Changes from report parliamentary committee draft to plenary report

Added‘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:’

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

Added‘(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.’;

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

Added‘(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.’;

Added(b) the following paragraph 3 is added:

Added‘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.’;

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

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

Added‘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.’;

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

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

Added(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;

Added(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.

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

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

AddedFor 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.

Added6a. 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:

Added(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;

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

Added7. 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.’;

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

Added‘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.’

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

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

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

Added(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;

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

AddedEBA 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].’;

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

Added‘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’.

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

Added‘Section 0

AddedApplication of this Chapter to investment firm groups

AddedScope of application to investment firm groups

AddedThis 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.

AddedThis 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.’;

Added______

Added*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).’;

Added(31) Article 131 is amended as follows:

Added(a) in paragraph 5, the following subparagraph is added:

Added‘Where an O-SII becomes bound by the output floor, its competent or designated authority, as applicable, may review the institutions O-SII buffer requirement to make sure that its calibration remains appropriate.’;

Added(b) in paragraph 5a, the second sub-paragraph is replaced by the following:

Added‘Within six weeks of receipt of the notification referred to in paragraph 7 of this Article, the ESRB shall provide the Commission with an opinion as to whether the O-SII buffer is deemed appropriate. EBA may also provide the Commission with its opinion on the buffer in accordance with Article 16a(1) of Regulation (EU) No 1093/2010.’;

Added▌

Added(32) Article 133 is amended as follows:

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

Added‘1. Each Member State shall ensure that it is possible to set a systemic risk buffer of Common Equity Tier 1 capital for the financial sector or one or more subsets of that sector on all or a subset of exposures as referred to in paragraph 5 of this Article, in order to prevent and mitigate macroprudential or systemic risks not covered by Regulation (EU) No 575/2013 and by Articles 130 and 131 of this Directive, including climate change risks, in the meaning of a risk of disruption in the financial system with the potential to have serious negative consequences to the financial system and the real economy in a specific Member State.’;

Added(b) the following paragraph 2a is inserted:

Added‘2a. Where an institution is bound by the output floor, both of the following shall apply:

Added(a) the amount of CET1 capital it is required to have in accordance with the first subparagraph shall be capped by the following amount:

Addedwhere:

AddedET = the un-floored total risk exposure amount of the institution calculated in accordance with Article 92(4) of Regulation (EU) No 575/2013’;

AddedEi = the un-floored risk exposure amount of the institution for the subset of exposures i calculated in accordance with Article 92(4) of Regulation (EU) No 575/2013;

AddedrT, ri = rT and ri as defined in the first subparagraph.

Added(b) the competent or designated authority, as applicable, may review ▌ the calibration of the systemic risk buffer rate or rates, as applicable, to ensure they remain appropriate and do not double-count the risks that are already covered by the fact that the institution is bound by the output floor.

AddedThe calculation in point (a) shall apply until the designated authority has completed the revision set out in point (b) and has published a new decision on the calibration of the systemic risk buffer rate or rates in accordance with the procedure set out in this Article. As of that moment, the cap in point (a) shall no longer apply.’;

Added(c) in paragraph 8, point (c) is replaced by the following:

Added‘(c) the systemic risk buffer is not to be used to address any of the following:

Added(i) risks that are covered by Articles 130 and 131;