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20 November 2002

DIRECTIVE ON FINANCIAL CONGLOMERATES ADOPTED




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The European Parliament approved the Councils Common Position of the Directive on Financial Conglomerates in second reading without any amendments.

The text adopted by the Parliament had already been approved by the Council in May 2002 and will become law as soon as it has been formally signed by the Presidents of the two institutions. The Directive must be implemented by Member States within 18 months of its publication in the EU's Official Journal.

The Common Position follows the Commission's proposal and incorporated a number of the amendments proposed by the European Parliament and includes among others:

A new definition has been introduced of the terms 'asset management company' and 'relevant competent authorities'. The terms 'group' and 'close links' have been amended. The definition of the term 'financial conglomerate' has been made more precise, the banking and investment services sectors are considered as one sector, and the term 'financial sector' has also been amended.

The financial conglomerate includes groups, not headed by an EU regulated entity, with mixed activities which have a financial interest of at least 40%. The cross sectoral activities of the group must be significant.

In addition to the 10% threshold for the determination of whether activities in different financial sectors are significant, the common position includes an alternative Threshold at EUR 6 billion. A group which meets the EUR 6 billion threshold but not the 10% threshold may be excluded, either from the application of the Directive or from the provisions relating to risk concentration, intra-group transactions and internal control mechanisms.

With regard to Capital adequacy the Common Position states that sectoral risks are to be covered by sectoral capital according to the sectoral rules and that any additional deficit at conglomerate level should be covered by cross-sectoral capital.

Adopted Common Position
Recommendation for second reading
Commission press release

© European Parliament


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