Supervisory Consolidation Regulations, 2014

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 19,198, 24 ta’ Jannar, 2014

L.N. 31 of 2014

BANKING ACT

(CAP. 371)

INVESTMENT SERVICES ACT

(CAP. 370)

Supervisory Consolidation Regulations, 2014

IN exercise of the powers conferred by article 3 of the Banking

Act, article 12 of the Investment Services Act and article 20D of the

Malta Financial Services Authority Act, the Minister for Finance,

acting on the advice of the Malta Financial Services Authority, has

made the following regulations:-

(1)

The title of these regulations is the Supervisory Citation,

purpose and

Consolidation Regulations, 2014.

commencement.

(2) The purpose of these regulations is to implement Articles

2(6), 3 (partly), 20(3), 48(1), 49, 51, 111, 112, 113, 114, 115, 116,

117, 118, 119, 120, 122, 123(1), 124, 127, 151, 155, 156 and 158 of

the CRD.

(3) These regulations shall come into force on such date as the

Minister responsible for finance may by notice in the Gazette

establish.

(1)

In these regulations, unless the context otherwise Interpretation.

requires -

"the Acts" means the Banking Act and the Investment Services Cap. 371.

Act;

"ancillary services undertaking" shall have the same meaning as

that assigned to it in point (18) of Article 4(1) of the CRR;

"branch" shall have the same meaning as that assigned to it in

point (17) of Article 4(1) of the CRR;

"consolidated basis" shall have the same meaning as that

assigned to it in point (48) of Article 4(1) of the CRR;

"consolidated situation" shall have the same meaning as that

assigned to it in point (47) of Article 4(1) of the CRR;

"the competent authority" means the Malta Financial Services

Authority established by the Malta Financial Services Authority Act; Cap. 330.

"consolidating supervisor" shall have the same meaning as that

assigned to it in point (41) of Article 4(1) of the CRR;

"credit institution" shall have the same meaning as that assigned

to it in point (1) of Article 4(1) of the CRR;

"the CRD" means Directive 2013/36/EU of the European

Parliament and of the Council of 26 June 2013 on access to the

activity of credit institutions and the prudential supervision of credit

institutions and investment firms, amending Directive 2002/87/EC

and repealing Directives 2006/48/EC and 2006/49/EC, as amended

from time to time, and includes any implementing measures that have

been or may be issued thereunder;

"the CRR" means means Regulation (EU) No 575/2013 of the

European Parliament and of the Council of 26 June 2013 on

prudential requirements for credit institutions and investment firms

and amending Regulation (EU) No 648/2012, as amended from time

to time, and includes any implementing measures that have been or

may be issued thereunder;

"EBA" means the European Banking Authority as established

by Regulation (EU) No 1093/2010 of the European Parliament and of

the Council of 24th November 2010 establishing a European

Supervisory Authority;

"EEA" means a State which is a contracting party to the

Agreement on the European Economic Area signed at Oporto on the

2nd May, 1992 as amended by the protocol signed at Brussels on the

17th March, 1993 and as amended by any subsequent acts;

"EIOPA" means the European Insurance and Occupational

Pensions Authority as established by Regulation (EU) No. 1093/2010

of the European Parliament and of the Council of 24th November

2010 establishing a European Supervisory Authority;

"ESCB central banks" shall have the same meaning as that

assigned to it in point (45) of Article 4(1) of the CRR;

"ESRB" means the European Systemic Risk Board established

by Regulation (EU) No 1092/2010;

"EU investment firm" means a firm as defined in Article 4(1)(2)

of the CRR, authorised by its European regulatory authority within

the meaning of Article 5 of the MiFID Directive or authorised by a

European regulatory authority in an EEA State;

"EU parent financial holding company" shall have the same

meaning as that assigned to it in point (31) of Article 4(1) of the CRR;

"EU parent institution" shall have the same meaning as that

assigned to it in point (29) of Article 4(1) of the CRR;

"EU parent mixed financial holding company" shall have the

same meaning as that assigned to it in point (33) of Article 4(1) of

Article 4(1) of the CRR;

"European regulatory authority" means an authority which is

situated in a country or territory outside Malta that is a Member State

and is empowered by law or regulation to supervise investment firms

or credit institutions;

"financial holding company"” shall have the same meaning as

that assigned to it in point (20) of Article 4(1) of the CRR;

"financial institution" shall have the same meaning as that

assigned to it in point (26) of Article 4(1) of the CRR

Provided that the entities referred to in point (1) and in points

(3) to (23) of Article 2(5) of the CRD shall be treated as financial

institutions;

"home Member State" shall have the same meaning as that

assigned to it in point (43) of Article 4(1) of the CRR;

"host Member State" shall have the same meaning as that

assigned to it in point (44) of Article 4(1) of the CRR;

"institution" shall have the same meaning as that assigned to it

in point (3) of Article 4(1) of the CRR;

"insurance undertaking" shall have the same meaning as that

assigned to it in point (5) of Article 4(1) of the CRR;

"investment firm" means a person who holds an investment

services licence issued by the competent authority under the

Investment Services Act and which is subject to the requirements of Cap. 370.

the CRD and CRR;

"Member State" includes an EU and EEA State;

"mixed activity holding company" shall have the same meaning

as that assigned to it in point (22) of Article 4(1) of the CRR;

"mixed financial holding company" shall have the same

meaning as that assigned to it in point (21) of Article 4(1) of the CRR;

"parent financial holding company in a Member State" shall

have the same meaning as that assigned to it in point (30) of Article

4(1) of the CRR;

"parent institution" means an institution licensed in terms of the

Acts which has an institution or a financial institution as a subsidiary

or which holds a participation in such an institution or financial

institution, and which is not itself a subsidiary of another institution

licensed in terms of the Acts, or of a financial holding company or

mixed financial holding company established in Malta;

"parent mixed financial holding company in a Member State"

shall have the same meaning as that assigned to it in point (32) of

Article 4(1) of the CRR;

"parent undertaking" shall have the same meaning as that

assigned to it in point (15) of Article 4(1) of the CRR;

"participation" shall have the same meaning as that assigned to

it in point (35) of Article 4(1) of the CRR;

"Rules" means Rules for credit institutions and investment firms

issued by the competent authority in terms of the Banking Act and the

Investment Services Act, as applicable;

"sub-consolidation basis" shall have the same meaning as that

assigned to it in point (49) of Article 4(1) of the CRR;

"subsidiary" shall have the same meaning as that assigned to it

in point (16) of Article 4(1) of the CRR;

"third country" means a country that is not a Member State;

"third country regulatory authority" means an authority which is

in a country or territory that is not a Member State and is empowered

by law or regulation to supervise investment firms and, or credit

institutions.

(2) For the purpose of these regulations, the phrase

"institutions licensed in terms of the Acts" means the holder of a

licence issued under either of the Acts or the holder of licences issued

under both Acts, as the case may be.

(3) Words and expressions which are also used in the Acts

shall have the same meaning as in the Acts.

Part I - Consolidated Supervision

(1)

The competent authority shall exercise supervision Responsibility

of the

on a consolidated basis

competent

authority for

consolidated

(a)

where the parent undertaking is a parent institution

supervision.

or an EU parent institution, licensed in terms of the Acts;

(b)

where the parent of an institution licensed in terms

of the Acts is a parent financial holding company or parent

mixed financial holding company in a Member State or an EU

parent financial holding company or EU parent mixed financial

holding company;

(c)

where institutions authorised in two or more

Member States, and one of the institutions is an institution

licensed in terms of the Acts, have as their parent the same

parent financial holding company, the same parent mixed

financial holding company in a Member State, the same EU

parent financial holding company or the same EU parent mixed

financial holding company established in Malta;

(d)

where institutions authorised in two or more

Member States, one of which is Malta, have as their parent more

than one financial holding company or mixed financial holding

company with head offices in different Member States, one of

which is Malta and there is a credit institution in each of these

Member States and the credit institution which is licensed in

Malta has the largest balance sheet total;

(e)

where the parent financial holding company or

parent mixed financial holding company is established in a

Member State other than Malta and it has more than one

institution authorised in the European Union other than the

Member State where the financial holding company is set up,

one of which is licensed in Malta, and the institution licensed in

Malta has the largest balance sheet total. That institution shall

be considered to be controlled by an EU parent financial

holding company or an EU parent mixed financial holding

company.

(2) In particular cases, the competent authority may, by

common agreement with other European regulatory authorities, waive

the criteria referred to in sub-regulation (1)(c), (d) and (e) if their

application would be inappropriate, taking into account the

institutions and the relative importance of their activities in different

countries, and appoint a European regulatory authority to exercise

supervision on a consolidated basis. In these cases, before taking its

decision, the competent authority shall give the EU parent institution,

EU parent financial holding company, EU parent mixed financial

holding company or the institution with the largest balance sheet

total, as appropriate, an opportunity to state its opinion on that

decision. The competent authority shall notify the Commission and

the EBA of any such agreement.

(3) Where the competent authority is the consolidating

supervisor, it shall provide the relevant European regulatory

authorities and EBA with all information regarding the group of

credit institutions in accordance with Articles 14(3), 74(1) and 109(2)

of the CRD, in particular regarding the legal and organisational

structure of the group and its governance.

(1)

In addition to the obligations imposed by the

provisions of the Acts and any regulations or Rules made thereunder

transposing the requirements of the CRD, and by the CRR, the

competent authority acting as consolidating supervisor, shall carry

out the following tasks

(a)

coordination of the gathering and dissemination of

relevant or essential information in going concern and

emergency situations; and

(b)

planning and coordination of supervisory activities

in going concern situations, including in relation to the activities

relating to supervision on a consolidated basis in cooperation

with the European regulatory authorities; and

(c)

planning and coordination of supervisory activities

in cooperation with the European regulatory authorities

involved, and if necessary with ESCB central banks, in

preparation for and during emergency situations, including

adverse developments in institutions or in financial markets

using, where possible, existing channels of communication for

facilitating crisis management. These include exceptional

measures referred to in regulation 9(3)(e), the preparation of

joint assessments, the implementation of contingency plans and

communication to the public.

(2) Where European regulatory authorities do not cooperate

with the competent authority, to the extent required in carrying out the

tasks in this regulation, the competent authority may refer the matter

to the EBA and request its assistance under Article 19 of Regulation

(EU) No 1093/2010.

(3) Where the competent authority does not act as

consolidating supervisor and either the consolidating supervisor fails

to carry out the tasks referred to in Article 112(1) of the CRD or any

European regulatory authority does not cooperate with the

consolidating supervisor to the extent required in carrying out the

tasks in Article 112(1) of the CRD, it may refer the matter to the EBA

and request its assistance under Article 19 of Regulation (EU) No

1093/2010.

(1)

Where an emergency situation, including a Notifications in

situation as described in article 18 of Regulation (EU) No 1093/2010 emergency

situations.

or a situation of adverse developments in markets arises, which

potentially jeopardises the market liquidity and the stability of the

financial system in any of the Member States where entities of a

group have been authorised or where significant branches as referred

to in regulation 14 are established and where the competent authority

is the consolidating supervisor, it shall, subject to confidentiality

requirements in the Malta Financial Services Authority Act and the Cap. 330.

Acts, alert as soon as is practicable

(a)

EBA, ESCB 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, and it shall

communicate all information that is essential for the pursuance

of their tasks;

(b)

the ESRB where such information is relevant for

the exercise of its statutory tasks; and

(c)

departments of government administrations in

other Member States responsible for law on the supervision of

institutions, financial institutions and insurance undertakings

and to inspectors acting on behalf of those departments.

(2) To the extent possible, the competent authority shall use

existing channels of communication with ESCB central banks.

(3) Where the competent authority is the consolidating

supervisor, it shall, when it needs information which has already been

given to a European regulatory authority, contact this authority,

whenever possible, in order to prevent duplication of reporting to the

various authorities involved in supervision.

(1)

Where the competent authority is the consolidating

supervisor, it shall have written coordination and cooperation

arrangements in place with European regulatory authorities

responsible for supervising the other members of the group.

(2) Under the arrangements made pursuant to sub-regulation

(1), additional tasks may be entrusted to the competent authority as

consolidating supervisor and procedures for the decision-making

process and for cooperation with other European regulatory

authorities may be specified.

(3) Where the competent authority is responsible for the

licensing of the subsidiary of a parent undertaking which is an

institution, it may, by bilateral agreement in accordance with Article

28 of Regulation (EU) No 1093/2010, delegate its responsibility for

supervision of such subsidiary to the European regulatory authority

which authorised and supervises the parent undertaking so that the

latter assume responsibility for supervising the subsidiary in

accordance with the CRD. The competent authority shall forward the

content of such agreements to the EBA.

(1)

Where the competent authority is the consolidating

supervisor, it shall establish colleges of supervisors to facilitate the

exercise of the tasks referred to in regulation 4, regulation 5(1) and

(2) and regulation 8, and it shall also, subject to the confidentiality

requirements of sub-regulation (3) and compatibility with European

Union law, ensure appropriate coordination and cooperation with

third country regulatory authorities where appropriate.

(2) When forming part of a college of supervisors, the

competent authority shall contribute towards the provision of a

framework for the consolidating supervisor, EBA and other European

regulatory authorities or third country regulatory authorities forming

part of that college, to carry out the following tasks

(a)

exchange information with European regulatory

authorities and third country regulatory authorities forming part

of that college and with EBA in accordance with Article 21 of

Regulation (EU) No 1093/2010;

(b)

agreeing on voluntary entrustment of tasks and

voluntary delegation of responsibilities where appropriate;

(c)

determining supervisory examination programmes

referred to in Article 99 of the CRD based on a risk assessment

of the group in accordance with Article 97 of the CRD;

(d)

increasing the efficiency of supervision by

removing unnecessary duplication of supervisory requirements,

including in relation to the information requests referred to in

Article 114 and Article 117(3) of the CRD;

(e)

consistently applying the prudential requirements

under the CRD and the CRR across all entities within a group of

institutions, without prejudice to the options and discretions

available in European Union law; and

(f)

applying Article 112(1)(c) of the CRD taking into

account the work of other fora that may be established in that

area.

(3) The competent authority, when forming part of a college of

supervisors, shall co-operate closely with EBA and all the European

regulatory authorities and third country regulatory authorities

forming part of the relevant college of supervisors. The

confidentiality requirements under the Malta Financial Services Cap. 330.

Authority Act and Acts shall not prevent the competent authority

from exchanging confidential information within colleges of

supervisors. The establishment and functioning of colleges of

supervisors shall not affect the rights and responsibilities of the

competent authority under the provisions of the Acts, and any

regulations or Rules made thereunder transposing the requirements of

the CRD, and under the CRR.

(4) Where the competent authority is the consolidating

supervisor of these regulations, it shall establish and manage the

colleges of supervisors based on written arrangements referred to in

regulation 6, determined after consultation with European regulatory

authorities and third country regulatory authorities concerned.

(5) The competent authority may form part of a college of

supervisors when

(a)

it is responsible for the supervision of subsidiaries

of an EU parent institution, an EU parent financial holding

company or an EU parent mixed financial holding company;

and

(b)

Malta is the host Member State where significant

branches as referred to in regulation 14 are established.

(6) Where the competent authority is the consolidating

supervisor, it shall chair the meetings of the college and shall decide

which European regulatory authorities and third country regulatory

authorities, where relevant, participate in a meeting or in an activity

of the college. The decision shall take into account the relevance of

the supervisory activity to be planned or coordinated for those

authorities, and in particular, the potential impact on the stability of

the financial system in the Member States concerned and, in

particular, in emergency situations, based on the information

available at the relevant time and the obligations referred to in

regulation 14(6) and (7).

(7) The competent authority, as consolidating supervisor, shall

keep all members of the college fully informed, in advance, of the

organisation of the meetings of the college, about the main issues to

be discussed and the activities to be considered and 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.

(8) The competent authority as consolidating supervisor shall,

subject to the confidentiality requirements of the Malta Financial

Services Authority Act and the Acts, inform EBA of the activities of

the college of supervisors, including in emergency situations, and

communicate to EBA all information that is of particular relevance

for the purposes of supervisory convergence.

(9) In the case of disagreement between the competent

authorities on the functioning of the supervisory colleges, the

competent authority may refer the matter to EBA and request its

assistance in accordance with Article 19 of Regulation (EU) No 1093/

2010. (10) Without prejudice to provisions of sub-regulation (6),

when the competent authority is the consolidating supervisor it may

invite the following entities to participate in the college which it shall

chair

(a)

the European regulatory authorities responsible for

the supervision of subsidiaries of an EU parent institution, an

EU parent financial holding company or an EU parent mixed

financial holding company;

(b)

the European regulatory authorities of a host

member state where significant branches, as referred to in

Article 51 of the CRD, are established;

(c)

ECSB central banks, where appropriate; and

(d)

third-country

regulatory

authorities

where

appropriate, subject to confidentiality requirements that are

equivalent, in the opinion of the competent authority and all the

European regulatory authorities concerned, to the requirements

under Chapter 1, Section II of the CRD, and where applicable,

Articles 54 and 53 of the MiFID Directive.

(1)

The competent authority, whether acting as Joint decisions

consolidating supervisor or as a competent authority responsible for on

prudential

the supervision of subsidiaries of an EU parent institution, an EU requirements.

parent financial holding company or EU parent mixed financial

holding company, within a college of supervisors, shall do everything

within its power to reach a joint decision with the other competent

authorities forming part of the said college

(a)

on the application of Articles 73 and 97 of the CRD

to determine the adequacy of the consolidated level of own

funds held by the group of institutions with respect to its

financial situation and risk profile and the required level of own

funds for the application of Article 104(1)(a) of the CRD to

each entity within the group of institutions and on a

consolidated basis;

(b)

on measures to address any significant matters and

material findings relating to liquidity supervision including

relating to the adequacy of the organisation and the treatment of

risks as required pursuant to Article 86 of the CRD and relating

to the need for institution-specific liquidity requirements in

accordance with Article 105 of the CRD.

(2) For the purposes of the joint decision referred to in sub-

regulations (1), the competent authority as consolidated supervisor

shall submit -

(a)

a report containing the risk assessment of the group

of institutions in accordance with the Acts, and any regulations

or Rules made thereunder transposing the requirements of

Articles 73 and 97 and Article 104(1)(a) of the CRD; and

(b)

a report containing the assessment of the liquidity

risk profile of the group of institutions in accordance with the

Acts, and any regulations or Rules made thereunder transposing

the requirements of Articles 86 and 105 of the CRD,

to the other relevant European regulatory authorities.

(3) Where the competent authority is the consolidating

supervisor, it shall provide the EU parent institution concerned with

the joint decision referred to in sub-regulation (1), set out in a

document containing full reasons. In the event of disagreement, the

competent authority shall at the request of any of the other European

regulatory authorities concerned consult the EBA. The competent

authority as consolidating supervisor of these regulations may consult

EBA on its own initiative.

(4) In the absence of such a joint decision between the

competent authorities within the time periods referred to in Article

113(2) of the CRD, a decision on the application of the relevant

provisions of the Acts and any regulations or Rules made thereunder

transposing the requirements of Articles 73, 86, 97, 104(1)(a) and 105

of the CRD shall be taken on a consolidated basis by the competent

authority as consolidating supervisor after duly considering the risk

assessment of subsidiaries performed by relevant European

regulatory authorities

Provided that

(a)

if at the end of the time periods referred to above

any of the European regulatory authorities concerned have

referred the matter to the EBA in accordance with Article 19 of

Regulation (EU) No 1093/2010, the competent authority as

consolidated supervisor shall defer its decision and await any

decision the EBA may take in accordance with Article 19(3) of

that Regulation, and shall take its decision in conformity with

the decision of the EBA;

(b)

where the competent authority is not acting as

consolidated supervisor but is responsible for the supervision of

subsidiaries of an EU parent institution or an EU parent

financial holding company or an EU parent mixed financial

holding company, it may refer the matter to the EBA in

accordance with Article 19 of Regulation (EU) No 1093/2010.

Such referral shall not be made after the end of the time periods

referred to above in this regulation or after a joint decision has

been reached.

(5) Where the competent authority is responsible for the

supervision of a subsidiary of an EU parent credit institution or an EU

parent financial holding company or an EU parent mixed financial

holding company and in the absence of a joint decision in terms of

this regulation, the competent authority shall decide on the

application of the relevant provisions of the Acts, and any regulations

or Rules made thereunder transposing the requirements of Articles

73, 86, 97, 104(1)(a) and 105 of the CRD, on an individual or sub-

consolidated basis, after duly considering the views and reservations

expressed by the consolidating supervisor

Provided that if at the end of the time periods referred to in

this regulation any of the European regulatory authorities concerned

have referred the matter to the EBA in accordance with Article 19 of

Regulation (EU) No 1093/2010, the competent authority shall defer

its decision and await any decision that the EBA shall take in

accordance with Article 19(3) of that Regulation, and shall take its

decision in conformity with the decision of the EBA.

(6) The competent authority may, in the event of

disagreement, refer a dispute to the EBA on its own initiative but

prior to a joint decision being made, and provided that no referral

shall be made once the specified time periods have expired.

(7) (a)

The joint and separate decisions referred to in this

regulation shall be set out in a document containing the fully reasoned

decisions and shall take into account the risk assessment, views and

reservations of the competent authority or the European regulatory

authorities as applicable, expressed during the time periods referred

to therein.

(b)

The competent authority as consolidating

supervisor shall provide these documents to the European regulatory

authorities concerned and to the EU parent institution. Where the

EBA has been consulted the competent authority shall consider its

advice and explain any significant deviation therefrom.

(c) The joint decision referred to in sub-regulation (1) and the

decisions taken by the competent authority or European regulatory

authorities in terms of sub-regulations (4) and (5) shall be recognised

as determinative and shall be applied by the competent authority in

Malta.

(8) The joint and separate decisions referred to in sub

regulation (1) shall be updated on an annual basis or, in exceptional

circumstances, where the competent authority is responsible for the

supervision of subsidiaries of an EU parent institution or an EU

parent financial company or an EU parent mixed financial holding

company, it may make a written and fully reasoned request to the

consolidating supervisor to update the decision on the application of

Article 104(1)(a) and Article 105 of the CRD. In the latter case, the

update may be addressed on a bilateral basis between the competent

authority and the consolidating supervisor

Provided that where the competent authority is the

consolidating supervisor, it shall update the decisions at the request of

the European regulatory authorities responsible for the supervision of

subsidiaries of an EU parent institution or an EU parent financial

company or an EU parent mixed financial holding company. The

competent authority may address the update to the European

regulatory authority making the request, on a bilateral basis.

(1)

The competent authority shall cooperate closely

with European regulatory authorities. Such cooperation shall include

the provision to such authorities of any information which is essential

or relevant for the exercise of their respective supervisory tasks under

the CRD, and the CRR. The competent authority shall communicate

on request all relevant information and shall communicate on its own

initiative all essential information.

(2) The competent authority shall cooperate with the EBA for

the purposes of the CRD and the CRR in accordance with Regulation

(EU) No 1093/2010. Such cooperation shall include the provision to

the EBA of all information necessary to carry out its duties under the

CRD and the CRR and under Regulation (EU) No 1093/2010, in

accordance with Article 35 of Regulation (EU) No 1093/2010.

(3) For the purpose of sub-regulation (1) information shall be

regarded as essential if it could materially influence the assessment of

the financial soundness of an institution or a financial institution in

another Member State and shall include, in particular, the following

items

(a)

identification of the group’s legal structure and the

governance structure including organisational structure,

covering all regulated entities, non-regulated entities, non-

regulated subsidiaries and significant branches belonging to the

group, and the parent undertakings, in accordance with the

relevant provisions of the Acts and any regulations or Rules

made thereunder transposing the requirements of Article 14(3),

74(1) and 109(2) of the CRD;

(b)

identification of the European regulatory

authorities of the regulated entities in the group, as the case may

be;

(c)

procedures for the collection of information from

the institutions in a group and the verification of that

information;

(d)

adverse developments in institutions or in other

entities of a group, which could seriously affect the institutions;

and

(e)

significant penalties and exceptional measures

taken by the competent authority in accordance with the CRD,

including the imposition of a specific own fund requirement

under Article 104 of the CRD and the imposition of any

limitation on the use of Advanced Measurement Approach for

the calculation of the own funds requirements under Article

312(2) of the CRR.

(4) Where the competent authority is acting as consolidating

supervisor, it shall provide European regulatory authorities who

supervise subsidiaries of parent undertakings with all relevant

information. In determining the extent of relevant information, the

importance of those subsidiaries within the financial system in those

Member States shall be taken into account.

(5) Where the competent authority is responsible for the

supervision of an institution controlled by an EU parent institution, it

shall whenever possible contact the consolidating supervisor when it

needs information regarding the implementation of approaches and

methodologies set out in the CRD and the CRR that may already be

available to that consolidating supervisor.

(6) The competent authority shall consult with European

regulatory authorities concerned before taking a decision with respect

to paragraphs (a) and (b), where such a decision is of importance for

these European regulatory authorities’ supervisory tasks

(a)

changes in the shareholder, organizational or

management structure of credit institutions in a group, which

require the approval or authorization of the competent authority;

and

(b)

significant penalties or exceptional measures taken

by the competent authority, including the imposition of a

specific own funds requirement under the Banking Act L.N. of 2013.

(Supervisory Review) Regulations 2013, and the Investment L.N. of 2013.

Services Act (Supervisory Review) Regulations 2013, and the

imposition of any limitation on the use of the advanced

measurement approaches for the calculation of the own funds

requirements under Article 312(2) of the CRR

Provided that the competent authority shall always consult

the consolidating supervisor for the purposes of paragraph (b) and

may decide not to consult European regulatory authorities in cases of

urgency or where such consultation could jeopardise the effectiveness

of its decision. In such cases, the competent authority shall, without

delay, inform the European regulatory authorities after taking its

decision.

(7) The competent authority may refer to the EBA any of the

following situations

(a)

where a European regulatory authority has not

communicated essential information;

(b)

where a request for cooperation, in particular to

exchange relevant information, has been rejected or has not

been acted upon within a reasonable time.

(1)

The competent authority shall ensure that there are

no legal impediments preventing the exchange, between undertakings

included within the scope of supervision on a consolidated basis,

mixed-activity holding companies and their subsidiaries, or

subsidiaries of an institution, a financial holding company or mixed

financial holding company, which are not included within the scope

of supervision on a consolidated basis, of any information which

would be relevant for the purposes of supervision in accordance with

the relevant provisions of the Acts, and any regulations or Rules made

thereunder transposing the requirements of Article 110 and Chapter 3

of the CRD.

(2) Where a subsidiary that is an institution licensed in terms

of the Acts is not included in supervision on a consolidated basis

under one of the cases provided for in Article 19 of the CRR, the

competent authority may ask the parent undertaking of such

institution for information which may facilitate supervision of that

subsidiary.

(3) The competent authority, as consolidating supervisor, may

ask the subsidiaries of an institution, a financial holding company or

mixed financial holding company which are not included within the

scope of supervision on a consolidated basis for information which

would be relevant for the purpose of supervising those subsidiaries. In

such a case, the procedures for transmitting and verifying the

information set out in regulation 16 shall apply.

(4) Where a parent undertaking and any of its subsidiaries that

are institutions are situated in different Member States, the competent

authority shall communicate to the European regulatory authorities

concerned all relevant information which may allow or aid the

exercise of supervision on a consolidated basis.

(5) The competent authority, as consolidating supervisor, may

invite the European regulatory authorities of the parent undertaking to

ask the parent undertaking to provide any information which would

be relevant for the purposes of supervision on a consolidated basis.

Such information shall be transmitted to the competent authority by

the European regulatory authority concerned.

(6) Where a parent undertaking is situated in Malta and the

competent authority does not itself exercise supervision on a

consolidated basis in terms of regulation 3, it shall, upon request by

the European regulatory authority responsible for exercising such

supervision, require the parent undertaking to provide any

information relevant for the purposes of supervision on a

consolidated basis and the competent authority shall transmit such

information to the European regulatory authority making the request.

(7) The competent authority shall exchange the information

referred to in sub-regulation (4) with other European regulatory

authorities, on the understanding that, in the case of financial holding

companies, mixed financial holding companies, financial institutions

or ancillary services undertakings, the collection or possession of

information shall not imply that the competent authority is required to

play a supervisory role in relation to those institutions or undertakings

standing alone.

(8) The competent authority shall exchange the information

referred to in regulation 19 with the European regulatory authorities

concerned, on the understanding that the collection or possession of

information does not imply that the competent authority plays a

supervisory role in relation to the mixed-activity holding company

and those of its subsidiaries which are not credit institutions, or to

subsidiaries of an institution, a financial holding company or mixed

financial holding company, which are not included within the scope

of supervision on a consolidated basis.

(1)

The competent authority shall cooperate closely Co-operation

with European regulatory authorities where the investment firm, with

regulatory

financial holding company, mixed financial holding company or authorities

the

mixed-activity holding company which is situated in Malta controls Commission.

one or more subsidiaries authorised in a country outside Malta which

are insurance companies or other undertakings providing investment

services. Without prejudice to its responsibilities, the competent

authority shall provide European regulatory authorities with any

information likely to simplify their task and to allow supervision of

the activity and overall financial situation of the undertakings they

supervise.

(2) Information received, within the framework of supervision

on a consolidated basis, and in particular any exchange of information

between the competent authority and European regulatory authorities

which is provided for in the CRD, shall be subject to professional

secrecy requirements at least equivalent to those pursuant to the

Malta Financial Services Authority Act and the Acts.

(3) The competent authority as consolidating supervisor shall

establish a list of the financial holding companies or mixed financial

holding companies referred to in Article 11 of the CRR. Such a list

shall be communicated to the European regulatory authorities, to

EBA and to the Commission.

(1)

The competent authority, in applying the

provisions of the Acts, and of any regulations or Rules made

thereunder transposing the requirements of the CRD, and the CRR,

may, in specific cases, request a European regulatory authority to

verify information concerning an institution, a financial holding

company, a mixed financial holding company, a financial institution,

an ancillary services undertaking, a mixed-activity holding company,

a subsidiary which is an insurance company or other undertaking

providing investment services which is subject to authorisation, or a

subsidiary of an institution, a financial holding company or mixed

financial holding company which is not included within the scope of

supervision on a consolidated basis, situated in another Member

State. The competent authority may carry out the verification itself, or

if it so wishes participate in the verification.

(2) Where the competent authority receives a request from a

European regulatory authority to verify information referred to in

sub-regulation (1), it shall, within the framework of its competence,

act upon it by either carrying out the verification itself, by allowing

the European regulatory authority making the request to carry out

such verification or by allowing an auditor or expert to carry out such

verification. The European regulatory authority making the request

may participate in the verification where it does not carry out the

verification itself.

(1)

Where an institution licensed in terms of the Acts,

the parent undertaking of which is an institution or a financial holding

company or mixed financial holding company, the head office of

which is established in a third country, is not subject to consolidated

supervision, the competent authority shall assess whether the

institution is subject to consolidated supervision by a third country

regulatory authority which is equivalent to that governed by the

principles laid down in this regulation and the requirements of Part

One, Title II, Chapter 2 of the CRR.

(2) The competent authority as consolidating supervisor, if

sub-regulation (4) were to apply, shall carry out the assessment at the

request of the parent undertaking or of any of the regulated entities

authorised in the Union or on its own initiative. The competent

authority shall consult the other European regulatory authorities.

(3) In carrying out the assessment referred to in sub-regulation

(1), the competent authority shall take into account any guidance

issued by the European Banking Committee as to whether the

consolidated supervision arrangements of third country regulatory

authorities are likely to achieve the objectives of consolidated

supervision as defined in this regulation, in relation to institutions

licensed in terms of the Acts, the parent undertaking of which has its

head office in a third country. For this purpose, the competent

authority shall consult EBA before making a decision.

(4) In the absence of such equivalent supervision, the

competent authority shall apply the provisions of the Acts, and of any

regulations or Rules made thereunder transposing the requirements of

the CRD, and the CRR to the institution mutatis mutandis or apply

other appropriate supervisory techniques which achieve the

objectives of supervision on a consolidated basis of institutions. Such

supervisory techniques shall be agreed upon by the competent

authority, as consolidating supervisor, after consultation with other

European regulatory authorities involved. The supervisory techniques

shall be designed to achieve the objectives of consolidated

supervision as set out in this regulation and shall be notified to other

European regulatory authorities involved, the EBA and the

Commission.

(5) The competent authority may in particular require the

establishment of a financial holding company or mixed financial

holding company with its head office in the European Union, and

apply the provisions on consolidated supervision to the consolidated

position of that financial holding company or the consolidated

position of the institutions of that mixed financial holding company.

(6) The competent authority may, in terms of Article 48 of the

CRD, request the Commission to submit proposals to the Council to

negotiate agreements with one or more third countries regarding the

means of exercising supervision on a consolidated basis over the

following

(a)

institutions the parent undertakings of which have

their head offices in a third country;

(b)

institutions situated in third countries the parent

undertakings of which, whether institutions, financial holding

companies or mixed financial holding companies, have their

head offices in the Union.

Part II - Establishment of Significant Branches

(1)

Where an institution, other than a EU investment

firm subject to Article 95 of the CRR, authorised in another Member

State has established a branch in Malta, the competent authority may

make a request to the European regulatory authority which is the

consolidating supervisor, where Article 112(1) applies, or to the

European regulatory authority of the home Member State of such

institution, for that branch to be considered as significant.

(2) The request referred to in sub-regulation (1) shall provide

reasons for considering the branch to be significant with particular

regard to the following

(a)

whether the market share of the branch in terms of

deposits exceeds 2% in Malta;

(b)

the likely impact of a suspension or closure of the

operations of the institution on systemic liquidity and the

payment, clearing and settlement systems in Malta; 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 Malta.

(3) The competent authority shall do everything within its

power to reach a joint decision with the European regulatory

authority of the home Member State and, where Article 112(1)

applies, the European regulatory authority which is the consolidating

supervisor, on the designation of a branch as being significant.

(4) If no joint decision is reached within two months of receipt

of a request under the sub-regulation (1), the competent authority

shall take its own decision within a further period of two months on

whether the branch is significant. In taking its decision, the competent

authority shall take into account any views and reservations of the

European regulatory authority which is the consolidating supervisor

or the European regulatory authority of the home Member State.

(5) The decisions referred to in sub-regulations (3) and (4)

shall be set out in a document containing full reasons and shall be

transmitted to the European regulatory authorities concerned. It shall

be recognised as determinative and applied by the European

regulatory authorities in the Member States concerned.

(6) Where the European regulatory authority of the home

Member State does not consult the competent authority, or where,

following such consultation, the competent authority maintains that

operational steps required by the Acts and any regulations or Rules

made thereunder transposing the requirements of Article 86(11) of the

CRD, are not adequate, the competent authority may refer the matter

to the EBA and request its assistance in accordance with Article 19 of

Regulation (EU) No 1093/2010.

(1)

Where the competent authority is responsible for Establishment

the supervision of an institution licensed in terms of the Acts or, other of

branches (Home

than an investment firm subject to Article 95 of the CRR, which has Authority).

established a branch in another Member State or is the consolidating

supervisor, it may receive a request from the European regulatory

authority of the host Member State where the branch is established,

for such branch to be considered as significant. This 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 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 institution on systemic 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.

(2) The competent authority shall do everything within its

power to reach a joint decision on the designation of a branch as

significant, with the European regulatory authority of the host

Member State where the branch is established and, where Article

112(1) of the CRD applies, the European regulatory authority which

is the consolidating supervisor.

(3) The competent authority shall communicate to the

European regulatory authority of the host Member State, where a

significant branch is established, the following information referred

to in regulation 9(3)(d) and (e) and carry out the tasks referred to in

regulation 4(1)(c) in cooperation with the European regulatory

authority of the host Member State.

(4) Where the competent authority becomes aware of an

emergency situation as referred to in regulation 5(1), it shall alert as

soon as practicable

(a)

ESCB 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, and it shall

communicate all information that is essential for the pursuance

of their tasks;

(b)

the ESRB where such information is relevant for

the exercise of its statutory tasks; and

(c)

departments of government administrations in

other Member States responsible for law on the supervision of

institutions, financial institutions and insurance undertakings

and to inspectors acting on behalf of those departments.

(5) The competent authority shall communicate to the

European regulatory authority of the host Member State where the

significant branch is established, the results of the risk assessment

carried out in terms of the Banking Act (Supervisory Review)

Regulations 2013, and the Investment Services Act (Supervisory

Review) Regulations 2013 with respect to the institution licensed in

Malta with such a branch and, where applicable, joint decisions on

institution specific prudential requirements taken pursuant to the

provisions of the Acts and any regulations or Rules made thereunder

transposing the requirements of Article 113(2) of the CRD. The

competent authority shall also communicate decisions required by the

Acts and any regulations or Rules made thereunder transposing the

requirements of Articles 104 and 105 of the CRD in so far as those

assessments and decisions are relevant to the branch.

(6) The competent authority shall consult the European

regulatory authority of the host Member State where the significant

branch is established about operational steps required by the Acts and

any regulations or Rules made thereunder transposing the

requirements of Article 86(11) of the CRD, where relevant for

liquidity risks in the host Member State’s currency.

The designation of a branch as being significant shall not

affect the rights and responsibilities of the competent authority under

the Acts, and any regulations or Rules made thereunder transposing

the requirements of the CRD.

(1)

Where regulation 7 does not apply and the

competent authority supervises an institution licensed in Malta with

significant branches in other Member States, it shall establish and

chair a college of supervisors to facilitate the cooperation in terms of

regulation 15(3) to (6) and in terms of the Acts and any regulations or

Rules made thereunder transposing the requirements of Article 50 of

the CRD. The establishment and functioning of the college shall be

based on written arrangements determined after consulting the

European regulatory authorities concerned by the competent

authority. The competent authority shall decide which European

regulatory authorities participate in a meeting or in an activity of the

college.

(2) In its decision the competent authority shall take account

of the relevance of the supervisory activity to be planned or

coordinated for those European regulatory authorities, in particular,

the potential impact on the stability of the financial system in the

Member States concerned, and, in particular, in emergency situations

based on the information available at the relevant time and the

obligations referred to in regulation 15(3) to (5).

(3) The competent authority 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 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.

(1)

The prudential supervision of an institution, Prudential

including that of the activities it carries out in accordance with the supervision

an institution.

European Passporting Rights for Credit Institutions Regulations and S.L. 371.11

the European Passporting Rights for Investment Firms Regulations S.L. 370.10

shall be the responsibility of the competent authority when such an

institution is licensed in Malta, without prejudice to those provisions

of the CRD and MiFID which give responsibility to the European

regulatory authorities of the host Member State.

(2) Sub-regulation (1) shall not prevent supervision on a

consolidated basis in terms of regulation 3.

(3) Where the branch of an institution authorised in a Member

State other than Malta, is established in Malta, any measures taken by

the competent authority with respect to such branch shall not allow

discriminatory or restrictive treatment on the basis that the institution

to which the branch belongs is authorised in another Member State.

Part III - Supervision of Mixed Activity Holding Companies and their

subsidiaries and of Mixed Financial Holding Companies

(1)

Where the parent undertaking of one or more Supervision of

institutions licensed in terms of either of the Acts is a mixed-activity mixed

holding

holding company, the competent authority shall, by approaching the companies

their

mixed-activity holding company and its subsidiaries either directly or subsidiaries.

via subsidiaries that are institutions, require them to supply any

information which would be relevant for the purpose of supervising

those subsidiaries.

(2) The competent authority may carry out, or have carried out

by external inspectors, on-the-spot inspections to verify information

received from mixed-activity holding companies and their

subsidiaries. If the mixed-activity holding company or one of its

subsidiaries is an insurance undertaking, the procedure set out in

regulation 11 may also be used. If a mixed-activity holding company

or one of its subsidiaries is situated in a Member State other than

Malta but is the parent undertaking of an institution licensed in terms

of the Acts, on-the-spot verifications of information shall be carried

out in accordance with the procedure set out in regulation 12.

(3) Without prejudice to Part Four of the CRR, where the

parent undertaking of one or more institutions licensed in terms of the

Acts is a mixed-activity holding company, the competent authority

shall exercise general supervision over transactions between the

institutions and the mixed-activity holding company and its

subsidiaries.

(1)

Where a mixed financial holding company is

subject to equivalent provisions under the Acts and any regulations or

Rules made thereunder transposing the requirements of the CRD, and

under 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 conglomerates, in particular in terms of risk-based

supervision, the competent authority may, as consolidating

supervisor, after consulting the other European regulatory authorities

responsible for the supervision of subsidiaries, apply only the latter

Directive to that mixed financial holding company.

(2) Where a mixed financial holding company is subject to

equivalent provisions under the Acts and any regulations or Rules

made thereunder transposing the requirements of the CRD, and under

Directive 2009/138/EC of the European Parliament and of the

Council of 25 November 2009 on the taking-up and pursuit of the

business of Insurance and Reinsurance (Solvency II), in particular in

terms of risk-based supervision, the competent authority as

consolidating supervisor may, in agreement with the group supervisor

in the insurance sector, apply to that mixed financial holding

company only the provisions under the Acts, and any regulations or

Rules made thereunder transposing the requirements of the CRD

relating to the most significant financial sector as defined in

regulation 3 of the Financial Conglomerates Regulations.

(3) The competent authority, as consolidating supervisor, shall

inform the EBA and the EIOPA of the decisions taken under sub-

regulations (1) and (2).

Part IV - Transitional Provisions

The provisions of regulations 14(6), 15(5) and (6), 17(1) Transitional

and 18(3) shall not apply until the date on which the liquidity provisions.

coverage requirement becomes applicable in accordance with a

delegated act adopted by the European Commission pursuant to

Article 460 of the CRR in accordance with Article 151 of the CRD

Provided that until the date referred to in this regulation,

regulation 17(1) shall be replaced by the following

"(1)

Where regulation 7 does not apply and the

competent authority supervises an institution licensed in Malta

with significant branches in other Member States, it shall

establish and chair a college of supervisors to facilitate the

reaching of a joint decision on the designation of a branch as

being significant in terms of regulation 15(2) and the exchange

of information in terms of the Acts, and any regulations or Rules

made thereunder transposing the requirements of Article 50 of

the CRD. The establishment and functioning of the college shall

be based on written arrangements determined after consulting

the European regulatory authorities concerned by the competent

authority. The competent authority shall decide which European

regulatory authorities participate in a meeting or in an ac tivity

of the college."

Provided further that until the date referred to in this

regulation, regulation 18(3) shall be replaced by the following

"(3)

The competent authority shall, in the exercise of its

general duties, duly consider the potential impact of its decision

on the stability of the financial system on other Member States

concerned and, in particular, in emergency situations, based on

the information available at the relevant time."

Provided further that until the date referred to in this

regulation the following sub-regulation shall be added to regulation

"(4)

Where the branch of a credit institution, authorised

in a Member State other than Malta, is established in Malta, the

competent authority shall, pending further coordination, retain

responsibility in cooperation with the European regulatory

authorities of the home Member State for the supervision of the

liquidity of the said branch.".

Part V - Revocation

The Investment Services Act (Financial Capital Adequacy

Revokes the

Investment

Consolidation) Regulations 2011, are hereby revoked.

Services Act

(Financial

Capital

Adequacy

Consolidation)

Regulations,

2011. L.N. 63 of 2011.

€1.17