The Capital Requirements (Amendment) Regulations 2012

Citation and commencement

1.  These Regulations may be cited as the Capital Requirements (Amendment) Regulations 2012 and come into force on 16th April 2012.

Amendment of the Capital Requirements Regulations 2006

2.  The Capital Requirements Regulations 2006(1) are amended as follows.

3.  In regulation 1(2) (interpretation)—

(a) in the definition of “banking consolidation directive” for “by Directive 2009/111/EC” substitute “on 24th November 2010 by Directives 2010/76/EU(2) and 2010/78/EU(3)”;

(b) in the definition of “capital adequacy directive” for “by Directive 2009/111/EC” substitute “on 24th November 2010 by Directives 2010/76/EU and 2010/78/EU”;

(c) after the definition of “EEA parent financial holding company” insert—

““ESRB” means the European Systemic Risk Board established by Regulation (EU) No. 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board(4);”; and

(d) after the definition of “proposal” insert—

““regulation establishing EBA” means Regulation (EU) No. 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority)(5);”.

4.  In regulation 3 (applications to the Authority as EEA consolidated supervisor) after paragraph (3) insert—

“(4) If, by the end of the six month period referred to in paragraph (2)(b), any of the relevant competent authorities has referred the matter to EBA in accordance with Article 19 of the regulation establishing EBA, the Authority must defer its decision and await any decision that EBA may take in accordance with Article 19(3) of that regulation on the Authority’s decision on the application.

(5) If EBA takes a decision in accordance with Article 19(3) of the regulation establishing EBA, the Authority must take its decision on the application in conformity with the decision of EBA.”.

5.  In regulation 10A (the Authority’s duties as an EEA consolidated supervisor: joint decision on level of own funds)—

(a) in paragraphs (5) and (6)(a) and (b), for “the Committee of European Banking Supervisors” substitute “EBA”;

(b) after paragraph (6) insert—

“(6A) If, by the end of the four month period referred to in paragraph (6), any of the relevant competent authorities has referred the matter to EBA in accordance with Article 19 of the regulation establishing EBA, the Authority must defer its decision and await any decision that EBA may take in accordance with Article 19(3) of that regulation on the Authority’s decision on the matters referred to in paragraph (2).

(6B) If EBA takes a decision in accordance with Article 19(3) of the regulation establishing EBA, the Authority must take its decision on the matters referred to in paragraph (2) in conformity with the decision of EBA.”;

(c) in paragraph (7) after “paragraph (6)(a)” insert “or (6B)”; and

(d) in paragraph (8) for “(2) and (6)” substitute “(2), (6) and (6A)”.

6.  In regulation 10B (the Authority’s duties as an EEA consolidated supervisor: joint decision on level of own funds)—

(a) in paragraphs (4) and (5)(a) and (b), for “the Committee of European Banking Supervisors” substitute “EBA”;

(b) after paragraph (5) insert—

“(5A) If, by the end of the four month period referred to in paragraph (5), any of the relevant competent authorities has referred the matter to EBA in accordance with Article 19 of the regulation establishing EBA, the Authority must defer its decision and await any decision that EBA may take in accordance with Article 19(3) of that regulation.

(5B) If EBA takes a decision in accordance with Article 19(3) of the regulation establishing EBA, the Authority must take its decision on the matters referred to in paragraph (5)(a) in conformity with the decision of EBA.”; and

(c) in paragraph (7) for “(3) and (5)” substitute “(3), (5) and (5A)”.

7.  In regulation 11 (the Authority’s duties as an EEA consolidated supervisor: co-ordination and co-operation requirements) after paragraph (3) insert—

“(4) Where a relevant competent authority fails to co-operate with the Authority to the extent required, the Authority may refer the matter to EBA, which may act in accordance with Article 19 of the regulation establishing EBA.”.

8.  In regulation 12A (the Authority’s duties as an EEA consolidated supervisor: requirement to establish a college of supervisors)—

(a) in paragraph (4) after “co-operate closely with” insert “EBA and”;

(b) in paragraph (7)—

(i) in sub-paragraph (a) for “the Committee of European Banking Supervisors” substitute “EBA”; and

(ii) in sub-paragraph (b) for “the Committee” substitute “EBA”.

9.  In regulation 14(1) (the Authority’s duties as an EEA or national consolidated supervisor: obligations in emergency situations) after sub-paragraph (a) insert—

“(aa) EBA;

(ab) ESRB;”.

10.  In regulation 16A (significant branches) after paragraph (5) insert—

“(6) If, by the end of the first two month period referred to in paragraph (5), any of the relevant competent authorities has referred the matter to EBA in accordance with Article 19 of the regulation establishing EBA, the Authority must defer its decision and await any decision that EBA may take in accordance with Article 19(3) of that regulation on the Authority’s decision on the designation of the branch as significant.

(7) If EBA takes a decision in accordance with Article 19(3) of the regulation establishing EBA, the Authority must take its decision on the designation of the branch as significant in conformity with the decision of EBA.”.

11.  In regulation 16E (the Authority’s general duties) in paragraphs (b) and (c) for “the Committee of European Banking Supervisors” substitute “EBA”.

12.  In regulation 16F (the Bank of England’s general duties)—

(a) in paragraph (b) after “including” insert “a situation as defined in Article 18 of the regulation establishing EBA or a situation of”; and

(b) after “the EEA consolidated supervisor” insert “and EBA”.

13.  After regulation 16F (the Bank of England’s general duties) insert—

“The Authority’s duties in relation to employee remuneration

16G.   The Authority must—

(a) use the information collected in accordance with the criteria for disclosure established in paragraph 15(f) of Part 2 of Annex XII of the banking consolidation directive to benchmark remuneration trends and practices;

(b) collect the information specified in Article 22(5) of the banking consolidation directive; and

(c) provide EBA with the information referred to in paragraphs (a) and (b).”.

14.  In regulation 26(2) (restriction on disclosure)—

(a) at the end of paragraph (d) delete “or”;

(b) at the end insert—

“(f) requires the credit institution to limit variable remuneration as a percentage of total net revenues where such variable remuneration is inconsistent with the maintenance of a sound capital base; or

(g) requires the credit institution to use net profits to strengthen the capital base.”.

Consequential amendments to primary legislation

15.  Schedule 1 (which amends primary legislation) has effect.

Consequential amendments to secondary legislation

16.  Schedule 2 (which amends secondary legislation) has effect.

Michael Fabricant

Angela Watkinson

Two of the Lords Commissioners of Her Majesty’s Treasury

22nd March 2012