Article 18(1) requires institutions, financial holding companies and mixed financial holding companies to carry out full consolidation of all their subsidiaries which are institutions or financial institutions.  Furthermore, ancillary services shall according to Art. 18(2) be included in consolidation in accordance with the methods laid down in Article 18. Competent authorities may also, in accordance with Art. 18 (4), require proportional consolidation of participations in institutions and financial institutions. Consolidation of other participations or capital ties, and the methods to be used, particularly the equity method, is, according to Art. 18 (5), subject to the discretion of the competent authority. However, Articles 18(1)-(6) make no mention of undertakings other than institutions, financial institutions or ancillary services undertakings, and holdings of participation in such undertakings. There is currently no common European consensus on the treatment of such undertakings or holdings of participation.

Article 18 (7) requires institutions to apply the equity method to subsidiaries which are undertakings other than institutions, financial institutions or ancillary services undertakings, and to holdings of participation in such undertakings. According to the second subparagraph, competent authorities may, however, allow or require institutions to apply different methods to such subsidiaries or participations, subject to certain conditions laid down in the same paragraph. The background behind adding this paragraph was to clarify the consolidation methods used for insurance subsidiaries or participations. Furthermore, EBA draft RTS (2021/04) on page 5 states that: “b) Paragraph 7 of Article 18 has been amended in order to regulate the treatment of subsidiaries and participations in undertakings, which are excluded from the scope of prudential consolidation since they are different from institutions, financial institutions and ancillary services undertakings”. This suggests that by default other subsidiaries and participations than institutions, financial institutions and ancillary services undertakings should not be consolidated.

According to Article 18 (8), competent authorities may, subject to certain conditions (where there is a substantial risk of step‐in and provided that the undertakings are not insurance undertakings.”) laid down in the same paragraph, require full or proportional consolidation of a subsidiary or an undertaking in which an institution holds a participation where that subsidiary or undertaking is not an institution, financial institution or ancillary services undertaking. Inclusion of such subsidiaries or holdings of participation in full or proportional consolidation is thus conditional.

Article 19 (1) states that an institution, a financial institution or an ancillary services undertaking which is a subsidiary or an undertaking in which a participation is held, need not to be included in the consolidation where the total amount of assets and off-balance sheet items of the undertaking concerned is less than the smaller of the two amounts laid down in the same paragraph. Undertakings other than institutions, financial institutions or ancillary services undertakings, and holdings of participation in such undertakings are not mentioned. Based on Article 19 (1), subsidiaries which are institutions, financial institutions and ancillary services undertakings, and participations held in them, could be excluded from consolidation where the thresholds are not exceeded. Undertakings other than institutions, financial institutions or ancillary services undertakings, and holdings of participation in such undertakings, however, would, if their inclusion in consolidation is otherwise unconditional by effect of Article 18 (7), be included in consolidation regardless of whether the thresholds laid down in Article 19 (1) are exceeded.