Regulations, 2015

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 19,406, 10 ta’ April, 2015

L.N. 129 of 2015

BANKING ACT

(CAP. 371)

European Passport Rights for Credit Institutions

Regulations, 2015

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

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 European Citation and

scope.

Passport Rights for Credit Institutions Regulations, 2015.

(2) The purpose of these regulations is to implement Articles 3

(in part), 33 to 46, 49, 50, 52, 151 to 157 and 159 of the CRD.

(3) In the event that any of the provisions of these regulations

conflict with the provisions of the CRD, the latter shall prevail.

(1)

In these regulations, unless the context otherwise Interpretation.

requires -

"the Act" means the Banking Act;

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

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

"competent authority" means the Malta Financial Services

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

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

Parliament and of the Council of 26 June 2013 on the 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 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;

"European credit institution" means a credit institution as

defined in point (1) of Article 4(1) of the CRR, which is authorised by

a European regulatory authority;

"European passport right" means the entitlement of a person to

establish a branch, or provide services, in a Member State other than

that in which it has its head office -

(a)

in accordance with the Treaty as applied in the

Member State; and

(b) subject to the requirements of the CRD and the

CRR, and subject to any rules, regulations or Banking Rules

made under the Act implementing such requirements;

"European regulatory authority" means a body which is in a

country or territory outside Malta that is a Member State and is

empowered by law or regulation to supervise credit institutions;

"home Member State" shall have the 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;

"Maltese credit institution" means a credit institution as defined

in point (1) of Article 4(1) of the CRR, which is licensed in terms of

the Act, whose head office is in Malta and who is entitled to carry on

an activity in a Member State other than Malta in exercise of a

European passport right;

"mixed-activity holding company" means a mixed activity

holding company as defined in point (22) of Article 4(1) of the CRR;

"systemic risk" means a risk of disruption in the financial

system with the potential to have serious negative consequences for

the financial system and the real economy;

"Treaty" means the Treaty of Rome signed in 1957, establishing

the European Economic Community, as subsequently amended;

"Tribunal" means the Financial Services Tribunal established

under the Malta Financial Services Authority Act.

(2) Words and expressions used in these regulations which are

also used in the Act but which are not defined herein, shall have the

same meaning as in the Act.

(3) Where there are any number of places of business set up in

the same Member State by a credit institution having its headquarters

in another Member State, they shall be regarded as a single branch.

Part I - Exercise of European passport rights by

European credit institutions

(1) A European credit institution which is seeking to Exercise of

establish a branch in Malta in exercise of a European passport right European

passport rights

shall be exempt from the provisions of article 5(1) of the Act. The by

credit

activities that may be carried out in Malta by such a European credit institutions -

institution in exercise of a European passport right shall be limited to establishment.

the activities it is authorised to undertake in the home Member State.

(2) A European credit institution may exercise a European

passport right to establish a branch in Malta in accordance with sub-

regulation (1) provided -

(a) the European credit institution has given the

European regulatory authority of the home Member State a

branch passport notification to establish a branch in Malta in

accordance with Article 35(1) and (2) of the CRD;

(b) the competent authority has received a notice from

the European regulatory authority of the home Member State,

which shall -

(i)

be given in accordance with the CRD;

(ii) certify that the European credit institution is

authorised to act as a credit institution by the European

regulatory authority;

(iii) identify which of the activities listed in

Annex I to the CRD it intends to carry out;

(iv) contain the information stated in the branch

passport notification referred to in paragraph (a);

(v) indicate the amount and composition of own

funds and the sum of the own funds requirements under

Article 92 of the CRR of the European credit institution;

and

(vi) contain details of any deposit guarantee

scheme which is intended to protect the branch’s clients.

(3) The competent authority shall, within two months of

receiving the notice referred to in sub-regulation (2)(b), prepare for

the supervision of the European credit institution and, if necessary,

indicate the conditions under which, in the interests of the general

good, those activities shall be carried out in Malta.

(4) A branch of a European credit institution shall not be

established and commence its activities in Malta unless -

(a) the European credit institution has received a

communication from the competent authority acknowledging its

establishment in Malta and, if necessary, indicating any

applicable conditions in the interests of the general good; or

(b) two months have elapsed from the date of receipt by

the competent authority of the notice referred to in sub-

regulation (2)(b), in the event that no communication has been

received from the competent authority.

(5) In the event of a change in branch particulars notified to

the European regulatory authority in accordance with sub-regulation

(2)(a), the European credit institution shall give both the competent

authority and the European regulatory authority a change of branch

particulars notification in accordance with Article 36(3) of the CRD,

at least one month before implementing any such change to enable the

competent authority to take a decision setting out the conditions for

the change in accordance with sub-regulation (3).

(6) Any measures taken by the competent authority with

respect to a branch shall not allow discriminatory or restrictive

treatment on the basis that the credit institution to which the branch

belongs is authorised in another Member State.

(1) A European credit institution which is seeking to

provide services by carrying out its activities in Malta in exercise of a

European passport right shall be exempt from the provisions of article

5(1) of the Act. The activities that may be carried out in Malta by

such a European credit institution in exercise of a European passport

right shall be limited to the activities it is authorised to undertake in

the home Member State.

(2) A European credit institution may exercise a European

passport right to provide services by carrying out its activities in

Malta in accordance with sub-regulation (1) provided -

(a)

the European credit institution has given the

European regulatory authority of the home Member State a

services passport notification to provide services in Malta in

accordance with Article 39(1) of the CRD; and

(b) the competent authority has received such

notification from the European regulatory authority of the home

Member State.

(3) When the competent authority receives the services

passport notification referred to in sub-regulation (2)(b), the

competent authority shall, where appropriate, notify the European

credit institution of any applicable conditions.

(4) In the event of a change in any of the particulars

communicated to the European regulatory authority in the services

passport notification referred to in sub-regulation (2), the European

credit institution shall give written notice of that change to the

competent authority before implementing any such change.

(5) Any measures taken by the competent authority in relation

to a European credit institution exercising the freedom to provide

services, shall not allow discriminatory or restrictive treatment on the

basis that such credit institution is authorised in another Member

State.

A European credit institution which is seeking to appoint Exercise of

tied agents in Malta in exercise of a European passport right and in European

passport rights

terms of Council Directive 2004/39/EC of the European Parliament by

credit

and of the Council of 21 April 2004 on markets in financial institutions -

instruments, amending Council Directives 85/611/EEC and 93/6/EEC tied agents.

and Directive 2000/12/EC of the European Parliament and of the

Council and repealing Council Directive 93/22/EEC, shall be subject

to the requirements of the Investment Services Act (Tied Agents) S.L. 370.14

Regulations.

(1) The competent authority may, for information or Reporting to the

statistical purposes, for the determination of a significant branch in competent

authority.

terms of Article 51(1) of the CRD, or for supervisory purposes in

terms of Chapter 4 of the CRD, in accordance with the powers

entrusted to the competent authority as host Member State, require a

European credit institution which has established a branch in Malta in

terms of these regulations, to report periodically on its activities in

Malta. Such reports shall be subject to professional secrecy

requirements.

(2) The competent authority may require a European credit

institution having a branch in Malta to provide information in order to

allow the competent authority to assess whether the branch is a

significant branch in terms of Article 51(1) of the CRD.

A European credit institution shall not be prohibited from Advertising.

advertising its services through any available means of

communication in Malta, subject to any rules governing the form and

the content of such advertising adopted in the interests of the general

good.

(1) Where a European credit institution carries out its

activities in Malta through a branch in exercise of a European

passport right, the European regulatory authority of the home

Member State may, after notifying the competent authority, carry out,

itself or through the intermediary of persons appointed for that

purpose, on-the-spot checks of the information referred to in

regulation 16 and inspections of such branches.

(2) Where it considers it relevant for reasons of stability of the

financial system in Malta, the competent authority may also carry out,

on a case-by-case basis, on-the-spot checks and inspections of the

activities carried out by branches of European credit institutions

authorised in other Member States, which are established in Malta,

and require information from a branch about its activities and for

supervisory purposes. Before carrying out such checks and

inspections, the competent authority shall consult the European

regulatory authority of the home Member State concerned.

(3) After such checks and inspections, the competent authority

shall communicate to the European regulatory authority of the home

Member State, the information obtained and findings that are relevant

for the risk assessment of the European credit institution or the

stability of the financial system in Malta.

(4) On-the-spot checks and inspections of branches carried out

in Malta shall be conducted in accordance with Maltese law.

(5) Information received or obtained by means of an on-the-

spot check or inspection referred to in this regulation, shall not be

disclosed under article 25(9) and (10) of the Act, except with the

express consent of the European regulatory authority which disclosed

the information.

A European credit institution which has established a

branch in Malta in terms of these regulations shall be subject to an

annual supervision fee equivalent to zero point zero zero zero two

(0.0002) of the branch’s deposit liabilities as reported at the end of the

year immediately before the year in which the fee is payable

Provided that the annual amount payable by the branch of a

European credit institution established in Malta by way of annual

supervision fee shall in no case be less than twenty-five thousand

euro (€25,000) and not more than one million two hundred thousand

euro (€1,200,000)

Provided further that the first annual supervision fee

payable by the branch of a European credit institution established in

Malta after 1st January of any calendar year shall be due immediately

once a branch is established in Malta, and shall be equal to a

proportion of the minimum fee established in the first proviso. The

fee payable shall be proportionate to the period remaining between

the date of establishment of a branch and the end of that calendar

year.

Part II - Exercise of European passport rights by

Maltese credit institutions

(1) A Maltese credit institution may exercise a Exercise of

European passport right to establish a branch in another Member European

passport rights

State provided the requirements set out in this regulation are satisfied. by

credit

The activities that may be carried out in the host Member State by institutions -

such a Maltese credit institution in exercise of a European passport establishment.

right shall be limited to the activities it is authorised to undertake in

Malta.

(2) The Maltese credit institution wishing to exercise a

European passport right to establish a branch in another Member

State shall provide the competent authority with a branch passport

notification to establish a branch in another Member State, which

shall contain -

(a)

the Member State within the territory of which the

Maltese credit institution plans to establish a branch;

(b) a programme of operations identifying, inter alia,

the activities which it seeks to carry out through the branch;

(c)

the address of the proposed branch from where

documents may be obtained; and

(d) the proposed organisational structure of the branch

and the names of the proposed managers.

(3) Without prejudice to sub-regulations (5) and (6), the

competent authority shall, within three months of receiving a branch

passport notification referred to in sub-regulation (2), give a notice to

the European regulatory authority of the host Member State, which

shall -

(a)

be given in accordance with the CRD;

(b) certify that the Maltese credit institution is

authorised to act as a credit institution by the competent

authority;

(c)

identify which of the activities listed in Annex I to

the CRD it intends to carry out;

(d) contain the information stated in the branch passport

notification referred to in sub-regulation (2);

(e)

indicate the amount and composition of own funds

and the sum of the own funds requirements under Article 92 of

the CRR of the Maltese credit institution; and

(f)

contain details of any deposit guarantee scheme

which is intended to protect the branch’s clients.

(4) The competent authority shall notify the European

regulatory authority of any change in the details of a deposit

guarantee scheme referred to in sub-regulation (3)(f).

(5) Where the requirements specified in sub-regulation (2) are

satisfied, the notice referred to in sub-regulation (3) shall only be sent

to the European regulatory authority if, taking into account the

activities which the Maltese credit institution seeks to carry out

through the branch, the competent authority has no reason to doubt

the adequacy of the administrative structure or the financial situation

of the Maltese credit institution

Provided that in the event of any changes in any of the

particulars referred to in this sub-regulation, the competent authority

shall notify the European regulatory authority accordingly.

(6) Where the competent authority refuses to give the

European regulatory authority of the host Member State the notice

referred to in sub-regulation (3), it shall, within three months from the

date of receipt of the branch passport notification referred to in sub-

regulation (2), give the Maltese credit institution the reasons for its

decision in writing. The Maltese credit institution may appeal to the

Tribunal and the provisions of article 10 of the Act shall apply mutatis

mutandis.

(7) A branch of a Maltese credit institution shall not be

established and commence its activities in the host Member State

unless -

(a)

the Maltese credit institution has received a

communication from the European regulatory authority

acknowledging its establishment in the host Member State and,

if necessary, indicating any applicable conditions in the interests

of the general good; or

(b) two months have elapsed from the date of receipt of

the notice referred to in sub-regulation (3), and no

communication has been received from the European regulatory

authority.

(8) In the event of a change in any of the particulars

communicated in the branch passport notification referred to in sub-

regulation (2), the Maltese credit institution shall give the European

regulatory authority and the competent authority a change of branch

particulars notification in accordance with Article 36(3) of the CRD

at least one month before implementing the change in order to enable

the competent authority to take a decision following the notification

under this regulation.

(9) The prudential supervision of a Maltese credit institution

shall be the responsibility of the competent authority whether the

credit institution establishes a branch in another Member State or not,

without prejudice to those provisions of the CRD which give

responsibility to the European regulatory authority of the host

Member State.

(10) Sub-regulation (9) shall not prevent the supervision on a

consolidated basis in terms of regulation 3 of the Supervisory L.N. 31 of 2014.

Consolidation Regulations.

(11) The competent authority shall notify the European

Commission and the EBA of the number and type of cases in which

there have been refusals in terms of sub-regulations (6) and (8).

(1) A Maltese credit institution may exercise a Exercise of

European passport right to provide services within the territory of European

passport rights

another Member State provided the requirements set out in this by

credit

regulation are satisfied. The activities that may be carried out in the institutions -

host Member State by such a Maltese credit institution in exercise of services.

a European passport right shall be limited to the activities it is

authorised to undertake in Malta.

(2) The Maltese credit institution wishing to exercise a

European passport right to provide services in another Member State

shall provide the competent authority with a services passport

notification in accordance with Article 39(1) of the CRD, to provide

services in another Member State, which shall -

(a)

identify which of the services listed in the Schedule

it intends to provide; and

(b)

indicate the Member State in which it intends to

operate.

(3) The competent authority shall, within one month of

receiving a services passport notification referred to in sub-regulation

(2), give such notification to the European regulatory authority of the

host Member State.

(4) A Maltese credit institution may exercise a European

passport right in accordance with sub-regulation (1) provided -

(a) it has given the competent authority a notification in

terms of sub-regulation (2); and

(b) the competent authority has notified the European

regulatory authority of the host Member State in accordance

with sub-regulation (3)

Provided that the competent authority shall give written

notice to the Maltese credit institution that the notification in terms of

sub-regulation (3) has taken place

Provided further that, where appropriate, the European

regulatory authority of the host Member State may, on receipt of the

information from the competent authority, indicate to the Maltese

credit institution any applicable conditions in the interests of the

general good.

(5) In the event of a change in any of the particulars provided

by the Maltese credit institution in the services passport notification

referred to in sub-regulation (2), the Maltese credit institution shall

give written notice of such change to the competent authority in order

to enable it to take a decision in terms of this regulation, and to the

European regulatory authority of the host Member State at least one

month before implementing any such change.

(6) The prudential supervision of a Maltese credit institution

shall be the responsibility of the competent authority, whether the

credit institution provides services in another Member State or not,

without prejudice to those provisions of the CRD which give

responsibility to the European regulatory authority of the host

Member State.

(7) Sub-regulation (6) shall not prevent supervision on a

consolidated basis in terms of regulation 3 of the Supervisory

Consolidation Regulations.

(1) Where a Maltese credit institution exercises a On-the-spot

European passport right to establish a branch, the competent authority checking

inspection of

may, after notifying the European regulatory authority of the host branches

established in a

Member State, carry out, itself or through the intermediary of persons Member State

appointed for that purpose by the competent authority, on-the-spot other

Malta.

checks of the information referred to in Article 50 of the CRD and

inspections of such branches.

(2) The competent authority may also, for the purposes of the

inspection of branches, have recourse to one of the other procedures

set out in regulation 12 of the Supervisory Consolidation Regulations. L.N. 31 of 2014.

(3) Where Malta is the home Member State, the competent

authority shall duly take into account the information and findings

obtained by the European regulatory authority of the host Member

State that are relevant for the risk assessment of the credit institution

or the stability of the financial system in the relevant host Member

State in accordance with Article 52(3) of the CRD in determining the

supervisory examination programme referred to in regulation 5 of the

Banking Act (Supervisory Review) Regulations and shall also have

regard to the stability of the financial system in the host Member

State concerned.

(4) On-the-spot checks and inspections of branches shall be

conducted in accordance with the law of the Member State where the

check or inspection is carried out.

(5) Information received under Article 52(3) of the CRD and

information obtained by means of an on-the-spot check or inspection

referred to in this regulation, shall not be disclosed under article 25(9)

and (10) of the Act, except with the express consent of the European

regulatory authority which disclosed the information or of the

European regulatory authority of the Member State in which such an

on-the-spot check or inspection was carried out.

A European passport right shall entitle a Maltese credit Right of

Maltese credit

institution to provide one or more services.

institutions.

Part III - Contraventions by European credit institutions

and Maltese credit institutions

(1) Where Malta is the host Member State and the Contraventions

competent authority, on the basis of the information received from the by

credit

European regulatory authority of the home Member State in institutions.

accordance with Article 50 of the CRD, ascertains that a European

credit institution which has a branch or provides services in Malta in

exercise of a European passport right fulfils one of the following

conditions in relation to the activities carried out in Malta, it shall

notify the European regulatory authority -

(a)

the credit institution does not comply with the

provisions of the Act or any regulations made or Banking Rules

issued thereunder which transpose the requirements of the CRD,

or with the CRR;

(b) there is a material risk that the credit institution will

not comply with the provisions of the Act or any regulations

made or Banking Rules issued thereunder transposing the

requirements of the CRD, or with the CRR.

(2) Where the competent authority considers that the European

regulatory authority of the home Member State, after having been

notified in terms of sub-regulation (1), has not fulfilled its obligations

or will not fulfil its obligations to take appropriate measures to ensure

that the credit institution concerned remedies its non-compliance or

takes measures to avert the risk of non-compliance, it may refer the

matter to EBA and request its assistance in accordance with Article

19 of Regulation (EU) No 1093/2010.

(3) Before following the procedures set out in sub-regulations

(1) and (2), where Malta is the host Member State, the competent

authority may, in emergency situations, pending measures by the

European regulatory authority of the home Member State or

reorganisation measures referred to in Article 3 of Directive 2001/24/

EC on the reorganisation and winding up of credit institutions, take

any precautionary measures necessary to protect against financial

instability that would seriously threaten the collective interests of

depositors, investors and clients in Malta.

(4) Any precautionary measures under sub-regulation (3) shall

be proportionate to their purpose to protect against financial

instability that would seriously threaten collective interests of

depositors, investors and clients in Malta as the host Member State.

Such precautionary measures may include a suspension of payment.

They shall not result in a preference for the creditors of the European

credit institution in Malta over creditors in other Member States.

(5) Any precautionary measure under sub-regulation (3) shall

cease to have effect when the administrative or judicial authorities of

the home Member State take reorganisation measures under Article 3

of Directive 2001/24/EC on the reorganisation and winding up of

credit institutions.

(6) Where Malta is the host Member State, the competent

authority shall terminate precautionary measures taken in accordance

with sub-regulations (3) to (5) where it considers those measures to

have become obsolete under sub-regulations (1) and (2), unless they

cease to have effect in accordance with sub-regulation (5).

(7) The competent authority shall, without undue delay, notify

the European Commission, the EBA and the European regulatory

authorities concerned of precautionary measures taken under sub-

regulation (3).

(8) Where Malta is the host Member State, the competent

authority may, notwithstanding regulation 6 and sub-regulations (1)

and (2) of this regulation, exercise the powers conferred upon it under

the CRD to take appropriate measures to prevent or to punish

breaches committed in Malta of the provisions of the Act or any

regulations made or Banking Rules issued thereunder transposing the

requirements of the CRD or in the interests of the general good. This

shall include the possibility of preventing credit institutions who have

so acted in breach, from initiating further transactions in Malta.

(9) Any measures taken in accordance with sub-regulations (3)

to (7) or sub-regulation (8) involving penalties or restrictions on the

exercise of the freedom to provide services or the freedom of

establishment shall be properly reasoned and communicated to the

credit institution concerned.

(10) Where Malta is the host Member State and a European

credit institution carrying out its activities in Malta in exercise of a

European passport right has had its authorisation withdrawn by the

European regulatory authority of the home Member State, the

competent authority shall take appropriate measures to prevent the

European credit institution concerned from initiating further

transactions in Malta and to safeguard the interests of depositors.

(11) Where Malta, neither being the home Member State nor

the host Member State, is affected by the precautionary measures

taken by the European regulatory authority of any host Member State

in terms of Article 43 of the CRD, the competent authority may

(a)

object to such precautionary measures;

(b)

refer the matter to the EBA; and

(c)

request the EBA’s assistance in accordance with

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

(1) Where Malta is the home Member State and the Contraventions

competent authority is notified by a European regulatory authority by

credit

that a Maltese credit institution carrying out its activities in the institutions.

relevant host Member State through a branch or by providing

services, fulfils any one of the following conditions, it shall, without

delay, take all appropriate measures to ensure that the Maltese credit

institution concerned remedies its non-compliance or takes measures

to avert the risk of non-compliance

(a)

if the credit institution does not comply with the

national provisions of the host Member State transposing the

CRD, or with the CRR;

(b) if there is a material risk that the credit institution

will not comply with the national provisions of the host Member

State transposing the CRD, or with the CRR.

(2) The competent authority shall communicate such measures

taken in accordance with sub-regulation (1) to the European

regulatory authority of the host Member State without delay.

(3) Where Malta is the home Member State and the European

regulatory authority of the host Member State takes precautionary

measures in terms of Article 43 of the CRD, the competent authority

may

(a)

object to such precautionary measures;

(b)

refer the matter to the EBA; and

(c)

request the EBA’s assistance in accordance with

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

(4) Any measures taken in accordance with sub-regulation (1)

or sub-regulation (3) involving penalties or restrictions on the

exercise of the freedom to provide services or the freedom of

establishment shall be properly reasoned and communicated to the

credit institution concerned.

(5) In the event of withdrawal of a licence by the competent

authority of a Maltese credit institution, the competent authority shall

notify the European regulatory authorities of the host Member State

without delay.

Part IV - Collaboration between Regulatory Authorities

(1) The competent authority shall collaborate closely

with relevant European regulatory authorities in order to supervise

the activities of credit institutions operating, in particular, through a

branch, in one or more Member States other than that in which their

head offices are situated. The competent authority shall supply the

European regulatory authority in the Member States concerned with

all information concerning the management and ownership of credit

institutions, that is likely to facilitate their supervision and the

examination of the conditions for their licensing, and all information

likely to facilitate the monitoring of credit institutions, in particular

with regard to liquidity, solvency, deposit guarantee, the limiting of

large exposures, other factors that may influence the systemic risk

posed by the credit institution, administrative and accounting

procedures and internal control mechanisms.

(2) Where Malta is the home Member State, the competent

authority shall

(a) immediately provide the European regulatory

authorities of the host Member States with any information and

findings pertaining to liquidity supervision in accordance with

Part Six of the CRR and with the Supervisory Consolidation L.N. 31 of 2014.

Regulations, of the activities performed by a credit institution

through its branches, to the extent that such information and

findings are relevant to the protection of depositors or investors

in the host Member State;

(b) immediately notify the European regulatory

authorities of all host Member States where liquidity stress

occurs or can reasonably be expected to occur. That information

shall also include details about the planning and implementation

of a recovery plan and about any prudential supervisory

measures taken in that context;

(c)

communicate and explain upon request to the

European regulatory authorities of the host Member State how

information and findings provided by the latter have been taken

into account

Provided that where the competent authority disagrees

with the measures to be taken by the European regulatory authority of

the host Member State, to prevent further breaches in order to protect

the interests of depositors, investors and others to whom services are

provided or to protect the stability of the financial system in

accordance with Article 50(4) of the CRD, the competent authority

may refer the matter to EBA and request its assistance in accordance

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

(3) Where Malta is the host Member State, the competent

authority may request from the European regulatory authority of the

home Member State an explanation on the manner in which

information and findings provided by the competent authority have

been taken into account. Where upon the provision of such

information the competent authority maintains that no appropriate

measures have been taken by the said European regulatory authority,

the competent authority may, after notifying the European regulatory

authorities concerned and EBA, take appropriate measures to prevent

further breaches in order to protect the interests of depositors,

investors and others to whom services are provided or to protect the

stability of the financial system.

(4) The competent authority may refer to EBA situations

where a request for collaboration to a European regulatory authority,

in particular to exchange information, has been rejected or has not

been acted upon within a reasonable time.

Part V - Companies other than credit institutions

(1) A company, other than a credit institution, the

principal activity of which is to acquire holdings or to carry on one or

more of the activities listed in points 2, 3 and 5 to 12 of Annex I to the

CRD (hereinafter referred to in this regulation as "company"), may

exercise a European passport right in accordance with Articles 35,

with the exclusion of the second paragraph of sub-article (3) thereof,

36(1), (2) and (3), 39(1) and (2) and 40 to 46 of the CRD provided the

following conditions are fulfilled

(a) the company is a subsidiary of a credit institution or

the jointly-owned subsidiary of two or more credit institutions;

(b) the memorandum and articles of association of the

company permit the carrying on of those activities;

(c)

the parent undertaking or undertakings of the

company are authorised as credit institutions in the Member

State by the law of which the company is governed;

(d) the activities in question are actually carried out

within the territory of the same Member State;

(e)

the parent undertaking or undertakings of the

company hold 90 per cent or more of the voting rights attaching

to shares in the capital of the company;

(f)

the parent undertaking or undertakings of the

company satisfy the European regulatory authority of the host

Member State or, where Malta is the host Member State, the

competent authority, regarding the prudent management of the

company and have declared, with the consent of the relevant

European regulatory authority of the home Member State, or,

where Malta is the home Member State, with the consent of the

competent authority, that they jointly and severally guarantee

the commitments entered into by the company;

(g) the company is effectively included, for the

activities in question in particular, in the consolidated

supervision of the parent undertaking, or of each of the parent

undertakings, in accordance with Title VII, Chapter 3 of the

CRD and Part One, Title II, Chapter 2 of the CRR, in particular

for the purposes of the own funds requirements set out in Article

92 of the CRR, for the control of large exposures provided for in

Part Four of the CRR and for the purposes of the limitation of

holdings provided for in Articles 89 and 90 of the said CRR.

(2) Where Malta is the home Member State, the competent

authority shall check compliance with the conditions referred to in

sub-regulation (1), and shall supply the company with a certificate of

compliance which shall form part of the notification referred to in

Articles 35 and 39 of the CRD.

(3) This regulation shall apply accordingly to subsidiaries of a

company referred to in sub-regulation (1).

(4) By way of derogation from the second sub-paragraph of

Article 35(3) of the CRD, for the purpose of this regulation, where

Malta is the home Member State, the competent authority shall

communicate to the European regulatory authority of the host

Member State the amount and composition of own funds of the

company and the total risk exposure amounts calculated in

accordance with Article 92(3) and (4) of the CRR of the credit

institution which is its parent undertaking.

(5) Where Malta is the home Member State, the competent

authority shall notify the European regulatory authority of the host

Member State where a company referred to in this regulation ceases

to fulfil any of the conditions imposed and the activities carried out

by such company in the host Member State shall become subject to

the law of the host Member State.

(6) Where Malta is the host Member State, and the competent

authority is notified by the European regulatory authority of the home

Member State that the company referred to in this regulation ceases to

fulfil any of the conditions imposed, the activities carried out by that

company in Malta shall become subject to Maltese law.

(7) The entities referred to in point (1) and in points (3) to (23)

of Article 2(5) of the CRD, shall be treated as companies for the

purpose of this regulation.

(8) This regulation shall also apply to financial holding

companies, mixed financial holding companies and mixed-activity

holding companies which have their head offices in the European

Union.

Part VI - Applicability provisions

(1) A legal person who, on the date of the coming into

force of these regulations, was in possession of a licence issued by the

competent authority which covers the provision of point 1 of Annex I

to the CRD, incorporated in the Schedule to these regulations, and

any other additional activities included in such Annex, shall be

deemed to be a Maltese credit institution for the purposes of these

regulations

Provided that such legal person conforms with all

applicable Banking Rules issued by the said competent authority.

(2) Every licence issued after the coming into force of these

regulations shall indicate whether the licence holder is a credit

institution in terms of these regulations.

Part VII - Interpretation

These regulations shall apply mutatis mutandis to

companies other than credit institutions, fulfilling the conditions laid

down in regulation 17, being companies authorised either by the

European regulatory authority or by the competent authority; and

accordingly the words "European credit institution" shall be read as if

they were a reference to a company or other body corporate

authorised by the European regulatory authority, and the words

"Maltese credit institution" shall be read as if they were a reference to

companies authorised by the competent authority.

Every authorisation, licence, approval or order taken,

granted or commenced under the European Passport Rights for Credit

Institutions Regulations, 2004 * and under the European Passport

Rights for Credit Institutions Regulations 2011 ** , shall continue to be

valid and in force, as if such authorisation, licence, approval or order

were taken, granted or commenced under these regulations.

2011.

In terms of article 29B of the Act, these regulations are

being published in the English language only.

* Revoked by European Passport Rights for Credit Institutions Regulations,

2011. ** Revoked by these Regulations.

Part VIII - Transitional Provisions

The provisions of regulations 3(6), 4(5), 6, 8, 12, 14, 15 Transitional

and 16 shall not apply until the date on which the liquidity coverage provisions.

requirement becomes applicable in accordance with a delegated act

adopted by the European Commission in accordance with Article 460

of the CRR in terms of Article 151 of the CRD

Provided that, until the date referred to in this regulation

(a) regulation 6 of these regulations shall be replaced by

the following

" Reporting to

6. (1) The competent authority may,

the competent

for statistical purposes, require a European

authority.

credit institution which has established a

branch in Malta in terms of these regulations,

to report periodically on its activities in Malta

to the competent authority.

(2) In discharging its responsibilities

within the meaning of regulation 23, the

competent authority may require such branches

of European credit institutions to provide the

same particulars as Maltese credit institutions

for that purpose.";

(b) regulation 8 of these regulations shall be replaced by

the following

" On-the-spot

8. (1) Where a European credit

checks of

institution carries out its activities in Malta

branches

through a branch in exercise of a European

established in

Malta.

passport right, the European regulatory

authority of the home Member State may, after

notifying the competent authority, carry out,

itself or through an intermediary, on-the-spot

checks of the information referred to in

regulation 16 of these regulations.

(2) This regulation and the right of

European regulatory authorities of the home

Member State to have recourse to one of the

other procedures set out in Article 118 of the

CRD for the purposes of such on-the-spot

checking of branches, shall not affect the right

of the competent authority, in discharging its

responsibilities under the CRD, to carry out

on-the-spot checks of branches established in

Malta.";

(c)

regulation 12 of these regulations shall be replaced

by the following

" On-the-spot

12. (1) Where a Maltese credit

checks of

institution carries out its activities in another

branches

Member State through a branch in exercise of a

established in a

Member State

European passport right, the competent

other than

Malta.

authority may, after notifying the European

regulatory authority of the host Member State,

carry out, itself or through an intermediary, on-

the-spot checks of the information referred to

in regulation 16 and may also, for the purposes

of such on-the-spot checking of branches, have

recourse to one of the other procedures set out

in regulation 12 of the Supervisory

L.N. 31 of

2014. Consolidation Regulations.

(2) This regulation shall not affect the

right of the European regulatory authority of

the host Member State, in discharging its

responsibilities under the CRD, to carry out

on-the-spot checks of branches established in

the host Member State.";

(d) regulation 14 of these regulations shall be replaced

by the following

" Contraventions

14. (1) Where Malta is the host

by European

Member State and the competent authority

credit

ascertains that a European credit institution

institutions.

which has a branch or provides services in

Malta in exercise of a European passport right

is not complying with the provisions of the Act

or any regulations made or Banking Rules

issued thereunder transposing the requirements

of the CRD relating to the powers of the

competent authority, the competent authority

shall require the European credit institution to

remedy its non-compliance.

(2) If the European credit institution

concerned fails to take the necessary steps to

remedy and rectify its position, the competent

authority shall notify the European regulatory

authority of such failure accordingly.

(3) Where Malta is the host Member

State, if, despite the measures taken by the

European regulatory authority of the home

Member State to ensure that the European

credit institution concerned remedies its non-

compliance, or because such measures prove

inadequate or are not provided for in the

Member State in question, the European credit

institution persists in violating the legal rules

referred to in sub-regulation (1), the competent

authority may, after notifying the European

regulatory authority, take appropriate measures

to prevent or to punish further breaches and, in

so far as necessary, to prevent the European

credit institution from initiating further

transactions in Malta.

(4) Before following the procedure set

out in sub-regulations (1) to (3), where Malta is

the host Member State, the competent authority

may, in emergencies, take any precautionary

measures necessary to protect the interests of

depositors, investors and others to whom

services are provided. The competent authority

shall notify the European Commission and the

European regulatory authorities concerned of

such measures at the earliest opportunity.

(5) Where Malta is the host Member

State, the competent authority may,

notwithstanding regulation 6 and sub-

regulations (1) to (3) of this regulation,

exercise the powers conferred upon it under the

CRD to take appropriate measures to prevent

or to punish breaches committed in Malta of

the provisions of the Act or any regulations

made or Banking Rules issued thereunder

transposing the requirements of the CRD or in

the interests of the general good. This shall

include the possibility of preventing credit

institutions who have so acted in breach, from

initiating further transactions in Malta.

(6) Any measures taken in accordance

with sub-regulation (1) or sub-regulations (4)

or (5) involving penalties or restrictions on the

exercise of the freedom to provide services or

the freedom of establishment shall be properly

reasoned and communicated to the credit

institution concerned.

(7) Where Malta is the host Member

State and a European credit institution carrying

out its activities in Malta in exercise of a

European passport right has had its

authorisation withdrawn by the European

regulatory authority of the home Member

State, the competent authority shall take

appropriate measures to prevent the European

credit institution concerned from initiating

further transactions in Malta and to safeguard

the interests of depositors.";

(e)

regulation 15 of these regulations shall be replaced

by the following

" Contraventions

15. (1) Where Malta is the home

by Maltese credit

Member State, if the European regulatory

institutions.

authority of the host Member State, after

ascertaining that a Maltese credit institution

having a branch or providing services within

its territory in exercise of a European passport

right is not complying with the legal provisions

adopted in that Member State pursuant to the

CRD relating to the powers of the European

regulatory authority of the host Member State,

requires the Maltese credit institution

concerned to remedy its non-compliance and

the Maltese credit institution concerned fails to

take the necessary steps to remedy such non-

compliance, the competent authority shall, at

the earliest opportunity, take all appropriate

measures to ensure that the Maltese credit

institution concerned remedies its non-

compliance. The nature of those measures shall

be communicated to the European regulatory

authorities concerned.

(2) Any measures taken in accordance

with sub-regulation (1) involving penalties or

restrictions on the exercise of the freedom to

provide services or the freedom of

establishment shall be properly reasoned and

communicated to the credit institution

concerned.

(3) In the event of withdrawal of a

licence by the competent authority of a Maltese

credit institution, the competent authority shall

notify the European regulatory authorities of

the host Member State without delay.";

(f)

regulation 16 shall be replaced by the following

" Collaboration

16. The competent authority shall

between

collaborate closely with relevant European

regulatory

regulatory authorities in order to supervise the

authorities.

activities of credit institutions operating, in

particular through a branch, in one or more

Member States other than that in which their

head offices are situated. The competent

authority shall supply all information

concerning the management and ownership of

credit institutions to the relevant European

regulatory authorities in the Member States

concerned, that is likely to facilitate their

supervision and the examination of the

conditions for their licensing, and all

information likely to facilitate the monitoring

of credit institutions, in particular with regard

to liquidity, solvency, deposit guarantees, the

limiting of large exposures, administrative and

accounting procedures and internal control

mechanisms.".

Until the date on which the liquidity coverage requirement

becomes applicable in accordance with a delegated act adopted by the

European Commission pursuant to Article 460 of the CRR in terms of

Article 151 of the CRD, where Malta is the host Member State, 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

branches of credit institutions authorised in other Member States,

which are established in Malta.

Part IX - Revocation

The European Passport Rights for Credit Institutions

Regulations, 2011, are hereby revoked.

2011. SCHEDULE

Annex I to the CRD

LIST OF ACTIVITIES SUBJECT TO MUTUAL RECOGNITION

1. Taking deposits and other repayable funds;

2. Lending including, inter alia: consumer credit, credit

agreements relating to immovable property, factoring, with or without

recourse, financing of commercial transactions (including forfeiting);

3. Financial Leasing;

4. Payment services as defined in Article 4(3) of Directive

2007/64/EC of the European Parliament and of the Council of 13

November 2007 on payment services in the internal market amending

Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and

repealing Directive 97/5/EC;

5. Issuing and administering other means of payment (e.g.

travellers cheques and bankers’ drafts) in so far as this activity is not

covered by activity 4 above;

6. Guarantees and commitments;

7. Trading for own account or for account of customers in

(a)

money market

instruments

(cheques,

bills,

certificates of deposit, etc.);

(b)

foreign exchange;

(c)

financial futures and options;

(d)

exchange and interest-rate instruments;

(e)

transferable securities;

8. Participation in securities issues and the provision of

services related to such issues;

9. Advice to undertakings on capital structure, industrial

strategy and related questions and advice as well as services relating

to mergers and the purchase of undertakings;

10. Money broking;

11. Portfolio management and advice;

12. Safekeeping and administration of securities;

13. Credit reference services;

14. Safe custody services;

15. Issuing of electronic money.

The services and activities provided for in Section A and

Section B of Schedule I to the European Passport Rights for

Investment Firms Regulations when referring to the instruments

provided for in Section C of the said Schedule are subject to mutual

recognition.

€1.17