A horizontally consolidated group is when a consolidated group is controlled by a natural person During the CRD V Transposition Workshop one of the questions from MS towards the EC was whether a natural person can be regarded as financial holding company (FHC). According to the EC answer, a parent FHO shall meet two conditions. It should be a financial institution as defined in Article 4(1) (26) CRR and an undertaking as per Art. 4(1) (29) CRR. Therefore, a natural person cannot be qualified as a FHC even if this natural person exercises a control over the FHC or MFHC. The statement of the EC can lead to the situation where a significant group controlled by a natural person is not part of supervision on a consolidated basis. For example, natural person exercises control (as defined in Article 4(1) point 37 CRR) over three institutions where none of them have any legal person as an ultimate parent undertaking. Thus, there is a horizontal group of three institutions controlled by a natural person. According to the EC, a group may be subject to consolidation even where there is no holding company in that group, including in the case described in the question. The legal basis of consolidation in such situations is Article 18(3) and 18(6) CRR and the consolidating supervisor for such groups is determined pursuant to Article 111(4) CRD. The consolidating supervisors will determine the precise modalities of consolidation. However, there may be another view that Article 18 CRR addresses methods for prudential consolidation, but does not provide a legal basis for a consolidating supervisor, or other entity, to determine which institution shall be responsible for prudential consolidation in a horizontally consolidated group and for fulfilment of all requirements on the basis of the consolidated situation. According to Article 11 and 13 CRR, parent institutions, FHC/MFHC approved in accordance with Article 21a CRD, designated institution controlled by a parent FHC or parent MFHC and FHC/MFHC/institution designated in accordance with Article 21a CRD, are responsible for fulfilment of requirements laid down in CRR. Therefore, a specific provision might be needed to specify the power of a consolidating supervisor to determine such institution in a horizontally consolidated group.