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    MFSA Issues Circular on Amendments to Banking Rule

    March 01, 2021

    MFSA is amending the Banking Rule BR/13 on prudential assessment of acquisitions and increase of shareholdings in credit institutions authorized under the Banking Act 1994. The Rule sets out the criteria to be applied by MFSA in its assessment of a person or persons who intend to acquire or increase a shareholding in a credit institution. The minor amendments being made to the Rule are aimed at rectifying and updating the outdated references while further clarifying certain provisions of the Rule.

    Appendix 1 to the Rule is aimed at providing a list of specific information and documentation that may be requested to be submitted to MFSA for the prudential assessment of acquisitions. MFSA repealed sections of the Appendix that are covered in the regulatory technical standards of EBA, pursuant to Article 8(2) of the Capital Requirements Directive, and replaced such sections with paragraph 1 of Part I of the Appendix that provides details on information to be submitted. Additionally, minor amendments are being made in the section on proportionality, through the introduction of paragraph 18A of the Rule. This paragraph provides that the intensity of the assessment of proposed acquirers shall take into account the likely influence that the proposed acquirer may exercise on the credit institution. With respect to the MFSA opposition of proposed acquisitions, amendments are being made to the Rule to clarify that where the circumstances are well-justified, MFSA shall not oppose the proposed acquisition solely on the basis of the lack of some required information, the absence of which can be justified by the nature of the transaction. 

    The revisions being made to the Rule also provide further clarifications on the MFSA procedure for assessing proposed acquisitions. In assessing indirect acquirers of a credit institution, which are entities already MFSA-licensed, MFSA may limit such assessment to the persons at the top of the corporate control chain. This is clarified through the introduction of Paragraph 32A of the Rule. Additionally, with respect to MFSA's procedure, the amendments to the Rule introduce provisions related to assessments of financial soundness of a proposed acquirer that are made by overseas regulatory authorities. The Rule clarifies the extent to which such assessments by these authorities are taken into consideration by MFSA. These amendments are aimed at ensuring that proposed acquirers are aware of the information that is required to be submitted to MFSA to allow it to assess the proposed acquisition in a complete and timely manner.

     

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    Keywords: Europe, EU, Banking, Banking Rule, Proportionality, Regulatory Technical Standards, CRD, MFSA

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