Annexes to COM(2021)663 - Amendment of Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches, and environmental, social and governance risks

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dossier COM(2021)663 - Amendment of Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches, and environmental, ...
document COM(2021)663 EN
date October 27, 2021
annex~d36d893ca2.en.pdf">https://www.bankingsupervision.europa.eu/press/pr/date/2020/html/ssm.pr200728_annex~d36d893ca2.en.pdf ).
(18) See https://www.bis.org/bcbs/publ/d424.htm
(19) See https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_19_6269 .
(20) More specifically to 1 January 2023 for the starting date of application and to 1 January 2028 for the full application of the final elements of the reform.
(21) See https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1588580774040&uri=CELEX:52019DC0640 .
(22) See https://eur-lex.europa.eu/legal-content/ES/TXT/?uri=COM:2021:550:FIN  
(23) See COM(2021) 390 final.
(24) See https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52018DC0097 .
(25) See https://ec.europa.eu/info/publications/sustainable-finance-high-level-expert-group_en .
(26) EBA/REP/2021/20. The CRD requires the EBA to report on the regulatory arbitrage resulting from the current different treatments of TCBs. This report takes stock of the national regimes for TCBs and confirms that significant differences persist in the national treatment of these branches and in the degree of involvement of the host-supervisor.
(27) The relevant Treaty Articles conferring the Union the right to adopt measures are those concerning the freedom of establishment (in particular Article 53 TFEU), the freedom to provide services (Article 59 TFEU), and the approximation of rules which have as their object the establishment and functioning of the internal market (Article 114 TFEU).
(28) See https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12015-Alignment-EU-rules-on-capital-requirements-to-international-standards-prudential-requirements-and-market-discipline-/public-consultation_en .
(29) See https://ec.europa.eu/info/consultations/finance-2018-basel-3-finalisation_en
(30) In its report published in December 2020, the EBA provided the impacts on the same sample of 99 banks but based on Q2 2018 data which was used in their previous impact analysis. From Q2 2018 to Q4 2019, the total increase in minimum capital requirements decreased by over 5 percentage points (i.e. from +24.1% to +18.5%), while the capital shortfall across these banks has more than halved (from EUR 109.5 bn to EUR 52.2 bn).
(31) SWD(2021) 321 (RIA). The impact assessment did not include an assessment of the proposal on third country branches, as the EBA Report on which the analysis is based was released on 23 June 2021. An assessment on the impact of the proposal based on the EBA Report has been included in this Explanatory memorandum as part of the section on third country branches.
(32) See https://www.eba.europa.eu/regulation-and-policy/internal-governance/joint-esma-and-eba-guidelines-on the-assessment-of-the-suitability-of-members-of-the-management-body .
See https://www.bankingsupervision.europa.eu/ecb/pub/pdf/ssm.fap_guide_201705_rev_201805.en.pdf
(33) This section is based on the EBA Report on the treatment of incoming third country branches under the national law of Member States of 23 June 2021 ( Report on third country branches.docx (europa.eu) )
(34) This metric is determined using CBD2 data which refers to data published by the ECB regarding ‘Domestic banking groups and stand‐alone banks, foreign (EU and non‐EU) controlled subsidiaries and foreign (EU and non‐EU) controlled branches’ for December 2019.
(35) These refer to any activities among those listed in Annex I of the CRD when performed by credit institutions, provision of investment services at a large scale as defined in Article 4(1), point (1)(b), and the provision of core banking activities (those listed in points (1) to (3) and (6) by any third country undertaking.
(36) According to Recital 19 of the CRD: “The branches of credit institutions authorised in third countries should not enjoy the freedom to provide services under the second paragraph of Article 49 of the Treaty or the freedom of establishment in Member States other than those in which they are established”. A TCB can only provide cross-border investment services to professional clients and eligible counterparties if the services are provided by branches authorised under MiFID and in case of an equivalence decision pursuant to Article 47(3) of MIFIR (see Annex 3). However, no equivalence decision has been taken or is envisaged in the near future.
(37) Instead of first setting P2R as a nominal amount, which is subsequently expressed as a percentage of TREA to fit in the overall capital stack.
(38) In this context, model risk should be understood as the risk that the own funds requirement calculated using internal models would not be commensurate to the risk inherent in the exposure for which the requirement is calculated.
(39) An institution becomes bound by the OF when the institution’s “floored” TREA (i.e. the TREA calculated by taking into account the OF) is higher than its “un-floored” TREA (i.e. the TREA calculated by not taking into account the OF). For further details on the functioning of the OF, please see the explanatory memorandum of the Regulation amending the CRR. 
(40) In the case of the P2R, the announcement will take the form of a letter from the competent authority to the supervised institution containing the results of the SREP and the institution’s new P2R (of course, in case no double-counting will be identified, the P2R will remain unchanged). In the case of the P2R, the announcement will take the form of a new decision by the competent or designated authority, as applicable, on the appropriate calibration of the SyRB rate or rates.
(41) OJ C , , p. .
(42) OJ C , , p. .
(43) Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190).
(44) Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ L 225, 30.7.2014, p. 1).
(45) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).
(46) Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73).
(47) Regulation (EU) 2019/876 of the European Parliament and of the Council of 20 May 2019 amending Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements, and Regulation (EU) No 648/2012 (OJ L 150, 7.6.2019, p. 1).
(48) Council Decision (EU) 2016/1841 of 5 October 2016 on the conclusion, on behalf of the European Union, of the Paris Agreement adopted under the United Nations Framework Convention on Climate Change (OJ L 282, 19.10.2016, p. 4).
(49) COM(2019) 640 final.
(50) Launched at the Paris One Planet Summit on 12 December 2017, is a group of Central Banks and Supervisors willing, on a voluntary basis, to share best practices and contribute to the development of environment and climate risk management in the financial sector and to mobilise mainstream finance to support the transition toward a sustainable economy.
(51) COM(2021) 390 final, 06.07.2021.
(52) Communication of the Commission COM(2021)568 final, 14.07.2021, comprising the following Commission proposals: COM(2021)562 final, COM(2021)561 final, COM(2021)564 final, COM(2021)563 final, COM(2021)556 final, COM(2021)559 final, COM(2021)558 final, COM(2021)557 final, COM(2021)554 final, COM(2021)555 final, COM(2021)552 final.