PUBLIC CONSULTATION DRAFT ECB SSM FRAMEWORK REGULATION TEMPLATE FOR COMMENTS Contact details (will not be published) Mr Ms First name Guido Surname Ravoet Institution European Banking Federation E-mail address [email protected]Telephone number 3225083711 Please tick here if you do not wish your personal data to be published. Please separate your comments per issue, citing the relevant article of the draft Framework Regulation where appropriate and indicating whether you are proposing an amendment, clarification or a deletion. If you require more space for your comments, please copy page 2. 1
Transcript
PUBLIC CONSULTATION
DRAFT ECB SSM FRAMEWORK REGULATION
TEMPLATE FOR COMMENTS
Contact details (will not be published)
Mr Ms
First name Guido Surname Ravoet
Institution European Banking Federation E-mail address [email protected] Telephone number 3225083711
Please tick here if you do not wish your personal data to be published.
Please separate your comments per issue, citing the relevant article of the draft Framework Regulation where appropriate and indicating whether you are proposing an amendment, clarification or a deletion. If you require more space for your comments, please copy page 2.
1
PUBLIC CONSULTATION
DRAFT ECB SSM FRAMEWORK REGULATION
TEMPLATE FOR COMMENTS
Name European Banking Federation Country Belgium
COMMENTS ON THE DRAFT ECB SSM FRAMEWORK REGULATION
Issue Article Comment Concise statement why your comment should be taken on board
Definition of material draft supervisory decisions
1 Clarification 1.- It is unclear what is meant by the term "material draft supervisory decisions" used in Article 1 (a) (iii), third indent and Article 23 (3) (d). Further details would be helpful.
2.- A definition of participating member states and SSM would be advisable. A clear definition will create certainty with regard to the status and relevant procedures to be taken into account for the non-Euro area member states in close cooperation. When does a non-Euro area member state turn into a close-cooperation member state? Immediately after signing of an agreement, after publication of such agreement in a register? And do transitional provisions apply in order to prevent last-minute surprises with respect to the relevant procedures re notifications?
2
3.- One of the supervisory decisions that is not detailed in the framework is the approval of internal models or of their related changes. It includes also aspects regarding the role of the Holding Company and the approval of models in subsidiaries located in non-EU Member States (non-close collaboration) and belonging to an EU banking Group. We would deem it worthwhile for this topic to be taken into proper account in the context of the Framework to fully complement Article 4 of the Regulation, unless it is going to be dealt with in the forthcoming ECB Supervisory Manual.
Several questions on the supervision of significant entities and the organisation of the JST.
3 Clarification 1.- Banking groups often apply common procedures throughout the group and are often organised with central Finance, Treasury, Risk Control, Compliance and Internal Audit. This is done for efficiency reasons and is a measure for reducing costs and improving the quality of the bank's operations. If the SSM applies a fragmented and uncoordinated approach towards such a group and imposes diverging requirements on the different group entities this will counteract these banks' ambition to apply coordinated and standardized procedures throughout the group. Making one JST responsible for the supervision of all entities within SSM that belong to a significant group will facilitate a coordinated SSM approach to that group, improve the quality of supervision and reduce the volume of resources required both at ECB, NCAs and the supervised group. This is also important for groups, where parent company is located in a non-participating Member State.
2.- We would like to know more about the composition of the JST: The number of members, the balance between ECB and NCA members.
3.- It is clear that there will be a coordinator from the ECB. However, when there is more than one member from the NCA, one sub-coordinator from the NCA will be appointed. Our question here is how will the relationship between the ECB coordinator and NCA sub-coordinator work and what will be the relationship between the sub-coordinator and the remaining members of the JST (from the NCA or the ECB). We would like more information about the concrete articulation of the relationship between NCA employees and ECB staff at hierarchical and organisational level.
3
4.- Will the JST sub-coordinators be appointed by the NCA of the parent company?
5.- Regarding the decision making process, we would like to know more about the mechanism to resolve potential disagreements between the members of the JST. Will the last say belong to the Coordinator or will there be a voting rule (e.g. majority)?
6.- It should also also be clarified what are the relevant rules to apply co-operation between ECB and NCA in case the group has no cross- border subsidiaries/branches.
Criteria for the appointment of JST members
4 Clarification We would like to know about the criteria for the appointment of JST members. We are of the view that JST members should have good knowledge of the national economic situation and the business model of the supervised institution.
Supervision of less significant entities: Involvement of staff members from other NCAs in an NCA’s supervisory team
7 Clarification Further details are required in regard to the involvement of staff members from other NCAs in the supervisory team of an NCA.
a) It is unclear what powers or legal status "seconded" staff members have.
b) As the rules on secrecy are set out in Article 53 of CRD IV and have thus been transposed into national law by Member States, it must be ensured that "seconded" staff members are subject to at least the same secrecy and confidentiality requirements as those applying to staff members of the NCA to which they are seconded.
Organisation of colleges
8 Clarification We would appreciate more details on the organisation of colleges of supervisors, in particular whether the supervision will be performed at consolidated level or at entity level.
Composition of colleges
9 Clarification a) Clarification is sought on the composition of the core college and the extended college. Will the institution be consulted about it?
b) Clarification is also required on the role of an NCA of a non-participating Member State in the 4
college of supervisors e.g. UK PRA. Clarification required on whether a subsidiary located in a non-participating Member State is subject to supervisory powers of ECB as well as their local NCA e.g. a subsidary based in the UK.
c) In the context of the Colleges of Supervisors, we would suggest clarifying the “powers” of observers beforehand in order to have it incorporated. Similarly, we would suggest the same clarification with reference to Crisis management groups.
Coordination between NCA and ECB in the college
10 Clarification In case of a NCA member attending the college, we would like to know more about the coordination mechanism between the NCA member and the ECB.
Right of establishment 11 Clarification The current text covers the right of establishment and exercise of freedom to provide services in a non-participating Member State (Art. 17), but it does not include the right of establishment of an EU credit institution in a third country (Art 11) or the provision of services in a third country (Art 12).
Furthermore, the CRD IV package does not include the case of establishment of an EU credit institution in a third country (Art. 35 Directive 2013/36/EU) or the provision of services in a third country (Art 39 Directive 2013/36/EU), therefore Member States are supposed to deal with this issue under national law.
The Regulation does not clarify which authority should be approached and is responsible for the application of the establishment of a branch outside the EU. As neither art. 4.1 nor 11 contain any provisions in this regard, is our assumption correct that NCA are exclusively responsible, without any ECB interference even in case of significant entities? Or does the ECB exercise the powers of the competent authority of the home Member State in accordance with Article 17 which deals with the right of establishment of a branch within the territory of a non-participating Member State?
We would appreciate more clarification in the process taking into account that the ECB is in charge 5
of the consolidated supervision.
Our understanding is that, as this is not regulated in EU legislation, the NCAs remain competent for these purposes. However, it would seem a little strange to entrust NCAs with this power when the ECB is the institution in charge of the consolidated supervision.
Freedom to provide services
12 Amendment It seems inconsistent that the freedom to provide services requires notification to the ECB whilst the right to establishment requires notification to the NCA. For the sake of simplification, we would propose that all notifications be sent to the NCA.
The same should apply in relation to non-participating Member States (article 17).
Should the institution itself not also be notified?
Coordination of financial conglomerates
18 Clarification Further details are required on the assumption by the ECB of the task of "coordinator" of financial conglomerates, taken into account that financial conglomerates include insurance companies and ECB supervises credit institutions. Content of the coordination should be specified.
Language regime between ECB and NCAs
23 Clarification It is unclear what is meant by the term "material draft supervisory decisions" used in Article 1 (a) (iii), third indent and Article 23 (3) (d). Further details would be helpful.
Language regime between ECB and NCAs
23 Amendment As for point 3, indent (ii), we would propose that the NCA provides an English translation in any case and not only in cases (a) to (c).
Language regime between the ECB and legal or natural
24 Clarification 1.- As to the translation of documents to English, we would also need more precision on the additional time required.
2.- There is need for a clear specification of the outreach of the provisions in this article 24, especially 6
persons, including supervised entities
as regards internal documentation like procedures, policies and acts. In particular, our question is whether an agreement to use English for written communications means that all internal documentation, procedures, policies and acts should be translated into English.
3.- We would like to draw the attention of the ECB to the significant difference between written communication and oral communication. If a banking group chooses English, does it mean that anyone in the organisation should express himself/herself in English when talking to ECB supervisors face to face or over the phone?
Interpretation in oral hearings
24 Amendment In general, we question the need to prescribe the requirement for ECB to seek explicit agreement on the use of the English language. This issue should rather be covered in the ECB internal rules.
Regarding point 2, fourth paragraph, we would suggest that the right to have access to interpretation in oral hearings upon particpant's request be recognised. The term for the advanced notification should also be specified.
Mandate to representative
27 Amendment In regard of Article 27(1), under Portuguese law (and possibly, in other EU national legal frameworks), a mandate may be given to a lawyer to represent a party in a proceedings by means of an oral statement by the party, made in the course of the proceedings. A similar possibility should be provided for herein.
Who can be appointed as the representative? Who is meant by 'appointed representative' - Is that an employee of the institution itself and/or an external party (a lawyer)?
Is it meant that every specific issue / question would require a separate written mandate?
Right to be heard 31 Amendment 1.- Banks would like clarificaiton on what appeals process is available if there is a significant difference of views between the ECB and the supervised institution.
7
2.- The notification referred to in point 1 should also mention the legal reasons on which the ECB intends to base its decision.
3.- As regards the definition of Article 2, point 26 ("ECB supervisory decision"), apparently, the project does not envisage the right to be heard for the bank in case of an ECB supervisory decision. The text is too vague ("if ECB deems it appropriate") and organizes exceptions to the right to be heard, that are not sufficiently restricted. Delays do not seem to be sufficient justification.
4.- Regarding the stage before the supervisory decision:
A code of conduct of the inspection and control stage, or supervision guidelines, should be established as is the case in some Member States, and the industry should be consulted on it. NCA has a duty of loyalty.
The inspection and control stage should also be subject to the right to be heard. Transparency of the supervisory decision process is needed. The bank should have the right to a written reply, accompanied by a sufficient delay to do so. Two weeks to react to a decision seems too short considering that the ECB decision has to be analysed, external lawyers may have to be consulted and the response has to be agreed internally. Comments could be inserted in the inspection report (as an annex, for instance).
5.- The term "in particular circumstances" should be specified.
Right to be heard 31 Amendment In line with our third comment in the previous box for clarification, we propose to delete the text "if ECB deems it appropriate".
Paragraph 3 prescribes that the party, in principle, shall be given the opportunity to provide its comments in writing within a time limit of two weeks following receipt of a statement mentioning the fact and the objections. We believe that a time frame of two weeks is limited, in particular if the
8
response requires the assistance of external services or the approval of the management board. We propose to extend it to 4 weeks.
Definition of confidentiality
32 Amendment The definition of confidential information is too broad. The term "in particular" suggests that the definition could be even broader which is likely to prevent credit institutions from using their right to access the ECB documents. This term should be deleted.
Access to files in an ECB supervisory procedure
32 Clarification a) Determination of a deadline by which a decision on the request for access to files connected to an ECB superviory procedure must be made and access to the files must be granted would be advisable, as the supervisory authorities may otherwise delay such entitlement.
b) One of the key principles of future oversight by the ECB is close cooperation with the NCAs, which will continue to perform a large part of actual supervision (e.g. drafting decisions). In this respect, the exclusion of correspondence between an NCA and the ECB as confidential under Article 32 (3) (b) is an unacceptable restriction of the right to access files.
This applies equally to internal documents of the ECB or an NCA (Article 32 (3) (a). An internal legal memo, for example, provides information on the basis for a particular decision or on whether unlawful or wrongly discretionary considerations played a role. If such memos are meant by "internal documents", this raises the question of what files there are are left to access.
c) We would welcome clarification to the effect that access to files may be requested without stating any specific reasons and that legitimate interests of third parties can only affect access to the extent that the relevant passages of files are blacked out.
Notification of ECB supervisory decisions
35 Amendment a) We welcome stipulation that notification of an ECB supervisory decision is deemed to have been received by a certain date. However, this arrangement should logically only apply unless it is shown that notification was received on a later (and not just a "different") date.
9
b) With regard to notification of ECB supervisory decisions, clarification is required on what procedure and time limits apply to all ECB actions not just notice of decisions. As to the notification to representatives, the ECB should send its supervisory decision to the representative and the institution itself.
c) Oral notifications of supervisory decisions: we would prefer to see the notification of supervisory decisions to be made only in a written form (as provided for in Art. 35 b) -f). This would bring certainty as to its effect.
d) The regulation should require both in Art.35 and 88 the ECB and the NCA to notify the parent company of copies of the supervisory decisions related to each supervised entity belonging to the group (even when it is not part of the group according to art.26). This will enable the parent company to exercise - according to national law - the responsibilities of group coordination in case the subsidiary has not duly informed it of the supervisory decision.
e) We would like to suggest the ECB to publish the anonymous supervisory decisions that are relevant with regards to interpretation of the prudential regulatory framework. This would have the benefit of increasing understanding and information among supervised entities. Alternatively, we would suggest providing for a FAQs website, where requests of clarifications could be sought.
Reporting of breaches 36 Deletion Whistle-blowing is already provided for by CRDIV. Member States are now responsible for implementing these provisions into their national law. Duplicate regulation should be avoided. Articles 37 and 38 should be deleted accordingly.
If the articles are not deleted, reporting in mala fide should be punishable, since false reporting causes unnecessary administrative costs and possible reputational risk to banks. Article 23 of SSM regulation states that the appropriate protection for accused person should be ensured in the process. Likewise that protection should be recognised in articles 36 to 38 of the SSM Framework Regulation.
10
In addition, we would like to know what is the the procedure that allows a supervised entity to self-report a breach that it has discovered itself.
Procedures for the follow-up of reports
38 Clarification The wording of paragraph 5 is too vague to justify the far-reaching information requirements.
Classifying a supervised entity on an individual basis as significant
39 Clarification Contrary to Article 6 (4), subparagraph 4 of the ECB Regulation, possible cases of financial assistance from the EFSF are not listed here. To ensure alignment with the ECB Regulation, these should be included (In contrast, Article 67 (2) (f) expressly mentions the EFSF).
Review of the status of a supervised entity
43 Clarification Contrary to Article 6 (4), subparagraph 4 of the ECB Regulation, possible cases of financial assistance from the EFSF are not listed here. To ensure alignment with the ECB Regulation, these should be included (In contrast, Article 67 (2) (f) expressly mentions the EFSF).
Beginning of direct supervision by the ECB
45 Clarification Contrary to Article 6 (4), subparagraph 4 of the ECB Regulation, possible cases of financial assistance from the EFSF are not listed here. To ensure alignment with the ECB Regulation, these should be included (In contrast, Article 67 (2) (f) expressly mentions the EFSF).
Reasons for ending direct supervision by the ECB
47 Clarification Contrary to Article 6 (4), subparagraph 4 of the ECB Regulation, possible cases of financial assistance from the EFSF are not listed here. To ensure alignment with the ECB Regulation, these should be included (In contrast, Article 67 (2) (f) expressly mentions the EFSF).
Pending procedures 48 Clarification Regarding paragraph 1, does it mean that the authorizations to use an internal model, for example, must be given by the competent authority before November 2014?
Moreover it could be very helpful for us, that national competent authorities make an inventory of all pending general and individual national procedures before November 2014.
11
Each institution should receive a precise list, in order to know which procedure will be handled by the ECB and which one by the NCA. Moreover, what does happen if a supervisory procedure is transferred from the NCA to the ECB, in terms of delay? We assume this transfer should be smooth and not create any additional supervisory delay in the approval / response process.
List of supervised entities and supervised groups
49 Amendment The list of supervised entities and supervised groups referred to in Article 49(4) should be kept updated at all times, and not only each quarter. In large and complex organisations, an entity being subject to the supervision of the ECB may not be a fact known to all. People inside the concerned organisation and third parties should be able to know at all times who is the relevant supervisor.
Method of consolidation
54 Clarification Method of consolidation for prudential purposes: link to relevant Union law may be useful.
Criteria for determining significance on the basis of importance for the economy of the Union or any participating Member State
57 Clarification The term "specific economic sectors" referred to in paragraph 1 (a) should be explained further so that it is clear in advance when the criterion in question is met.
Request for or receipt of direct public financial assistance from the ESM
61 Clarification Contrary to Article 6 (4), subparagraph 4 of the ECB Regulation, possible cases of financial assistance from the EFSF are not listed in the heading of Title 6 or the heading of Article 61. To ensure alignment with the ECB Regulation, these should be included (In contrast, Article 67 (2) (f) expressly mentions the EFSF).
Three credit 66 Amendment Regarding Article 66(1), although we understand that the date of 1 October is consistent with the
12
institutions or supervised groups - date
commencement of the supervisory tasks of the ECB - 4 November 2014 -, the internal organisation and procedures of credit institutions are usually aligned with their financial year, which as a general rules starts at 1 January. Therefore, the decision by the ECB should result in its supervision of these three institutions or supervised groups commencing on 1 January each year, to allow the latter to organise and prepare procedures (e.g., with regard to the drafting, preparation and sending of communications in English, if the supervised entity and the ECB so agree) in advance.
Notification of the ECB of an application for an authorisation to take up the business of a credit institution
73 Clarification a) Does "notification" of the receipt of an application for an authorisation in Article 73 (1) mean just notice that the application has been received or that all the relevant documents have been submitted? The latter should actually be the case, since on what factual basis could the ECB otherwise ask the the NCA to request additional information if an application is incomplete (Article 73 (3))? We request clarification.
b) With this in mind, and to provide planning certainty for applicants, a definite deadine for examining formal completeness of an application should be introduced like, for example, in Article 15 (1) of Directive 2007/44/EC or Section 2c (1) of the German Banking Act, although it should be made clear that "formal" completeness merely means checking that all the documents required by law have been presented.
c) Time limit for a license application is governed by national law. As the ECB has an additional assessment to perform, the available time for assessment by the NCAs will in fact be shortened by the time required by the ECB. How will a due process and due assessment be guaranteed?
NCAs’ decisions rejecting an application
75 Clarification a) We request clarification that rejection of an application also falls within the ECB's responsibility. While Article 77 (1), sentence 2 seems to ensure this interpretation, the wording of Article 75 appears open to misunderstanding in this respect. Particularly if an application is rejected, however, it is very much in the applicant's interest that a uniform EU-wide assessment takes place.
13
b) The FR should clearly state how an entity can appeal against a decision of the supervisor. Is the assumption correct that decisions based on the CRD can be challenged before national courts and that the CRR can be challenged before European Court? This should be clarified in the FR.
The notification of an application for an authorization to take up the business of a credit institution shall be assessed by the NCA considering the conditions laid down in the relevant national law. A rejection of the application seems to qualify as a decision of a NCA, taking account of Article 88 (3)(b) which refers to ’an NCA decision’. Consequently, do the procedural rules laid down in national law apply to this decision?
Can a NCA still make a supervisory decision or is each decision of a NCA per definition a decision of the ECB? Can a decision of the NCA be challenged before national courts or does it qualify as a decision under the responsibility of the ECB and subject to the European procedures?
ECB decision on the withdrawal of an authorisation
83 Clarification a) Paragraph 1 should be worded more precisely. It is unclear what it ties in to, i.e. on what event the requirement to take a decision without undue delay is based.
b) The exception to the right to be heard seems more a rule than an exception when reading article 83(1) where the ECB has the obligation to take a decision without undue delay. An exception to the right to be heard as mentioned in clause 31(4) is unacceptable in the situation of a (draft) decision on the withdrawal of an authorization. The institution has the unconditional right to be heard.
14
PUBLIC CONSULTATION
DRAFT ECB SSM FRAMEWORK REGULATION
TEMPLATE FOR COMMENTS
Contact details (will not be published)
Mr Ms
First name Guido Surname Ravoet
Institution European Banking Federation E-mail address [email protected] Telephone number 3225083711
Please tick here if you do not wish your personal data to be published.
Please separate your comments per issue, citing the relevant article of the draft Framework Regulation where appropriate and indicating whether you are proposing an amendment, clarification or a deletion. If you require more space for your comments, please copy page 2.
1
PUBLIC CONSULTATION
DRAFT ECB SSM FRAMEWORK REGULATION
TEMPLATE FOR COMMENTS
Name European Banking Federation Country Belgium
COMMENTS ON THE DRAFT ECB SSM FRAMEWORK REGULATION
Issue Article Comment Concise statement why your comment should be taken on board
Notification to NCAs of the acquisition of a qualifying holding
85 Clarification a) Whilst Article 73 refers to a requirement to "notify the ECB of the receipt of such application", Article 85 (1) sets a requirement to "notify the ECB of such complete notification no later than five working days following receipt thereof". Does this different wording actually mean different things? If so, we request clarification; if not, we request alignment of the wording.
b) The wording of Article 85 (1) is unclear in that the NCA only notifies the ECB when it is satisfied that the notification of the intention to obtain a qualifying holding is complete. This article should refer to "formal" completeness which then triggers the notification requirement.
c) The NCA will notify the ECB after a ‘complete notification’ of an intention to acquire a qualifying
2
holding instead of ‘notification’ as mentioned in Article 22(1) CRD. Consistency with the clauses in CRD is necessary.
d) The current text does not include the case of an acquisition of a qualifying holding in a credit institution established in a third country. Furthermore, the CRD IV package does not regulate in Art 22 of the Directive 2013/36/EU the acquisition of a qualifying holding in a third country and, therefore, Member States are supposed to deal with this issue under national law. We would appreciate more clarification in the process taking into account that the ECB is in charge of the consolidated supervision. Our understanding is that, as this is not regulated in EU legislation, the NCAs remain competent for these purposes. However, it would seem a little strange to entrust NCAs with this power when the ECB is the institution in charge of the consolidated supervision and the authority that shall decide upon the acquisitions of qualifying holdings in the EU.
Assessment of potential acquisitions
86 Amendment Whilst Article 15 (2) of the SSM Regulation provides for notification of the ECB no later than 10 working days before expiry of the assessment period, Article 86 (2) of the present Regulation calls for notification at least 15 days before expiry of the assessment period. It must at any rate be ensured that the requirements of Article 15a (2), sentence 1 of Directive 2007/44/EC are met. As a result, the supervisory authority may request additional information from parties interested in acquiring a qualifying holding up to no later than the 50th working day of the assessment period (i.e. 10 working days before expiry of the assessment period). To have enough time for drafting the decision to the ECB, the deadline for requesting additional information in both cases would effectively end between the 35th and 40th working day of the assessment period. While this would be beneficial for market participants, both clarification of the deadlines and alignment with Article 15a (2), sentence 1 of Directive 2007/44/EC should be requested in order to avoid any subsequent confusion in day-to-day practice.
Requests, notifications 88 Amendment As a general rule, the significant supervised entities shall address to the ECB all their requests, notifications or applications. However, there are some exceptions (e.g., authorisations, qualifying
3
or applications holdings, managers suitability, opening of branches within the SSM). The use of a single point of entry (ECB or NCAs) for all the cases would make the framework simpler and more intuitive. Likewise, it would be advisable to use one single point of exit (Art. 88).
Supervision of significant supervised entities
89 Clarification Confirmation is sought that measures to ensure the supervision of less significant supervised entities by NCAs will not be materially different to the level and nature of supervision applied by the ECB to significant supervised entities
Relationship ECB - NCAs
90 Clarification More precision on the role of NCA, e.g. "day-by-day assessment".
Exchange of information
92 Clarification The wording "serious indication of circumstances that could lead to a determination" is too vague to justify the far-reaching legal consequences.
A permanent exchange of information between the ECB and NCA should be institutionally arranged, not only under the circumstances as mentioned in this clause. The ECB has to take into account the information available to NCAs.
Supervision of significant supervised entities
94 Amendment a) Article 94 suggests that the onus is on the significant credit institution to notify the NCA of any new facts that may affect an initial assessment of suitability; this would represent a change from the current national law which places the onus on the individual to notify the NCA of any new facts; is that the intention?
b) It is stated that ‘the single point of entry for all requests coming from significant supervised entities is, as a rule, the ECB, except as otherwise provided for in the SSM Regulation or in the draft FR’. We note that there is no specific rule on vetting procedures. Apparently, the ECB will do this on the basis of national law (see previous remark). Does this mean that national administrative law will apply? How will ECB ensure a level playing field between countries? Will ECB (or maybe EBA)
4
develop common standards? Will ECB aim for mutual recognition of approvals?
c) Article 94 provides that a significant supervised entity shall inform the relevant NCA of any new fact that may affect the initial suitability assessment of a manager,without undue delay once the facts are known to the supervised entity or the relevant manager. We would suggest the regulation should also provide for the duty of the manager to inform the bank and the parent company without undue delay of such new facts or issues.
Relationship between ECB and NCAs
95 Amendment All communications from ECB to supervised entities belonging to a directly supervised group and vice versa should be channelled via the parent company, at least for those related to the JST activities.
In this regard the role of the parent company should be clarified, above all the reconciliation with the jurisdictions where the holding is ruled to have an effective steering and control role.
It is unclear what is meant by the reference to ‘its ordinary interaction with its NCA’. The significant supervised entity shall address to the ECB all its requests, notifications of applications relating to the exercise of the tasks conferred on the ECB without changing its ordinary interaction with the NCA. How does this relate to the Joint Supervisory Teams?
Deterioration of the financial situation of a less significant supervised entity
96 Clarification The wording "rapidly and significantly" is too vague to justify the far-reaching legal consequences.
Application of macro-prudential tools by the ECB
102 Clarification Regarding to the second sentence of article 102 “If an NDA does not set a buffer rate, this does not prevent the ECB from setting a buffer requirement in accordance with this Regulation and Article 5(2) of the SSM Regulation”. It should be clarified that in case Member State has decided not to introduce a particular buffer (e.g. systemic risk buffer) in its national legislation, the ECB has no right
5
to set a buffer of such type.
Setting macroprudential buffers
104 Amendment In case NCA does not accept ECB point of view, it should clearly disclose the underlying rationale.
Exchange of information and cooperation in respect of the ECB’s use of macro-prudential tools
105 Clarification NCA should have more than 5 days to object to the ECB's intended measure, in order to have time to assess consequences to all relevant market participants if the measure affects the whole domestic system or several financial institutions. The NCA might need to collect extra data from the financial institutions and 5 days seems short. 10 days seems more appropriate time-frame.
Close cooperation 106 Clarification We would appreciate clarification of how the SSM/ECB will interact with regulatory authorities in Member States which choose not to enter into a close cooperation agreement
Administrative penalties
120 Clarification Clarification that less significant entities supervised by NCAs are subject to an Administrative Penalties regime that is not materially different to those significant entities supervised by ECB. Why are entities supervised by ECB singled out given that all regulated entities in Euro area are subject to same Banking regulations? What safeguards are in place to ensure consistent administrative penalty regime between entities supervised by ECB and those supervised by NCAs?
Procedural rights 126 Amendment The notification referred to in point 2 should also mention the legal provisions presumably violated that have been the cause for the investigation as well as the exact time period in which the supervised entities are expected to answer.
Right to be heard 129 Amendment “May be combined” is not appropriate. According to SSMR Article 22, before taking supervisory decisions, the ECB shall give the persons who are the subject of the proceedings the opportunity of being heard and shall base its decisions only on objections on which the parties concerned have been able to comment. Only in cases where urgent action is needed should the person be heard only after
6
the decision has been taken.
Limitation periods for the enforcement of administrative pecuniary penalties
131 Clarification Is there a sunset date for the expiry of the limitation period for enforcement of administrative pecuniary penalties referred to in Article 131?
Publication of decisions regarding administrative pecuniary penalties
132 Deletion Publication of decisions regarding administrative pecuniary penalties on the ECB's website is an unacceptable "name and shame" measure that is neither necessary nor appropriate nor helpful. Particularly in the case of significant institutions which conduct a wide range of different business activities and therefore have to meet a large number of different supervisory requirements, it can never be ruled out that, despite careful and conscientious conduct on their part, they may be fined for actions or breaches of rules.
Should this article not be deleted, paragraph 3 should at any rate be reworded to refer to a one-year period at most instead of a five-year period.A five-year period would lead to an unjustifiably long list of penalties that could create the impression in public that banks fail to comply with statutory provisions.
Penalties should only be published in last instance and only once the full legal procedings have ended. Publishing penalties without a solide legal ruling will damage the reputation of the institution, and lead to legal uncertainty.
Significant supervised entities
134 Clarification a) Paragraph 1 (b) refers to "Union directives". This paragraph does not satisfy the requirement of clarity, given the large number of relevant legal acts and possible measures. In line with Article 1 of Regulation No. 1093/2010 on the establishment of a European Supervisory Authority (European Banking Authority), at least the relevant Union legal acts governing this area should be cited in the present Regulation.
7
b) Confirmation that a significant supervised entity will not be subject to two sets of Administrative Penalty proceedings for the same breach.
Cooperation between the ECB and NCAs as regards the powers referred to in Articles 10 to 13 of the SSM Regulation -Cooperation in respect of requests for information
138 Amendment In connection with the power to request information under Article 10, in conjunction with Article 9, of the ECB Regulation, the principle that nobody needs to incriminate themselves (nemo tenetur se ipsum accusare) should be reflected in a right for any persons requested to provide information to refuse to provide it if, in doing so, they would expose themselves or relatives to the risk of legal prosecution. This is also stipulated in Article 47 of the EU Charter of Fundamental Rights; it should be made clear in Article 138 et seq.
Request for information
139 Amendment There should be enough time to make preparations in order to secure the good quality of responses to requests, especially when the requested information is very detailed and is only partly basis for existing reporting. The requested information and documentation should be able to be given in local languages. If the existing reporting framework is not enough, there should be clear agreement on items to be reported with relevant instructions and reporting tools. Reporting on ad hoc basis with varying items to be reported should be avoided.
Regulatory reporting 140 Clarification In our understanding, the article does not clarify who is the relevant authority for consolidated regulatory reporting, i.e. the ECB or the NCA of the mother company?
Requests for information at recurring intervals under Article 10 of the
141 Amendment Reporting to EBA and NCA is already required, in accordance with CRR. Therefore the ECB should always justify that its request for additional reporting is necessary because information has not already been reported to another supervision authority.
How will be ensured that the reporting process will be as efficient as possible? It should be avoided
8
SSM Regulation that double reporting obligations (both to NCA and ECB) will be created.
Procedure and notification of an on-site inspection
145 Amendment The notification time of "at least 5 working days" is very short. There should be enough time to make necessary preparations for on site inspection. As regards the involvement of JST in on site inspections, it would be preferable to have common timetables at Group level synchronised with other inspection activities.
Start of direct supervision by the ECB when the ECB assumes its tasks for the first time
147 Clarification The article states that ECB shall address at least two months before 4 November 2014 a decision to each credit institution to confirm its status as a significant supervised entity. There is a need to clarify, will this decision be determined on the basis of the year end 2013 data (total value of assets) or later.
Pending procedure and transitional provisions
149 Amendment Insitution should receive from their NCAs a recap of the pending procedures with for each of them the status (transferred to the ECB, still followed at the NCA level) and the timeframe.
Applies to article 48 as well.
Cooperation with Authorities out of SSM
152 Clarification We would request further clarification on the transition of the current Memorandum of Understanding (MoU) with non-Euro member states and with third countries as well as their validity. Also, the rules that will govern the relationship of the SSM with third countries which had only signed MoU with one or various former NCAs. How and when will they be applicable to the whole SSM?
Regulatory cost of being a significant institution or a less significant one
Clarification We would like the ECB to address the differential between the incremental regulatory burden of being in the SSM versus the on-going regime for ‘less significant’ institutions which would continue to be regulated by the NCA. It is not clear at this point what exactly will be involved over and above current requirements, in being a SSM regulated institution. It is also not clear what practical difference it will be for an institution which remains outside the SSM. (For instance, will the NCAs
9
follow ECB/SSM practice to such an extent that there is no practical difference.)
Choose one option
Choose one option
Choose one option
Choose one option
Choose one option
Choose one option
Choose one option
10
PUBLIC CONSULTATION
DRAFT ECB SSM FRAMEWORK REGULATION
TEMPLATE FOR COMMENTS
Contact details (will not be published)
Mr Ms
First name Guido Surname Ravoet
Institution European Banking Federation E-mail address [email protected] Telephone number 3225083711
Please tick here if you do not wish your personal data to be published.
Please separate your comments per issue, citing the relevant article of the draft Framework Regulation where appropriate and indicating whether you are proposing an amendment, clarification or a deletion. If you require more space for your comments, please copy page 2.
1
PUBLIC CONSULTATION
DRAFT ECB SSM FRAMEWORK REGULATION
TEMPLATE FOR COMMENTS
Name European Banking Federation Country Belgium
COMMENTS ON THE DRAFT ECB SSM FRAMEWORK REGULATION
Issue Article Comment Concise statement why your comment should be taken on board
Definition of supervisory procedures
2 Clarification a) Please clarify if local public holidays will be taken into account as a non-working day.
b) Supervisory procedures (definition no. 24); the text should more clearly state when supervisory procedures begin. It must be upfront clear when informal communication between the entity and supervisory turns into formal acts.
c) What is meant by legal act of general application?
NCA/NDA use of national powers
22 Clarification How will the ECB guarantee a level playing field where it instructs NCAs/NDAs to exercise national powers to enforce ECB tasks, as national powers may differ (substantially)?
2
Administrative Board of Review
25 Amendment a) We suggest to include a definition of Administrative Board of Review in the Framework Regulation.
b) A maximun timeframe should be set, as it is the case winthin CRD (3 or 6 months elapsed time for decisions, e.g. submission of internal models for approval). In the absence of supervisory reaction within the maximum timeframe the request should be considered as accepted.
Lack of legal certainty 29 Amendment It is stated in paragraph 3 that the ECB may set the time limits. This will create legal uncertainty. The ECB should not have discretionary powers to set the time limits. This paragraph should be adjusted to provide clear time limits.
Adjustment of criteria for size
52 Amendment Legal seperation is not mentioned in this article as one of the options as a change in circumstances. this option should be inserted into the paragraph.
Suitability of managers 93 Amendment 93(2) states that the ECB shall (also) have the supervisory powers that NCAs have under national law, in addition to Union law. This suggests an extension of the authority to ‘pure’ national law that isn’t based on EU law. We doubt whether this is intended effect of this wording, as it may go beyond the intended scope of ECB authority. It would be better to delete the phrase “and national law”, or to clarify what is meant exactly.
Articles 93 and 94 deal with the suitability of management bodies, but no clarification is given on to whom requests for vetting are to be directed.
Does this mean that national administrative law will apply? How will ECB ensure a level playing field between countries? Will ECB (or maybe EBA) develop common standards? Will ECB aim for mutual recognition of approvals?
121 Clarification Is it possible that the Framework Regulation superseeds the SSM Regulation? What happens in case
3
of overlap or inconsistencies?
137 Amendment The FR states that proceeds from penalties shall be the ECB’s property. We assume that these proceeds cannot be used by the ECB to carry out its tasks with regard to maintaining the euro's purchasing power and price stability in the euro area (i.e. monetary policy) but the text or explanation does not specify this. We propose to amend the text that the proceeds will be added to the budget meant in par. 29 of the SSM Regulation.
Ne bis in idem 142 Clarification Why the addition “without prejudice to national law”? If an obstruction forms a breach of 18(7) SSM, and the ECB imposes sanctions on the basis of that article, then a potential national sanction would conflict with the ne bis in idem principle.
Sanctions Part X Amendment Part X could be drafted more accurately. It should clearly specify the applicable regime considering the following criteria: (i) regulation that is breached (directly applicable Union law, national law transposing a directive, national law exercising options of applicable Union law, national law not transposing any directive and not exercising options of applicable Union law, or ECB regulations and decisions), (ii) type of supervised entity (significant or less significant), (iii) addressee of the penalty (legal entity or natural person), and (iv) type of penalty (pecuniary or non-pecuniary). In particular, it would be advisable to clarify the regime applicable to a breach of national law exercising options of applicable Union law.
Joint Supervisory Teams
6 Clarification We would like to have clarifications if in those countries where the NCA is not the central bank, representatives of both authorities (the central bank and the institution in charge of supervision) will be members of JST.
On-site audit 144 Clarification We would appreciate more clarity on the mechanisms adopted by ECB to ensure consistency in auditing methodology and procedures, above all when the head of the inspection team is not an ECB member.
4
General question Clarification On a general note, while we fully support the centralization of prudential supervision at the ECB level as a mean to further integrate the Eurozone banking system, we would like to highlight the importance of transitional arrangements and procedures between the ECB and NCAs in order to make sure that the functioning of the SSM banking system is not hampered until the ECB system becomes fully operational.
"ECB may request an NCA to prepare a draft decision"
91 Amendment It is suggested that the term "draft decision" is replaced by the word "recommendation" i.e. an NCA may submit a recommendation to ECB as the ECB is the ultimate decision maker. Otherwise there may be consistency and credibility issues with regard to the decision making process.
Administrative penalties
126 Clarification Will the materiality impact of a breach be taken into account when deciding upon an administrative penalty? Will the co-operation of the supervised entity be taken into consideration when deciding an administrative penalty?
Ad-hoc requests for information
139 Clarification In situations where the supervised entity does not have information in the format requested by the ECB, will the ECB accept best available information or best estimates?
Requests for information at recurring intervals
141 Clarification In situations where the supervised entity does not have information in the format requested by the ECB, will the ECB accept best available information or best estimates?
Duty of transfer of requests
21 Amendment Suggestion for amendment article 21a new:
1. An administrative authority (NDA/NCA/ECB/FSA) shall send documents which manifestly come within the competence of another administrative authority to such authority without delay, while simultaneously informing the sender.
2. An administrative authority shall return to the sender as soon as possible documents which are not
5
intended for it and are also not passed on to another administrative authority.
