Response to consultation paper on regulatory and implementing technical standards on the functioning of colleges of supervisors

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Q2: Do you have any suggestions regarding elements of the college supervisory examination programme that need to be considered and agreed by the members of the college?

In the assessment performed by the College, UniCredit would suggest to include also the review of IT systems, since IT are a key factor for an effective management and control of a bank. Furthermore, the IT Systems should be reviewed by the College, since IT could be relevant at group level and therefore should not fall under the competence of a single authority. This is a clear example where a delegation of a significant task to the College could lead to a more effective decisions, thus avoiding (1) duplication of reviews by various supervisors; and (2) benefitting the bank, which would avoid an unreasonable and excessive burden (in terms of costs and time) of tasks. In this regard RTS art. 9 (2) should be integrated by adding Group relevant IT systems as topic viii.

Q3: Do you have suggestions regarding any other aspects of home-host cooperation that should be covered by these draft binding technical standards, bearing in mind the mandate of the Level 1 text, to ensure that colleges operate efficiently, effectively and consistently?

Based on its experience, UniCredit deems the effective cooperation amongst supervisory authorities, above all between consolidating and host ones, as a key factor for a successful work of the College. Even if this mainly relies on the authorities willingness to cooperate, it could be further fostered by an appropriate drafting of the RTS and ITS under consultation.

In this regard UniCredit would suggest to better define the scope of Colleges and above all making the decision making process more effective, with a special focus on emergency situations, as suggested below:

1) better defining the scope of Colleges:
 model validation is one of the main areas of cooperation for supervisors, hence it should be clearly mentioned in the college working. Therefore we suggest integrating RTS art. 4 (1) (f) and art. 16 (2) to explicitly include the focus on model validation among the areas of supervisors’ cooperation;
 getting more explicit split of roles in Recovery and Resolution planning, i.e. review the recovery plan submitted by the bank We suggest integrating accordingly RTS art. 4 (1) (h);
 the exchange of qualitative and quantitative information should regard all risk types, also to be consistent with the provisions of art. 9 (2). The list should also include pending supervisory procedures and debates, given their significant role;
 for sake of clarity, it could be more appropriate to share the mapping with all the authorities related to the banking group and not only with the potential members, therefore aligning ITS art. 1 (2) accordingly;

2) effective decision making process:
 on revocation of permission to use internal models, it should be specified that in case of disagreement between the consolidating supervisor and the host authorities, the consolidating supervisor makes the final decision after having adequately taken into account the views and assessments of the members of the college responsible for the supervision of the involved entities. We would therefore suggest modifying RTS art. 11 (2) and ITS art. 6 (2) as well as ITS art. 7 (3) to adopt an approach as the one outlined in ITS Art. 4. 2. (“The consolidating supervisor shall take into account proposals on model validation made by the other members of the college and shall explain, if necessary, the reason for not taking them on board”);
 the communication to the group should be coordinated by the consolidating supervisor. This would mean that the communication from the host authorities to the legal entities member of the Group should be previously coordinated with the consolidated supervisor, modifying RTS art. 7 (1), for instance sharing a communication programme in the College;
 to avoid communications gaps between the consolidated supervisor and the host authorities, RTS art. 13 (1) could be integrated by a provision where the consolidated supervisor has to define the cases to be reported;
 in order to get the College more efficient in dealing with all the supervisory authorities, the consolidating supervisor could be tasked with the role to manage the communication also to those that are not members. This could be achieved for instance via a report to be circulated as appropriate to the legal entities. Therefore we suggest to modify ITS art. 1. Such initiatives would ensuring a smooth communication between authorities part of the College;

3) In case of an emergency, the effectiveness is also based on time efficiency, that should be ensured by the provisions of the RTS and ITS above all regarding decision making and communications.

Name of organisation

UniCredit