Featured Product

    ECB Offers Opinion on Estonian Law Transposing CRD5, CRR2, and BRRD2

    February 26, 2021

    ECB published an opinion on the liability and audit of the national supervisory authority, the establishment of small credit institutions, and requirements on key function holders of credit institutions in Estonia. ECB published its opinion in response to a request from the Ministry of Finance of the Republic of Estonia for an opinion on a draft law amending the Laws on banking, Financial Supervisory Authority, financial crisis prevention and resolution, and the National Audit Office (draft law). The primary purpose of the draft law is to transpose into Estonian law amendments to the Union banking legislation, including provisions of the revised Capital Requirements Directive (CRD5), Capital Requirements Regulation (CRR2), Bank Recovery and Resolution Directive (BRRD2), and Single Resolution Mechanism Regulation (SRMR2).

    In its opinion, ECB acknowledged that the provisions of the draft law enabling credit institutions to be established with an initial capital between EUR 1 million and EUR 5 million arise out of the discretion granted to member states under Article 12(4) of CRD4 (2013/36/EU). Thus, when exercising the discretion provided for in Article 12(4), member states must establish a special category of credit institutions to which the reduced initial capital requirement applies. ECB welcomed the specification that, under the draft law, such credit institutions may not provide investment services and that the Estonian Financial Supervisory Authority (Estonian FSA)  has the power to determine that such credit institutions may not provide financial services in other countries either via a branch or through the provision of cross-border services.

    In addition, ECB welcomed the extension of the requirements applicable to managers of credit institutions to key function holders of credit institutions, as this contributes to the sound and prudent management of credit institutions. However, neither the existing provisions of the Estonian law, nor the draft law, establish deadlines for the Estonian FSA or ECB to carry out the assessment of the suitability of the members of the management body and key function holders. In that regard, consideration could be given to introducing a possible maximum assessment period. Other key points highlighted in the ECB opinion include the following:

    • Financial independence of Bank of Estonia—ECB welcomed the clarifications introduced by the draft law, specifying that the liability of Estonian FSA for a violation of rights and damage caused in conducting financial supervision and performing resolution functions must be determined on the basis of, and pursuant to, the procedure provided for in the Law on state liability. ECB would welcome further clarification in the draft law that in relation to such damage Bank of Estonia is not liable under the Law on state liability, or that the State has sole liability. Under the draft law, it is not expressly clear that Bank of Estonia is excluded from such liability.
    • Auditing of the Estonian FSA—ECB notes that, under the draft law, the audit by the National Audit Office of the Estonian FSA’s management is limited to the performance of management in relation to the credit institutions and investment firms under its supervision. Regarding the disclosure to the National Audit Office of confidential data originating from ECB, other resolution or competent authorities or from SRB, ECB notes that, under the draft law, such disclosure is permitted only with the consent of the relevant institution and for the purposes specified by such institution. ECB welcomed these conditions in relation to the data originating from ECB.

     

    Related Link: Opinion (PDF)

     

    Keywords: Europe, EU, Estonia, Banking, CRR2, CRD5, BRRD2, SRMR2, Basel, Regulatory Capital, Investment Firms, Opinion, Estonian FSA, Resolution Framework, ECB

    Featured Experts
    Related Articles
    News

    HKMA Finalizes Policy Modules on Group-Wide Approach and Remuneration

    The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.

    July 29, 2021 WebPage Regulatory News
    News

    EBA Guide to Monitor Threshold for Intermediate Parent Undertakings

    The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).

    July 28, 2021 WebPage Regulatory News
    News

    PRA Finalizes Approach to Supervision of International Banks

    In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.

    July 26, 2021 WebPage Regulatory News
    News

    FCA Issues PS21/9 on Implementation of Investment Firms Regime

    The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.

    July 26, 2021 WebPage Regulatory News
    News

    EBA Proposes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.

    July 26, 2021 WebPage Regulatory News
    News

    IOSCO Proposes Recommendations on ESG Ratings and Data Providers

    The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.

    July 26, 2021 WebPage Regulatory News
    News

    ESMA Group Issues Recommendations on RFR Switch in Interdealer Market

    The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.

    July 26, 2021 WebPage Regulatory News
    News

    ECB Study Assesses Impact of Basel III Finalization Package

    The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.

    July 26, 2021 WebPage Regulatory News
    News

    ISDA Finds FRTB Results in Higher Capital Charges for Carbon Trading

    The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.

    July 26, 2021 WebPage Regulatory News
    News

    PRA Updates Remuneration Policy Statement Templates and Tables

    The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.

    July 26, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7311