The German Insurance Association basically supports the efforts of the ESAs to converge the supervisory practises on financial conglomerates in Europe. Consistent and harmonised requirements on coordination arrangements of supervisory colleges might prove to be useful in this respect.
However, the consultation paper remains silent about an important aspect of financial conglomerates supervision, which is the future cooperation between the ESAs and the European Central Bank (ECB). Article 4 Section 1 (h) of Council Regulation 1024/2013/EU empowers the ECB to participate in the supplementary supervision of a financial conglomerate in relation to the credit institutions included in it and to assume the tasks of a coordinator where the ECB is appointed as the coordinator for a financial conglomerate in accordance with the criteria set out in relevant Union law.
Given that the ECB shall exercise its tasks in close cooperation with the ESAs (Article 3 of of Council Regulation 1024/2013/EU) and the assignment to develop technical standards, guidelines and recommendations should rest with the EBA respectively the ESAs (Recital 32 of Council Regulation 1024/2013/EU), clarification is needed how the ECB and its special role should be integrated in the coordination agreements. This relates both to the allocation of tasks and responsibilities within the college and in particular to the cooperation between the supervisory authorities involved if the ECB acts as coordinator for the financial conglomerate.
We therefore encourage to ESAs to engage in a dialogue with the ECB in order to discuss the implications of an ECB-involvement. From an insurance perspective, it is paramount that all authorities are aware of the restrictions of ECB supervisory powers with regard to insurance undertakings as part of the conglomerate, no matter whether an insurance-led or a bank-led conglomerate is concerned. Council regulation 1024/2013 limits the exercise of supervisory powers of the ECB on credit institutions. This is in line with Article 127 (6) of the Treaty on the Functioning of the European Union (TFEU) which actually prevents the Council from delegating powers relating to the prudential supervision of insurance undertakings to the ECB. It needs to be ensured that the ban on granting supervisory powers to the ECB according to Article 127 (6) TFEU is not violated. Therefore, the guidelines should explicitly clarify that the decisions taken by the ECB, especially in its capacity as coordinator, must not affect the insurance entities belonging to the financial conglomerate.
Apart from that, we acknowledge that Article 11 of Directive 2002/87/EC requires the coordinator and the competent authorities to have written coordination agreements in place. However, Article 11 does not grant a legal mandate for the ESAs to specify these agreements through guidelines. Neither does Article 12b of Directive 2002/87/EC, according to which common guidelines are limited to risk-based assessments of financial conglomerates and supplementary supervision of mixed financial holding companies. Thus, we would recommend to reconsider the issue and clarify the mandate.
No. Instead we recommend to clarify that the mapping refers to the regulated entities of the group defined in paragraph 15.
Lessons learned from the supervision of financial conglomerates so far clearly indicate that a regular exchange of experiences among supervisory authorities involved improve the understanding of the risk situation the conglomerate is operating under. This will help supervisors to focus their efforts and resources on issues which are material for the purpose of supplementary supervision. We are afraid that a minimum cycle of yearly meetings is not sufficient to materialize the benefits from face-to-face encounters. The ESAs may want to consider semi-annual meetings as an assumption.