Featured Product

    ESAs Publish Reporting Templates for Financial Conglomerates

    January 18, 2021

    ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU. The standards are intended for the supplementary supervision of credit institutions, insurance undertakings, and investment firms under the Financial Conglomerates Directive or FICOD. The implementing standards provide the foundation for harmonization of reporting, with one set of templates, along with the common definitions and instructions to fill in the templates, as set out in the Annex to the implementing standards. As mentioned in the report of ESAs, the implementing technical standards will enter into force on January 01, 2022.

    The draft implementing standards set out harmonized templates for the reporting of intra-group transactions and risk concentration by financial conglomerates. For the purpose of the reporting, the Financial Conglomerates Directive does not specify a default threshold for the determination of the significance of risk concentrations to be reported. The threshold may be introduced by the coordinator, in coordination with the relevant competent authorities and the conglomerate. The published Templates FC07 and FC08 are based on all the exposures of the conglomerate. The coordinator may define the number of items reported under the risk concentration templates. The decision regarding the frequency of the reporting (for example, quarterly, semi-annually, yearly) is within the remit of coordinator and should be notified to the financial conglomerate in due course. Yet, as required by the Directive, the reporting shall be addressed at least annually to the coordinator in an electronic format. For annual reporting, reference date should be December 31, unless the financial conglomerate uses a different reporting date. 

    The harmonized templates aim to align reporting under the Financial Conglomerates Directive to enhance supervisory convergence on group-specific risks, particularly the contagion risk. The mixed financial holding companies are prone to contagion effects and defaults arising from undertakings of the group and spread risks within the financial conglomerate. Significant transactions between the mixed financial holding companies and non-regulated entities are, therefore, an important element for the ability of the supervisor to identify at a group-wide level the possible contagion effects, circumvention of sectoral rules, or conflicts of interests within financial conglomerates. The intra-group transactions that would need to be reported are those that are significant between:

    • Regulated entities of different sectors belonging to the same financial conglomerate
    • Regulated entities of the same sector belonging to the same financial conglomerate
    • Regulated entity and a non-regulated entity belonging to the same financial conglomerate
    • Regulated entity and any natural or legal person linked to the undertakings of the financial conglomerate by close links

    The harmonization will also increase comparability among financial conglomerates of different member states, thus improving supervisory consistency. The harmonized templates are expected to help coordinators and other relevant competent authorities to identify relevant issues and exchange information more efficiently. The draft implementing standards have been submitted to EC for endorsement in the form of a delegated regulation. Following the EC endorsement, the standards will be subject to non-objection by the Parliament and the Council of the European Union.

     

    Related Links

    Effective Date: January 01, 2022

    Keywords: Europe, EU, Banking, Insurance, Securities, Reporting, Intra-Group Transaction, FICOD, Risk Concentration, Solvency II, CRR, IFR, ESAs

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582