Response to consultation on RTS and ITS on the authorisation of credit institutions

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Question 1: Do you have any general comments on the draft Regulatory Technical Standards under Article 8(2) of Directive 2013/36/EU or on the draft Implementing Technical Standards under Article 8(3) of Directive 2013/36/EU?

EAPB would welcome if national competent authorities (NCAs) were given more freedom and could act
more flexibly. An NCA should, for example, be able to dispense with requesting data and documents if it
already possesses this information or is of the opinion that it does not need this information to assess an
application for authorisation.

Question 2: Do you have any comments on the proposed list of information to be provided for the authorisation of credit institutions?

The list of information that an applicant credit institution is required to submit is too long and too detailed.
As such, it is an obstacle to the establishment of a bank without delivering any added value. Much of the
information does not help to provide better protection. An application procedure already takes at least six
months today. If the amount of information to be submitted increases, supervisors will either take even
longer to decide on applications or have less time to carefully examine individual items of information.
Therefore, the size of the list should be reconsidered.
According to Article 7 (1) (g), the applicant credit institution has to indicate the minimum time that will be
devoted by members of the management body and supervisory body to performing their functions. This
will be difficult to estimate prior to the commencement of business activities and will vary from person to
person (depending on previous experience, travel time, etc.). The added value of such uncertain
information based merely on an estimate is unclear. Therefore, this requirement should be dropped.
Article 8 calls in connection with the “programme of operations” under point (i) for “details of market
research and competitor analysis and its outcome”. It is not clear what is meant by “details”. It is equally
unclear what relevance details of “future promotion and marketing” (point viii) have and whether they
should be available on submission of an application for authorisation.
Moreover, EAPB would believe that there is no value-added in imposing a requirement on an applicant
credit institution preparing to open for business to draft a recovery plan at this early stage. Such a credit
institution is usually of a size that does not require a recovery plan. In addition, by submitting the
required financial information, the credit institution demonstrates that it has a sustainable business plan
for the coming years. Therefore, EAPB would believe that it is sufficient for a credit institution to provide
a summary of its policies when submitting an application for authorisation. If a recovery plan was still to
be a mandatory requirement, business model specificities should be taken into account. This is
particularly relevant for the case of public and promotional banks given their low risk character.
Further to that, several clarifications are requested for the Annex on “information provided for the
purposes of the application for authorisation”. With regards to information on own funds, point 3.6 in the
Annex requires a stress test. It remains unclear, which stress test is referred to (i.e. CRD article 100(1)).
In the same vein, more light should be shed on “programme of initial operations” under Annex item 7.1
for which it should be clarified whether a base case and stressed scenario as defined in CRD Article 10
need to be included.

Question 3: Do you have any comments on the proposed requirements applicable to shareholders and members with qualifying holdings of credit institutions?

With regards to Article 13 and paragraph (1) in particular, EAPB would want to highlight that a link of a
new bank to politically exposed persons should not immediately be perceived as an obstacle which may
prevent the effective exercise of the supervisory functions of the competent authorities. As a matter of
fact, for the case of promotional banks in Europe and their link to a respective central, regional or local
government, this provision could be confusing. Therefore, it should be avoided that in the future,
promotional entities will be denied a banking license by their NCA due to Article 13(1). EAPB would thus
request further clarification or paragraph (1) to be entirely dropped.

Question 7: Regarding the assessment of the credit institution’s management, do you believe that, in addition to the members of the management body, information should be provided in respect of (i) the heads of internal control function and chief financial officer, (ii) generally in respect of members of senior management or (iii) in respect of another set of officers (if so, please specify which ones)?

EAPB does not believe that, in addition to the members of the management body, information should
have to be provided on other employees. While, when submitting an application for authorisation, the
credit institution needs to know that it has to fill the positions of head of internal control and chief
financial officer, there is no need for these positions to actually be taken. Furthermore, EAPB would want
to highlight that with regards to public promotional banks, the special link between a central, regional or
local government and the respective institutions should be kept in mind when setting out requirements
on political exposure of the management body and the heads of internal control function and chief
financial officer. The provisions in Article 7f) (v) could be too generic and unintentionally restrictive for
this specific business model.

Question 8: Do you believe that further flexibility along the lines of the sequencing process described in the explanatory box at the end of Article 11 should be provided for? If so, do you consider that the sequencing process as described is suitable or would you propose a different approach?

While EBA’s work on sequencing is welcomed, it is important to refrain from further details on the
sequencing process at this stage since there is no mandate for this in the Capital Requirements
Directive. Instead, this issue should remain within the jurisdiction of the Level 1 legislator.

Name of organisation

European Association of Public Banks