EBA publishes an Opinion on the perimeter of credit institutions

The European Banking Authority (EBA) published today an Opinion addressed to the European Commission, relating to the perimeter of credit institutions and namely to the different approaches across EU Member States on the interpretation of the definition of ‘credit institution' in the Capital Requirements Regulation (CRR). The Opinion is based on a report, also published today, in which the EBA summarises the findings of a comprehensive study, which focuses on the interpretation of the term ‘credit institution' and the prudential treatment of those entities established in the Union which carry on credit intermediation but are not ‘credit institutions'. 

 

 A ‘credit institution' is defined in the CRR as ‘an undertaking the business of which is to take deposits or other repayable funds from the public and to grant credits for its own account'. 

 

In its Opinion, the EBA observes that there is a degree of variation across EU Member States as to the interpretation of the term ‘credit institution' as a result of the absence of a definition of key terms, such as ‘deposit' and ‘other repayable funds'.  Although it is not clear whether the variations are, in practice, material as regards the number and types of entities which are classified as ‘credit institutions' in the Member States, the EBA urges the Commission to give consideration to possible clarifications to the definition of ‘credit institution' in light of the weight placed on the term, for example, in defining the scope of entities subject to the Deposit Guarantee Schemes Directive (DGSD), the Bank Recovery and Resolution Directive (BRRD) and the Single Supervision Mechanism (SSM).

 

The EBA also observes that there is wide variation between the Member States as to the prudential treatment of entities established in the Union which carry on bank-like activities within the scope of credit intermediation but are not subject to solo prudential requirements under relevant Union measures.  The EBA observes that there may be merit in the Commission conducting or commissioning further analysis of the sector to determine whether it would be appropriate to put forward any Union legislative proposals with respect to some or all such entities.

 

Finally, the EBA observes that any future work in relation to the shadow banking sector should take account of the need to ensure that the perimeter of credit institutions is clearly defined.

The EBA's competence to deliver the Opinion is based on Article 34(1) of Regulation (EU) No 1093/2010.In accordance with Article 14(5) of the Rules of Procedure of this Board of Supervisors the Opinion has been adopted by the Board of Supervisors.