   
CRD II (Capital
Requirements Directive II)
From the
Basel ii Compliance Professionals Association
(BCPA)
the largest
association of Basel ii Professionals in the world
Capital
Requirements Directive II - Part 1
Capital Requirements Directive II - Part 3
Article 1
Amendments to Directive 2006/48/EC
Directive 2006/48/EC is hereby
amended as follows:
1. Article 3(1) is amended as
follows:
(a) in the first subparagraph, the
introductory part is replaced by the following:
‘1.
One or more credit institutions
situated in the same Member State and which are permanently
affiliated to a central body which supervises them and which is
established in the same Member State, may be exempted from the
requirements of Article 7 and Article 11(1) if national law
provides that:’;
(b) the second and third
subparagraphs are deleted;
2. Article 4 is amended as follows:
(a) point (6) is replaced by the
following:
‘(6) “institutions” for the purposes
of Sections 2, 3 and 5 of Title V, Chapter 2, means institutions
as defined in Article 3(1)(c) of Directive 2006/49/EC;’;
(b) in point (45) point (b) is
replaced by the following:
‘(b) two or
more natural or legal persons between whom there is no
relationship of control as described in point (a) but who are to
be regarded as constituting a single risk because they are so
interconnected that, if one of them were to experience financial
problems, in particular funding or repayment difficulties, the
other or all of the others would also be likely to encounter
funding or repayment difficulties.’;
(c) the
following point is
added:
‘(48)
“consolidating supervisor” means the competent authority
responsible for the exercise of supervision on a consolidated
basis of EU parent credit institutions and credit institutions
controlled by EU parent financial holding companies.’;
3. in Article 40, the following
paragraph is added:
‘3.
The
competent authorities in one Member State shall, in the exercise
of their general duties, duly consider the potential impact of
their decisions on the stability of the financial system in all
other Member States concerned and, in particular, in emergency
situations, based on the information available at the relevant
time.’;
4. the following Articles are
inserted:
‘Article 42a
1. The competent authorities of a
host Member State may make a request to the consolidating
supervisor where Article 129(1) applies or to the competent
authorities of the home Member State, for a branch of a credit
institution to be considered as significant.
That request shall
provide reasons for considering the branch
to be significant with particular regard to the following:
(a) whether the market share of the
branch of a credit institution in terms of deposit
exceeds 2 % in the host Member State;
(b) the likely impact of a suspension
or closure of the operations of the credit institution on market
liquidity and the payment and clearing and settlement systems in
the host Member State; and
(c) the size and the importance of
the branch in terms of number of clients within the context of
the banking or financial system of the host Member State.
The competent authorities of the home
and host Member States, and the consolidating supervisor where
Article 129(1) applies, shall do everything within their power
to reach a joint decision on the designation of a branch as
being significant.
If no joint decision is reached
within two months of receipt of a request under the first
subparagraph, the competent authorities of the host Member State
shall take their own decision within a further period of two
months on whether the branch is significant.
In taking their decision, the competent
authorities of the host Member State shall take into account any
views and reservations of the consolidating supervisor or the
competent authorities of the home Member State.
The decisions referred to in the
third and fourth subparagraph shall be set out in a document
containing the fully reasoned decision and transmitted to the
competent authorities concerned, and shall be recognised as
determinative and applied by the competent authorities in the
Member States concerned.
The
designation
of a branch as being significant shall not affect the rights and
responsibilities of the competent authorities under this
Directive.
2. The competent authorities of the
home Member State shall communicate
to the competent authorities of a host
Member State where a significant branch is established the
information referred to in Article 132(1)(c) and (d) and carry
out the tasks referred to in Article 129(1)(c) in cooperation
with the competent authorities of the host Member State.
If a competent authority of a home
Member State becomes aware of an emergency situation within a
credit institution as referred to in Article 130(1), it shall
alert as soon as practicable the authorities referred to in the
fourth paragraph of Article 49 and in Article 50.
3. Where Article 131a does not apply,
the competent authorities supervising a credit institution with
significant branches in other Member States shall establish and
chair a college of supervisors to
facilitate the cooperation under paragraph 2 of this Article and
Article 42.
The establishment and functioning of the
college shall be based on written arrangements determined, after
consultation with competent authorities concerned, by the
competent authority of the home Member State.
The competent
authority of the home Member State shall decide which competent
authorities participate in a meeting or in an activity of the
college.
The decision of the competent
authority of the home Member State shall take account of the
relevance of the supervisory activity to be planned or
coordinated for those authorities, in particular the potential
impact on the stability of the financial system in the Member
States concerned referred to in Article 40(3) and the
obligations referred to in paragraph 2 of this Article.
The competent authority of the home
Member State shall keep all members of the college fully
informed, in advance, of the organisation of such meetings, the
main issues to be discussed and the activities to be considered.
The competent authority of the home
Member State shall also keep all the members of the college
fully informed, in a timely manner, of the actions taken in
those meetings or the measures carried out.
Article 42b
1. In the exercise of their duties,
the competent authorities shall take into
account the convergence in respect of supervisory tools and
supervisory practices in the application of the laws,
regulations and administrative requirements adopted pursuant to
this Directive.
For that purpose,
Member States shall ensure that:
(a) the competent authorities
participate in the activities of the Committee of European
Banking Supervisors;
(b) the competent authorities follow
the guidelines, recommendations, standards and other measures
agreed by the Committee of European Banking Supervisors and
shall state the reasons if they do not do so;
(c) national mandates conferred on
the competent authorities do not inhibit the performance by them
of their duties as members of the Committee of European Banking
Supervisors or under this Directive.
2. The
Committee of European Banking Supervisors shall report to the
European Parliament, the Council and the Commission on the
progress made towards supervisory convergence every year
starting from 1 January 2011.’;
5. Article 49 is amended as follows:
(a) in the first paragraph, point (a)
is replaced by the following:
‘(a) central banks of the European
system of the central banks and other bodies with a similar
function in their capacity as monetary authorities when this
information is relevant for the exercise of their respective
statutory tasks, including the conduct of monetary policy and
related liquidity provision, oversight of payments, clearing and
settlement systems, and the safeguarding of stability of the
financial system’;
(b) the following paragraph is added:
‘In an emergency situation as
referred to in Article 130(1),
Member
States shall allow competent authorities to communicate
information to the central banks of the European system of the
central banks when this information is relevant for the exercise
of their statutory tasks, including the conduct of monetary
policy and related liquidity provision, the oversight of
payments, clearing and settlement systems, and safeguarding
the stability of the financial system.’;
6. in Article 50, the following
paragraph is added:
‘In an emergency situation as
referred to in Article 130(1),Member States shall allow
competent authorities to disclose information which is relevant
to the departments referred toin the first paragraph of this
Article in all Member States concerned.’;
7. Article 57 is
amended as follows:
(a) point (a) is replaced by the
following:
‘(a) capital within the meaning of
Article 22 of Directive 86/635/EEC, in so far as it has been
paid up, plus the related share premium accounts, it fully
absorbs
losses in going concern situations, and in the event of
bankruptcy or liquidation ranks after all other claims;’;
(b) the following point is inserted:
‘(ca) instruments other than those
referred to in point (a), which meet the requirements set out
in points (a), (c), (d) and (e) of Article 63(2) and in Article
63a;’;
(c) the third paragraph is replaced
by the following:
‘For the purposes of point (b), the
Member States shall permit inclusion of
interim or year-end profits before a formal decision has been
taken only if these profits have been verified by persons
responsible for the auditing of the accounts and if it is proved
to the satisfaction of the competent authorities that the amount
thereof has been evaluated in accordance with the principles set
out in Directive 86/635/EEC and is net of any foreseeable charge
or dividend.’;
8. the first paragraph of Article 61
is replaced by the following:
‘The concept of own funds as defined
in Article 57(a) to (h)embodies a maximum number of items and
amounts. Member States may decide on the use of those items and
on the deduction of items other than those listed in Article
57(i)to (r).’;
9. in Article 63(2), the following
subparagraph is added:
‘Instruments referred to in Article
57(ca) shall comply with the requirements set out in points (a),
(c), (d) and (e) of this Article.’;
10. the following Article is
inserted:
‘Article 63a
1. Instruments referred to in Article
57(ca) shall comply with the requirements set out in paragraphs 2
to 5 of this Article.
2. The instruments shall be undated
or have an original maturity of at least 30 years.
The instruments may
include one or more call options at the sole discretion of the
issuer, but they shall not be redeemed before five years after
the date of issue.
If the provisions governing undated
instruments provide for a moderate incentive for the credit
institution to redeem as determined by the competent authorities,
such incentive shall not occur within 10 years of the date of
issue.
The provisions governing dated
instruments shall not permit an incentive to redeem on a date
other than the maturity date.
Dated and undated
instruments may be called or redeemed only with the prior consent
of the competent authorities. The competent authorities may grant
permission provided the request is made at the initiative of the
credit institution and either financial or solvency conditions of
the credit institution are not unduly affected.
The competent authorities may require
institutions to replace the instrument by items of the same or
better quality referred to in point (a) or (ca) of Article 57.
The competent
authorities shall
require the suspension of the redemption for dated instruments if
the credit institution does not comply with the capital
requirements set out in Article 75 and may require such
suspension at other times based on the financial and solvency
situation of credit institutions.
The competent authority may at any
time grant permission for early redemption of dated or undated
instruments in the event that there is a change in the applicable
tax treatment or regulatory classification of such instruments
which was unforeseen at the date of issue.
3. The provisions governing the
instrument shall allow the credit institution to cancel, when
necessary, the payment of interest or dividends for an unlimited
period of time, on anon-cumulative basis.
However, the credit institution shall
cancel such payments ifit does not comply with the capital
requirements set out in Article 75.
The competent authorities may require
the cancellation of such payments based on the financial and
solvency situation of the credit institution.
Any such cancellation shall not prejudice
the right of the credit institution to substitute the payment of
interest or dividend by a payment in the form of an instrument
referred to in Article 57(a), provided that any such mechanism
allows the credit institution to preserve financial resources.
Such substitution may be subject to specific conditions
established by the competent authorities.
4. The
provisions governing the instrument shall provide for principal,
unpaid interest or dividend to be such as to absorb losses and to
not hinder the recapitalisation of the credit institution through
appropriate mechanisms, as elaborated by the Committee of
European Banking Supervisors under paragraph 6.
5. In the
event of the bankruptcy or liquidation of the credit institution,
the instruments shall rank after the items referred to in Article
63(2).
6. The Committee of European Banking Supervisors
shall elaborate guidelines for the convergence of supervisory
practices with regard to the instruments referred to in
paragraph 1of this Article and in Article 57(a) and shall
monitor their application. By 31 December 2011, the Commission
shall review the application of this Article and shall report to
the European Parliament and the Council together with
any appropriate proposals to ensure the quality of own funds.’;
11. in Article 65(1), point (a) is replaced by the
following:
‘(a) any minority interests within the meaning
of Article 21of Directive 83/349/EEC, where the global
integration method is used. Any instruments referred to in
Article
57(ca), which give rise to minority interests shall meet the
requirements under points (a), (c), (d) and (e) of Article 63(2)
and Articles 63a and 66;’;
12. Article 66 is amended as
follows:
(a) paragraphs 1 and 2 are replaced by the
following:
‘1. The items referred to in Article 57(d) to
(h) shall be subject to the following limits:
(a) the total
of the items referred to in Article 57(d)to (h) must not exceed
a maximum of 100 % of the items in points (a) to (ca) minus (i),
(j) and (k) of that Article; and
(b) the total of the items
referred to in Article 57(g)to (h) must not exceed a maximum of
50 % of the items in points (a) to (ca) minus (i), (j) and (k) of
that Article.
1a. Notwithstanding paragraph 1 of this
Article, the total of the items in Article 57(ca) shall be
subject to the following limits:
(a) instruments that must
be converted during emergency situations and may be converted at
the initiative of the competent authority, at any time, based on
the financial and solvency situation of the issuer into items
referred to in Article 57(a) within a pre-determined range must
in total not exceed a maximum of 50 % of the items in points (a)
to (ca)minus (i), (j) and (k) of that article;
(b) within
the limit referred to in point (a) of this paragraph, all other
instruments must not exceed amaximum of 35 % of the items in
points (a) to (ca)minus (i), (j) and (k) of Article 57;
(c)
within the limits referred to in points (a) and (b) of this
paragraph, dated instruments and instruments with provisions that
provide for an incentive for the credit institution to redeem
must not exceed a maximum of 15 % of the items in points (a) to
(ca)minus (i), (j) and (k) of Article 57;
(d) the amount
of items exceeding the limits set out in points (a), (b) and (c)
must be subject to the limit setout in paragraph 1 of this
Article.
2. The total of the items
referred to in Article 57(l)to (r) shall be deducted half from
the total of the items referred to in points (a) to (ca) minus
(i), (j) and (k) of that Article, and half from the total of the
items referred toin points (d) to (h) of that Article, after
application of the limits laid down in paragraph 1 of this
Article.
To the extent that half of the total of the items (l) to
(r) of Article 57 exceeds the total of the items (d) to (h) of
that Article, the excess shall be deducted from the total of
the items (a) to (ca) minus (i), (j) and (k) of that Article.
Items referred to in Article 57(r) shall not be deducted if
they have been included in the calculation of
risk-weighted exposure amounts for the purposes of Article 75
as referred to in Annex IX, Part 4.’;
(b) paragraph 4 is
replaced by the following:
‘4.
The competent authorities
may authorize credit institutions to exceed the limits laid down
in paragraphs 1 and 1a temporarily during emergency situations.’;
13. the subtitle of Title V, Chapter 2, Section 2, Subsection
2 ‘Calculation of requirements’ is replaced by ‘Calculation
and reporting requirements’;
14. in Article 74(2) the
following subparagraph is inserted after the first subparagraph:
‘For the communication of those calculations by credit
institutions, competent authorities shall apply, from 31
December 2012, uniform formats, frequencies and dates
of reporting.
To facilitate this, the Committee of
European Banking Supervisors shall elaborate guidelines to
introduce, within the Community, a uniform reporting format
before1 January 2012.
The reporting formats shall be
proportionate to the nature, scale and complexity of the credit
institutions’ activities.’;
15. Article 81(2) is replaced
by the following:
‘2. The competent authorities shall
recognise an ECAI as eligible for the purpose of Article 80 only
if they are satisfied that its assessment methodology complies
with the requirements of objectivity, independence, ongoing
review and transparency, and that the resulting credit
assessments meet the requirements of credibility and
transparency.
For those purposes, the competent authorities shall
take into account the technical criteria set out in Annex VI,
Part 2. Where anECAI is registered as a credit rating agency in
accordance with Regulation (EC) No 1060/2009 of 16 September
2009of the European Parliament and of the Council on credit
rating agencies, the competent authorities shall consider
the requirements of objectivity, independence, ongoing review
and
transparency with respect to its assessment methodology to be
satisfied.
16. Article 87 is amended as follows:
(a) paragraph 11 is replaced by the following:
‘11.
Where exposures in the form of a collective investment
undertaking (CIU) meet the criteria set out in Annex VI, Part 1,
points 77 and 78 and the credit institution is aware of all or
parts of the underlying exposures of the CIU, the credit
institution shall look through to those underlying exposures in
order to calculate risk-weighted exposure amounts and expected
loss amount sin accordance with the methods set out in this
Subsection.
Paragraph 12 shall apply to the part of the
underlying exposures of the CIU the credit institution is
not aware of or could not reasonably be aware of.
In particular,
paragraph 12 shall apply where it would be unduly burdensome for
the credit institution to look through the underlying exposures
in order to calculate risk-weighted exposure amounts and
expected loss amount sin accordance with methods set out in this
Subsection.
Where the credit institution does not meet the
conditions for using the methods set out in this Subsection
for all or parts of the underlying exposures of the CIU,
risk weighted exposure amounts and expected loss amounts shall be
calculated in accordance with the following approaches:
(a)
for exposures belonging to the exposure class referred to in
Article 86(1)(e), the approach set outin Annex VII, Part 1,
points 19 to 21.
(b) for all other underlying exposures,
the approach setout in Articles 78 to 83, subject to the
following modifications:
(i) for exposures subject to a
specific risk weight for unrated exposures or subject to the
credit quality step yielding the highest risk weight fora given
exposure class, the risk weight must be multiplied by a factor of
two but must not be
higher than 1 250 %;
(ii) for all other
exposures, the risk weight must be multiplied by a factor of 1,1
and must be subject to a minimum of 5 %.
Where, for the
purposes of point (a), the credit institution is unable to
differentiate between private equity, exchange-traded and other
equity exposures, it shall treat the exposures concerned as other
equity exposures.
Without prejudice to Article 154(6),where those
exposures, taken together with the credit institution’s direct
exposures in that exposure class, are not material within the
meaning of
Article 89(2), Article 89(1) may be applied
subject to the approval of the competent authorities.’;
(b)
in paragraph 12, the second subparagraph is replaced bythe
following:
‘Alternatively to the method described in the
first subparagraph, credit institutions may calculate
themselves or may rely on a third party to calculate and report
the average risk weighted exposure amounts based on theCIU’s
underlying exposures in accordance with the approaches referred
to in points (a) and (b) of paragraph 11, provided that the
correctness of the calculation and the report is adequately
ensured.’;
17. in Article 89(1)(d), the introductory part
is replaced by the following:
‘(d)
exposures to central
governments of the Member States and their regional governments,
local authorities and administrative bodies provided that:’;
18. Article 97(2) is replaced by the following:\
‘2.
The
competent authorities shall recognise an ECAI as eligible for the
purpose of paragraph 1 of this Article only if they are satisfied
as to its compliance with the requirements laid down in Article
81, taking into account the technical criteria set out in Annex
VI, Part 2, and that it has a demonstrated ability in the area
of securitization, which may be evidenced by a strong market
acceptance.
Where an ECAI is registered as a credit rating agency
in accordance with Regulation (EC) No 1060/2009, the competent
authorities shall consider the requirements of objectivity,
independence, ongoing review and transparency with respect to its
assessment methodology to be satisfied.’;
19. Article 106
is amended as follows:
(a) paragraph 2 is replaced by the
following:
‘2. Exposures shall not include any of the
following:
(a) in the case of foreign exchange
transactions, exposures incurred in the ordinary course of
settlement during the two working days following payment;
(b)
in the case of transactions for the purchase or sale of
securities, exposures incurred in the ordinary course of
settlement during five working days following payment or
delivery of the securities, whichever the earlier;
(c) in
the case of the provision of money transmission including the
execution of payment services, clearing and settlement in any
currency and correspondent banking or financial instruments
clearing, settlement and custody services to clients,
delayed receipts in funding and other exposures arising from
client activity which do not last longer than the following
business day; or
(d) in the case of the provision of money
transmission including the execution of payment services,
clearing and settlement in any currency and correspondent
banking, intra-day exposures to institutions providing those
services.
The Committee of European Banking Supervisors
shall provide for guidelines in order to enhance the convergence
of supervisory practises in applying the exemptions in points
(c) and (d).’;
(b) the following paragraph is added:
‘3. In order to determine the existence of a group
of connected clients, in respect of exposures referred to
in points (m), (o) and (p) of Article 79(1), where there is
an exposure to underlying assets, a credit institution
shall assess the scheme, its underlying exposures, or both.
For that purpose, a credit institution shall evaluate the
economic substance and the risks inherent in the structure of the
transaction.’;
20. Article 107 is replaced by the
following:
‘Article 107
For the purposes of calculating
the value of exposures in accordance with this Section, the term
“credit institution "also means any private or public
undertaking, including its branches, which meets the definition
of “credit institution”and has been authorised in a third
country.’;
21. Article 110 is replaced by the following:
‘Article 110
1. A credit institution shall report the
following information about every large exposure to the
competent authorities, including large exposures exempted from
the application of Article 111(1):
(a) the identification
of the client or the group of connected clients to which a credit
institution has a large exposure;
(b) the exposure value
before taking into account the effect of the credit risk
mitigation, when applicable;
(c) where used, the type of
funded or unfunded credit protection;
(d) the exposure
value after taking into account the effect of the credit risk
mitigation calculated for the purpose of Article 111(1).
If a credit institution is subject to Articles 84 to 89, its
20largest exposures on a consolidated basis, excluding
those exempted from the application of Article 111(1), shall
bemade available to the competent authorities.
2. Member
States shall provide that reporting is to be carried out at
least twice a year. The competent authorities shall apply, from
31 December 2012, uniform formats, frequencies and dates of
reporting. To facilitate this, the Committee of European Banking
Supervisors shall elaborate guidelines to introduce, within the
Community, a uniform reporting format
before 1 January 2012.
The
reporting formats shall be proportionate to the nature, scale and
complexity of the credit institutions’ activities.
3.
Member States shall require credit institutions to analyse, to
the extent possible, their exposures to collateral issuers,
providers of unfunded credit protection and underlying assets
pursuant to Article 106(3) for possible concentrations and where
appropriate take action and report any significant findings to
their competent authority.’;
22. Article 111 is amended as
follows:
(a) paragraph 1 is replaced by the following:
‘1. A credit institution shall not incur an exposure,
after
taking into account the effect of the credit risk mitigation in
accordance with Articles 112 to 117, to a client or group of
connected clients the value of which exceeds 25 % of its own
funds.
Where that client is an institution or where a group
of connected clients includes one or more institutions, that
value
shall not exceed 25 % of the credit institution 'sown funds or
EUR 150 million, whichever the higher, provided that the sum of
exposure values, after taking into account the effect of the
credit risk mitigation in accordance with Articles 112 to 117, to
all connected clients that are not institutions does not exceed
25 % of the credit institution’s own funds.
Where the amount
of EUR 150 million is higher than 25 %
of the credit
institution’s own funds, the value of the exposure, after taking
into account the effect of credit risk mitigation in accordance
with Articles 112 to 117,shall not exceed a reasonable limit in
terms of the credit institution's own funds.
That limit shall be
determinedby credit institutions, consistently with the policies
and procedures referred to in Annex V, point 7, to address and
control concentration risk, and shall not be higher than 100 % of
the credit institution’s own funds.
Member States may set a
lower limit than EUR 150 million and shall inform the
Commission.’;
(b) paragraphs 2 and 3 are deleted;
(c) paragraph 4 is replaced by the following:
‘4.
A
credit institution shall at all times comply with the relevant
limit laid down in paragraph 1.
If, in an exceptional case,
exposures exceed this limit, the value of the exposure shall be
reported without delay to the competent authorities which may,
where the circumstances warrant it, allow the credit institution
a limited period of time in which to comply with the limit.
Where the amount of EUR 150 million referred to in paragraph 1 is
applicable, the competent authorities may allow on a case-by-case
basis the 100 % limit in terms of the credit institution’s own
funds to be exceeded.’;
23. Article 112 is amended as
follows:
(a) paragraph 2 is replaced by the following:
‘2. Subject to paragraph 3 of this Article, where, under
Articles 113 to 117, the recognition of funded or unfunded credit
protection is permitted, this shall be subject to compliance with
the eligibility requirements and other minimum requirements, set
out in Articles 90to 93.’;
(b) the following paragraph is
added:
‘4. For the purpose of this Section, a credit
institution shall not take into account the collateral referred
to in Annex VIII, Part 1, points 20 to 22, unless permitted
under
Article 115.’;
24. Article 113 is amended as follows:
(a) paragraphs 1 and 2 are deleted;
(b) paragraph 3 is
amended as follows:
(i) the introductory part is replaced
by the following:
‘3. The following exposures shall be
exempted from the application of Article 111(1):’;
(ii)
points (e) and (f) are replaced by the following:
‘(e)
asset items constituting claims on regional governments or local
authorities of Member States where those claims would be assigned
a 0 %risk weight under Articles 78 to 83 and other exposures to
or guaranteed by those regional governments or local authorities,
claims on which would be assigned a 0 % risk weight under Articles
78 to 83;
(f) exposures to counterparties referred to
in paragraph 7 or paragraph 8 of Article 80
if they would be
assigned a 0 % risk weight under Articles 78 to 83; exposures
that do not meet those criteria, whether or not exempted
from Article 111(1), shall be treated as exposures toa third
party.’;
(iii) point (i) is replaced by the following:
‘(i) exposures arising from undrawn credit facilities that are
classified as low-risk off-balance sheet items in Annex II and
provided that an agreement has been concluded with the client
or group of connected clients under which the facility may be
drawn only if it has been ascertained that it will not cause the
limit applicable under Article 111(1) to be exceeded.’;
(iv)
points (j) to (t) are deleted;
(v) the third, fourth and
fifth subparagraphs are deleted;
(c) the following
paragraph is added:
‘4. Member States may fully or
partially exempt the following exposures from the application
of Article 111(1):
(a) covered bonds falling within the
terms of Annex VI,Part 1, points 68, 69 and 70;
(b) asset
items constituting claims on regional governments or local
authorities of Member States where those claims would be assigned
a 20 % risk weight under Articles 78 to 83 and other exposures to
or guaranteed by those regional governments or local authorities,
claims on which would be assigned a20 % risk weight under
Articles 78 to 83;
(c) notwithstanding paragraph 3(f) of
this Article, exposures, including participations or other
kinds of holdings, incurred by a credit institution to its
parent
undertaking, to other subsidiaries of that parent undertaking or
to its own subsidiaries, in sofar as those undertakings are
covered by the supervision on a consolidated basis to which the
credit institution itself is subject, in accordance with
this Directive or with equivalent standards in force in athird
country; exposures that do not meet these criteria, whether or
not exempted from Article 111(1),shall be treated as exposures
to a third party;
(d) asset items constituting claims on
and other exposures, including participations or other kinds
of holdings, to regional or central credit institutions with which
the credit institution is associated in anetwork in accordance
with legal or statutory provisions and which are responsible,
under those provisions, for cash-clearing operations within
the network;
(e) asset items constituting claims on and
other exposures to credit institutions incurred by credit
institutions operating on a non-competitive basis, providing
loans under legislative programmes or their statutes, to promote
specified sectors of the economy under some form of government
oversight and restrictions on the use of the loans, provided
that the respective exposures arise from such loans that are
passed on to the beneficiaries via other credit institutions;
(f) asset items constituting claims on and other exposures to
institutions, provided that those exposures do not constitute
such institutions’ own funds, donot last longer than the
following business day and are not denominated in a major trading
currency;
(g) asset items constituting claims on central
banks in the form of required minimum reserves held at those
central banks which are denominated in their national currencies;
(h) asset items constituting claims on central governments in
the form of statutory liquidity requirements held in government
securities which are denominated and funded in their national
currencies provided that, at the discretion of the competent
authority, the credit assessment of those central governments
assigned by a nominated ECAI is investment grade;
(i) 0 %
of medium/low risk off-balance-sheet documentary credits and of
medium/low risk off-balance sheet undrawn credit facilities
referred to in Annex II, and subject to the competent
authorities 'agreement, 80 % of guarantees other than
loan guarantees which have a legal or regulatory basis and are
given for their members by mutual guarantee schemes possessing
the status of credit institutions;
(j) legally required
guarantees used when a mortgage loan financed by issuing mortgage
bonds is paid tothe mortgage borrower before the final
registration of the mortgage in the land register, provided
the guarantee is not used as reducing the risk in calculating the
risk weighted assets.’;
25. Article 114 is amended as
follows:
(a) paragraph 1 is replaced by the following:
‘1. Subject to paragraph 3 of this Article, for the purposes
of calculating the value of exposures for the purposes of
Article 111(1) a credit institution may use the“fully adjusted
exposure value” as calculated under Articles 90 to 93, taking
into account the credit risk mitigation, volatility adjustments,
and any maturity mismatch (E*).’;
(b) paragraph 2 is
amended as follows:
(i) the first subparagraph is replaced
by the following:
‘Subject to paragraph 3 of this Article, a
credit institution permitted to use own estimates of LGDs
and conversion factors for an exposure class under Articles 84 to
89 shall be permitted, where it is able to the satisfaction of
the competent authorities to estimate the effects of financial
collateral on their exposures separately from other
LGD-relevant aspects, to recognise such effects in calculating
the value of exposures for the purposes of Article 111(1).’;
(ii) the fourth subparagraph is replaced by the following:
‘Credit institutions permitted to use own estimates of LGDs and
conversion factors for an exposure class under Articles 84 to 89
which do not calculate the value of their exposures using the
method referred to in the first subparagraph of this paragraph
may use the Financial Collateral Comprehensive Method or the
approach set out in Article 117(1)(b) for calculating the value
of exposures.’;
(c) paragraph 3 is amended as follows:
(i) the first subparagraph is replaced by the following:
‘A credit institution that makes use of the Financial
Collateral
Comprehensive Method or is permitted touse the method described
in paragraph 2 of this Article in calculating the value of
exposures for the purposes of Article 111(1), shall conduct
periodic stress tests of their credit-risk
concentrations, including in relation to the realisable value of
any collateral taken.’;
(ii) the fourth subparagraph is
replaced by the following:
‘In the event that such a stress
test indicates a lowerrealisable value of collateral taken than
would be permitted to be taken into account while making use of
the Financial Collateral Comprehensive Method or the method
described in paragraph 2 of this Article as appropriate, the
value of collateral permitted to be recognised in calculating the
value of exposures for the purposes of Article 111(1) shall be
reduced accordingly.’;
(iii) in the fifth subparagraph,
point (b) is replaced bythe following:
‘(b)
policies and
procedures in the event that astress test indicates a lower
realisable value of collateral than taken into account while
making use of the Financial Collateral Comprehensive Method or
the method described in paragraph 2; and’;
(d) paragraph 4
is deleted;
26. Article 115 is replaced by the
following:
‘Article 115
1. For the purpose of this
Section, a credit institution may reduce the exposure value by up
to 50 % of the value of the residential property concerned, if
either of the following conditions is met:
(a) the
exposure is secured, by mortgages on residential property or by
shares in Finnish residential housing companies, operating in
accordance with the Finnish Housing Company Act of 1991 or
subsequent equivalent legislation;
(b) the exposure
relates to a leasing transaction under which the lessor retains
full ownership of the residential property leased for as long as
the lessee has not exercised his option to purchase.
The value
of the property shall be calculated, to the satisfaction of the
competent authorities, on the basis of prudent valuation
standards laid down by law, regulation or administrative
provisions. Valuation shall be carried out at least once every
three years for residential property.
The requirements in
Annex VIII, Part 2, point 8, and in Annex VIII Part 3, points 62
to 65 shall apply for the purpose of this paragraph.
“Residential property” shall mean a residence to be
occupied or
let by the owner.
2. For the purpose of this Section,
a
credit institution may reduce the exposure value by up to 50 % of
the value of the commercial property concerned only if
the
competent authorities concerned in the Member State where the
commercial property is situated allow the following exposures
to receive a 50 % risk weight in accordance with Articles 78to
83:
(a) exposures secured by mortgages
on offices or
other commercial premises, or by shares in Finnish
housing companies, operating in accordance with the
Finnish Housing Company Act of 1991 or subsequent equivalent
legislation, in respect of offices or other commercial premises;
or
(b) exposures related to property leasing transactions
concerning offices or other commercial premises.
The value of
the property shall be calculated, to the satisfaction of the
competent authorities, on the basis of prudent valuation
standards laid down by law, regulation or administrative
provisions.
Commercial property shall be fully constructed,
leased and produce appropriate rental income.’;
Capital
Requirements Directive II - Part 1
Capital Requirements Directive II - Part 3
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