16 February 2001

CEA Comments on Proposal on Financial Conglomerates

First of all, concerning the general terms of the contents, CEA would like to see guidelines for ensuring convergence in the application of the substantial powers granted by the directive proposals to national supervisory authorities, especially as they to such a large extent remain at the supervisors’ own discretion. Concerning this proposal CEA fears an opposite direction : even the definition of a conglomerate, the measures used to define it and the possibility to set new limits concerning risk concentration and intra-group transactions, are left to the discretion of national authorities, without limits or guidelines. This the CEA sees as a negative development.

Secondly, the role of supervison is, in some places, unclear : the supervisor is to decide if a group of companies is a financial conglomerate. However, at that stage there is no defined supervisor in charge of the group. Supervisor is to decide whether to lower the threshold concerning the definition of a conglomerate or accept an entity within the defined conglomerate. However, again, it is not clear which supervisor can do this, as no co-ordinator exists at that stage. For a sectoral supervisor to decide on the issue alone, is hardly sensible. For a group of supervisors, a unanimous decision could be made. The proposal, nevertheless, implies that the decisions as mentioned above, are to be made by « a supervisor ». Any such decision, for the sake of stressing our point, should only be done following clear guidelines leading to similar practices in all sectors and in all member countries, be they done by a supervisor or by a unanimous group of them.

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