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Polish Bank Association

No comment.
Our remark concerns the text of proposed guidelines, particularly in the paragraph 5. It is not clear if the analyses prepared under paragraph 3 and 4 should take into consideration the requirements of sound capital and liquidity management on the group level or also on the entity level.
In our opinion the conditions expressed in Directive 2014/59/EU are more restrictive than the ones proposed in draft Regulatory Standards and Guidelines. In the Article 23 paragraph 1 (e) of Directive is set up the condition that the provision of the financial support would not jeopardize the liquidity or solvency of the group entity providing the support. The proposal of guidelines is more detailed and goes in our opinion further than the text of Directive. The guidelines in paragraph 9 (a) may allow for conditional financial supporting the member of financial group also in situation when the providing entity does not meet capital requirements, combined buffer requirements. The paragraph 9 (c) goes deeper indicating assessing of plausibility of the capital conservation plan and non-compliance with capital requirements. In our opinion the non-compliance with capital requirements may generate the problem of solvability of providing entity. According to Directive 2013/36/EU the institution has to inform the competent authorities that it does not meet capital requirements any longer and this situation generates the heavy consequences for further activity of this institution. In our opinion the non-compliance with capital requirements may be treated as risk of broadening the solvency problem to new entities. The intragroup financial support should be limited to that extend in order not to generate the lack of compliance with principal banking regulations.
Having in mind the comment expressed in point 3, we have no comment.
As expressed above in area of capital requirements, these same limitation of financial support should be applied in area of liquidity requirements. The Directive 2013/36/EU and the Regulation 575/2013 implemented the quantitative liquidity requirements for all banking institutions active in European Union. This is completely new approach in banking regulation. Simultaneously, these requirements are treated in more flexible way in draft Guidelines specifying the conditions for group financial support under Directive 2014/59/EU. In our opinion new regulatory approach in liquidity area should have the strong consequences for conditions of intra-group financial support.
Having in mind more general comment expressed in point 5, we have no comment to this point.
If the Guidelines allow for the providing financial support which generate the strong negative financial consequences for providing entity in area of the capital or liquidity requirements, these information should be disclosed by the providing entities. The stakeholders should have the full access to information concerning economic situation of institution of public interest. The disclosures are treated as very important factor for market discipline and they should not only include the result of economic activity of entity but also the economic consequences of decision made by the competent authorities.
Polish Bank Association