Do undertakings subject to Article 22(1) CRR Sub-consolidation in case of entities in third countries have to comply with Part Two of the CRR in full or shall they only comply with Articles 89, 90 and 91 of Part Two?

According to Article 22(1) CRR, subsidiary institutions mentioned therein shall apply the requirements laid down in Articles 89, 90 and 91 and Parts Three, Four and Seven and the associated reporting requirements laid down in Part Seven A on the basis of their sub-consolidated situation. The literal reading of Article 22(1) CRR implies that any undertaking subject to Article 22(1) CRR would not be required to comply on a sub-consolidated basis with all the other Articles in Part Two of the CRR.

Without the application of Part Two in full, an undertaking would not be able to comply with the prudential requirements under Articles 89, 90 and 91 and Parts Three, Four, and Seven of the CRR in an orderly manner. For instance, in order to comply with Article 92 of the CRR on the minimum own funds requirements (Part Three), an undertaking subject to Article 22(1) CRR would need to hold a certain amount of CET1, Tier 1 and total capital. However, the rules that define what constitutes CET1, Tier 1 and total capital are included in Part Two of the CRR – to which the undertaking would not be subject.