Changes from report parliamentary committee draft to plenary report

RemovedDirective 2013/36/EU

Added(36) The provisions in Article 133 of Directive 2013/36/EU on the systemic risk buffer framework may already be used to address various kinds of systemic risks, including risks related to climate change. To the extent that the relevant competent or designated authorities, as applicable, consider that risks related to climate change have the potential to have serious negative consequences for the financial system and the real economy in Member States, they should introduce a systemic risk buffer rate which could also be applied to certain sets or subsets of exposures, for instance those subject to physical and transition risks related to climate change, where they consider the introduction of such rate effective and proportionate to mitigate those risks.

RemovedArticle 1 – paragraph 1 – point 7, Article 27b – paragraph 6: 6. Notwithstanding Article 27a(2) to (7), where two or more proposals to acquire holdings in the same entity have been notified, the competent authority shall treat the acquirers in a non-discriminatory manner.

Added(37) Members of the management body may undergo the suitability assessment only after a significant time after their appointment or, in the case of key function holders, not at all. Thus, members of the management body who do not meet the suitability criteria may have exercised their duties for a long time, which is problematic especially for large institutions. Moreover, cross-border institutions must navigate through a wide diversity of national rules and processes, which does not make the current system efficient. The existence of different requirements as regards the suitability assessment across the Union is a particularly acute issue in the context of the Banking Union. As a result, it is important to provide a set of rules at Union level to put in place a consistent and predictable “fit-and-proper” framework. This will foster supervisory convergence, enabling further trust between competent authorities and give more legal certainty to institutions. Having a robust “fit-and-proper” framework for assessing the suitability of members of the management body and key function holders is a crucial factor to ensure that institutions are adequately run and their risks appropriately managed.

RemovedDirective 2013/36/EU

Added(38) The purpose of assessing the suitability of members of management bodies is to ensure that those members are qualified for their role and are of good repute. Having the primary responsibility for assessing the suitability of each member of the management body, institutions should carry out the suitability assessment, followed by a verification by the competent authorities that may perform it before or after the member of the management body takes up the position. In particular, small and non-complex institutions should be given more flexibility in line with the principle of proportionality. In this case, and in exceptional and well justified situations where an ex-ante assessment cannot be performed, this assessment should be performed without undue delay immediately after members of management bodies take up their position. However, due to the risks posed by large institutions resulting in particular from potential contagion effects, unsuitable members of management body should be prevented from influencing the running of such large institutions with potential serious detrimental effects. It is therefore appropriate that, safe in exceptional circumstances, the competent authorities assess the suitability of members of the management body of large institutions before those members exercise their duties. This should not interfere with any statutory rights of certain bodies or legal entities to appoint representatives to supervised entities’ management bodies under applicable national law. In these cases, appropriate safeguards should be in place to ensure the suitability of these representatives.

RemovedArticle 1 – paragraph 1 – point 7, Article 27b – paragraph 7 – subparagraph 1 – point a: (a) the minimum list of information to be provided to the competent authorities at the time of the notification referred to in Article 22(1), Article 27a(1), Article 27f(1) and Article 27k(1);

Added(38a) To facilitate independent opinions and critical challenges, the management body should be sufficiently diverse as regards age, gender, geographical provenance and educational and professional background to present a variety of views and experiences. Gender balance is of particular importance to ensure adequate representation of the population. Institutions should set target and define measures to balance gender participation in the management body.

RemovedDirective 2013/36/EU

Added(39) Not only members of the management body, but also key function holders have a significant influence in ensuring the sound and prudent management of an institution on a day-to-day basis. Because Directive 2013/36/EU does not currently define key function holders, Member States have diverging practices across the Union, which impedes an effective and efficient supervision and prevents a level playing field. It is therefore necessary to define key function holders. In addition, the responsibility for assessing the suitability of key function holders should primarily belong to institutions. In particular, small and non-complex institutions should be given more flexibility in line with the principle of proportionality. However, due to the risks posed by the activities of large institutions, the suitability of the heads of internal control functions and the chief financial officer in such large institutions should be assessed by competent authorities before those persons take up their positions. In any case, the assessment of the members of the management body should be without prejudice to provisions of the Member States in regards to the appointment by representation of employees or by regional or local elected bodies.

RemovedArticle 1 – paragraph 1 – point 7, Article 27c –paragraph 1 – subparagraph 1 – point a: (a) a credit institution, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company within the meaning of Article 2(1) point (b) of Directive 2009/65/EC authorised in another Member State or in a sector other than that of the proposed acquirer;

Added(40) In order to ensure legal certainty and predictability for the institutions, it is necessary to establish an efficient and timely process for verifying the suitability of members of the management body and key function holders by competent authorities. Such process should enable competent authorities to request any additional information where necessary, but also ensure that those competent authorities are able to handle the suitability assessments within the prescribed timeframe. Institutions, from their side, should provide the competent authorities with correct and complete information within the allocated time and respond quickly and in good faith to requests for additional information from the competent authorities.

RemovedDirective 2013/36/EU

Added(41) In light of the role of the suitability assessment for the prudent and sound management of institutions, it is necessary to provide competent authorities with new tools, such as statements of responsibilities and a mapping of duties, to assess the suitability of members of the management body and key function holders. Those new tools will also support the work of competent authorities when reviewing the governance arrangements of institutions as part of the supervisory review and evaluation process. Notwithstanding the overall responsibility of the management body as a collegial body, institutions should be required to draw up individual statements and a mapping that clarify the duties held by members of the management body, senior management and key function holders. Their individual duties are not always clearly or consistently laid down and there may be situations where two or more roles overlap or where areas of duties are overlooked because they do not fall neatly under the remit of a single person. The scope of each individual’s duties should be well defined and no areas of duties should be left without ownership. Those tools should ensure further accountability of the members of the management body, senior management and key function holders.

RemovedArticle 1 – paragraph 1 – point 7, Article 27c – paragraph 1 – subparagraph 1 – point b: (b) a parent undertaking of a credit institution, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company within the meaning of Article 2(1), point (b) of Directive 2009/65/EC authorised in another Member State or in a sector other than that of the proposed acquirer;

Added(42) In order to safeguard financial stability, competent authorities should be able to take and implement decisions swiftly. In the context of early intervention measures or resolution action, competent authorities and resolution authorities may consider it appropriate to remove or replace members of the management body or senior management. To take into account such situations, competent authorities should perform the suitability assessment of members of the management body or key function holders after those members of the management body or key function holders have taken up their position.

RemovedDirective 2013/36/EU

Added(43) The additional own funds requirement set by an institution’s competent authority in accordance with Article 104(1), point (a), of Directive 2013/36/EU to address risks other than the risk of excessive leverage should not be increased as a result of the institution becoming bound by the output floor laid down in Regulation (EU) No 575/2013, all else being equal. Furthermore, upon the institution's becoming bound by the output floor, the competent authority should review the institution’s additional own funds requirement and assess, in particular, whether and to what extent such requirement captures risks of excessive variability or lack of comparability of risk weights from the use of internal models by the institution. Where that is the case, the institution’s additional own funds requirement should be regarded as overlapping with the risks captured by the output floor in the own funds requirement of the institution and, consequently, the competent authority should reduce that requirement to the extent necessary to remove any such overlap for as long as the institution remains bound by the output floor.

RemovedArticle 1 – paragraph 1 – point 7, Article 27c – paragraph 2: 2. The competent authorities shall seek to coordinate their assessment and ensure the consistency of their decisions. To this end, the decision by the competent authority of the acquirer shall indicate any views or reservations made by the other relevant competent authority.

Added(44) Similarly, upon becoming bound by the output floor, the nominal amount of an institution’s CET1 capital required under the systemic risk buffer should not increase where there has been no increase in the macroprudential or systemic risks associated with the institution. In such cases, it should be possible for the institution’s competent or designated authority, as applicable, to review the calibration of the systemic risk buffer rates if needed, to ensure that they remain appropriate and do not double-count the risks that are already covered by virtue of the fact that the institution is bound by the output floor. EBA is mandated to issue guidelines on this review. As a rule, competent and designated authorities, as applicable, should not impose systemic risk buffer requirements for risks which are already fully covered by the output floor, regardless of whether or not an institution is bound by the output floor.

RemovedDirective 2013/36/EU

Added▌

RemovedArticle 1 – paragraph 1 – point 7, Article 27d – paragraph 1: Member States shall require any institution or any financial holding company or mixed financial holding company within the scope of Article 21a(1) to notify the competent authorities where it intends to dispose, directly or indirectly, of a holding that exceeds 15% of its eligible capital on a consolidated basis. That notification shall be made in writing and in advance of the divestiture, indicating the size of the holding concerned.

Added(46) To enable the timely and effective activation of the systemic risk buffer it is necessary to clarify the application of the relevant provisions and simplify and align the applicable procedures. Setting a systemic risk buffer should be possible for designated authorities in all Member States to enable the recognition of systemic risk buffer rates set by authorities in other Member States and to ensure that authorities are empowered to address systemic risks in a timely, proportionate and effective manner. Recognition of a systemic risk buffer rate set by another Member State should require only a notification from the authority recognising the rate. To avoid unnecessary authorisation procedures where the decision to set a buffer rate results in a decrease or no change from any of the previously set rates, the procedure laid down in Article 131(15) of Directive 2013/36/EU needs to be aligned with the procedure laid down in Article 133(9) of that Directive. The procedures laid down in Article 133(11) of that Directive should be clarified and made more consistent with the procedures applying for other systemic risk buffer rates, where relevant.

RemovedDirective 2013/36/EU

Added(46a) When drafting regulatory technical standards, guidelines and Q&As, EBA should pay due attention to the principle of proportionality and ensure that those legal acts can also be transposed by small and non-complex institutions without undue effort,

RemovedArticle 1 – paragraph 1 – point 7, Article 27e – paragraph 1: Where the acquirer fails to notify the proposed acquisition in advance in accordance with Article 27a(1) or has acquired a holding as referred to in that Article despite the competent authorities’ opposition, Member States shall require those competent authorities to take appropriate measures. Such measures may include injunctions, periodic penalty payments and penalties, in accordance with Articles 65 to 72, against members of the management body and senior management. Where a holding is acquired despite opposition by the competent authorities, Member States shall, without prejudice to potential penalties, provide either for exercise of the corresponding voting rights to be suspended or for votes cast to be declared null and void.

AddedHAVE ADOPTED THIS DIRECTIVE:

Change 4

ChangedDirective 2013/36/EU is amended as follows:

Change 5

RemovedArticle 1 – paragraph 1 – point 7, Article 27f – paragraph 2 – point a: (a) the intended operation shall be deemed material for an institution where it is at least equal to 10 % of its total assets or liabilities on a consolidated basis;

Added(-1) in Article 2(5), point 5 is replaced by the following:

RemovedDirective 2013/36/EU

Added‘(5) in Germany, the ‘Kreditanstalt für Wiederaufbau’, ‘Landwirtschaftliche Rentenbank’, ‘Bremer Aufbau-Bank GmbH’, ‘Hamburgische Investitions- und Förderbank’, ‘Investitionsbank Berlin’, ‘Investitionsbank des Landes Brandenburg’, 'Investitionsbank Sachsen-Anhalt', ‘Investitionsbank Schleswig-Holstein’, ‘Investitions- und Förderbank Niedersachsen – NBank’, ‘Investitions- und Strukturbank Rheinland-Pfalz’, ‘Landeskreditbank Baden-Württemberg – Förderbank’, ‘LfA Förderbank Bayern’, ‘NRW.BANK’, ‘Saarländische Investitionskreditbank AG’, ‘Sächsische Aufbaubank – Förderbank’, ‘Thüringer Aufbaubank’, undertakings which are recognised under the ‘Wohnungsgemeinnützigkeitsgesetz’ as bodies of State housing policy and are not mainly engaged in banking transactions, and undertakings recognised under that law as non-profit housing undertakings;’;

RemovedArticle 1 – paragraph 1 – point 7, Article 27h – paragraph 3: 3. The competent authorities shall seek to coordinate their assessment and ensure the consistency of their decisions. Moreover, the competent authorities shall indicate in their decisions any views or reservations made by the competent authority supervising other entities involved in the intended operation.

Added(1) in Article 3, paragraph 1 is amended as follows:

RemovedDirective 2013/36/EU

Added(a) the following point (8a) is inserted:

RemovedArticle 1 – paragraph 1 – point 7, Article 27i – paragraph 1: Member States shall require that, where the institutions fail to notify the intended operation in advance in accordance with Article 27f(1), or has performed the intended operation as referred to that Article despite opposition by the competent authorities, the competent authorities take appropriate measures. Such measures may consist of injunctions, periodic penalty payments, penalties, subject to Articles 65 to 72, against members of the management body and managers.

Added‘(8a) ‘management body in its management function’ means the management body acting in its role of directing effectively the institution and includes the persons who direct the business of the institution;’;

RemovedDirective 2013/36/EU

Added(b) point (9) is replaced by the following:

RemovedArticle 1 – paragraph 1 – point 7, Article 27k – paragraph 1 – subparagraph 2: deleted / (deleted) / (deleted)

Added‘(9) ‘senior management’ means those natural persons who exercise executive functions within an institution and are directly accountable to the institution’s management body but are not members of that body, and who are responsible for the day-to-day management of the institution under the direction of the management body of the institution;’;

RemovedDirective 2013/36/EU

Added(c) the following points (9a) to (9d) are inserted:

RemovedArticle 1 – paragraph 1 – point 7, Article 27k – paragraph 5: 5. The proposed operations shall not be completed before the issuance of an approval by the competent authorities.

Added‘(9a) ‘key function holders’ means ▌the heads of internal control functions and the chief financial officer, where those heads or that officer are not members of the management body, and the AML Compliance Officer referred to in Article 9(3) of Regulation [please insert reference – proposal for Anti-Money Laundering Regulation - COM/2021/420 final];

RemovedDirective 2013/36/EU

Added(9b) ‘chief financial officer’ means the person with overall responsibility for the financial resources management, financial planning and financial reporting of the institution;

RemovedArticle 1 – paragraph 1 – point 7, Article 27k – paragraph 6 – subparagraph 1: The competent authorities shall, within two working days from the completion of their assessment, issue in writing a motivated positive or negative decision to the financial stakeholders. Subject to national law, an appropriate statement of the reasons for the decision may be made accessible to the public at the request of the financial stakeholders. This shall not prevent a Member State from allowing the competent authority to publish such information in the absence of a request by the financial stakeholder.

Added(9c) ‘heads of internal control functions’ means the persons at the highest hierarchical level responsible for effectively managing the day-to-day operation of the independent risk management, compliance and internal audit functions of the institution;

RemovedDirective 2013/36/EU

Added(9d) ‘internal control functions’ means risk management, compliance and internal audit functions;’;

RemovedArticle 1 – paragraph 1 – point 7, Article 27k – paragraph 6 – subparagraph 2: The financial stakeholders shall transmit the motivated decision issued by their competent authorities under the first subparagraph to the authorities in charge, under the national corporate and/or civil law, of the scrutiny of the proposed operation.

Added(d) point (11) is replaced by the following:

RemovedDirective 2013/36/EU

Added‘(11) ‘model risk’ means model risk as defined in Article 4(1), point (52b), of Regulation (EU) No 575/2013;’;

RemovedArticle 1 – paragraph 1 – point 7, Article 27k – paragraph 8: 8. The competent authorities may fix a maximum period for concluding the proposed operation and extend it where appropriate.

Added(e) the following point (29a) is inserted:

RemovedDirective 2013/36/EU