EBA publishes peer review on the prudential assessment of qualifying holdings

The European Banking Authority (EBA) published today its peer review on the prudential assessment of qualifying holdings, aiming at assessing competent authorities’ application of the Joint ESAs Guidelines on the prudential assessment of the acquisition of qualifying holdings. Overall, competent authorities have largely or fully applied the ESAs Guidelines, which have thus significantly contributed to the convergence of assessment practices of proposed acquisition or increase of qualifying holdings across the EU.

The EBA’s ad hoc Peer Review Committee’s conclusions included in this Report are based on competent authorities’ self-assessment of how they applied selected areas of the Joint ESAs Guidelines on the prudential assessment of the acquisition of qualifying holdings, notably the notion of acting in concert, significant influence, indirect qualifying holdings, assessment of completeness of the notification and time limits, financial soundness, reputation of the acquirer, and selected aspects relating to the fifth assessment criterion on money laundering /terrorist finance (ML/TF) risk.

The Report also provides early indications as to the areas in which the ESAs Guidelines could provide additional guidance to the competent authorities, with a view to fostering convergence of practices. These include:

• review and enhancement of guidance on the fifth assessment criterion relating to ML/TF risk;
• additional guidance on the assessment of large and complex acquisitions, so as to achieve a more proportionate and efficient assessment;
• review of the guidance on the application of the proportionality principle;
• additional guidance on the content of documents and information to be provided with an application, in order to better explain supervisory expectations and speed up the pre-application phase.

Legal basis

Article 30 of the EBA Regulation requires that the EBA shall periodically conduct peer reviews of some or all of the activities of competent authorities within its remit, to further strengthen consistency and effectiveness in supervisory outcomes. In addition, the peer review shall include an assessment of, but shall not be limited to  the effectiveness and the degree of convergence reached in the application of Union law and in supervisory practice, including guidelines adopted pursuant to Article 16 of the EBA Regulation, and the extent to which the supervisory practice achieves the objectives set out in Union law. The EBA shall produce a report setting out the results of the peer review.

Joint ESAs Guidelines on the prudential assessment of the acquisition of qualifying holdings, JC/GL/2016, (‘The Guidelines’) aim to provide the necessary legal certainty, clarity and predictability with regard to the assessment process contemplated in the sectoral Directives and Regulations.

This peer review only assessed the application of the Guidelines by competent authorities supervising credit institutions authorised under the Capital Requirements Directive (CRD) in respect of which a notification has to be submitted to the competent authority of the target credit institution, pursuant to Article 22 of the CRD, in case of proposed acquisition or increase of qualifying holdings by a natural or legal person.