EBA published the final guidelines on supervision of significant branches. Prompted by the increasing demand to establish branches across the EU, these guidelines are designed to facilitate cooperation and coordination between the competent authorities involved in the prudential supervision of significant branches of EU institutions established in another member state. These guidelines will facilitate cooperation and coordination of supervision of the largest and systemically important branches, the so-called “significant-plus” branches.
The final guidelines provide a framework for the identification of significant-plus branches through a common assessment performed by home and host competent authorities of the branches' relevance to the institution or the financial stability in the host member state. Furthermore, the final guidelines outline a coordinated approach to their supervision and the assessment of recovery planning facilitated through the framework of colleges of supervisors. The final guidelines propose a set of principles that competent authorities should comply with in the performance of risk assessments of the institution having such significant-plus branches, such as exchange of supervisory intelligence and information, planning of supervisory activities, on-the-spot checks and inspections, application of supervisory and precautionary measures, and allocation of tasks between authorities.
The final guidelines do not interfere with the tasks and responsibilities conferred on the consolidating supervisor and the home and host competent authorities by the Capital Requirements Directive (CRD) and Bank Recovery and Resolution Directive (BRRD). They also do not limit the freedom of institutions to establish branches in other member states, nor do they create additional obligations to institutions in terms of Internal Capital Adequacy Assessment Process (ICAAP) and Internal Liquidity Adequacy Assessment Process (ILAAP) or reporting.
Related Link: Guidelines on Supervision of Significant Branches (PDF)
Keywords: Europe, EU, Banking, Significant Branches, CRD, BRRD, Systemic Risk, EBA
Sam leads the quantitative research team within the CreditEdge™ research group. In this role, he develops novel risk and forecasting solutions for financial institutions while providing thought leadership on related trends in global financial markets.
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