Application at the consolidated level and implications for group entities
At the consolidated level, in addition to the elements covered in the sections above, competent authorities should assess whether:
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 organisational and legal structure of the group – where relevant – is clear and transparent, and suitable for the size and the complexity of the business and operations;
the institution has established an effective group-wide management information and reporting system applicable to all business units and legal entities, and this information is available to the management body of the institution’s parent undertaking on a timely basis;
the management body of the consolidating institution has established consistent group-wide strategies, including a group wide risk strategy and appetite framework;
group risk management covers all material risks regardless of whether the risk arises from entities not subject to consolidation (including SPVs, SPEs, property firms, legal arrangements, entities managed on behalf of customers as trustee or nominee) and establishes a comprehensive view on all risks;
the institution carries out regular stress testing covering all material risks and entities in accordance with the EBA Guidelines on institutions’ stress testing; and
the group-wide internal audit function is independent, has a group-wide risk based audit plan, is appropriately staffed and resourced, has appropriate stature and has a direct reporting line to the management body of the consolidating institution.
When conducting the assessment of internal governance and institution-wide controls at subsidiary level, in addition to the elements listed in this title, competent authorities should assess whether group-wide policies and procedures are implemented consistently at subsidiary level and whether group entities have taken steps to ensure that their operations are compliant with all applicable laws and regulations.