Regarding the application of Article 8 (1) of Regulation (EU) No 575/2013 (CRR), can it be considered to extend the option to accept a liquidity sub-group to cases where the parent company is a EU parent financial holding company owning a single credit institution or a single investment firm, if all the conditions laid out in article 8 (1) of Regulation (EU) No 575/2013 (CRR) are met?
There is no particular difficulty for a financial holding company to respect organisational and legal requirements to manage a liquidity sub-group as a credit institution does:
- it can continuously monitor and supervise the liquidity positions of all institutions of the sub-group and ensure that there is an adequate level of liquidity for these institutions;
- it may contract for freely transfer funds between them to enable them to meet their individual and collective obligations when due;
- it complies with the prudential rules on liquidity on a consolidated basis.
• In terms of organizational and contractual requirements to manage the liquidity risk in a liquidity sub-group, a financial holding company can put them in place and respect them in the same way as a credit institution;
• In terms of utility for the prudential supervision, the parent financial company may have as only significant activity the one of its subsidiary institution so that the reporting on liquidity prepared on a consolidated basis provides information similar to that provided by its subsidiary institution on an individual basis.
• In economic terms, it seems strange not to consider this type of organization, which choice is often only linked to asset management considerations.
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