EBA欧洲银行-JC-RTS-2013-0128Draft-RTS-on-consistent-application-of-Article-6-2_FICOD29_62页_1mb

Summary of JC FINAL Draft Regulatory Technical Standards (RTS) on the Consistent Application of Calculation Methods under Article 6(2) of the Financial Conglomerates Directive

Core Content

The JC FINAL draft Regulatory Technical Standards (RTS) aim to ensure a consistent application of calculation methods for determining the supplementary capital adequacy requirements of financial conglomerates under Article 6(2) of Directive 2002/87/EC (FICOD) and Regulation (EU) No 575/2013 (CRR). These standards are developed by the European Supervisory Authorities (ESAs) — EBA, ESMA, and EIOPA — through the Joint Committee, in accordance with the mandates from Article 49(6) of the CRR and Article 21a(3) of the FICOD.

The RTS define three calculation methods for financial conglomerates:

1. Method 1: Accounting consolidation method
2. Method 2: Deduction and aggregation method
3. Method 3: Combination of Method 1 and Method 2

These methods are designed to eliminate double-counting of capital instruments, ensure the transferability of own funds, and accurately reflect the availability of capital to absorb losses within the conglomerate.

Main Features of the RTS

1. Elimination of Multiple Gearing and Intra-Group Own Funds Creation

• Own funds created through intra-group transactions are not eligible for inclusion in the calculation of capital adequacy at the conglomerate level.
• This ensures consistent capital coverage and avoids multiple gearing, where capital is counted more than once.

2. Transferability and Availability of Own Funds

• Own funds exceeding sectoral solvency requirements can only be included in the conglomerate’s capital calculation if they are transferable across entities within the group.
• This ensures that only available capital is considered for absorbing losses.

3. Sector-Specific Own Funds

• Own funds are eligible only for the sector in which they are defined.
• Certain capital items (e.g., Common Equity Tier 1, Additional Tier 1, Tier 2) are excluded from being used for cross-sector risk coverage.

4. Deficit Coverage at Conglomerate Level

• In the case of a deficit in own funds, only capital items that are eligible under both banking and insurance sector rules may be used to cover the deficit.
• This ensures that the conglomerate has a common capital buffer that is applicable across sectors.

5. Consistency and Uniformity

• Regulated entities and mixed financial holding companies must apply the same calculation method consistently over time.
• Method 3 is only applicable when neither Method 1 nor Method 2 is feasible, and its use must be permitted by competent authorities.

Technical Calculation Methods

Method 1: Accounting Consolidation Method

• Own funds are calculated based on consolidated accounts of the group.
• Eliminates intra-group capital items to avoid double-counting.
• Applies sectoral solvency rules for the calculation of own funds.

Method 2: Deduction and Aggregation Method

• Own funds are calculated based on the accounts of solo entities.
• Deducts the book value of participations in other group entities.
• Includes proportional share treatment for own funds and solvency requirements.
• A notional solvency requirement and notional own funds are calculated for non-regulated entities.
• The closest financial sector is determined based on the range of activities and proportion of operations.

Method 3: Combination of Methods 1 and 2

• Used only when Method 1 or 2 is not feasible.
• Requires permission from competent authorities.
• Must be applied consistently across financial conglomerates.

Key Regulatory Context

• The RTS are supplementing the Financial Conglomerates Directive (FICOD) and the Capital Requirements Regulation (CRR).
• They are based on sectoral solvency regimes established in the EU, including Solvency II and CRR.
• The RTS will apply from the date of full entry into force, after the implementation of CRR and Solvency II.
• National implementations of the capital adequacy calculation will be used in areas not yet harmonized by this Regulation.

Stakeholder Engagement

• The ESAs conducted public consultations and analysed stakeholder feedback.
• They considered cost-benefit analyses and impact assessments.
• The opinion of stakeholder groups was requested and taken into account in the drafting process.

Final Provisions

• The RTS will enter into force 20 days after publication in the Official Journal of the European Union.
• They are binding and directly applicable in all EU Member States.
• Certain provisions (e.g., Articles 5, 6(2), 8, 9(1), 14(6) and 14(10)) will apply from the date of application of Article 309(1) of Directive 2009/138/EC.