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DRAFT REPORT (COM(2021)0663 – C90395/2021 – 2021/0341(COD))

On the proposal for a directive of the European Parliament and of the Council amending Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches, and environmental, social and governance risks, and amending Directive 2014/59/EU

ECON-PR-731819

Committee on Economic and Monetary Affairs · Rapporteur: Jonás Fernández

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This is the rapporteur's draft report on the Commission proposal to amend Directive 2013/36/EU on supervisory powers, sanctions, third-country branches and environmental, social and governance risks, and to amend Directive 2014/59/EU. It proposes amendments to the Commission's text, including changing supervisory opinions into decisions, adding approval requirements for mergers and divisions, and setting rules for third-country branches. It also proposes amendments on environmental, social and governance risks, including requiring institutions to manage these risks over at least 10 years and to set quantifiable targets. The draft report also proposes changes to the treatment of the output floor, the systemic risk buffer, and the O-SII buffer.

Committee position. The rapporteur proposes to amend the Commission proposal by changing supervisory opinions into decisions, adding approval requirements for mergers and divisions, strengthening rules on third-country branches, and adjusting the treatment of the output floor and systemic risk buffer.

Key points

  1. The rapporteur proposes that the motivated opinion issued by the competent supervisory authority for cross-border mergers and divisions should become a motivated decision, transferred to the national authority issuing the pre-merger or pre-division certificate.
  2. The rapporteur proposes that mergers or divisions should not be concluded before a prior approval is received from the competent authorities, and that other material operations be assessed under a tacit approval procedure.
  3. The rapporteur proposes that, by way of derogation, where a Member State's legal system does not allow administrative penalties, penalties could be exceptionally applied by judicial authorities, with Member States still ensuring equivalent effect.
  4. The rapporteur proposes that the specificity of climate-related environmental risks requires that such risks be managed over a period of at least 10 years.
  5. The rapporteur proposes that institutions assess the alignment of their portfolios with the Union's climate-neutrality ambition and set out specific plans to address risks from misalignment with relevant policy objectives.
  6. The rapporteur proposes that competent or designated authorities should introduce a systemic risk buffer rate, which could also be applied to certain sets or subsets of exposures, for instance those subject to physical and transition risks related to climate change.
  7. The rapporteur proposes that an institution's additional own funds requirement should not be increased by the institution becoming bound by the output floor, and that competent authorities should review and reduce such requirements to remove overlap with risks captured by the output floor.
  8. The rapporteur proposes that competent and designated authorities should not impose systemic risk buffer requirements for risks already fully covered by the output floor, regardless of whether an institution is bound by the output floor.
  9. The rapporteur proposes to delete the provision on reviewing the O-SII buffer requirement when an institution becomes bound by the output floor.
  10. The rapporteur proposes amendments to the definitions of 'chief financial officer' and 'periodic penalty payments'.
  11. The rapporteur proposes amendments to the rules on acquisition and divestiture of holdings, including notification thresholds, assessment periods, and the treatment of complex acquisitions.
  12. The rapporteur proposes amendments to the rules on third-country branches, including a registry book requirement and reporting on cross-border investment services.

Who is affected

  • Credit institutions and financial holding companies in the EU, which would face new notification and approval requirements for acquisitions and disposals.
  • Third-country branches operating in the EU, which would need to maintain a registry book and report on cross-border services.
  • Competent authorities, which would gain new powers and duties regarding mergers, divisions, and ESG risk assessment.
  • Institutions and their management bodies, which would need to develop plans and targets for ESG risks and review strategies annually.

Figures and deadlines

  • at least 10 years, the period over which climate-related environmental risks must be managed.
  • 15%, the threshold of eligible capital for notification of acquisitions or disposals.
  • 60 working days, the assessment period for competent authorities to assess proposed acquisitions.
  • 30 working days, the maximum extension of the suspension referred to in Article 27a(6).
  • 10%, the threshold of total assets or liabilities for an operation to be deemed material.
  • EUR 5 billion, the threshold of assets booked or originated by a third-country branch for application of the directive.
  • 40 working days, the maximum extension of the assessment period for additional information or documentation.
  • 120 working days, the maximum assessment period for additional information or documentation.

Legal basis: Article 294(2) and Article 53(1) of the Treaty on the Functioning of the European Union.