On Thursday 9 November, the European Banking Authority (EBA) published an opinion addressed to the European Parliament, Council and Commission, flagging up certain ambiguities in the CRD IV-CRR legislative package, which need to be put right in the framework of the current revision of the banking credentials (see EUROPE 11674).
The EBA's opinion first of all points out the ambiguity of certain definitions included in the CRR regulation on the capital requirements applicable to banks, which could be interpreted inconsistently across the EU, thereby bringing in potential differences in the application of the banking rules, the authority explains.
It argues that the definition of “financial institution” in particular raises questions due to the absence of a formal definition of the term “principal activity”. For instance, it is unclear whether there should be a determination on a case-by-case basis or a quantitative criterion should be used, for instance more than 50% of the entity's total activities, the EBA explains.
In a similar vein, the definition of “ancillary services undertaking” also lacks precision. The uncertainty over the interpretation of the terms “owning or managing property” and “managing data processing services” leads to a lack of clarity concerning the treatment of real property leasing companies or data processing services companies, for instance, it observes.
Calling on the institutions to make changes to these definitions, the EBA stresses that clarifications would help to ensure a consistent treatment of the potential risks and their competition conditions.
In its opinion, the EBA furthermore stresses that Annex I to the CRD IV directive listing activities subject to mutual recognition, in other words the activities that banks and financial institutions are authorised to carry out throughout the EU by creating branches or cross-border services, have been largely unchanged for nearly 30 years.
It argues that this annex should be updated to clarify certain terms, such as “money broking”, “commercial information” and “participation in securities issues”, to reflect the new European sectorial measures.
Prudential treatment of 'other financial intermediaries' in the EU. On this plank, the EBA observes that the prudential treatment of other financial intermediaries, in other words entities carrying out financial intermediation activities which are not banks or other types of financial entities, varies considerably between member states. Although some of them apply the requirements set out by the CRD IV-CRR for entities of this kind under their jurisdiction, others apply tailor-made requirements or even no prudential requirements at all, it reports.
For crowdfunding platforms, for instance, some member states have adopted specific national regimes, whilst others have not laid down any prudential requirements, arguing that the European rules already cover such situations to a certain extent, for instance the payment services directive, it explains.
On this last point, the EBA makes no recommendation as to the need for additional intervention at EU level, but states that these activities should continue to be closely monitored.
On the same day, the EBA also launched a public consultation on its draft regulatory technical standards (RTS) on banking consolidation methods, which also calls for the stakeholders' views on matters raised in this opinion. The consultation will run until 9 February 2018. (Original version in French by Marion Fontana)