The European Banking Authority (EBA) published its peer review report on the prudential assessment of qualifying holdings. The review aimed to assess the competent authorities’ application of the European Supervisory Authorities (ESAs) guidelines on the prudential assessment of the acquisition of qualifying holdings. The guidelines define common procedures based on the assessment criteria laid down in the European Union (EU) legislative framework that establishes how acquisitions and increases of qualifying holdings by natural or legal persons in financial institutions should be assessed. According to the peer review, the competent authorities have largely or fully applied the guidelines, which have significantly contributed to the convergence of assessment practices of proposed acquisition or increase of qualifying holdings across EU.
The EBA report presents the Ad hoc Peer Review Committee’s conclusions of the peer review based on the competent authorities' self-assessment of how they apply a selection of the most critical areas of the guidelines. These areas include the notion of acting in concert, significant influence, indirect qualifying holdings, assessment of completeness of the notification and time limits, financial soundness, reputation of the acquirer, and selected aspects relating to the fifth assessment criterion on money laundering/terrorist financing risk. The conclusions illustrated in the EBA report are based on the results of a self-assessment questionnaire addressed to the competent authorities rather than of a full review of the competent authorities’ application of the guidelines.
Based on the peer reviewed findings, the report indicates areas where relevant competent authorities should improve their practices rather than request enforcement measures and the Peer Review Committee reserves the right to request updates on implementation developments. The report also provides early indications as to the areas in which the ESAs guidelines could provide additional guidance to the competent authorities, with a view to fostering convergence of practices. The report also provides early indications as to the areas in which the ESAs guidelines could provide additional guidance to the competent authorities, with a view to fostering convergence of practices. In this regard, the EBA Peer Review Committee suggests that the following improvements could be included in the guidelines:
- Review and enhancement of guidance on the fifth assessment criterion related to money laundering/terrorist financing risk
- Additional guidance on the assessment of large and complex acquisitions, including by—but not limited to—special acquirers like private equity funds, with multiple direct and indirect acquirers or acquirers acting in concert, in order to achieve a more proportionate and efficient assessment. It is also acknowledged that complex transactions with numerous direct and indirect acquirers raise specific challenges for competent authorities, in particular as to the compliance with the strict time limit of two working days set out by Article 22(2) of Capital Requirements Directive (CRD IV) for the assessment of the completeness of the notification
- Review of the guidance on the application of the principle of proportionality
- Review and improvement of the guidance on the content of documents and information to be provided with an application, in order to speed up the pre-application phase, for example in respect of the expectations of the content and assessment of the business plan.
Keywords: Europe, EU, Banking, Peer Review, Qualifying Holdings, CRD IV, Basel, ML/TF Risk, Proportionality, ESAs, EBA
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