CHAPTER I OBJECTIVE AND DEFINITIONS
Article 1 ObjectiveSubject matter This Directive lays down rules for supplementary supervision of regulated entities which have obtained an authorisation pursuantin toaccordance with Article 6 of Directive 73/239/EEC, Article 64 of Directive 792002/26783/EECEC (), Article 5 of Directive 2004/39/EC (), Article 3 of Directive 2005/68/EC (1), Article 6 of Directive 932006/2248/EECEC or(), Article 45 of Directive 20002009/1265/EC (), Article 14 of Directive 2009/138/EC () or Articles 6 to 11 of Directive 2011/61/EU (), and which are part of a financial conglomerate.
This ItDirective also amends the relevant sectoral rules which apply to entities regulated by thethose Directives referred to above.
Article 2 Definitions For the purposes of this Directive:
(1.) ‘credit institution’ shallmeans mean a credit institution within the meaning of the second subparagraph of Article 14(1) of Directive 20002006/1248/EC;
(2.) ‘insurance undertaking’ shallmeans mean an insurance undertaking within the meaning of Article 6 of Directive 73/239/EEC13(1), Article(2) 6 of Directive 79/267/EEC or Article 1(b3) of Directive 982009/78138/EC;
(3.) ‘investment firm’ shallmeans mean an investment firm within the meaning of Articlepoint 1 of Article 4(21) of Directive 932004/2239/EECEC, including the undertakings referred to in Article 23(41)(d) of Directive 932006/649/EECEC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions () or an undertaking the registered office of which is in a third country and which would require authorisation under Directive 2004/39/EC if its registered office were in the Union;
(4.) ‘regulated entity’ shallmeans mean a credit institution, an insurance undertaking, ora reinsurance undertaking, an investment firm, an asset management company or an alternative investment fund manager;
(5.) ‘asset management company’ shallmeans mean a management company within the meaning of Article 1a(2(1)(b) of Council Directive 852009/61165/EECEC ofor 20an Decemberundertaking 1985 on the coordinationregistered office of laws,which regulationsis in a third country and administrativewhich provisionswould relatingrequire toauthorisation undertakingsunder forthat collectiveDirective investmentif inits transferableregistered securitiesoffice were within the Union;
(UCITS5a) ‘alternative investment fund manager’ means a manager of alternative investment funds within the meaning of Article 4(1)(b), as(l) welland as(ab) of Directive 2011/61/EU or an undertaking the registered office of which is outsidein thea Communitythird country and which would require authorisation inunder accordance with Article 5(1) of that Directive if it had its registered office were within the CommunityUnion;
(6.) ‘reinsurance undertaking’ shallmeans mean a reinsurance undertaking within the meaning of Article 113(c4), (5) or (6) of Directive 982009/78138/EC or a special purpose vehicle within the meaning of Article 13(26) of Directive 2009/138/EC;
(7.) ‘sectoral rules’ shallmeans meanUnion the Community legislation relating to the prudential supervision of regulated entities, in particular laid down in Directives 732004/23939/EECEC, 792006/26748/EECEC, 982006/7849/EC, 93/6/EEC, 93/22/EEC and 20002009/12138/EC;
(8.) ‘financial sector’ shallmeans mean a sector composed of one or more of the following entities:
(a) a credit institution, a financial institution or an ancillary banking services undertaking within the meaning of Article 4(1), (5) andor (2321) of Directive 20002006/1248/EC (hereinafter referred to collectively as ‘the banking sector’);
(b) an insurance undertaking, a reinsurance undertaking or an insurance holding company within the meaning of Article 13(1), (i2), (4) or (5) or of Article 212(1)(f) of Directive 982009/78138/EC (hereinafter referred to collectively as ‘the insurance sector’);
(c) an investment firm or a financial institution within the meaning of Article 23(71)(b) of Directive 932006/649/EECEC (hereinafter referred to collectively as ‘the investment services sector’);
(d9) a mixed financial holding company;
9. ‘parent undertaking’ shallmeans mean a parent undertaking withinas thedefined meaningin of Article 1 of Seventh Council Directive 83/349/EEC of 13 June 1983 on consolidated accounts () andor any undertaking which, in the opinion of the competent authorities, effectively exercises a dominant influence over another undertaking;
(10.) ‘subsidiary undertaking’ shallmeans mean a subsidiary undertaking withinas thedefined meaningin of Article 1 of Directive 83/349/EEC andor any undertaking over which, in the opinion of the competent authorities, a parent undertaking effectively exercises a dominant influence; or all subsidiarysubsidiaries undertakings of subsidiarysuch undertakings shall also be considered as subsidiary undertakings of the parent undertaking;
(11.) ‘participation’ shallmeans mean a participation within the meaning of the first sentence of Article 17 of Fourth Council Directive 78/660/EEC of 25 July 1978 on the annual accounts of certain types of companies (), or the direct or indirect ownership of 20 % or more of the voting rights or capital of an undertaking;
(12.) ‘group’ shallmeans mean a group of undertakings, which consists of a parent undertaking, its subsidiaries and the entities in which the parent undertaking or its subsidiaries hold a participation, asor well as undertakings linked to each other by a relationship within the meaning of Article 12(1) of Directive 83/349/EEC;
13. ‘close links’ shall mean a situation in which two or more natural or legal persons are linked by:
(a) ‘participation’, whichincluding shallany meansubgroup the ownership, direct or by way of control, of 20 % or more of the voting rights or capital of an undertakingthereof; or
(b12a) ‘control’, whichmeans shall mean the relationship between a parent undertaking and a subsidiary, inundertaking allas theset casesout referred to in Article 1(1) and (2) of Directive 83/349/EEC, or a similar relationship between anya natural or legal person and an undertaking;
(13) any‘close subsidiarylinks’ undertakingmeans of a subsidiarysituation undertakingin shallwhich alsotwo beor consideredmore anatural subsidiaryor oflegal thepersons parentare undertakinglinked whichby iscontrol ator theparticipation, heador ofa those undertakings.
A situation in which two or more natural or legal persons are permanently linked to one and the same person by a control relationship shall also be regarded as constituting a close link between such persons;
(14.) ‘financial conglomerate’ shallmeans mean a group whichor meetssubgroup, subjectwhere to Article 3, the following conditions:
(a) a regulated entity within the meaning of Article 1 is at the head of the group or subgroup, or where at least one of the subsidiaries in thethat group or subgroup is a regulated entity, withinand thewhich meaningmeets ofthe Articlefollowing 1;conditions:
(ba) where there is a regulated entity within the meaning of Article 1 at the head of the group, itor issubgroup:
(i) eitherthat entity is a parent undertaking of an entity in the financial sector, an entity which holds a participation in an entity in the financial sector, or an entity linked with an entity in the financial sector by a relationship within the meaning of Article 12(1) of Directive 83/349/EEC;
(cii) whereat thereleast one of the entities in the group or subgroup is nowithin regulatedthe entityinsurance sector and at least one is within the banking or investment services sector; and
(iii) the consolidated or aggregated activities of the entities in the group or subgroup within the insurance sector and of the entities within the banking and investment services sector are both significant within the meaning of Article 13(2) or (3) of this Directive; or
(b) where there is no regulated entity at the head of the group, or subgroup:
(i) the group'’s activitiesor mainlysubgroup’s activities occur mainly in the financial sector within the meaning of Article 3(1) of this Directive;
(dii) at least one of the entities in the group or subgroup is within the insurance sector and at least one is within the banking or investment services sector; and
(eiii) the consolidated and/or aggregated activities of the entities in the group or subgroup within the insurance sector and the consolidated and/or aggregated activities of the entities within the banking and investment services sector are both significant within the meaning of Article 3(2) or (3).
Any subgroup of a group within the meaning of point 12 which meets the criteria in this point shall be considered as a financial conglomerateDirective;
(15.) ‘mixed financial holding company’ shallmeans mean a parent undertaking, other than a regulated entity, which, together with its subsidiaries, — at least one of which is a regulated entity which has its headregistered office in the Community,Union — and other entities, constitutes a financial conglomerate;
(16.) ‘competent authorities’ shallmeans mean the national authorities of the Member States which are empowered by law or regulation to supervise credit institutions, and/or insurance undertakings, and/orreinsurance undertakings, investment firms, asset management companies or alternative investment fund managers whether on an individual or a group-wide basis;
(17.) ‘relevant competent authorities’ shall meanmeans:
(a) Member States'’ competent authorities responsible for the sectoral group-wide supervision of any of the regulated entities in a financial conglomerate, in particular of the ultimate parent undertaking of a sector;
(b) the coordinator appointed in accordance with Article 10 if different from the authorities referred to in point (a);
(c) where appropriate, other competent authorities concerned, where relevant, into the opinion of the authorities referred to in points (a) and (b); this opinion shall especially take into account the market share of the regulated entities of the conglomerate in other Member States, in particular if it exceeds 5 %, and the importance in the conglomerate of any regulated entity established in another Member State;
(18.) ‘intra-group transactions’ shallmeans mean all transactions by which regulated entities within a financial conglomerate rely either directly or indirectly uponon other undertakings within the same group or uponon any natural or legal person linked to the undertakings within that group by ‘close links’, for the fulfilment of an obligation, whether or not contractual, and whether or not for payment;
(19.) ‘risk concentration’ shallmeans mean all risk exposures with a loss potential borne by entities within a financial conglomerate, which areis large enough to threaten the solvency or the financial position in general of the regulated entities in thea financial conglomerate;, whether such exposures mayare be caused by counterparty risk/credit risk, investment risk, insurance risk, market risk, other risks, or a combination or interaction of thesesuch risks.
Until the entry into force of any regulatory technical standards adopted in accordance with Article 21a(1)(b), the opinion referred to in point (17)(c) shall, in particular, take into account the market share of the regulated entities of the financial conglomerate in other Member States, in particular if it exceeds 5 %, and the importance in the financial conglomerate of any regulated entity established in another Member State.
Article 3 Thresholds for identifying a financial conglomerate
1. For the purposes of determining whether the activities of a group mainly occur in the financial sector, within the meaning of Article 2(14)(cb)(i), the ratio of the balance sheet total of the regulated and non-regulated financial sector entities in the group to the balance sheet total of the group as a whole should exceed 40 %.
2. For the purposes of determining whether activities in different financial sectors are significant within the meaning of Article 2(14)(ea)(iii) or (14)(b)(iii), for each financial sector the average of the ratio of the balance sheet total of that financial sector to the balance sheet total of the financial sector entities in the group and the ratio of the solvency requirements of the same financial sector to the total solvency requirements of the financial sector entities in the group should exceed 10 %.
For the purposes of this Directive, the smallest financial sector in a financial conglomerate is the sector with the smallest average and the most important financial sector in a financial conglomerate is the sector with the highest average. For the purposes of calculating the average and for the measurement of the smallest and the most important financial sectors, the banking sector and the investment services sector shall be considered together.
Asset management companies shall be added to the sector to which they belong within the group. If they do not belong exclusively to one sector within the group, they shall be added to the smallest financial sector.
Alternative investment fund managers shall be added to the sector to which they belong within the group. If they do not belong exclusively to one sector within the group, they shall be added to the smallest financial sector.
3. Cross-sectoral activities shall also be presumed to be significant within the meaning of Article 2(14)(ea)(iii) or (14)(b)(iii) if the balance sheet total of the smallest financial sector in the group exceeds EUR 6 billion.
If the group does not reach the threshold referred to in paragraph 2 of this Article, the relevant competent authorities may decide by common agreement not to regard the group as a financial conglomerate,. orThey may also decide not to apply the provisions of ArticlesArticle 7, 8, or 9, if they are of the opinion that the inclusion of the group in the scope of this Directive or the application of such provisions is not necessary or would be inappropriate or misleading with respect to the objectives of supplementary supervision,.
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Decisions taken in accordance with this paragraph shall be notified to the other competent authorities concernedand shall, save in exceptional circumstances, be made public by the competent authorities.
4. For the application of paragraphs 1, 2 and 3, the relevant competent authorities may by common agreement:
(a) exclude an entity when calculating the ratios, in the cases referred to in Article 6(5), unless the entity moved from a Member State to a third country and there is evidence that the entity changed its location in order to avoid regulation;
(b) take into account compliance with the thresholds envisaged in paragraphs 1 and 2 for three consecutive years so as to avoid sudden regime shifts, and disregard such compliance if there are significant changes in the group's structure;
(c) exclude one or more participations in the smaller sector if such participations are decisive for the identification of a financial conglomerate, and are collectively of negligible interest with respect to the objectives of supplementary supervision.
Where a financial conglomerate has been identified according to paragraphs 1, 2 and 3, the decisions referred to in the first subparagraph of this paragraph shall be taken on the basis of a proposal made by the coordinator of that financial conglomerate.
5. For the application of paragraphs 1 and 2, the relevant competent authorities may, in exceptional cases and by common agreement, replace the criterion based on balance sheet total with one or bothmore of the following parameters or add one or bothmore of these parameters, if they are of the opinion that thesethose parameters are of particular relevance for the purposespurpose of supplementary supervision under this Directive: income structure, off-balance- sheet activities, total assets under management.
6. For the application of paragraphs 1 and 2, if the ratios referred to in those paragraphs fall below 40 % and 10 % respectively for conglomerates already subject to supplementary supervision, a lower ratio of 35 % and 8 % respectively shall apply for the following three years to avoid sudden regime shifts.
⋯ 3 unchanged lines
The solvency requirements referred to in paragraphs 2 and 3 shall be calculated in accordance with the provisions of the relevant sectoral rules.
8. The European Supervisory Authority (European Banking Authority) established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council () (EBA), the European Supervisory Authority (European Insurance and Occupational Pensions Authority) established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council () (EIOPA) and the European Supervisory Authority (European Securities and Markets Authority) established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council () (ESMA) (hereinafter collectively referred to as ‘the ESA’) shall, through the Joint Committee of the ESA (Joint Committee), issue common guidelines aimed at the convergence of supervisory practices with regard to the application of paragraphs 2, 3, 3a, 4 and 5 of this Article.
9. The competent authorities shall, on an annual basis, reassess waivers of the application of supplementary supervision and shall review the quantitative indicators set out in this Article and risk-based assessments applied to financial groups.
Article 4 Identifying a financial conglomerate
1. Competent authorities which have authorised regulated entities shall, on the basis of Articles 2, 3 and 5, identify any group that falls under the scope of this Directive.
For thisthat purpose:
competent authorities which have authorised regulated entities in the group shall, where necessary, cooperate closely,
if a competent authority is of the opinion that a regulated entity authorised by that competent authority is a member of a group which may be a financial conglomerate, and which has not already been identified accordingin toaccordance with this Directive, the competent authority shall communicate its view to the other competent authorities concerned and to the Joint Committee.
2. The coordinator appointed in accordance with Article 10 shall inform the parent undertaking at the head of a group or, in the absence of a parent undertaking, the regulated entity with the largest balance sheet total in the most important financial sector in a group, that the group has been identified as a financial conglomerate and of the appointment of the coordinator.
The coordinator shall also inform the competent authorities which have authorised regulated entities in the group, and the competent authorities of the Member State in which the mixed financial holding company has its head office, and the Joint Committee.
3. ofThe theJoint EuropeanCommittee Supervisoryshall Authoritiespublish (ESA)and establishedkeep byup-to-date Articleson 54its ofwebsite Regulation (EU) No 1093/2010 of the Europeanlist Parliament and of thefinancial Councilconglomerates ofdefined 24in Novemberaccordance 2010with establishingArticle a European Supervisory Authority 2(European Banking Authority14). (),That ofinformation Regulationshall (EU)be Noavailable 1094/2010by ofhyperlink theon Europeaneach Parliament and of the CouncilESA's ofwebsites.
The 24name November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority) () and of Regulationeach (EU)regulated Noentity 1095/2010referred ofto thein EuropeanArticle Parliament1 andwhich ofis thepart Council of 24 November 2010 establishing a Europeanfinancial Supervisoryconglomerate Authorityshall (Europeanbe Securitiesentered andon Marketsa Authority)list, ()which (hereinafter ‘the Joint Committee’), respectively.
3. The Joint Committee shall publish on its website and keep up-to-date the list of identified financial conglomerates. That information shall be available by hyperlink on eachits of the European Supervisory Authority's websiteswebsite.