05 October 2012

EBF preliminary comments on the draft RTS on the uniform application of the calculation methods of the Financial Conglomerates Directive

The European Banking Federation provides its preliminary comments on the draft RTS on the uniform application of the calculation methods under article 6.2 of the Financial Conglomerates Directive (JC/CP/2012/02).

As the consultation period is restricted to about one month, this is not in accordance with EBA’s “Public Statement on Consultation Practices” of 25 September 2012 which state that EBA will allow those consulted adequate time to respond, according to the complexity of the issue and the time available. The EBA will generally aim at allowing a three-month consultation period for public consultation, unless reasons exist to the contrary.

The Consultation Paper explains in its introduction that the proposed RTS have been based on the European Commission’s legislative proposals for the CRR/CRD IV and have also taken into account major changes subsequently proposed by the revised texts produced by the Council of the EU and the European Parliament, during the ordinary legislative procedure.

The Consultation paper does not, however, include any reference whatsoever to documents that are publicly available clarifying to respondents which texts precisely have been taken into consideration when preparing the ITS. EBF believes this to be another flaw in the process.

The draft RTS under consultation is based on the mandate contained in Article 46 (4) of the CRR and Article 139 of CRD IV. It follows that the proposed ITS are not expected to modify the conditions of application which have been enshrined in the Directive 2002/78/EC.

The second paragraph of Annex I to the Directive 2002/87/EC requires the coordinator to decide on the method of consolidation only after having consulted the other competent authorities involved and the financial conglomerate itself. The process which is being proposed in Article 6 (2) of the proposed ITS deviates from the process which the text of Annex I imposes. Article 6 (2) of the ITS, as proposed, is, therefore, contra legem.

Article 4 of the proposed ITS confirms the principle that, for all entities of a financial conglomerate, own funds, in excess of sectoral solvency requirements, shall be considered available to absorb losses elsewhere in the financial conglomerate, “provided that there are no practical, legal, regulatory, contractual or statutory impediments to the transfer of funds or repayment of liabilities across conglomerate entities in due course”.

Article 4 (b) specifies in this regard that, for the purpose of assessing the transferability of funds to entities subjected to CRR, “in due course” shall mean no later than, three calendar days with no impediments on the coordinator requiring a faster transfer if necessary. EBF does not believe the proposed timeframe to be in accordance with what the Annex I of the Directive 2002/78/EC requires.

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