MT
Financial Conglomerates Regulations, 2013
Table of Provisions (11)
Statutory Text (11 Articles)
Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 19, 109, 12 ta’ Lulju, 2013
L.N. 182 of 2013
MALTA FINANCIAL SERVICES AUTHORITY ACT
(CAP. 330)
Financial Conglomerates Regulations, 2013
IN exercise of the powers conferred by article 20C of the Malta
Financial Services Authority Act, the Minister for Finance, after
consultation with the Malta Financial Services Authority, has made
the following regulations:-
(1) The title of these regulations is the Financial Citation and
scope.
Conglomerates Regulations, 2013.
(2) The purpose of these regulations is to implement the
provisions of the Financial Conglomerates Directive, as currently in
force and as may be amended from time to time, and these regulations
shall be interpreted and applied accordingly.
Capital Adequacy
(Regulation 6)
The calculation of the supplementary capital adequacy requirements of the
regulated entities in a financial conglomerate referred to in regulation 6(1) shall be
carried out in accordance with the technical principles and one of the methods
described in this Schedule.
Without prejudice to the provisions (A) and (B), the Authority, when
appointed coordinator with regard to a particular financial conglomerate, shall
decide, after consultation with the other relevant competent authorities and the
financial conglomerate itself, which method shall be applied by that financial
conglomerate.
(A) Where a financial conglomerate is headed by a regulated entity
authorised in Malta, the Authority may determine which particular method among
those described in this Schedule shall be used for the purpose of the calculation;
and
(B) Where a financial conglomerate is not headed by a regulated entity, a
method among those described in this Schedule shall be used for the purpose of the
calculation.
I.
Technical principles
1. Extent and form of the supplementary capital adequacy requirements
calculation
Whichever method is used, when the entity is a subsidiary undertaking and
has a solvency deficit or, in the case of a non-regulated financial sector entity, a
notional solvency deficit, the total solvency deficit of the subsidiary has to be
taken into account. Where, in the opinion of the Authority in this case, when
appointed coordinator, the responsibility of the parent undertaking owning a share
of the capital is limited strictly and unambiguously to that share of the capital, the
coordinator may give permission for the solvency deficit of the subsidiary
undertaking to be taken into account on a proportional basis.
Where there are no capital ties between entities in a financial conglomerate,
the coordinator, after consultation with the other relevant competent authorities,
shall determine which proportional share will have to be taken into account,
bearing in mind the liability to which the existing relationship gives rise.
2. Other technical principles
Regardless of the method used for the calculation of the supplementary
capital adequacy requirements of regulated entities in a financial conglomerate as
laid down in section II of this Schedule, the coordinator and, where necessary,
other competent authorities concerned, shall ensure that the following principles
will apply
(i)
the multiple use of elements eligible for the calculation of own
funds at the level of the financial conglomerate (multiple gearing) as well as
any inappropriate intra-group creation of own funds is not permissible; in
order to ensure the elimination of multiple gearing and the intra-group
creation of own funds, competent authorities shall apply by analogy the
relevant principles laid down in the relevant sectoral rules;
(ii) the solvency requirements for each different financial sector
represented in a financial conglomerate shall be covered by own funds
elements in accordance with the corresponding sectoral rules; when there is a
deficit of own funds at the financial conglomerate level, only own funds
elements which are eligible according to each of the sectoral rules (cross-
sector capital) shall qualify for verification of compliance with the additional
solvency requirements;
(iii) where sectoral rules provide for limits on the eligibility of certain
own funds instruments, which would qualify as cross-sector capital, these
limits shall apply mutatis mutandis when calculating own funds at the level
of the financial conglomerate;
(iv) when calculating own funds at the level of the financial
conglomerate, competent authorities shall also take into account the
effectiveness of the transferability and availability of the own funds across
the different legal entities in the group, given the objectives of the capital
adequacy rules;
(v) where, in the case of a non-regulated financial sector entity, a
notional solvency requirement is calculated in accordance with Section II of
this Schedule, notional solvency requirement means the capital requirement
with which such an entity would have to comply under the relevant sectoral
rules as if it were a regulated entity of that particular financial sector; in the
case of asset management companies, solvency requirement means the
capital requirement set out in Article 5a(1)(a) of Directive 85/611/EEC; the
notional solvency requirement of a mixed financial holding company shall be
calculated according to the sectoral rules of the most important financial
sector in the financial conglomerate.
II.
Technical calculation methods
Method 1: Accounting consolidation method
The calculation of the supplementary capital adequacy requirements of the
regulated entities in a financial conglomerate shall be carried out on the basis of
the consolidated accounts.
The supplementary capital adequacy requirements shall be calculated as the
difference between
(i)
the own funds of the financial conglomerate calculated on the
basis of the consolidated position of the group; the elements eligible are
those that qualify in accordance with the relevant sectoral rules; and
(ii) the sum of the solvency requirements for each different financial
sector represented in the group; the solvency requirements for each different
financial sector are calculated in accordance with the corresponding sectoral
rules.
In the case of non-regulated financial sector entities which are not included in
the aforementioned sectoral solvency requirement calculations, a notional
solvency requirement shall be calculated.
The difference shall not be negative.
Method 2: Deduction and aggregation method
The calculation of the supplementary capital adequacy requirements of the
regulated entities in a financial conglomerate shall be carried out on the basis of
the accounts of each of the entities in the group.
The supplementary capital adequacy requirements shall be calculated as the
difference between
(i)
the sum of the own funds of each regulated and non-regulated
financial sector entity in the financial conglomerate; the elements eligible are
those which qualify in accordance with the relevant sectoral rules; and
(ii)
the sum of -
-
the solvency requirements for each regulated and non-
regulated financial sector entity in the group; the solvency requirements
shall be calculated in accordance with the relevant sectoral rules; and
-
the book value of the participations in other entities of the
group.
In the case of non-regulated financial sector entities, a notional solvency
requirement shall be calculated. Own funds and solvency requirements shall be
taken into account for their proportional share as provided for in regulation 6(9)
and in accordance with Section I of this Schedule.
The difference shall not be negative.
Method 3: Combination method
The Authority in agreement with the other relevant competent authorities
may allow a combination of method 1 and method 2.
In these regulations, unless the context otherwise requires
Interpretation.
"the Act" means the Malta Financial Services Authority Act;
"the Authority" means the Malta Financial Services Authority
established by article 3 of the Act;
"alternative investment fund manager" means a manager of
alternative investment funds within the meaning of Article 4(1)(b), (l)
and (ab) of Directive 2011/61/EU or an undertaking the registered
office of which is in a third country and which would require
authorisation under that Directive if its registered office were within
the European Union;
"asset management company" means a management company
within the meaning of Article 2(1)(b) of Directive 2009/65/EC or an
undertaking the registered office of which is in a third country and
which would require authorisation under that Directive if it had its
registered office within the European Union;
"balance sheet total" means total assets reported in the balance
sheet;
"close links" means a situation in which two or more natural or
legal persons are linked by control or participation, or a situation in
which two or more natural or legal persons are permanently linked to
the same person by a control relationship;
"the Commission" means the Commission of the European
Union;
"competent authorities"
(a)
in the case of Malta, means the Authority;
(b) in the case of another Member State, means the
national authority or national authorities of the Member State
which are empowered by law or regulation to supervise credit
institutions, insurance undertakings, reinsurance undertakings,
investment firms, asset management companies or alternative
investment fund managers whether on an individual or a group-
wide basis;
"control" means a relationship between a parent undertaking
and a subsidiary undertaking as set out in Article 1 of Directive 83/
349/EEC and includes a similar relationship between a natural or
legal person and an undertaking;
"coordinator" means the Authority or a competent authority
appointed under regulation 11;
"credit institution" shall have the same meaning as is assigned
to it in Article 4(1) of Directive 2006/48/EC;
"the Financial Conglomerates Directive" means Directive 2002/
87/EC of the European Parliament and of the Council of 16
December, 2002 on the supplementary supervision of credit
institutions, insurance undertakings and investment firms in a
financial conglomerate and amending Council Directives 73/239/
EEC, 2002/83/EC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/
EEC, and Directives 98/78/EC and 2000/12/EC of the European
Parliament and of the Council as amended by Directive 2011/89/EC
of the European Parliament and of the Council of 16 November 2011
amending Directive 98/78/EC, 2002/87/EC, 2006/48/EC and 2009/
138/EC as regards supplementary supervision of financial entities in a
financial conglomerate and as may be amended from time to time;
"financial conglomerate" means a group or subgroup, where a
regulated entity is at the head of the group or subgroup, or where at
least one of the subsidiaries in that group or subgroup is a regulated
entity and which meets the following conditions
(a)
where there is a regulated entity at the head of the
group or subgroup
(i)
that entity is a parent undertaking of an entity
in the financial sector, an entity which holds a participation
in an entity in the financial sector, or an entity linked with
an entity in the financial sector by a relationship within the
meaning of Article 12(1) of Directive 83/349/EEC;
(ii) at least one of the entities in the group or
subgroup is within the insurance sector and at least one is
within the banking or investment services sector; and
(iii) the consolidated or aggregated activities of
the entities in the group or subgroup within the insurance
sector and of the entities within the banking and
investment services sector are both significant within the
meaning of Article 3(2) or (3) of the Financial
Conglomerates Directive; or
(b) where there is no regulated entity at the head of the
group or subgroup
(i) the group’s or subgroup’s activities mainly
occur in the financial sector within the meaning of
regulation 3(1);
(ii) at least one of the entities in the group or
subgroup is within the insurance sector and at least one is
within the banking or investment services sector; and
(iii) the consolidated or aggregated activities of
the entities in the group or subgroup within the insurance
sector and of the entities within the banking and
investment services sector are both significant within the
meaning of regulation 3(2) and (3);
"Financial Conglomerates Committee" means the Committee
set up by the Commission in pursuance of Article 21 of the Financial
Conglomerates Directive;
"financial sector" means a sector composed of one or more of
the following entities
(a)
a credit institution, a financial institution or an
ancillary services undertaking within the meaning of Article
4(1), (5) or (21) of Directive 2006/48/EC, hereinafter
collectively referred to as "the banking sector";
(b) an insurance undertaking, a reinsurance undertaking
or an insurance holding company within the meaning of Article
13(1), (2), (4) or (5) or of Article 212(1)(f) of Directive 2009/
138/EC, hereinafter collectively referred to as "the insurance
sector";
(c)
an investment firm within the meaning of Article
3(1)(b) of Directive 2006/49/EC, hereinafter collectively
referred as "the investment services sector";
"group" means a group of undertakings which consists of a
parent undertaking, its subsidiaries and the entities in which the
parent undertaking or its subsidiaries hold a participation, as well as
undertakings linked to each other by a relationship within the
meaning of Article 12(1) of Directive 83/349/EEC, including any
subgroup thereof;
"insurance undertaking" shall have the same meaning as is
assigned to it in Article 13(1), (2) or (3) of Directive 2009/138/EC;
"intra-group transactions" means all transactions by which
regulated entities within a financial conglomerate rely either directly
or indirectly upon other undertakings within the same group or on any
natural or legal person linked to the undertakings within that group by
close links, for the fulfilment of an obligation, whether or not
contractual, and whether or not for payment;
"investment firm" shall have the same meaning as is assigned to
it in point 1 of Article 4(1) of Directive 2004/39/EC, including the
undertakings referred to in Article 3(1)(d) of Directive 2006/49/EC of
the European Parliament and of the Council of 14 June 2006 on the
capital adequacy of investment firms and credit institutions or an
undertaking the registered office of which is in a third country and
which would require authorisation under Directive 2004/39/EC if its
registered office were in the European Union;
"Joint Committee" means the Committee of the European
Supervisory Authorities (ESA) established by Article 54 of
Regulation (EU) No 1093/2010 of the European Parliament and of the
Council of 24 November 2010, of Regulation (EU) No 1094/2010 of
the European Parliament and of the Council of 24 November 2010
and of Regulation (EU) No 1095/2010 of the European Parliament
and of the Council of 24 November 2010;
"Member State" means a State which is a member of the
European Union;
"mixed financial holding company" means a parent undertaking
which is not a regulated entity and which, together with its
subsidiaries and other entities, constitutes a financial conglomerate,
provided that at least one of its subsidiaries is a regulated entity
having its head office in the European Union;
"parent undertaking" shall have the same meaning as is assigned
to it in Article 1 of the Seventh Council Directive 83/349/EEC of 13
June, 1983 on consolidated accounts and shall include any
undertaking which, in the opinion of the competent authorities,
effectively exercises a dominant influence over another undertaking;
"participation" shall have the same meaning as is assigned to it
in the first sentence of Article 17 of Fourth Council Directive 78/660/
EEC of 25 July, 1978 on the annual accounts of certain types of
companies and shall include the direct or indirect ownership of 20 per
centum or more of the voting rights or capital of an undertaking;
"proportional share" means the proportion of the subscribed
capital which is held, directly or indirectly, by that undertaking;
"regulated entity" means a credit institution, an insurance
undertaking, a reinsurance undertaking, an investment firm, an asset
management company or an alternative investment fund manager and
includes a regulated entity authorised in Malta;
"regulated entity authorised in Malta" means
(a)
a credit institution licensed in terms of article 5 of
the Banking Act;
(b) an insurance undertaking or a reinsurance
undertaking duly authorised in terms of article 7 of the
Insurance Business Act;
(c)
an investment services licence holder licensed in
terms of article 3 of the Investment Services Act; or
(d) a financial institution licensed in terms of article 3
of the Financial Institutions Act;
"reinsurance undertaking" shall have the same meaning as is
assigned to it in Article 13(4), (5) or (6) of Directive 2009/138/EC
and shall include a special purpose vehicle within the meaning of
Article 13(26) of Directive 2009/138/EC;
"relevant competent authorities" means
(a)
the competent authorities of the Member States
responsible for the sectoral group-wide supervision of any of
the regulated entities in a financial conglomerate, in particular
of the ultimate parent of a sector;
(b) the coordinator appointed in accordance with
regulation 11, if different from the authorities referred to in
paragraph (a);
(c)
where appropriate, other competent authorities
deemed to be relevant by the authorities referred to in
paragraphs (a) and (b); this opinion shall in particular take into
account the market share of the regulated entities of the
conglomerate in other Member States, in particular if it exceeds
five (5) per centum, and the importance in the conglomerate of
any regulated entity established in another Member State;
"risk concentration" means all risk exposures with a loss
potential which is large enough to threaten the solvency or the
financial position in general of the regulated entities in the financial
conglomerate whether such exposures are caused by counterparty
risk/credit risk, investment risk, insurance risk, market risk, other
risks, or a combination or interaction of these risks;
"sectoral rules" means the European Union legislation relating
to the prudential supervision of regulated entities, in particular the
provisions of Directives 2004/39/EC, 2006/48/EC, 2006/49/EC and
2009/138/EC and all laws, regulations, and rules by virtue of which
the Authority has functions or powers in relation to licensed regulated
entities authorised in Malta;
"subsidiary undertaking" shall have the same meaning as is
assigned to it in Article 1 of Directive 83/349/EEC and shall include
any undertaking over which, in the opinion of the competent
authorities, a parent undertaking effectively exercises a dominant
influence; and all subsidiary undertakings of subsidiary undertakings
shall also be considered as subsidiary undertakings of the parent
undertaking;
"the Tribunal" means the Financial
Services
Tribunal
established under article 21 of the Act.
Technical application of the provisions on intra-group transactions
and risk concentration
(Regulations 7 and 8)
The coordinator, after consultation with the other relevant competent
authorities, shall identify the type of transactions and risks regulated entities in a
particular financial conglomerate have a duty to report in accordance with the
provisions of regulation 7(2) and regulation 8(2) on the reporting of intra-group
transactions and risk concentration.
When defining or giving their opinion about the type of transactions and
risks, the coordinator and the relevant competent authorities shall take into account
the specific group and risk management structure of the financial conglomerate.
In order to identify significant intra-group transactions and significant risk
concentration to be reported in accordance with the provisions of regulations 7 and
8, the coordinator, after consultation with the other relevant competent authorities
and the conglomerate itself, shall define appropriate thresholds based on
regulatory own funds and/or technical provisions.
When overviewing the intra-group transactions and risk concentrations, the
coordinator shall in particular monitor the possible risk of contagion in the
financial conglomerate, the risk of a conflict of interests, the risk of circumvention
of sectoral rules, and the level or volume of risks.
€1.62
(1) For the purposes of determining whether the
activities of a group mainly occur in the financial sector, the ratio of
the balance sheet total of the regulated and non-regulated financial
sector entities in the group to the balance sheet total of the group as a
whole shall exceed forty (40) per centum.
(2) For the purposes of determining whether activities in
different financial sectors are significant, for each financial sector the
average of the ratio of the balance sheet total of that financial sector
to the balance sheet total of the financial sector entities in the group
and the ratio of the solvency requirements of the same financial sector
to the total solvency requirements of the financial sector entities in
the group shall exceed ten (10) per centum
Provided that for the purposes of these regulations, the
smallest financial sector in a financial conglomerate is the sector with
the smallest average and the most important financial sector in a
financial conglomerate is the sector with the highest average. For the
purposes of calculating the average and for the measurement of the
smallest and the most important financial sectors, the banking sector
and the investment services sector shall be considered together.
(3) Asset management companies shall be added to the sector
to which they belong within the group. If they do not belong
exclusively to one sector within the group, they shall be added to the
smallest financial sector.
(4) Alternative investment fund managers shall be added to the
sector to which they belong within the group. If they do not belong
exclusively to one sector within the group, they shall be added to the
smallest financial sector.
(5) Cross-sectoral activities shall also be presumed to be
significant if the balance sheet total of the smallest financial sector in
the group exceeds six (6) billion euro. If the group does not reach the
threshold referred to in sub-regulation (2), the Authority may decide
in agreement with the other relevant competent authorities not to
regard the group as a financial conglomerate or not to apply the
provisions of regulations 7, 8 or 9, if the Authority and the other
relevant competent authorities are of the opinion that the inclusion of
the group in the scope of these regulations or the application of such
provisions is not necessary or would be inappropriate or misleading
with respect to the objectives of supplementary supervision
Provided that decisions taken in accordance with this sub-
regulation shall be notified to the other competent authorities and
shall, save in exceptional circumstances, be made public by the
Authority.
(6) If the group reaches the threshold referred to in sub-
regulation (2), but the smallest sector does not exceed the six (6)
billion euro threshold, the Authority may decide in agreement with
the other relevant competent authorities not to regard the group as a
financial conglomerate or not to apply the provisions of regulations 7,
8 or 9, if the Authority and the other relevant competent authorities
are of the opinion that the inclusion of the group in the scope of these
regulations or the application of such provisions is not necessary or
would be inappropriate or misleading with respect to the objectives of
supplementary supervision
Provided that decisions taken in accordance with this sub-
regulation shall be notified to the other competent authorities and
shall, save in exceptional circumstances, be made public by the
Authority.
(7) For the application of sub-regulations (1) to (6), the
Authority, in agreement with the other relevant competent authorities,
may
(a)
exclude an entity when calculating the ratios in the
cases referred to in regulation 6(10) unless the entity moved
from a Member State to a third country and there is evidence
that the entity changed its location in order to avoid regulation;
and
(b) take into account compliance with the thresholds
envisaged in sub-regulations (1) and (2) for three consecutive
years so as to avoid sudden regime shifts and disregard such
compliance if there are significant changes in the group’s
structure;
(c)
exclude one or more participations in the smaller
sector if such participations are decisive for the identification of
a financial conglomerate and are collectively of negligible
interest with respect to the objectives of supplementary
supervision
Provided that where a financial conglomerate has been
identified in accordance with sub-regulations (1) to (6), the decisions
referred to in paragraph (a) shall be taken on the basis of a proposal
made by the coordinator of that financial conglomerate.
(8) For the application of sub-regulations (1) to (4), the
Authority may, in exceptional cases and in agreement with the other
relevant competent authorities, replace the criterion based on balance
sheet total with one or both of the following parameters
(a)
income structure;
(b)
off-balance sheet activities; and
(c)
total assets under management
Provided that the Authority may, alternatively, add one or
both of these parameters if the Authority and the other relevant
competent authorities are of the opinion that these parameters are of
particular relevance for the purposes of supplementary supervision
under these regulations.
(9) For the application of sub-regulations (1) to (4), if the
ratios referred to in those sub-regulations fall below forty (40) per
centum and ten (10) per centum respectively for conglomerates
already subject to supplementary supervision, a lower ratio of thirty-
five (35) per centum and eight (8) per centum respectively shall apply
for the following three years to avoid sudden regime shifts
Provided that for the application of sub-regulation (5), if
the balance sheet total of the smallest financial sector in the group
falls below six (6) billion euro for conglomerates already subject to
supplementary supervision, a lower figure of five (5) billion euro
shall apply for the following three years to avoid sudden regime
shifts
Provided further that during the period referred to in this
sub-regulation, the coordinator may, with the agreement of the other
relevant competent authorities, decide that the lower ratios or the
lower amount referred to in this sub-regulation shall cease to apply.
(10) The calculations referred to in this regulation regarding the
balance sheet shall be made on the basis of the aggregated balance
sheet total of the entities of the group, according to their annual
accounts. For the purposes of this calculation, undertakings in which
participation is held shall be taken into account as regards the amount
of their balance sheet total corresponding to the aggregated
proportional share held by the group. Where consolidated accounts
are available, they shall be used instead of aggregated accounts
Provided that the solvency requirements referred to in sub-
regulations (2) to (5) shall be calculated in accordance with the
provisions of the relevant sectoral rules.
(11) The Authority shall, on an annual basis, reassess waivers
of the application of supplementary supervision and shall review the
quantitative indicators set out in this regulation and risk-based
assessments applied to financial groups.
(1) The Authority shall identify from among its Identifying a
regulated entities, in accordance with regulations 3 and 5, any group financial
conglomerate.
that falls within the scope of these regulations.
(2) The Authority shall cooperate closely with other
competent authorities when regulated entities authorised in Malta
form part of any group which has been identified by other competent
authorities in accordance with the Financial Conglomerates Directive
or regulations transposing the Financial Conglomerates Directive in
another Member State.
(3) If the Authority is of the opinion that a regulated entity
authorised in Malta is a member of a group which may be a financial
conglomerate and which has not already been identified in
accordance with these regulations, similar or equivalent regulations in
another Member State or the Financial Conglomerates Directive, the
Authority shall communicate its view to the other competent
authorities concerned and to the Joint Committee.
(4) The Authority, when appointed as coordinator in
accordance with regulation 11, shall inform the parent undertaking at
the head of a group or, in the absence of a parent undertaking, the
regulated entity with the largest balance sheet total in the most
important financial sector in a group, that the group has been
identified as a financial conglomerate and of its appointment as
coordinator. The Authority shall also inform the competent
authorities which authorised the regulated entities in the group, the
competent authorities of the Member State in which the mixed
financial holding company has its head office as well as the Joint
Committee.
(1) Without prejudice to the provisions on supervision
contained in the sectoral rules, regulated entities which are part of a
financial conglomerate in terms of these regulations shall be subject
to supplementary supervision to the extent and in the manner
prescribed by these regulations.
(2) The following regulated entities shall be subject to
supplementary supervision at the level of the financial conglomerate
in accordance with these regulations
(a)
every regulated entity which is at the head of a
financial conglomerate;
(b) every regulated entity, the parent undertaking of
which is a mixed financial holding company which has its head
office in the European Union; and
(c)
every regulated entity linked with another financial
sector entity by a relationship within the meaning of Article
12(1) of Directive 83/349/EEC
Provided that where a financial conglomerate is a subgroup
of another financial conglomerate which has at its head a regulated
entity the Authority, together with the other relevant competent
authorities, may agree that the provisions of these regulations and the
provisions of the Financial Conglomerates Directive may be applied
to the regulated entities within the latter group and any reference in
these regulations to the terms "group" and "financial conglomerate"
will then be understood as referring to that latter group.
(3) A regulated entity which is not subject to supplementary
supervision in accordance with sub-regulation (2), the parent
undertaking of which is a regulated entity or a mixed financial
holding company which has its head office in a third country, shall be
subject to supplementary supervision at the level of the financial
conglomerate to the extent and in the manner prescribed in regulation
(4) Where a person holds a participation or capital ties in one
or more regulated entities or otherwise exercises significant influence
over such entities other than the cases referred to in sub-regulations
(2) and (3), the Authority, in agreement with the other relevant
competent authorities, shall determine whether and to what extent
supplementary supervision of the regulated entities is to be carried
out in the same manner as if they constitute a financial conglomerate.
(5) In order to apply supplementary supervision, at least one of
the entities must be a regulated entity as defined in regulation 2(1)
and the conditions prescribed in paragraphs (a)(ii) or (b)(ii) and
(a)(iii) or (b)(iii) of the definition of the term "financial
conglomerates" in regulation 2 must be satisfied. The Authority in
agreement with the other relevant competent authorities shall take
into account the objectives of the supplementary supervision as
provided for by these regulations in taking its decision.
(6) For the purposes of applying the provisions of sub-
regulation (4) to cooperative groups, the Authority, in agreement with
the other relevant competent authorities, shall take into account the
public financial commitment of these groups with respect to other
financial entities.
(7) Without prejudice to regulation 15, the exercise of
supplementary supervision at the level of the financial conglomerate
shall in no way imply that the Authority or another coordinator is
required to play a supervisory role in relation to mixed financial
holding companies, third-country regulated entities in a financial
conglomerate or unregulated entities in a financial conglomerate on a
stand-alone basis.
6. (1) Without prejudice to the sectoral rules, Capital
supplementary supervision of the capital adequacy of the regulated adequacy.
entities in a financial conglomerate shall be exercised in accordance
with the rules laid down in these regulations.
(2) Regulated entities forming part of a financial conglomerate
shall maintain own funds at the level of the financial conglomerate at
least equal to the capital adequacy requirements as calculated in
accordance with the First Schedule.
(3) Regulated entities authorised in Malta which form part of a
financial conglomerate shall ensure that adequate capital adequacy
policies are in place at the level of the financial conglomerate.
(4) The requirements in sub-regulations (2) and (3) shall be
subject to supervisory overview by the Authority when acting as
coordinator or by another coordinator in accordance with the
provisions of regulations 11 to 15 and regulations 18 to 21.
(5) Where the Authority is the coordinator, it shall ensure that
the calculation referred to in sub-regulation (2) shall be carried out
once a year, either by the regulated entities or by the mixed financial
holding company.
(6) The results of the calculation referred to in sub-regulation
(2) and the relevant data for such calculation shall be submitted to the
Authority when acting as coordinator or to another coordinator
(a)
by the regulated entity which is at the head of the
financial conglomerate; or
(b) where the financial conglomerate is not headed by a
regulated entity, by the mixed financial holding company or by
a regulated entity in the financial conglomerate which has been
identified by the Authority or by another coordinator as the case
may be, after consultation with the other relevant competent
authorities and with the financial conglomerate.
(7) For the purposes of calculating the capital adequacy
requirements referred to in sub-regulation (2), the following entities
shall be included within the scope of supplementary supervision in
the manner and to the extent provided in the First Schedule
(a)
a credit institution, a financial institution or an
ancillary services undertaking;
(b) an insurance undertaking, a reinsurance undertaking
or an insurance holding company;
(c)
an investment firm; and
(d)
a mixed financial holding company.
(8) When calculating the supplementary capital adequacy
requirements with regard to a financial conglomerate by applying
method 1 (Accounting Consolidation) as provided for in the First
Schedule, the own funds and the solvency requirements of the entities
in the group shall be calculated by applying the corresponding
sectoral rules on the form and extent of consolidation as laid down in
Articles 133 and 134 of Directive 2006/48/EC and Article 221 of
Directive 2009/138/EC.
(9) When applying method 2 (Deduction and Aggregation)
referred to in the First Schedule, the calculation shall take account of
the proportion of the subscribed capital which is directly or indirectly
held by the parent undertaking or undertaking which holds a
participation in another entity of the group.
(10) The Authority when acting as coordinator or another
coordinator may decide not to include a particular entity when
calculating the supplementary capital adequacy requirements in the
following cases
(a)
if the entity is situated in a third country where there
are legal impediments to the transfer of the necessary
information, without prejudice to the sectoral rules regarding
the obligation of competent authorities to refuse authorisation
where the effective exercise of their supervisory functions is
prevented;
(b) if the entity is of negligible interest with respect to
the objectives of the supplementary supervision of regulated
entities in a financial conglomerate; or
(c)
if the inclusion of the entity would be inappropriate
or misleading with respect to the objectives of supplementary
supervision
Provided that, if several entities are to be excluded
pursuant to paragraph (b), the Authority when acting as coordinator
or another coordinator must include them when collectively they are
of non-negligible interest
Provided further that, in the case referred to in paragraph
(c), the Authority when acting as coordinator or another coordinator
shall, except in cases of urgency, consult the other relevant competent
authorities before taking a decision.
(11) When a coordinator does not include a regulated entity
authorised in Malta when calculating the supplementary capital
adequacy requirement on the basis of sub-regulation (10)(b) or (c),
the Authority may ask the entity which is at the head of the financial
conglomerate for information which may facilitate their supervision
of the regulated entity concerned
Provided that, in the event such a request is made to a
regulated entity authorised in Malta which is at the head of a financial
conglomerate, such regulated entity shall provide such information.
7. (1) Without prejudice to the sectoral rules,
supplementary supervision of the risk concentration of regulated
entities in a financial conglomerate shall be exercised in accordance
with the rules laid down in these regulations.
(2) Regulated entities authorised in Malta or a mixed financial
holding company of a group identified as a financial conglomerate
with its head office in Malta shall report at least once a year to the
coordinator any significant risk concentration at the level of the
financial conglomerate, in accordance with the rules laid down in this
regulation and in the Second Schedule.
(3) The information required in terms of sub-regulation (2)
shall be submitted to the coordinator
(a)
by the regulated entity which is at the head of the
financial conglomerate; or
(b) where the financial conglomerate is not headed by a
regulated entity, by the mixed financial holding company or by
a regulated entity in the financial conglomerate identified by the
coordinator, after consultation with the other relevant competent
authorities and with the financial conglomerate.
(4) These risk concentrations shall be subject to supervisory
overview by the coordinator in accordance with regulations 11 to 15
and regulations 18 to 21.
(5) The Authority may by means of rules set quantitative
limits or adopt other supervisory measures which would achieve the
objectives of supplementary supervision with regard to any risk
concentration at the level of a financial conglomerate.
(6) Where a financial conglomerate is headed by a mixed
financial holding company, the sectoral rules applicable to risk
concentration of the most important financial sector in the financial
conglomerate, if any, shall apply to that sector as a whole, including
the mixed financial holding company.
8. (1) Without prejudice to the sectoral rules, Intra-group
supplementary supervision of intra-group transactions of regulated transactions.
entities in a financial conglomerate shall be exercised in accordance
with these regulations.
(2) Regulated entities authorised in Malta or a mixed financial
holding company with its head office in Malta shall report at least
once a year to the coordinator all significant intra-group transactions
of regulated entities within a financial conglomerate in accordance
with the rules laid down in this regulation and in the Second
Schedule.
(3) In the absence of any definition of the thresholds in terms
of paragraph 3 of the Second Schedule, an intra-group transaction
shall be presumed to be significant if its amount exceeds at least five
(5) per centum of the total amount of capital adequacy requirements
at the level of a financial conglomerate.
(4) The information required in terms of sub-regulation (2)
shall be submitted to the coordinator
(a) by the regulated entity which is at the head of
the financial conglomerate; or
(b) where the financial conglomerate is not
headed by a regulated entity, by the mixed financial
holding company or by a regulated entity in the financial
conglomerate which has been identified by the coordinator,
after consultation with the other relevant competent
authorities and with the financial conglomerate.
(5) Intra-group transactions in terms of this regulation shall be
subject to supervisory overview by the coordinator.
(6) The Authority may by means of sectoral rules set
quantitative limits and qualitative requirements and may also take
other supervisory measures that would achieve the objectives of
supplementary supervision with regard to intra-group transactions of
regulated entities within a financial conglomerate.
(7) Where a financial conglomerate is headed by a mixed
financial holding company, the sectoral rules regarding intra-group
transactions of the most important financial sector in the financial
conglomerate shall apply to that sector as a whole, including the
mixed financial holding company.
9. (1) A regulated entity authorised in Malta identified as
forming part of a financial conglomerate in terms of these regulations
shall have in place, at the level of the financial conglomerate,
adequate risk management processes and internal control
mechanisms, including sound administrative and accounting
procedures.
(2) The risk management processes referred to in sub-
regulation (1) shall include
(a)
sound governance and management with the
approval and periodic review of the strategies and policies by
the appropriate governing bodies at the level of the financial
conglomerate with respect to all the risks they assume;
(b) adequate capital adequacy policies in order to
anticipate the impact of their business strategy on risk profile
and capital requirements as determined in accordance with
regulation 6 and the First Schedule; and
(c)
adequate procedures to ensure that their risk
monitoring systems are well integrated into their organisation
and that all measures are taken to ensure that the systems
implemented in all the undertakings included in the scope of
supplementary supervision are consistent so that the risks can be
measured, monitored and controlled at the level of the financial
conglomerate; and
(d) arrangements in place to contribute to and develop,
if required, adequate recovery and resolution arrangements and
plans. Such arrangements shall be updated regularly.
(3) The internal control mechanisms referred to in sub-
regulation (1) shall include
(a)
adequate mechanisms as regards capital adequacy to
identify and measure all material risks incurred and to
appropriately relate own funds to risks; and
(b) sound reporting and accounting procedures to
identify, measure, monitor and control the intra-group
transactions and the risk concentration.
(4) The Authority shall ensure that in all undertakings
included in the scope of supplementary supervision pursuant to
regulation 5, there are adequate internal control mechanisms for the
production of any data and information which would be relevant for
the purposes of supplementary supervision.
(5) The Authority shall require the regulated entities at the
level of the financial conglomerate to regularly provide details on
their legal structure, governance and organisational structure
including all regulated entities, non-regulated subsidiaries and
significant branches.
(6) The Authority shall require the regulated entities to
disclose publicly, at the level of the financial conglomerate, on an
annual basis, either in full or by way of references to equivalent
information, a description of their legal structure and governance and
organisational structure.
(7) The processes and mechanisms referred to in sub-
regulations (1) to (6) shall be subject to supervisory overview by the
Authority when acting as coordinator or by another coordinator.
(8) The Authority shall align the application of supplementary
supervision of internal control mechanisms and risk management
processes as provided for in this regulation with the supervisory
review processes as provided for by Article 124 of Directive 2006/48/
EC and Article 248 of Directive 2009/138/EC.
10. The Authority when acting as coordinator may, whenever Stress testing.
it deems it appropriate, require financial conglomerates to undertake
regular stress testing within the meaning of the Financial
Conglomerates Directive and, in this respect, the Authority shall
cooperate fully with other competent authorities when acting as
coordinators.
11. (1) The Authority shall, together with the relevant The coordinator.
competent authorities, including those of the Member State in which
a mixed financial holding company has its head office, appoint from
among such competent authorities a coordinator responsible for
coordination and exercise of supplementary supervision of the
regulated entities in a financial conglomerate in accordance with the
provisions of these regulations.
(2) The appointment of the coordinator in terms of sub-
regulation (1) shall be based on the following criteria
(a)
where a financial conglomerate is headed by a
regulated entity, the task of coordinator shall be exercised by the
competent authority which has authorised that regulated entity
pursuant to the relevant sectoral rules
(b) where a financial conglomerate is not headed by a
regulated entity, the task of coordinator shall be exercised by the
competent authority identified in accordance with the following
principles
(i) where the parent of a regulated entity is a
mixed financial holding company, the task of coordinator
shall be exercised by the competent authority which has
authorised that regulated entity pursuant to the relevant
sectoral rules;
(ii) where at least two regulated entities which
have their registered office in the European Union have as
their parent the same mixed financial holding company,
and one of these entities has been authorised in the
Member State in which the mixed financial holding
company has its head office, the task of coordinator shall
be exercised by the competent authority of the regulated
entity authorised in that Member State. When one of these
regulated entities has been authorised in Malta and the
mixed financial holding company also has its head office
in Malta, the coordinator shall be the Authority
Provided that, where more than one regulated
entity, being active in different financial sectors, have been
authorised in the Member State in which the mixed
financial holding company has its head office, the task of
coordinator shall be exercised by the competent authority
of the regulated entity active in the most important
financial sector as defined in the proviso to regulation 3(2);
Provided further that, where the financial
conglomerate is headed by more than one mixed financial
holding company with a head office in different Member
States and there is a regulated entity in each of these states,
the task of coordinator shall be exercised by the competent
authority of the regulated entity with the largest balance
sheet total if these entities are in the same financial sector,
or by the competent authority of the regulated entity in the
most important financial sector as defined in the proviso to
regulation 3(2);
(iii) where at least two regulated entities which
have their registered office in the European Union have as
their parent the same mixed financial holding company and
none of these entities has been authorised in the Member
State in which the mixed financial holding company has its
head office, the task of coordinator shall be exercised by
the competent authority which authorised the regulated
entity with the largest balance sheet total in the most
important financial sector. When one of these regulated
entities has been authorised in Malta and the mixed
financial holding company also has its head office in
Malta, the coordinator shall be the Authority;
(iv) where the financial conglomerate is a group
without a parent undertaking, or in any other case, the task
of coordinator shall be exercised by the competent
authority which authorised the regulated entity with the
largest balance sheet total in the most important financial
sector as defined in the proviso to regulation 3(2).
(3) The Authority may, in particular cases, by common
agreement with the relevant competent authorities, waive the criteria
referred to in sub-regulation (2) if their application would be
inappropriate, taking into account the structure of the conglomerate
and the relative importance of its activities in different countries, and
may appoint a different competent authority as coordinator.
(4) In the cases referred to in sub-regulation (3), before taking
a decision, the Authority and the other competent authorities
concerned shall give the financial conglomerate an opportunity to
state its opinion on the proposed decision.
(5) When a competent authority other than the Authority has
been appointed coordinator, that coordinator shall be recognised in
Malta for the purpose of exercising and enforcing its responsibilities
and for the purpose of exercising any powers given to the coordinator
under these regulations.
12. (1) The functions to be carried out by the Authority Functions of the
when acting as coordinator or by another coordinator with regard to coordinator.
supplementary supervision shall include
(a)
coordination of the gathering and dissemination of
relevant or essential information in the ordinary exercise of its
functions and emergency situations, including the dissemination
of information which is of importance for a competent
authority’s supervisory task under sectoral rules;
(b) supervisory overview and assessment of the
financial situation of a financial conglomerate;
(c)
assessment of compliance with the rules on capital
adequacy and of risk concentration and intra-group transactions
as provided in regulations 6, 7 and 8;
(d)
assessment of the financial conglomerate’s structure,
organisation and internal control system as provided in
regulation 9;
(e)
planning and coordination of supervisory activities
in the ordinary exercise of its functions as well as in emergency
situations, in cooperation with the relevant competent
authorities; and
(f)
exercising other tasks, measures and decisions
assigned to the coordinator by these regulations or deriving
from the application of the Financial Conglomerates Directive
and these regulations.
(2) The coordinator appointed in terms of regulation 11 in
respect of a particular group shall inform the parent undertaking at the
head of the group or, in the absence of a parent undertaking, the
regulated entity with the largest balance sheet total in the most
important financial sector in a group, that the group has been
identified as a financial conglomerate and of its appointment as
coordinator. The coordinator shall also provide such information to
the competent authorities which have regulated entities in the group
and the competent authorities of the Member State in which the
mixed financial holding company has its head office, and the Joint
Committee.
(3) The coordinator may enter into coordination agreements
with the other relevant competent authorities and other competent
authorities concerned in order to facilitate and establish
supplementary supervision. Such coordination agreements may
entrust additional tasks to the coordinator and may specify the
procedures for the decision-making process among the relevant
competent authorities as referred to in these regulations.
(4) The coordinator shall, when it requires information which
has already been given to another competent authority in accordance
with the sectoral rules, contact such competent authority in order to
provide it with this information whenever possible and in order to
prevent duplication of reporting to the various authorities involved in
supervision.
(5) When the Authority receives a request from a coordinator
in terms of sub-regulation (3), the Authority shall make available to
the coordinator any information which it has received in accordance
with the sectoral rules, subject to its obligations under provisions
relating to confidentiality in the Act and the relevant sectoral rules.
(6) Without prejudice to the possibility of delegating specific
supervisory competences and responsibilities as provided for by
European Union legislative acts, the presence of a coordinator
entrusted with specific tasks concerning the supplementary
supervision of regulated entities in a financial conglomerate shall not
affect the tasks and responsibilities of the competent authorities as
provided for by the sectoral rules.
(7) The required cooperation under this regulation and the
exercise of the tasks listed in sub-regulations (1) to (6) of this
regulation and in regulation 13 and, subject to confidentiality
requirements and European Union Law, the appropriate coordination
and cooperation with relevant third-country supervisory authorities,
where appropriate, shall be fulfilled through colleges, established
pursuant to Article 131a of Directive 2006/48/EC or Article 248(2) of
Directive 2009/138/EC.
(8) The coordination arrangements referred to in sub-
regulation (2) shall be separately reflected in the written coordination
arrangements in place pursuant to Article 131 of Directive 2006/48/
EC or Article 248 of Directive 2009/138/EC. The Authority, when
appointed coordinator and Chair of the College established pursuant
to Article 131a of Directive 2006/48/EC or Article 248(2) of
Directive 2009/138/EC, shall decide which other competent
authorities participate in a meeting or in any activity of that college.
13. (1) The Authority shall cooperate closely with the Cooperation and
coordinator and with the other competent authorities responsible for exchange
information
the supervision of regulated entities in that financial conglomerate in between
competent
performing its functions in terms of these regulations.
authorities.
(2) The Authority shall, without prejudice to its
responsibilities under the Act and the sectoral rules, provide the
coordinator and, or the other competent authorities responsible for the
supervision of regulated entities in a financial conglomerate with any
information which is essential or relevant for the exercise of the other
authorities’ supervisory tasks under the sectoral rules and the
Financial Conglomerates Directive
Provided that, upon a request by such entities, the
Authority shall provide the said entities with all relevant information
Provided further that the Authority shall provide all
essential information on its own initiative.
(3) The cooperation referred to in this regulation shall, as a
minimum, provide for the gathering and the exchange of information
with regard to the following
(a)
identification of the group’s legal structure and the
governance and organisational structure, including all regulated
entities, non-regulated subsidiaries and significant branches
belonging to the financial conglomerate, the holders of
qualifying holdings at the ultimate parent level, as well as of the
competent authorities of the regulated entities in the group;
(b)
the financial conglomerate’s strategic policies;
(c)
the financial situation of the financial conglomerate,
in particular on capital adequacy, intra-group transactions, risk
concentration and profitability;
(d) the financial conglomerate’s major shareholders and
management;
(e)
the organisation, risk management and internal
control systems at financial conglomerate level;
(f)
procedures for the collection of information from
the entities in a financial conglomerate, and the verification of
that information;
(g) adverse developments in regulated entities or in
other entities of the financial conglomerate which could
seriously affect the regulated entities; and
(h) major sanctions and exceptional measures taken by
any competent authority in accordance with sectoral rules or
these regulations.
(4) The Authority may exchange such information as may be
needed for the performance of their respective tasks regarding
regulated entities in a financial conglomerate, in line with the
provisions laid down in the sectoral rules, with central banks, the
European System of Central Banks and the European Central Bank
and the European Systemic Risk Board in accordance with Article 15
of 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.
(5) Without prejudice to its responsibilities as defined in the
Act and under sectoral rules, the Authority shall, prior to taking a
decision, consult the other competent authorities concerned with
regard to the following matters where these decisions are of
importance for the competent authorities’ supervisory functions
(a)
changes in the shareholder, organisational or
management structure of regulated entities in a financial
conglomerate which require the approval or authorisation of the
Authority; and
(b) major sanctions or exceptional measures taken by
the Authority.
(6) The Authority may decide not to consult the other
competent authorities concerned in cases of urgency or where such
consultation may jeopardise the effectiveness of the decisions and in
such cases the Authority shall inform the other competent authorities
concerned without delay.
(7) Where the Authority does not exercise the supplementary
supervision pursuant to regulation 11 in respect of a parent
undertaking having its head office in Malta, the Authority shall, upon
a request by the coordinator, ask the parent undertaking for any
information which would be relevant for the exercise of the
coordinator’s coordination functions in terms of regulation 12 and
shall transmit that information, once obtained, to the coordinator.
(8) Where the Authority exercises the supplementary
supervision pursuant to regulation 11, it may request the competent
authority of the Member State in which a parent undertaking has its
head office to obtain information from the parent undertaking which
would be relevant for the exercise of its function as coordinator as
laid down in regulation 12 and to transmit that information, once
obtained, to the Authority.
(9) Where the information referred to in regulation 18(2) and
(3) has already been provided to the Authority in accordance with the
sectoral rules, the Authority shall, at the request of the competent
authorities responsible for exercising supplementary supervision,
transmit that information to them.
(10) The Authority shall have the power to exchange
information with other competent authorities and other authorities as
referred to in this regulation
Provided that the collection or possession of information
by the Authority with regard to an entity within a financial
conglomerate which is not a regulated entity shall not in any way
imply that the Authority is required to play a supervisory role in
relation to such entity on a stand-alone basis.
(11) Any information received by the Authority under these
regulations shall be subject to the provisions of professional secrecy
and confidentiality as laid down in the Act and the sectoral rules.
14. (1) The Authority shall cooperate with the Joint
Committee for the purposes of these regulations, in accordance with
Regulation (EU) No 1093/2010, Regulation (EU) No 1094/2010, and
Regulation (EU) No 1095/2010.
(2) The Authority shall without delay provide the Joint
Committee with all information necessary to carry out its duties in
accordance with Article 35 of Regulation (EU) No 1093/2010, of
Regulation (EU) No 1094/2010, and of Regulation (EU) No 1095/
2010, respectively.
(3) The Authority, when appointed coordinator, shall provide
the Joint Committee with the information referred to in regulation
9(4) and regulation 13(3)(a). The Joint Committee shall make
available to the competent authorities information regarding the legal
structure and the governance and organisational structure of financial
conglomerates.
15. (1) The Authority may require persons who effectively
direct the business of a mixed financial holding company with its
head office in Malta to submit to the Authority such information,
including that relating to qualifications and experience, as it may
require in respect of the following
(a)
any of its shareholders;
(b)
its directors;
(c)
those persons who, in the opinion of the Authority,
effectively direct the business; and
(d) the holders of such managerial posts as the
Authority may specify.
(2) Where it appears to the Authority that a person referred to
in sub-regulation (1) is not fit and proper to hold that position, the
Authority may decide that, as long as that person holds the position,
the mixed financial holding company with its head office in Malta
shall take such action as the Authority deems appropriate and such
mixed financial holding company shall comply with that decision.
(3) Every proposal to appoint a director, chief executive or
holders of such managerial posts by a company referred to in sub-
regulation (1) shall be notified to the Authority and shall not be made
if the Authority objects to the proposal on the ground that the person
proposed is not deemed fit and proper for the post.
16. (1) Pending further coordination of European Union Asset
sectoral rules, the Authority shall, at its discretion, include asset management
companies.
management companies within the scope of consolidated supervision
of credit institutions and investment firms, or within the scope of
supplementary supervision of insurance undertakings in an insurance
group.
(2) Where the group is a financial conglomerate, the Authority
shall include such asset management companies within the scope of
supplementary supervision within the meaning of the Financial
Conglomerates Directive.
(3) The Authority shall provide for the inclusion of asset
management companies within the identification process in
accordance with regulation 3
Provided that the relevant sectoral rules regarding the form
and extent of the inclusion of financial institutions (where asset
management companies are included in the scope of consolidated
supervision of credit institutions and investment firms) and of
reinsurance undertakings (where asset management companies are
included in the scope of supplementary supervision of insurance
undertakings) shall apply mutatis mutandis to asset management
companies
Provided further that, for the purposes of supplementary
supervision referred to in sub-regulation (2), the asset management
company shall be treated as part of whichever sector it is included in
by virtue of sub-regulation (1).
17. (1) Pending further coordination of European Union Alternative
sectoral rules, the Authority shall, at its discretion, include alternative investment
managers.
investment fund managers within the scope of consolidated
supervision of credit institutions and investment firms, or within the
scope of supplementary supervision of insurance undertakings in an
insurance group.
(2) Where the group is a financial conglomerate, the Authority
shall include such asset management companies within the scope of
supplementary supervision within the meaning of the Financial
Conglomerates Directive.
(3) The Authority shall provide for the inclusion of asset
management companies within the identification process in
accordance with regulation 3
Provided that the relevant sectoral rules regarding the form
and extent of the inclusion of financial institutions shall apply mutatis
mutandis to alternative investment fund managers
Provided further that, for the purposes of supplementary
supervision referred to in sub-regulation (2), the alternative
investment fund manager shall be treated as part of whichever sector
it is included in by virtue of sub-regulation (1)
Provided further that this shall apply as regards groups
referred to in sub-regulation (1).
18. (1) Notwithstanding the provisions of any other law, all
persons included within the scope of supplementary supervision,
whether or not they are regulated entities, may exchange freely
among themselves any information which would be relevant for the
purposes of supplementary information and shall exchange such
information in accordance with these regulations and with the
European Supervisory Authorities in accordance with Article 35 of
Regulation (EU) No 1093/2010, of Regulation (EU) No 1094/2010,
and of Regulation (EU) No 1095/2010, respectively, where necessary
through the Joint Committee.
(2) The Authority shall, either directly or indirectly, have
access to any information relating to entities in a financial
conglomerate, whether or not they are regulated entities, which would
be relevant for the purpose of supplementary supervision.
(3) Any person licensed, authorised, established, situated or
with its head office in Malta included within the scope of
supplementary supervision as provided for by these regulations,
whether or not a regulated entity, shall provide the Authority or
coordinator on request such information as may be required for the
purpose of supplementary supervision.
(4) Any person referred to in sub-regulation (3) from whom
the Authority or coordinator may require information in terms of
these regulations shall put in place the necessary internal reporting,
managerial and technological arrangements to ensure that the
required information is capable of being provided to the Authority or
coordinator.
19. (1) Where, in applying these regulations, the Authority
wants to verify the information concerning an entity, whether or not
regulated, which is part of a financial conglomerate and is licensed,
authorised, established, situated or with its head office in another
Member State, the Authority may ask the competent authorities of
that other Member State
(a)
to have the verification carried out by that
competent authority to allow the Authority to otherwise
participate in the verification when it does not carry out the
verification itself; or
(b) for permission to allow the Authority or one of its
officers or auditors or other experts appointed by the Authority
to carry out that verification including on-site verification.
(2) Subject to the provisions of sub-regulation (3), where the
competent authorities of another Member State request the Authority
to verify information concerning an entity, whether or not regulated,
licensed, authorised, established, situated or with its head office in
Malta and which is part of a financial conglomerate, the Authority
shall
(a)
comply with the request;
(b) allow the competent authorities of the Member State
which made the request to participate in the verification if they
do not carry out the verification themselves; or
(c)
allow the competent authorities of that other
Member State to carry out the verification, including on-site
verification.
(3) Verification may be carried out by an official auditor or
other expert appointed by the competent authorities of the other
Member State, who may exercise all the powers vested in the
Authority necessary to conduct the verification.
20. (1) If the regulated entities in a financial conglomerate Necessary
do not comply with any of the requirements referred to in regulations measures.
6 to 9, or where the requirements are met but solvency may
nevertheless be jeopardized, or where the intra-group transactions or
the risk concentrations are a threat to the financial position of such
regulated entities, the necessary measures shall be taken under these
regulations or the relevant sectoral rules in order to rectify the
situation as soon as possible. Such measures shall be taken by the
following persons
(a)
by the coordinator in respect of a mixed financial
holding company with its head office in Malta;
(b) by the Authority, upon receiving information from
the coordinator, in respect of the regulated entities authorised in
Malta; and
(c)
where the coordinator is the Authority, by the
Authority in respect of a mixed financial holding company with
its head office in a Member State other than in Malta
Provided that where the Authority is appointed as
coordinator in terms of regulation 11, it shall inform the relevant
competent authorities of any findings in terms of this sub-regulation.
(2) Without prejudice to the sectoral rules
(a)
the Authority, where acting as coordinator, may take
a decision in respect of a mixed financial holding company with
its head office in Malta in relation to any matter covered by
these regulations and shall notify the mixed financial holding
company in writing of such decision; and
(b) the Authority, where acting as a coordinator, may
take a decision in respect of a mixed financial holding company
with its head office in a Member State other than in Malta in
relation to any matter covered by these regulations and shall
notify the relevant competent authorities and the mixed
financial holding company, in writing, of such a decision.
(3) The Authority, where acting as a coordinator, shall, where
appropriate, coordinate its supervisory actions with the other relevant
competent authorities.
(4) Where the Authority takes a decision in respect of a mixed
financial holding company directing it to comply with any
requirement resulting from these regulations or the Financial
Conglomerates Directive, that mixed financial holding company shall
comply with such decision.
(5) If a mixed financial holding company fails to comply with
a decision of the Authority or the coordinator given under this
regulation, the Authority or coordinator may notify the other relevant
competent authorities and, with their agreement, may decide on the
measures to be taken.
21. (1) The Authority may take any measures in terms of
these regulations in relation to a regulated entity authorised in Malta
within the financial conglomerate and may take any step or action
permitted in the sectoral rules or in any laws, rules, regulations,
guidelines or directives implementing or giving effect to the sectoral
rules in respect of such regulated entity in a financial conglomerate.
(2) The Authority may apply the provisions of the sectoral
rules on capital adequacy, intra-group transactions and risk
concentration at the level of the financial conglomerate.
(3) Where the Authority is of the opinion that a mixed
financial holding company with its head office in Malta
(a)
is or is likely to become unable to meet its
obligations towards its creditors or its clients;
(b) whose subsidiaries or entities in whom it holds a
participation or with whom it has close links are not maintaining
or are unlikely to be in a position to maintain adequate capital
resources having regard to the volume and nature of their
business, or which no longer comply with capital or other
financial requirements specified by the competent authorities
from time to time;
(c)
fails to provide to the coordinator within such
reasonable period as may be specified by the coordinator such
information as it may reasonably request for the purpose of its
functions under these regulations; or
(d) fails to comply with any decision, direction,
condition or requirement imposed under these regulations, and
the circumstances are such that the Authority or the coordinator
is of the opinion that the stability or soundness of a mixed
financial holding company is materially affected by this failure;
it shall, subject to the provisions of sub-regulation (4), inform the
mixed financial holding company accordingly of its decision and
shall in writing direct the mixed financial holding company to comply
immediately with the decision and any requirements set out by the
Authority or the coordinator as the case may be.
(4) Before taking a decision in respect of a mixed financial
holding company under sub-regulation (3), the Authority shall notify
the mixed financial holding company of its intention to take such
decision.
(5) Every notice given under sub-regulation (4) shall state that
the recipient of the notice may make representations, within such
reasonable period after the service thereof as may be stated in the
notice, being a period of not less than forty-eight (48) hours and not
longer than thirty (30) days. Such representations shall be made in
writing to the Authority giving reasons why the proposed decision
should not be taken, and the Authority shall consider any
representation so made before arriving at a final decision.
(6) The Authority shall, as soon as practicable, notify its final
decision in writing to the mixed financial holding company
concerned.
(7) If the mixed financial holding company fails to comply
with a decision of the Authority under sub-regulation (3), the
Authority shall notify the relevant competent authorities.
(8) Without prejudice to the provisions of these regulations,
the Authority shall cooperate with the other relevant competent
authorities to ensure the effectiveness of penalties and other measures
in relation to the mixed financial holding company concerned or their
effective manager, secretary, director or other person responsible
therefor.
(9) Any decision taken in terms of these regulations shall have
effect from the date specified by the Authority or the coordinator, as
the case may be therein.
22. Subject to the provisions of the Act, any person in respect
of whom a decision is taken by the Authority under these regulations
may appeal to the Tribunal in terms of article 21 of the Act.
23. (1) Where a mixed financial holding company or a
regulated entity authorised in Malta, or the respective manager,
secretary, director or other person responsible therefor, contravenes or
fails to comply with the provisions of these regulations, the Authority
may, by notice in writing and without recourse to a court hearing,
impose on such person, as the case may be, an administrative penalty
which may not exceed the sum of one hundred and sixteen thousand
and five hundred euro (€116,500).
(2) Any administrative penalty imposed by the Authority in
terms of sub-regulation (1) in respect of a regulated entity authorised
in Malta shall be without prejudice to
(a)
the imposition of any penalties or other measures by
the Authority under the relevant sectoral rules; and
(b) the commencement of criminal proceedings and the
imposition of criminal sanctions for breaches of the sectoral
rules.
(3) Within a period of thirty (30) days from the date of service
of a notice imposing an administrative penalty in accordance with
sub-regulation (1), a person upon whom the notice is served may
appeal to the Tribunal against the decision of the Authority in
accordance with regulation 22.
(4) Where a notice as referred to in sub-regulation (1) has not
been appealed or, where such notice has been appealed, within fifteen
(15) days of the determination of such appeal, the administrative
penalty as contained in the notice or as reduced by the decision of the
Tribunal shall be due to the Authority and upon the service of a copy
of the notice or the decision, as the case may be, by means of a
judicial act on the person indicated in the notice or decision, the said
notice or decision shall constitute an executive title for all effects and
purposes of Title VII of Part I of Book Second of the Code of Cap. 12.
Organization and Civil Procedure.
24. (1) Without prejudice to the sectoral rules, where the Parent
parent undertaking of a regulated entity, which parent undertaking has undertakings
a third country.
its head office outside the European Union, is subject to supervision
by a third country competent authority, a verification as to whether
supplementary supervision is equivalent to that provided for in these
regulations shall be carried out in terms of sub-regulation (2).
(2) The verification referred to in sub-regulation (1) shall be
carried out by the competent authority which would be the
coordinator if the criteria set out in regulation 11(2) were to apply.
The verification shall be carried out
(a)
at the request of the parent undertaking;
(b) at the request of the regulated entities authorized in
the European Union; or
(c)
on such competent authority’s own initiative.
(3) The Authority shall consult with the other relevant
competent authorities and shall make every effort to comply with any
applicable guidelines prepared through the Joint Committee in
accordance with Articles 16 and 56 of Regulation (EU) No 1093/
2010, of Regulation (EU) No 1094/2010, and of Regulation (EU) No
1095/2010, respectively.
(4) Where the Authority disagrees with the decision taken by
another relevant competent authority under sub-regulation (2), Article
19 of Regulation (EU) No 1093/2010, Article 19 of Regulation (EU)
No 1094/2010, and Article 19 of Regulation (EU) No 1095/2010,
respectively shall apply.
(5) In the absence of equivalent supervision referred to in sub-
regulation (1), the provisions concerning the supplementary
supervision of regulated entities referred to in regulation 5(2) shall
apply by analogy to the regulated entities referred to in sub-regulation
(1) or, as an alternative, one of the methods provided in sub-
regulation (6).
(6) The Authority may apply other methods which ensure
appropriate supplementary supervision of the regulated entities in the
financial conglomerate. Those methods shall be agreed by the
Authority when acting as coordinator after consulting the other
relevant competent authorities. The competent authorities may in
particular require the establishment of a mixed financial holding
company which has its head office in the European Union and apply
this Directive to the regulated entities in the financial conglomerate
headed by that holding company. The competent authorities shall
ensure that those methods achieve the objective of supplementary
supervision under this Directive and shall notify the other competent
authorities involved and the Commission thereof.
Article 39(1) and (2) of Directive 2006/48/EC, Article 10a
of Directive 98/78/EC and Article 264 of Directive 2009/138/EC
shall apply mutatis mutandis to the negotiation of agreements with
one or more third countries regarding the means of exercising
supplementary supervision of regulated entities in a financial
conglomerate.
The Financial Conglomerates Regulations, 2004 are
hereby being revoked.