Question ID:
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Own funds
20, 21, 26
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Disclose name of institution / entity:
Type of submitter:
Competent authority
Subject Matter:
Definition of financial institution and mixed activity insurance holding company

Can a mixed-activity insurance holding company (MAIHC) that has at least one subsidiary credit institution pursuant to Article 4(1)(1) CRR qualify as a financial institution pursuant to Article 4(1)(26) CRR?

Background on the question:

A holding company (HoldCo) has several subsidiaries, some of which are insurance undertakings, others are financial institutions and/or ancillary services undertakings, and at least one is a credit institution. The group does not qualify as a financial conglomerate under Article 2(14) of Directive 2002/87/EC (FICOD) because the insurance part of the group does not reach the significance thresholds set out in Article 3(2) or (3) of the FICOD (i.e. the EUR 6 bn. and the 10% ratio thresholds). Considering that the HoldCo does not qualify as a financial conglomerate, it does not fulfil the definition of mixed financial holding company (MFHC) set out in Article 2(15) of the FICOD, and consequently the HoldCo also does not qualify as an MFHC for prudential purposes pursuant to Article 4(1)(21) CRR.

It is further noted that the HoldCo fulfils the conditions for being a MAIHC as per Article 212(1)(g) of Directive 2009/138/EC (Solvency II Directive).

Furthermore, while the insurance subsidiaries account for only a small fraction of the HoldCo’s equity, assets and revenues on a consolidated basis, the HoldCo could qualify as a financial holding company (FHC) in the meaning of Article 4(1)(20) CRR only if it were also to qualify as a financial institution in the meaning of Article 4(1)(26) CRR. However, according to a literal reading of the definition of financial institution in Article 4(1)(26) CRR, a MAIHC is excluded from qualifying as a financial institution. Therefore, according to a literal reading of this definition, the HoldCo cannot be considered at the same time both (i) a financial institution, and consequently a FHC, and (ii) a MAIHC.

This would imply that solely because the HoldCo holds a small fraction of its equity, assets and revenues in insurances subsidiaries, it would ultimately not be subject to prudential consolidation despite the fact that subsidiaries of the HoldCo include a credit institution and other financial institutions: 40% of the group’s assets relate to banking services and another 40% of its assets relate to (financial and operational) leasing activities; less than 1.5% of the group’s assets are associated with the insurance sector.

Date of submission:
Question under review
Answer prepared by:
Answer prepared by the European Commission because it is a matter of interpretation of Union law.