13 February 2002

EMAC presents Draft Report on Financial Conglomerates

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The Report on Financial Conglomerates will be subject to a first consideration in parliamentary Committee on its next meeting on 19-20 February. Vote in Committee is expected on 25 February. The rapporteur Alain Lipietz shares in principle the general approach taken by the directive proposal. Main amendments made by the rapporter are concerned to:

the definition of financial conglomerates which should be modified by lowering the threshold of consolidated or aggregated balance sheet total of financial sector entities within a group from 50 to 40% in order to ensure that financial entities with significant activities which are part of a large group with mixed activities are covered by the directive.

the free choice of calculation method. The rapporteur suggests to leave the choice to the financial conglomerates that would be obliged to communicate it to the public. In order to avoid a weakening of prudential standards, supervisory authorities should be free to check whether the conglomerates meets the standards of any of the other methods and to inform the public in case of failure.

the intra group transactions and risk concentration which are particularly sensitive for the financial stability of a group. Based on the experience with the application of the existing rules, the Commission should come forward with an evaluation report three years after the directive has entered into force, which should identify possible ways towards the introduction of quantitative rules for intra-group transactions and risk-concentration within financial groups and conglomerates in general.

the identification of the competent co-ordinator should follow the criteria established by the Directive in case that competent authorities fail to reach agreement amongst them. Member States should be allowed to waiver these criteria, if their application in specific cases is inappropriate.

the deduction of participations should be limited to the proportional share of solvency requirements of these entities. After the agreement on new prudential capital rules within the Basel II process, the Commission should come forward with proposals that would ensure a higher degree of convergence of sectoral prudential capital rules.

Co-operative conglomerates should be made subject to supplementary supervision if they engage in financial commitments towards other financial institutions.

Next to the 10 amendments made by the rapporteur himself another 141 amendments have been made by other parliamentarians so far.

See explanatory statement and amendments suggested by the rapporteur.
See amendments made by other parliamentarians .

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