stability of the Union or for the Member States▌. For those purposes, competent authorities shall, in particular, have regard to the indicators of systemic importance referred to in Article 48j(4) and Article 131(3).

Added3. The assessment ▌ referred to in paragraph 2 ▌shall be performed by the competent authorities of the Member States where the relevant third country group has established third country branches and subsidiary institutions (the “competent authorities concerned”). The assessment shall be led by the competent authority of the Member State where the largest third country branch by asset size is established (the “lead competent authority”).

Added▌

AddedThe ▌“lead competent authority” ▌shall conduct the assessment in full cooperation with all the competent authorities concerned. The competent authorities concerned shall assist and provide all the necessary documentation to the lead competent authority. ▌The lead competent authority ▌shall hear the third country group and shall set reasonable timeframes for the third country group to submit documentation and make its views known in writing.

Added4. The lead competent authority shall transmit a draft assessment of the matters referred to in paragraph 2 to the competent authorities concerned by no later than six months from the starting date of the annual reporting period immediately following the last reporting period that triggered the obligation to conduct the assessment in accordance with paragraph 1. The assessment shall be performed every two years thereafter.

AddedWhere appropriate to address the risks identifiedin the draft assessment, the lead competent authority may recommend that the third country branches be subject to targeted requirements that may include:

Added(a) the obligation to restructure their assets or activities in the Union in such a manner that they cease to qualify as systemic in accordance with paragraph 2 of this Article or that they cease to pose an undue risk to the financial stability of the Union; or

Added(b) additional prudential requirements in accordance with Article 48p.

Added▌

Added5.▌ The lead competent authority and the competent authorities concerned shall do their best endeavours to reach a joint decision by consensus on the draft report and, where applicable, on the targeted requirements referred to in paragraph 4 by no later than three months from the date on which the draft report was transmitted from the former to the latter.

AddedIn the absence of a joint decision after the end of the three-month period referred to in the first subparagraph, any competent authority concerned may refer the matter to the EBA for mediation in accordance with Article 19 of Regulation (EU) No 1093/2010. EBA shall take its decision within one month of the referral and the competent authorities concerned shall adopt the joint decision referred to in the first subparagraph in conformity with the decision of EBA.

Added▌

Added6. The third country branches shall have a period of three months from the date of the decision’s entering into force in accordance with paragraphs 5 or 6 to comply with the requirements laid down in that decision.

AddedWhere the third country branches are required to apply for authorisation as institutions in accordance with Title III, Chapter 1, their authorisation under this Title shall remain valid on an interim basis until the expiry of the deadline referred to in the first subparagraph of this paragraph is reached or, as the case may be, until the completion of the authorisation process as institutions. The third country branches may request the competent authority to extend the three-month deadline referred to in the first subparagraph where they can justify the need for such an extended deadline to comply with the relevant requirement imposed on them.

AddedWhere the threshold referred to in paragraph 1 is met by aggregation of assets of various branches, the competent authorities may impose the requirement referred to in this subparagraph in decreasing asset size order up to the point in which the total assets remaining on the books of the third country branches in the Union is less than EUR 30 billion.

Added7. EBA shall develop draft regulatory technical standards to specify the rules of construction for the interpretation of Article 111 of this Directive for the purposes of determining the hypothetical consolidated supervisor as referred to in paragraph 3, point (b), of this Article.

AddedEBA shall submit those draft regulatory technical standards to the Commission by [OP please insert the date = 12 months from the date of entry into force of this amending Directive].

AddedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

AddedSub-section 4 Reporting requirements