Organisational structure, management body and its committees
In assessing the institution’s organisational structure, management body and committees, competent authorities should assess institution’s compliance with Articles 74, 88, and 91 of Directive 2013/36/EU, the EBA Guidelines on internal governance(27) and the Joint ESMA and EBA Guidelines on the assessment of the suitability of members of the management body and key function holders(28). In the context of assessing the institution’s organisational and operational structure of the institution, and where applicable that of the group, competent authorities should consider inter alia whether:
it is appropriately and clearly established, with well-defined, transparent and consistent lines of responsibility, including for the management body and its committees;
it is suitable for the size and the complexity of the business and operations;
it is transparent to stakeholders, including staff and shareholders.
In the context of assessing the institution’s management body, competent authorities should consider inter alia whether:
the management body knows and understands the institution’s legal, organisational and operational structure (‘know your structure’) and its risks, including appropriate oversight;
where applicable, the management body of the consolidating institution understands both the organisation of the group and the roles of its different entities, and the links and relationships among them;
the management body collectively has an appropriate understanding of the institution’s business model and activities, and remains up to date on sufficient knowledge and skills regarding relevant risks, including ICT risks, ESG risks and other emerging risks, through regular training;
the institution has a policy to promote diversity and inclusion within the management body and regularly assesses these, including gender balance, and whether the composition, functioning and succession planning of the management board support effective decision-making and reflect the institution’s diversity and inclusion objectives;
the members of the management body interact effectively, including between its management and supervisory functions;
each member of the management body acts with independence of mind, maintaining a sufficient time commitment and is appropriately informed of the institution’s risk situation;
the management body in its supervisory function has established, where applicable, risk, audit, nomination and remuneration committees, and whether these committees fulfil their tasks as prescribed by the applicable legal and regulatory framework.
When reviewing the composition and functioning of the institution’s management body and its committees, competent authorities should also consider any relevant findings from the suitability assessments on the institution’s members of the management body and key function holders, performed by the institution, or where relevant by the competent authorities. Competent authorities should review the outcome of the institution’s process of identifying key function holders and evaluate the level of individual accountability by taking into account the individual statements regarding the roles and duties of all members of the management body in its management function, senior management, and key function holders, along with the mapping of duties, including details of the reporting lines, lines of responsibility, and the persons who are part of the governance arrangements of the institution, and their duties.