ESAs consult on the application of the capital calculation methods for financial conglomerates

31 August 2012

The Joint Committee of the European Supervisory Authorities launched a public consultation on Draft Regulatory Technical Standards for the calculation methods of the Financial Conglomerates Directive.

The RTS will be part of the Single rulebook aimed at enhancing regulatory harmonisation in the European Union. The proposed draft RTS set out specifications for institutions in a financial conglomerate to ensure uniform conditions of application of the calculation methods for determining the amount of capital required at the level of the financial conglomerate.

The draft RTS are based on the following general principles and technical calculation methods:

General Principles

• elimination of multiple gearing;
• elimination of intra-group creation of own funds;
• transferability and availability of own funds; and
• coverage of deficit at financial conglomerate level having regard to definition of cross-sector capital.

Technical calculation methods

• Method 1: Accounting consolidation method;
• Method 2: Deduction and aggregation method; and
• Method 3: Combination of methods 1 and 2.

The consultation paper is based on the draft Capital Requirements Regulation (CRR)/Capital Requirements Directive (CRD IV) as proposed by the European Commission on 20 July, 2011.

This proposal might be subject to further changes, following this consultation and also the final adoption of CRR/CRDIV.  The RTS shall be submitted to the EU Commission by 1 January, 2013.

The consultation runs until 5 October, 2012.

Consultation paper

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