ECB Consults on Part 2 of Guide to Assessments of License Applications
ECB launched a public consultation on Part 2 of the guide to assessments of license applications. Part 2 complements the Licensing Guide published in March 2018 and both documents should be read together as one guide. Consultation ends on October 25, 2018. ECB will consider the comments received when finalizing this guide and publish a feedback statement. ECB has made available the draft guide, frequently asked questions (FAQs), and public consultation template on its Banking Supervision website.
Part 2 of the Licensing Guide focuses on the assessment criteria for capital requirements and program of operations, including business plans. While the national competent authorities act as the first point of contact for licensing applications, their assessments are conducted jointly with ECB, which is the competent authority for making the final decision to grant, extend, or withdraw a banking license in the euro area. As part of its evaluation of license applications, ECB assesses capital needs. Therefore, to ensure consistent application of practices within the Single Supervisory Mechanism, Part 2 of the Licensing Guide explains the stance of ECB on the expected capital at the time of authorization. Part 2 also indicates the main topics of interest to supervisors when they assess the program of operations. These include:
- Business model and associated risk profile of a credit institution
- Situation of the credit institution within the economic context,the business environment, and its financial projections
- Clarity and effectiveness of the organizational structure of the institution and its governance arrangements
- Internal control and risk management framework and IT infrastructure of the credit institution
The Licensing Guide is intended as a practical tool to support those involved in the process of authorization and to ensure a smooth and effective procedure and assessment, but it is not legally binding in nature.
Related Links
Comment Due Date: October 25, 2018
Keywords: Europe, EU, Banking, License Applications, CRR, FAQ, ECB
Related Articles
FINMA Approves Merger of Credit Suisse and UBS
The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.
BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks
The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.
MFSA Sets Out Supervisory Priorities, Issues Reporting Updates
The Malta Financial Services Authority (MFSA) outlined its supervisory priorities for 2023
German Regulators Issue Multiple Reporting Updates for Banks
Deutsche Bundesbank published the nationally deactivated validation rules for the German Commercial Code (HGB) users on the taxonomy 3.2, which became valid from December 31, 2022
BCBS Report Examines Impact of Basel III Framework for Banks
The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.
PRA Consults on Prudential Rules for "Simpler-Regime" Firms
Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.