07 November 2022
The European Banking Authority today published an Opinion to clarify the framework applicable to the set-up and operationalisation of intermediate EU parent undertakings (IPUs) by third country groups (TCGs) operating in the EU. This Opinion, which is addressed to the competent and resolution authorities, aims to ensure a harmonised and effective application throughout the Union of the requirement introduced by Article 21b of the revised Capital Requirements Directive (CRD5).
In particular, the Opinion provides guidance for those cases where the TCG intends to have in place two IPUs and not a single one because it is subject to segregation of activities imposed by mandatory third country law, or because having a single IPU would make resolution less effective. The Opinion clarifies the process, as well as the information requirements and the assessment criteria, both from a supervisory and/or resolution perspective, for the approval of the two IPUs structure by the competent authority.
In addition, the Opinion underscores the importance of adequate and effective arrangements to ensure the safety and soundness of the IPU and its subsidiaries in the Union, and draws attention to internal governance, outsourcing, risk management, liquidity and funding arrangements.
The Opinion has been adopted based on Article 29(1)(a) of Regulation (EU) No 1093/2010 establishing the EBA, as part of the EBA’s task to foster convergence and consistency of supervisory practices.
Article 21b CRD requires two or more institutions in the Union belonging to the same third country group to have one single IPU where the total value of assets of that TCG in the Union is equal to or greater than EUR 40 bn. In specific circumstances, ie in cases of mandatory third country law imposing segregation of activities or where having a single IPU would make resolution less efficient, the competent authority may approve the establishment of two IPUs. The IPU determines the consolidation perimeter of the TCG’s operations in the EU. An IPU may be a credit institution, a financial holding company, a mixed financial holding company or an investment firm.
The Opinion is a further step in the uniform approach to access the EU market from third countries and in the uniform treatment of TCGs operating in the EU. The adoption of the Opinion follows the EBA Guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate EU parent undertakings under Article 21b of Directive 2013/36/EU and the publication of the list of third country groups, of the IPU (where applicable) and of third country branches of credit institutions with head quarter in a third country.