SUPERVISORY CONSOLIDATION (CREDIT INSTITUTIONS) REGULATIONS (creditinstitutions)

(CREDIT INSTITUTIONS)

SUBSIDIARY LEGISLATION 371.22

SUPERVISORY CONSOLIDATION

(CREDIT INSTITUTIONS) REGULATIONS

1st February, 2022 *

LEGAL NOTICE 494 of 2021, as amended by Legal Notices 148 of

2023,44 and 153 of 2025.

(1)

The title of these regulations is the Supervisory

Consolidation (Credit Institutions) Regulations.

(2) The purpose of these regulations is to implement

Articles 2(6), 3 (partly), 20(3), 48(1) and (2), 49, 51, 111, 112, 113,

114, 115, 116, 117, 118, 119, 120, 122, 123(1), 124, 125, 127, 155

and 156 of the CRD.

(1)

In these regulations, unless the context otherwise

requires -

"the Act" means the Banking Act;

"ancillary services undertaking" shall have the same

meaning as that assigned to it in point (18) 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;

"EU parent investment firm" shall have the same

meaning as that assigned to it in point (29b) 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 institution" shall have the same meaning as

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

shall include the entities referred to in points (3) to (24) of

Article 2(5) of the CRD;

"parent credit institution" shall have the same meaning

as that assigned to the term "parent credit institution in a

Member State" in point (29c) of the CRR;

"parent investment firm" shall have the same meaning as

that assigned to the term "parent investment firm in a Member

State" in point (29a) of the CRR;

*See Legal Notice 36 of 2022.

(CREDIT INSTITUTIONS)

"participation" shall have the same meaning as that

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

"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 credit

institutions.

(2) Words and expressions which are also used in the Act

shall have the same meaning as assigned to them in the Act

Provided that, in accordance with article 2(1A) of the

Act, for the purposes of applying the requirements and supervisory

powers laid down in these regulations on a consolidated or sub-

consolidated basis in accordance with the Act and any regulations

and Banking Rules made or issued thereunder transposing the CRD,

with any binding legal instruments issued under the CRD and with

the CRR, the terms "institution", "EU parent institution" and "parent

undertaking" shall also include the entities listed in paragraphs (a),

(b) and (c) of article 2(1A) of the Act

Provided further that, for the purposes of applying the

requirements and supervisory powers laid down in regulations 6(3),

9(5), 10(2), (3) and (8), 11(1), 13(1), (4) and (6), 14, 15, 17, 18(1),

and 19 on a consolidated or sub-consolidated basis in accordance

with the Act and any regulations and Banking Rules made or issued

thereunder transposing the CRD, with any binding legal instruments

issued under the CRD and with the CRR, the term "credit institution"

shall also include the entities listed in paragraphs (a), (b) and (c) of

article 2(1B) of the Act.

PART I

Consolidated Supervision Responsibility of the competent

authority for consolidated supervision

(1)

Subject to the provisions of article 11B of the

Act, the competent authority shall exercise supervision on a

consolidated basis

(a)

where the parent undertaking is a parent credit

institution established in Malta or in another Member State or

an EU parent credit institution supervised by the competent

authority on an individual basis;

(aa)

Deleted by Legal Notice 44 of 2025.

(b)

where a parent undertaking is a parent

investment firm established in Malta or in another Member

State or an EU parent investment firm and at least one of its

subsidiaries is a credit institution supervised by the competent

authority

(CREDIT INSTITUTIONS)

Provided that, where there are several credit

institutions, the competent authority shall exercise supervision

on a consolidated basis where it supervises the credit

institution with the largest balance sheet total;

(c)

where the parent of a credit institution

supervised by the competent authority on an individual basis is

a parent financial holding company established in Malta or in

another Member State, a parent mixed financial holding

company established in Malta or in another Member State, an

EU parent financial holding company or EU parent mixed

financial holding company;

(d)

where two or more institutions authorised in the

European Union, one of which is a credit institution supervised

by the competent authority, have the same parent financial

holding company established in Malta or in another Member

State, parent mixed financial holding company established in

Malta or in another Member State, EU parent financial holding

company or EU parent mixed financial holding company, and

(i)

the competent authority supervises the

credit institution, which is the only credit institution

within the group; or

(ii) the competent authority supervises the

credit institution with the largest balance sheet total,

where there are several credit institutions within the

group

Provided that, for the purposes of this paragraph,

the term "institution" shall also include investment firms;

(da)

Deleted by Legal Notice 44 of 2025.

(e)

where consolidation is required pursuant to

Article 18(3) or (6) of the CRR and the competent authority

supervises the credit institution with the largest balance sheet

total.

(2) By way of derogation from sub-regulation (1)(b), (d)(ii)

and (e), the competent authority shall be the consolidating supervisor

where it supervises on an individual basis one or more credit

institutions within a group, and the sum of the balance sheet totals of

those supervised credit institutions is higher than that of the credit

institutions supervised on an individual basis by any other European

regulatory authority.

(3) In particular cases, the criteria referred to in sub-

regulation (1)(a), (b), (d) and (e) may be waived by common

(CREDIT INSTITUTIONS)

agreement of the competent authority with the other relevant

European regulatory authorities and a European regulatory authority

may be appointed to exercise supervision on a consolidated basis

where the application of the criteria referred to in such sub-regulation

(1)(a), (b), (d) and (e) would be inappropriate, taking into account the

credit institutions or investment firms concerned and the relative

importance of their activities in the relevant Member States, or the

need to ensure the continuity of supervision on a consolidated basis

by the same European regulatory authority. In these cases, before

such decision is taken 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 applicable, shall

have the right to be heard.

(4) The competent authority shall notify the Commission

and the EBA without delay of any agreement falling within sub-

regulation (3).

(5) 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 Act and any regulations made or Rules issued

thereunder transposing the requirements of the CRD, by any binding

legal instrument issued under the CRD and by the CRR, the

competent authority, acting as consolidating supervisor, shall carry

out the following tasks

(a)

co-ordination 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 co-ordination 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

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contingency plans and communication to the public.

(2) Where European regulatory authorities do not co-

operate with the competent authority, to the extent required in

carrying out the tasks in sub-regulation (1), 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 is not the 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

situation as described in Article 18 of Regulation (EU) No 1093/

2010, 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 any

other applicable law, alert as soon as is practicable the EBA and the

authorities referred to in Articles 58(4) and 59 of the CRD and it shall

communicate to the said authorities all the information that is

essential for the pursuance of their tasks.

(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.

(CREDIT INSTITUTIONS)

(3) Where the competent authority is responsible for the

licensing of the subsidiary of a parent undertaking which is a credit

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 assumes responsibility for supervising the subsidiary in

accordance with the CRD. The competent authority shall forward the

content of such agreements to the EBA.

(4) Where the competent authority is the consolidating

supervisor, and a financial holding company or a mixed financial

holding company that has been granted approval in accordance with

article 11B of the Act is established in a Member State other than

Malta, the co-ordination and co-operation arrangements referred to in

sub-regulations (1) and (2) shall also be concluded with the European

regulatory authority where the parent undertaking is established.

(5) Where the competent authority is not the consolidating

supervisor, but a financial holding company or a mixed financial

holding company has been granted approval in accordance with

Article 21a of the CRD and is established in Malta, the coordination

and cooperation arrangements referred to sub-regulations (1) and (2)

shall be concluded with the European regulatory authority acting as

the consolidating supervisor.

(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 (4) 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

(CREDIT INSTITUTIONS)

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) In order to facilitate the tasks referred to in regulations

4(1), 5(1) and 6(1) and (2), where the competent authority is the

consolidating supervisor, it shall also establish colleges of

supervisors where all the cross-border subsidiaries of an EU parent

institution, an EU parent financial holding company or an EU parent

mixed financial holding company have their head offices in third

countries

Provided that the third countries’ regulatory authorities

are subject to confidentiality requirements that are equivalent to the

requirements laid down in the Malta Financial Services Authority Act

and any other applicable law.

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

of supervisors, shall co-operate closely with the 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

Authority Act and any other applicable law 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 Act, and any

regulations made or Rules issued thereunder transposing the

requirements of the CRD, under any binding legal instrument issued

under the CRD, and under the CRR.

(5) 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.

(CREDIT INSTITUTIONS)

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

supervisors when

(a)

it is responsible for the supervision of credit

institutions which are 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.

(7) 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).

(8) 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.

(9) The competent authority as consolidating supervisor

shall, subject to the confidentiality requirements of the Malta

Financial Services Authority Act and any other applicable law,

inform the EBA of the activities of the college of supervisors,

including in emergency situations, and communicate to the EBA all

information that is of particular relevance for the purposes of

supervisory convergence.

(10) In the case of a disagreement between the competent

authorities on the functioning of the supervisory colleges, 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.

(11) Without prejudice to the 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

(CREDIT INSTITUTIONS)

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 Title VII, Chapter 1, Section II of the

CRD, where applicable, Chapter 1, Section 2 of Title IV of

Directive (EU) 2019/2034, the Malta Financial Services

Authority Act and any other applicable law

Provided that the competent authority shall,

when providing its opinion on whether the confidentiality

requirements of a third country regulatory authority are

equivalent, take into consideration any assessment carried out

by the EBA on the equivalence of the confidentiality regime of

the relevant third country regulatory authority.

(12) Where a financial holding company or a mixed financial

holding company has been granted approval in accordance with

article 11B of the Act and, or Article 21a of the CRD, the competent

authority may participate in the relevant college of supervisors.

(1)

The competent authority, whether it is the

consolidating supervisor or the competent authority responsible for

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

financial holding company or EU parent mixed financial holding

company which are credit institutions, shall do everything within its

power to reach a joint decision with the other European regulatory

authorities

(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 point (a) of Article 104(1) 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

(CREDIT INSTITUTIONS)

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;

(c)

on any guidance on additional own funds

referred to in Article 104b(3) of the CRD.

(2) Where it is the consolidating supervisor, the competent

authority shall submit -

(a)

for the purpose of sub-regulation (1)(a), a report

containing the risk assessment of the group of institutions in

accordance with Article 104a of the CRD to the other relevant

European regulatory authorities;

(b)

for the purpose of sub-regulation (1)(b), a report

containing the assessment of the liquidity risk profile of the

group of institutions in accordance with Articles 86 and 105 of

the CRD, to the other relevant European regulatory authorities;

(c)

for the purpose of sub-regulation (1)(c), a report

containing the risk assessment of the group of institutions in

accordance with Article 104b of the CRD, to the other relevant

European regulatory authorities.

(3) The joint decisions referred to in sub-regulation (1) shall

be reached within four (4) months from submission of the reports

referred to in sub-regulation (2)

Provided that the joint decisions referred to in sub-

regulation (1) shall also duly consider the risk assessment of

subsidiaries performed by the competent authority and, or relevant

European regulatory authorities in accordance with Articles 73, 97,

104a and 104b of the CRD.

(4) Where the competent authority is the consolidating

supervisor, it shall provide the EU parent institution concerned with

the joint decisions referred to in sub-regulation (1), which shall be set

out in a document containing the full reasons for the decisions. In the

event of disagreement, the competent authority shall, at the request of

any of the other European regulatory authorities concerned, consult

the EBA

Provided that the competent authority, when it is the

consolidating supervisor, may consult the EBA on its own initiative.

(5) In the absence of such a joint decision within the time

period referred to in sub-regulation (3) and, or Article 113(2) of the

CRD, a decision on the application of Articles 73, 86, 97, 104(1)(a),

104b and 105 of the CRD shall be taken by the competent authority,

where it is acting as the consolidating supervisor, on a consolidated

(CREDIT INSTITUTIONS)

basis, after duly considering the risk assessment of subsidiaries

performed by the relevant European regulatory authorities

Provided that

(a)

if, at the end of the time period referred to in

sub-regulation (3), 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 the EBA may take in accordance with Article 19(3) of

that Regulation. The competent authority shall take its

decision in conformity with the decision of the EBA. The time

period referred to in sub-regulation (3) shall be deemed the

conciliation period within the meaning of Regulation (EU) No

1093/2010;

(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.

The matter shall not be referred to the EBA after the end of the

time period referred to above in sub-regulation (3) or after a

joint decision has been reached.

(6) Where the competent authority is not the consolidating

supervisor but 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, which is

a credit institution, and in the absence of a joint decision in terms of

this regulation within the time period referred to in Article 113(2) of

the CRD, the competent authority shall decide on the application of

Articles 73, 86, 97, 104(1)(a), 104b 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 period referred to

in Article 113(2) of the CRD, 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 the said

Regulation. The competent authority shall take its decision in

conformity with the decision of the EBA. The time period referred to

above shall be deemed to be the conciliation period within the

meaning of the said Regulation

(7)

Where the competent authority is not acting as

(CREDIT INSTITUTIONS)

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, in the event of any disagreement, refer a dispute to the EBA

on its own initiative but prior to a joint decision being made,

provided that no referral shall be made once the time period specified

in Article 113(2) of the CRD has expired.

(8) (a)

The decisions taken by the competent authority

referred to in this regulation shall be set out in a document

containing fully reasoned decisions and shall take into account the

risk assessment, views and reservations of the competent authority

or the other European regulatory authorities, as applicable,

expressed during the time period referred to in sub-regulation (3).

(b)

The competent authority shall provide the

document referred to above 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 decisions referred to in sub-regulation

(1) and the decisions taken by the competent authority or European

regulatory authorities in terms of Article 113(3) of the CRD shall be

recognised as determinative and shall be applied by the competent

authority, where applicable.

(9) The decisions referred to in sub-regulation (1) and any

decision taken in terms of sub-regulations (5) and (6) 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

holding company or an EU parent mixed financial holding company

which are credit institutions, 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), Article 104b and Article 105 of the

CRD. In those exceptional circumstances, such 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

(CREDIT INSTITUTIONS)

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

(CREDIT INSTITUTIONS)

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 a credit 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, organisational 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

(Supervisory Review) Regulations, 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

this paragraph 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.

(8)

The competent authority shall cooperate closely with the

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financial intelligence units and authorities entrusted with the public

duty of supervising the obliged entities listed in points (1) and (2) of

Article 2(1) of Directive (EU) 2015/849 for compliance with that

Directive within their respective competences and shall provide them

with information relevant for their respective tasks under the CRD,

the CRR and under Directive (EU) 2015/849, provided that such

cooperation and information exchange do not impinge on an on-

going inquiry, investigation or proceedings in accordance with the

criminal or administrative law of Malta.

(1)

The competent authority shall ensure that there

are no 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 a credit institution licensed in

terms of the Act 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 credit

institution for information which may facilitate supervision of that

subsidiary.

(3) The competent authority, as consolidating supervisor,

may ask the subsidiaries of a credit 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 the 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.

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(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 a credit institution, a financial holding company or

mixed financial holding company, which are not included within the

scope of supervision on a consolidated basis.

(1)

Where a credit institution, financial holding

company, mixed financial holding company or mixed-activity

holding company is situated in Malta and controls one or more

subsidiaries authorised in another Member State which are insurance

undertakings or other undertakings providing investment services,

the competent authority shall cooperate closely with European

regulatory authorities and with other authorities entrusted with the

public task of supervising insurance undertakings in other Member

States. Without prejudice to its responsibilities, the competent

authority shall provide the authorities referred to in this sub-

regulation 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)

Where, pursuant to regulation 3, the competent

authority is the consolidating supervisor of a group with a parent

mixed financial holding company, but is not the coordinator in

accordance with Article 10 of Directive 2002/87/EC, the competent

authority shall cooperate with the coordinator for the purpose of

applying the CRD and the CRR on a consolidated basis. In order to

facilitate and establish effective cooperation, the competent authority

shall have written coordination and cooperation arrangements with

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the coordinator in place.

(3)

Where, pursuant to regulation 3, the competent

authority is not the consolidating supervisor of a group with a mixed

parent financial holding company, but is not the coordinator in

accordance with Article 10 of Directive 2002/87/EC, the competent

authority shall cooperate with the consolidating supervisor for the

purposes of applying the CRD and the CRR on a consolidated basis.

In order to facilitate and establish effective cooperation, the

competent authority shall have written coordination and cooperation

arrangements with the consolidating supervisor in place.

(4) 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

Act.

(5) 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 the EBA and to the Commission.

(1)

The competent authority, in applying the

provisions of the Act, and of any regulations made or Rules issued

thereunder transposing the requirements of the CRD, of any binding

legal instrument issued under the CRD and of 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

(CREDIT INSTITUTIONS)

verification itself.

(1)

Where a credit institution licensed in terms of

the Act, 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 credit 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 credit

institutions licensed in terms of the Act, the parent undertaking of

which has its head office in a third country. For this purpose, the

competent authority shall consult the EBA before making a decision.

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

competent authority shall apply the provisions of the Act, any

regulations or Rules made thereunder transposing the requirements of

the CRD, of any binding legal instrument issued under the CRD and

of the CRR to the credit 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

(CREDIT INSTITUTIONS)

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)

credit institutions the parent undertakings of

which have their head offices in a third country;

(b)

credit 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 a credit institution 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) of the

CRD applies, or to the European regulatory authority of the home

Member State of such credit 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 credit 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) of the

CRD 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,

(CREDIT INSTITUTIONS)

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 Act and any regulations made or

Rules issued 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

the supervision of a credit institution licensed in terms of the Act

which has 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 credit 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

(CREDIT INSTITUTIONS)

significant branch is established, the 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)

the 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)

the 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 with respect to the credit institution licensed in Malta

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

institution specific prudential requirements taken pursuant to Article

113(2) of the CRD. The competent authority shall also communicate

decisions required by 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 made or Rules issued 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 Act, and any regulations or Rules made thereunder

transposing the requirements of the CRD and any binding legal

instruments issued under the CRD.

(CREDIT INSTITUTIONS)

(1)

Where regulation 7 does not apply and the

competent authority supervises a credit 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 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 a credit institution,

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

European Passport Rights for Credit Institutions Regulations shall be

the responsibility of the competent authority when such a credit

institution is licensed in Malta, without prejudice to those provisions

of the CRD which give responsibility to the European regulatory

authorities of the host Member State.

(2) The provisions of sub-regulation (1) shall not prevent

supervision on a consolidated basis in terms of regulation 3.

(3) Where the branch of a credit 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

credit institution to which the branch belongs is authorised in another

Member State.

(CREDIT INSTITUTIONS)

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

credit institutions licensed in terms of the Act is a mixed activity

holding company, the competent authority shall, by approaching the

mixed activity holding company and its subsidiaries either directly or

via subsidiaries that are credit 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 a credit institution licensed in

terms of the Act, 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 credit institutions licensed in terms

of the Act is a mixed-activity holding company, the competent

authority shall exercise general supervision over transactions

between the credit institutions and the mixed-activity holding

company and its subsidiaries.

(1)

Where a mixed financial holding company is

subject to equivalent provisions under the Act and any regulations or

Rules made thereunder transposing the requirements of the CRD, and

under Directive 2002/87/EC, 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 Act and any regulations or Rules

made thereunder transposing the requirements of the CRD and under

Directive 2009/138/EC, in particular in terms of risk-based

supervision, the competent authority may, where it is the

consolidating supervisor, in agreement with the group supervisor in

the insurance sector, apply to that mixed financial holding company

only the provisions of the Directive relating to the most significant

financial sector as defined in Article 3(2) of Directive 2002/87/EC.

(CREDIT INSTITUTIONS)

(3) The competent authority, as consolidating supervisor,

shall inform the EBA of the decisions taken under sub-regulations (1)

and (2).