Guidelines on the assessment of the suitability of members of the management body and key function holders (EBA/GL/2012/06)

Status: Final and translated into the EU official languages

These Guidelines set out the process, criteria and minimum requirements for assessing the suitability of members of the management body and key function holders. Their ultimate aim is to ensure robust governance arrangements and appropriate oversight. The Guidelines contain provisions to be followed by both credit institutions and competent authorities when assessing the suitability of all members of the management body and extend also to key function holders. Moreover, as financial and mixed financial holding companies have significant influence on their credit institutions, they are also included in the scope of the Guidelines.

EBA identifies divergent supervisory practices in the implementation of its Guidelines on the assessment of the suitability of members of the management body and key function holders

EBA identifies divergent supervisory practices in the implementation of its Guidelines on the assessment of the suitability of members of the management body and key function holders

22 July 2015

The European Banking Authority (EBA) published today its peer review report on the assessment of the suitability of members of the management body and key function holders. The report shows that National Competent Authorities (NCAs) largely comply with the EBA guidelines. The EBA analysis identified best practices carried out by some NCAs, but also highlighted significant differences remaining between NCAs' supervisory approaches. The EBA concluded that the existing EBA guidelines have not led to sufficient convergence in supervisory practices, and proposed the incorporation in its forthcoming review of the guidelines of a number of specific best practices observed. The EBA also intends to send an opinion to the European Commission suggesting a change in the underlying Capital Requirements Directive (CRD) framework.

Despite most NCAs being assessed as being fully or largely compliant with the EBA guidelines, the peer review assessment highlighted that the EBA Guidelines have not led to sufficiently convergent supervisory practices. Differences in actual practices include the definition of suitability, the criteria used by NCAs and institutions to assess the candidates' suitability, the approach regarding the suitability of key function holders and the notion of independence of members of the management body.

In addition, the report reveals some best practices observed of some NCAs, including the practice of assessing candidates for key positions by performing interviews, the application of the proportionality principle and the criteria used to assess suitability. The EBA proposes that the current guidelines be updated to incorporate these identified best practices so as to improve the level of convergence across NCAs' practices and also to reflect its mandates under the CRD. The EBA expects to launch a public consultation on these revised Guidelines in the first quarter of 2016. The EBA is also considering submitting an opinion to the European Commission suggesting legislative amendments that would allow for enhanced convergence of supervisory practices in this area.

Legal basis

Peer reviews are conducted in accordance with Article 30 of the EBA Regulation and with the EBA Decision establishing the Review Panel. A peer review entails an assessment and comparison of the effectiveness of supervisory activities as well as of the implementation of the provisions by competent authorities vis-à-vis those of their peers.

Press contacts:

Franca Rosa Congiu

E-mail: press@eba.europa.eu - Tel: +44 (0) 207 382 1772

Guidelines on the assessment of the suitability of members of the management body and key function holders (EBA/GL/2012/06)

Guidelines on the assessment of the suitability of members of the management body and key function holders (EBA/GL/2012/06)

22 November 2012

The European Banking Authority (EBA) published today its guidelines on the assessment of the suitability of members of the management body and key function holders. These Guidelines set out the process, criteria and minimum requirements for assessing the suitability of those persons and are ultimately aimed at ensuring robust governance arrangements and appropriate oversight.

The Guidelines contain provisions to be followed by both credit institutions and competent authorities when assessing the suitability of all members of the management body and extend also to key function holders. Moreover, as financial and mixed financial holding companies have significant influence on their credit institutions, they are also included in the scope of the Guidelines.

The Guidelines set out the criteria for the assessment of experience and reputation and documentation requirements for credit institutions. They also contain a notification requirement and provide that in cases where a member of the management body is not suitable, the credit institution and, if necessary, the competent authority shall take appropriate action.

The EBA publicly consulted on the draft proposal contained in this paper and the responses received during the public consultation have been considered in the current text.

Next steps

These Guidelines are a first important step in achieving a high level of harmonisation in an area which has been governed so far by national rules. With a view of reaching a greater level of harmonisation, the EBA will review these Guidelines in light of the final Capital Requirements Directive text (CRD IV). During this review, the EBA will also identify those situations where a higher level of harmonisation would allow supervisors to rely strongly on assessments made by other national competent authorities.

Notes to editors

  1. Article 11 of the Directive 2006/48/EC (CRD) asks the EBA to develop guidelines for the assessment of the suitability of the persons who effectively direct the business of a credit institution. Weak governance arrangements - namely inadequate oversight by and challenge from the supervisory function of the management body - are widely acknowledged to have been underlying causes of the financial crisis. For this reason, and to ensure robust governance arrangements, the EBA extended the scope of the Guidelines to the supervisory function and to key function holders.

Press contacts:

Franca Rosa Congiu

E-mail: press@eba.europa.eu - Tel: +44 (0) 207 382 1772