(This note is not part of the Regulations)
These Regulations implement, in part, Directive 2006/48/EC of the European Parliament and of the Council relating to the taking up and pursuit of the business of credit institutions (the Banking Consolidation Directive) and Directive 2006/49/EC of the European Parliament and of the Council on the capital adequacy of investment firms and credit institutions (the Capital Adequacy Directive). These two Directives recast and replace Directives 2000/12/EC and 93/6/EEC.
A Transposition Table setting out how the elements of the Banking Consolidation Directive and the Capital Adequacy Directive will be transposed into UK law is available from the Financial Stability and Regulatory Policy Team, HM Treasury, 1 Horseguards Road, London, SW1A 2HQ. The Transposition Table is also available on HM Treasury's website (www.hm-treasury.gov.uk).
A Regulatory Impact Assessment has been produced for this instrument and has been deposited in both Houses of Parliament. It is available either from the above address or on HM Treasury's website.
The Banking Consolidation Directive and Capital Adequacy Directive introduce a new prudential supervisory framework in the European Union which reflects the international Basel 2 rules on capital measurement and capital standards agreed by the Basel Committee on Banking Supervision in 2004. The requirements contained in the Banking Consolidation Directive and the Capital Adequacy Directive apply to all credit institutions and those investment firms defined by Article 4(1) of the Market in Financial Instruments Directive (2004/39/EC).
The Banking Consolidation Directive includes provisions regarding: certain procedural requirements for the prudential supervision of pan-European groups (Article 129); co-operation between competent authorities (Article 130 – 132) and the recognition of external credit assessment institutions by the competent authorities so that their credit assessments may be used to calculate capital requirements (Articles 81, 82, 97, and 98 and parts of Annexes VI and IX). These Regulations impose obligations on the Financial Services Authority, the competent authority for the United Kingdom, for the purpose of implementing these requirements.
Part 2 of these Regulations makes provision in relation to applications by pan-European groups for permission to calculate their capital requirements in accordance with one of the advanced methods allowed by the Banking Consolidation Directive.
Part 3 of the Regulations makes provision for co-operation between competent authorities.
Part 4 of the Regulations makes provision for the Financial Services Authority to recognise External Credit Assessment Institutions (ECAIs) as eligible, so that their credit assessments may be used by credit institutions and those investment firms defined by Article 4(1) of the Market in Financial Instruments Directive to calculate their capital requirements.
Part 5 of the Regulations contains miscellaneous provisions relating to restrictions on disclosure required by Article 136 of the Banking Consolidation Directive (regulation 26), functions of the Financial Services Authority (regulation 27) and the service of notices (regulation 28).
Schedules 1 and 2 to the Regulations contain provisions relating to the recognition of ECAIs. Schedules 3 to 6 contain amendments to primary and secondary legislation made in consequence of the adoption of the Banking Consolidation Directive and the Capital Adequacy Directive.