Changes from report parliamentary committee draft to plenary report

Added‘By way of derogation from paragraph 1 of this Article, based on the application received in accordance with that paragraph and the information received in accordance with Article 95a of Directive 2014/65/EU, the competent authority may, after receivinga request from the undertaking, decide to waive the requirement to obtain an authorisation as a credit institution in accordance with Article 8 of this Directive for an undertaking referred to in that paragraph. The waiver shall not be applied where the undertaking is identified as a credit institution in accordance with Article 4(1), point (b)(iii), of Regulation (EU) No 575/2013.

RemovedArticle 1 – paragraph 1 – point 12, Article 73 – paragraph 1: 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. The coverage of environmental, social and governance risks through this process shall be done for the short, medium and long term;

AddedWhen deciding whether to apply the waiver referred to in the second subparagraph, the competent authority shall consider an opinion to be delivered by the EBA within one month from the notification by the competent authority of such request and the following elements:

RemovedDirective 2013/36/EU

Added(a) where the undertaking is part of a group, the group structure, the booking practices prevailing within the group and the allocation of assets across the group entities;

RemovedArticle 1 – paragraph 1 – point 13, Article 74 – paragraph 1 – subparagraph 1 – point b: (b) effective processes to identify, manage, monitor and report the risks they are or might be exposed. For environmental, social and governance risks, such exposure shall be assessed over the short, medium and long term;

Added(b) the nature, size and complexity of the activities carried out by the undertaking in the Member State where it is established and in the Union as a whole;

RemovedDirective 2013/36/EU

Added(c) the importance of, and systemic risk posed by, the activities performed by the undertaking in the Member State where it is established and in the Union as a whole.

RemovedArticle 1 – paragraph 1 – point 14 – point a, Article 76 – paragraph 1: 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.;

AddedThe competent authority shall notify its decision to the undertaking and shall publish it, together with the EBA opinion, on the EBA website. Where the decision deviates from the opinion provided by the EBA, the competent authority shall state the reasons for the deviation in its decision. The decision shall be re-assessed every 3 years.’;

RemovedDirective 2013/36/EU

Added(2b) In Article 8a, the following paragraph is added:

RemovedArticle 1 – paragraph 1 – point 14 – point b, Article 76 – paragraph 2 – subparagraph 1 a (new): Member States shall ensure that the management body develops specific plans, quantifiable targets and processes to monitor and address the risks arising in the short, medium and long-term from the misalignment of the business model and strategy of the institutions, with relevant transition trends towards a sustainable economy in relation to environmental, social and governance factors.;

Added‘6a. EBA shall develop draft regulatory technical standards to specify further the elements that need to be considered by a competent authority when deciding to grant a waiver in accordance with paragraph 4 of this Article.

RemovedDirective 2013/36/EU

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

RemovedArticle 1 – paragraph 1 – point 14 – point c, Article 76 – paragraph 5 – subparagraph 5: The heads of the internal control functions shall not be removed without prior approval of the management body in its supervisory function.

AddedPower is delegated to the Commission to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.’;

RemovedDirective 2013/36/EU

Added(3) In Article 18 the following point (g) is added:

RemovedArticle 1 – paragraph 1 – point 14 – point c a (new), Article 77 – paragraph 4 – subparagraph 1: (ca) in Article 77(4), first subparagraph is replaced by the following: / "4. EBA shall develop draft regulatory technical standards to define the notion 'exposures to specific market risk which are material in absolute terms' referred to in the first subparagraph of paragraph 3 and the thresholds for large numbers of material counterparties and positions in debt instruments of different issuers.’

Added‘(g) meets all of the following conditions:

Removed(https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32013L0036&from=EN)

Added(i) it has been determined to be failing or likely to fail in accordance with Article 32(1), point (a) of Directive 2014/59/EU or in accordance with Article 18(1), point (a), of Regulation (EU) No 806/2014;

RemovedDirective 2013/36/EU

Added(ii) the resolution authority considers that the condition in Article 32(1), point (b) of Directive 2014/59/EU or in Article 18(1), point (b), of Regulation (EU) No 806/2014 is met with respect to that credit institution;

RemovedArticle 1 – paragraph 1 – point 15 – point b, Article 78 – paragraph 1 – subparagraph 1 – point b: (b) that institutions using the alternative standardised approach set out in Part Three, Title IV, Chapter 1a of Regulation (EU) No 575/2013 report the results of their calculations for their exposures or positions that are included in the benchmark portfolios;

Added(iii) the resolution authority considers that the condition in Article 32(1), point (c) of Directive 2014/59/EU or in Article 18(1), point (c), of Regulation (EU) No 806/2014 is not met with respect to thats credit institution.’;

RemovedDirective 2013/36/EU

Added(4) Article 21a is amended as follows:

RemovedArticle 1 – paragraph 1 – point 15 – point b, Article 78 – paragraph 1 – subparagraph 1 – point c – introductory part: (c) that institutions permitted to use internal approaches under Part Three, Title II, Chapter 3 of Regulation (EU) No 575/2013, as well as relevant institutions that apply the standardised approach under Part Three, Title II, Chapter 2 of that Regulation, report the results of the calculations of the approaches used for the purpose of determining the amount of expected credit losses for their exposures or positions that are included in the benchmark portfolios, where any of the following conditions is met:

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

RemovedDirective 2013/36/EU

Added‘1. Parent financial holding companies in a Member State, parent mixed financial holding companies in a Member State, EU parent financial holding companies and EU parent mixed financial holding companies shall seek approval in accordance with this Article. Other financial holding companies or mixed financial holding companies shall seek approval in accordance with this Article where they are required to comply with this Directive or Regulation (EU) No 575/2013 on a sub-consolidated basis.

RemovedArticle 1 – paragraph 1 – point 15 – point b, Article 78 – paragraph 1 – subparagraph 2: Institutions shall submit the results of their calculations referred to in the first subparagraph together with an explanation of the methodologies used to produce them and any qualitative information, as requested by EBA, that can explain the impact of these calculations on own funds requirements, to the competent authorities at least annually, unless EBA conducts the exercise biennially, while the frequency of the submission may differ in relation to the different approaches referred to in points (a), (b) and (c) of the first subparagraph.

AddedCompetent authorities shall regularly review ▌the parent undertakings of an institution, or the parent undertakings of an entity requesting an authorisation pursuant to Article 8, in order to verify whether the institution or entity requesting authorisation has correctly identified an undertaking that complies with the criteria to be considered as a parent financial holding company in a Member State, a parent mixed financial holding company in a Member State, an EU parent financial holding company or an EU parent mixed financial holding company.

RemovedDirective 2013/36/EU

AddedFor the purposes of the second sub-paragraph, where the parent undertakings are located in other Member States than the Member State in which the institution, or the entity requesting an authorisation pursuant to Article 8, is established, competent authorities of those two Member States shall cooperate closely to perform the review.

RemovedArticle 1 – paragraph 1 – point 15 – point c – point i, Article 78 – paragraph 3 – introductory part: Competent authorities shall, on the basis of the information submitted by institutions in accordance with paragraph 1, monitor the range of risk weighted exposure amounts or own funds requirements, as applicable, for the exposures or transactions in the benchmark portfolio resulting from the approaches of those institutions. Competent authorities shall make an assessment of the quality of those approaches with at least the same frequency as the EBA exercise referred to in paragraph 1, second subparagraph, paying particular attention to:

AddedCompetent authorities shall publish and regularly update a list of all identified and designated financial holding companies and mixed financial holding companies in their Member State that are subject to approval in accordance with the first subparagraph.’;

RemovedDirective 2013/36/EU

Added(b) paragraph 2 is amended as follows:

RemovedArticle 1 – paragraph 1 – point 15 – point f – point i, Article 78 – paragraph 8 – subparagraph 1 – point c: (c) the list of relevant institutions referred to in paragraph 1, point (c).;

Added(-i) in the first subparagraph, the introductory part is replaced by the following:

RemovedDirective 2013/36/EU

Added‘For the purposes of paragraph 1, financial holding companies and mixed financial holding companies referred to therein shall provide the relevant consolidating supervisor and, where different, the competent authority in the Member State where they are established with the following information:’;

RemovedArticle 1 – paragraph 1 – point 15 – point f – point ii, Article 78 – paragraph 8 – subparagraph 1 a (new): For the purposes of point (c), when determining the list of relevant institutions EBA shall take into account proportionality considerations.’;

Added(i) in the first subparagraph, point (b) is replaced by the following:

RemovedDirective 2013/36/EU

Added‘(b) information regarding the nomination of at least two persons effectively directing the financial holding company or mixed financial holding company and compliance with the requirements set out in Article 91(1);’;

RemovedArticle 1 – paragraph 1 – point 17, Article 87a – paragraph 4: 4. Competent authorities shall assess and monitor developments of institutions’ practices concerning their environmental, social and governance strategy and risk management, including the plans to be prepared in accordance with Article 76, as well as the progress made and the risks to adapt their business models to the relevant transition trends towards a sustainable economy, taking into account related loan origination policies, and environmental, social and governance related targets and limits.

Added(ii) the second subparagraph is replaced by the following:

RemovedDirective 2013/36/EU

Added‘Where the approval or the exemption from approval of a financial holding company or mixed financial holding company referred to in paragraphs 3 and 4 takes place concurrently with the assessment referred to in Article 8, Article 22 or Article 27a, the competent authority for the purposes of that Article shall coordinate, as appropriate, with the consolidating supervisor and, where different, the competent authority in the Member State where the financial holding company or mixed financial holding company is established. The assessment period referred to in Article 22(2), second subparagraph, and Article 27a(3) shall be suspended ▌until the procedure set out in this Article is complete.’;

RemovedArticle 1 – paragraph 1 – point 17, Article 87a – paragraph 5 – subparagraph 1 – point b: (b) the content of plans to be prepared in accordance with Article 76, which shall include specific timelines and intermediate quantifiable targets and milestones, in order to address the risks from misalignment of the business model and strategy of institutions with the relevant transition trends towards a sustainable economy in relation to environmental, social and governance factors;

Added(ba) in paragraph 3, point (c) is replaced by the following:

RemovedDirective 2013/36/EU

Added‘(c) the criteria regarding shareholders and members of credit institutions set out in Article 14 and the requirements laid down in Article 121 are complied with.’;

RemovedArticle 1 – paragraph 1 – point 17, Article 87a – paragraph 5 – subparagraph 2: EBA shall publish those guidelines referred to in point (b) of the first subparagraph by ... [12 months from the date of entry into force of this amending Directive]; the guidelines referred to in point (d) of the first subparagraph by [18 months from the date of entry into force of this amending Directive]; and the guidelines referred to in points (a) and (c) of the first subparagraph by ... [24 months from the date of entry into force of this amending Directive]. EBA shall update those guidelines on a regular basis, to reflect the progress made in measuring and managing environmental, social and governance factors as well as the developments of policy objectives of the Union on sustainability.;