Commission Delegated Regulation (EU) 2019/348Show full title

Article 1 U.K. Quantitative assessment for credit institutions

1. Competent authorities and resolution authorities shall assess the impact of the failure of a credit institution on financial markets, on other institutions or on funding conditions on the basis of a total quantitative score calculated in accordance with Annex I. They shall do so on a regular basis and at least every two years.

2. A credit institution with a total quantitative score equal to or higher than 25 basis points shall be regarded as an institution the failure of which would be likely to have a significant negative effect on financial markets, other institutions or funding conditions.

3. Competent and resolution authorities may raise or lower the threshold referred to in paragraph 2 within the range of 0 to 105 basis points. Competent and resolution authorities shall keep the amended threshold under regular review.

4. Where the indicator values of Annex I are not available, the assessment referred to in paragraph 1 shall be made on the basis of proxies correlated to the greatest extent possible with the indicators as specified in Annex III.

5. Where a credit institution does not exceed the threshold specified in Article 5(a)(4) of Implementing Regulation (EU) No 680/2014 and does not submit Template 20 of that Regulation, competent and resolution authorities may assign a value of zero to the relevant indicators specified in Annex III.

6. Where the total assets of a credit institution do not exceed 0,02 % of the total assets of all credit institutions authorised and, where relevant data are available, of branches established in the Member State, including Union branches, competent and resolution authorities may, without applying paragraphs 1 to 5, establish that the failure of that credit institution would not be likely to have a significant negative effect on financial markets, other institutions or funding conditions, unless that would not be justified on the basis of Article 2.

7. Where a credit institution has been identified as a G-SII or an O-SII under Article 131(1) of Directive 2013/36/EU or classified as Category 1 on the basis of the guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) issued in accordance with Article 107(3) of that Directive, competent and resolution authorities may, without applying paragraphs 1 to 5 of this Article, establish that the failure of that credit institution would be likely to have a significant negative effect on financial markets, other institutions or funding conditions. The relevant indicator values for those institutions shall, in any event, still be taken into account for determining the aggregate amount referred to in point 2 of Annex I, and for determining the total assets of all credit institutions authorised in the Member State for the purpose of paragraph 6.

Article 2 U.K. Qualitative assessment for credit institutions

1. Where, pursuant to Article 1, a credit institution is not regarded as an institution the failure of which would be likely to have a significant negative effect on financial markets, on other institutions or on funding conditions, competent and resolution authorities shall assess the impact of that credit institution's failure on financial markets, other institutions or funding conditions on a regular basis and at least every two years and having regard to, at least, all of the following qualitative considerations:

(a) the extent to which the credit institution performs critical functions in one or more Member States;

(b) whether the credit institution's covered deposits would exceed the available financial means of the relevant deposit guarantee scheme and the deposit guarantee scheme's capacity to raise extraordinary ex post contributions, as referred to in Article 10 of Directive 2014/49/EU of the European Parliament and of the Council(1);

(c) whether the credit institution's shareholding structure is highly concentrated, highly dispersed or not sufficiently transparent in a way that could negatively impact the availability or timely implementation of the institution's recovery or resolution actions;

(d) whether the credit institution that is a member of an IPS, as referred to in Article 113(7) of Regulation (EU) No 575/2013 of the European Parliament and of the Council(2), provides critical functions to other IPS members, including clearing, treasury or other services;

(e) whether the credit institution is affiliated to a central body, as referred to in Article 10 of Regulation (EU) No 575/2013, and the mutualisation of losses among affiliated institutions would constitute a substantive impediment to normal insolvency proceedings.

2. The assessment referred to in paragraph 1 shall be performed independently by competent and resolution authorities having regard to the objectives pursued by recovery and resolution planning.

3. The assessment referred to in paragraph 1 may be performed for a category of credit institutions where the relevant competent or resolution authority determines that two or more credit institutions have similar characteristics in terms of all of the qualitative considerations set out in paragraph 1.

Article 3 U.K. Quantitative assessment for investment firms

1. Competent and resolution authorities shall assess the impact of the failure of an investment firm on financial markets, other institutions or funding conditions on a regular basis and at least every two years and on the basis of:

(a) the total quantitative score calculated based on the indicators referred to in Annex II;

(b) the weights assigned to those indicators by competent and resolution authorities.

2. The values of the indicators shall be determined on the basis of the indicators as specified in Annex III. Where the indicator values of Annex II are not available, the assessment referred to in paragraph 1 shall be made on the basis of proxies correlated to the greatest extent possible with the indicators as specified in Annex III. Where proxies are not available, competent and resolution authorities may replace the indicators referred to in Annex II with other relevant indicators.

3. The threshold for the total quantitative score shall be set by competent and resolution authorities.

4. An investment firm with a total quantitative score equal to or higher than the threshold referred to in paragraph 3 shall be regarded as an institution the failure of which would be likely to have a significant negative effect on financial markets, other institutions or funding conditions.

5. Where an investment firm has been identified as a G-SII or an O-SII in accordance with Article 131(1) of Directive 2013/36/EU or has been classified as Category 1 on the basis of the guidelines on common procedures and methodologies for SREP issued in accordance with Article 107(3) of that Directive, competent and resolution authorities may, without applying paragraphs 1 to 4 of this Article, establish that the failure of that institution would be likely to have a significant negative effect on financial markets, other institutions or funding conditions.

Article 4 U.K. Qualitative assessment for investment firms

1. Where an investment firm is not regarded as an institution the failure of which would be likely to have a significant negative effect on financial markets, other institutions and funding conditions pursuant to Article 3, competent and resolution authorities shall assess the impact of that investment firm's failure on financial markets, other institutions or funding conditions on a regular basis and at least every two years and having regard to, at least, all of the following qualitative considerations:

(a) the extent to which the investment firm performs critical functions in one or more Member States;

(b) whether the investment firm's shareholding structure is highly concentrated, highly dispersed, or not sufficiently transparent in a way that could negatively impact the availability or timely implementation of the institution's recovery or resolution actions;

(c) whether an investment firm that is a member of an IPS, as referred to in Article 113(7) of Regulation (EU) No 575/2013, provides critical functions to other IPS members, including clearing, treasury or other services;

(d) whether the majority of the investment firm's clients are retail or professional;

(e) the extent to which money and financial instruments held by the investment firm on its clients' behalf would not be fully protected by an investor-compensation scheme as referred to in Directive 97/9/EC of the European Parliament and of the Council(3);

(f) whether the investment firm's business model is complex, including the scale of its investment activities.

2. The assessment referred to in paragraph 1 shall be performed independently by competent and resolution authorities having regard to the objectives pursued by recovery and resolution planning.

Article 5 U.K. Institutions belonging to groups

1. For an institution that is part of a group, the assessments referred to in Articles 1 to 4 shall be made at the level of the parent undertaking in the Member State where the institution has been authorised.

2. By way of derogation from paragraph 1, for an institution that is part of a group subject to consolidated supervision pursuant to Articles 111 and 112 of Directive 2013/36/EU, the assessments referred to in Articles 1 to 4 of this Regulation shall be made at the following levels:

(a) the level of the Union parent undertaking;

(b) the level of each parent undertaking in a Member State or, where there is no parent undertaking in a Member State, the level of each stand-alone subsidiary of the group in a Member State.

3. Institutions that are part of a group subject to consolidated supervision pursuant to Articles 111 and 112 of Directive 2013/36/EU shall be regarded as institutions the failure of which would be likely to have a significant negative effect on financial markets, other institutions or funding conditions, where any of the following apply at any of the levels referred to in points (a) and (b) of paragraph 2 of this Article:

(a) the institution has a total quantitative score that is equal to or exceeds the threshold set by competent and resolution authorities pursuant to Article 1(3) or Article 3(3);

(b) the criteria in Article 2(1) or Article 4(1) are satisfied.

4. Paragraphs 2 and 3 shall not apply to institutions that are subject to a recovery plan as referred to in Article 8(2)(b) of Directive 2014/59/EU.

5. Competent and resolution authorities shall coordinate the assessments referred to in this Article and exchange all necessary information within the framework of supervisory and resolution colleges.

Article 6 U.K. Assessment of promotional banks

Competent and resolution authorities may regard promotional banks, as defined in Article 3(27) of Commission Delegated Regulation (EU) 2015/63(4), as institutions the failure of which would not be likely to have a significant negative effect on financial markets, other institutions or funding conditions, without applying paragraphs 2 and 7 of Article 1 and Article 5(3), where the qualitative considerations of Article 2(1) are not satisfied at any of the following levels:

(a)

the level of the Union parent undertaking;

(b)

the level of each parent undertaking in a Member State or, where there is no parent undertaking in a Member State, the level of each stand-alone subsidiary of the group in a Member State.

Article 7 U.K. Assessment of credit institutions subject to an orderly winding-up process

Competent and resolution authorities may regard credit institutions that are subject to an orderly winding-up process as institutions the failure of which is not likely to have a significant negative effect on financial markets, other institutions or funding conditions, without the application of paragraphs 2 and 7 of Article 1 and Article 5(3), where the qualitative considerations of Article 2(1) are not satisfied at any of the following levels:

(a)

the level of the Union parent undertaking;

(b)

the level of each parent undertaking in a Member State or, where there is no parent undertaking in a Member State, the level of each stand-alone subsidiary of the group in a Member State.

Article 8 U.K. Assessment by competent and resolution authorities from the same Member State

Taking into account different purposes of recovery and resolution planning, competent and resolution authorities from the same Member State may reach different conclusions with regard to the application of Articles 1 to 4, 6 and 7, in which case they shall regularly assess whether those different conclusions remain justified.

Article 9 U.K. Entry into force

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 25 October 2018.

For the Commission

The President

Jean-Claude Juncker