Commission Delegated Regulation (EU) 2015/923 of 11 March 2015 amending Delegated Regulation (EU) No 241/2014 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards for own funds requirements for institutions (Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to 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 (1), and in particular the third subparagraph of Article 36(2), the third subparagraph of Article 73(7) and the third subparagraph of Article 84(4) thereof,

Whereas:

(1) In order to avoid regulatory arbitrage and ensure harmonised application of the own funds requirements in the Union, it is important to ensure that there is a uniform approach concerning the deduction from own funds items of indirect and synthetic holdings in institutions' own own funds instruments and indirect and synthetic holdings in financial sector entities.

(2) Given that Regulation (EU) No 575/2013 already provides rules for direct holdings of an institution's own funds instruments by the institution itself and direct holdings of own funds instruments of other financial sector entities, supplementing rules should be laid down for the deduction from own funds of holdings by the institution that relate to indirect and synthetic holdings in such instruments of the institution itself or in such instruments of other financial sector entities.

(3) The treatment of indirect holdings arising from index holdings is covered by Article 76 of Regulation (EU) No 575/2013 and by Articles 25 and 26 of Commission Delegated Regulation (EU) No 241/2014 (2). However, Delegated Regulation (EU) No 241/2014 does not cover indirect and synthetic holdings arising in the context of points (f), (h) and (i) of Article 36(1), points (a), (c), (d) and (f) of Article 56, and points (a), (c) and (d) of Article 66 of Regulation (EU) No 575/2013. It is necessary to set out new rules in respect of the treatment of indirect and synthetic holdings referred to in those provisions.

(4) Where an institution's own credit standing drives the rates set by market indices which are also used as a reference for the remuneration of Additional Tier 1 and Tier 2 instruments of that institution, prudential concerns arise, relating to the correlation between the distributions on the instrument and the credit standing of the institution. The number and the diversity of institutions in the panel should be high enough to adequately reflect the activities in the related market. Therefore, if an institution issues an Additional Tier 1 or Tier 2 instrument with a floating rate or a fixed rate that will revert to a floating rate, the rate that it pays on that instrument should not increase when the institution's credit standing declines. Therefore, where the rate is linked to an index, the index should be sufficiently ‘broad’ to ensure that the institution's credit standing is not a main factor influencing the rates set by that index. The distinction should be made between correlation due to the entire sector suffering stress and affecting the benchmark rate, and correlation due to one institution's credit standing affecting the benchmark rate.

(5) The calculation of minority interests at the consolidated level and subconsolidated level should be consistent. Therefore, the eligible minority interests of a subsidiary that is itself a parent undertaking of a financial sector entity should be the amount that results, for the parent institution of that subsidiary, when the parent institution applies the prudential consolidation referred to in Title II of Part One of Regulation (EU) No 575/2013.

(6) Given the similar nature of the deductions covered by Articles 84, 85 and 87 of Regulation (EU) No 575/2013, the same provisions for the calculation of eligible minority interests should apply to all of those cases.

(7) This Regulation is based on the draft regulatory technical standards submitted by the European Banking Authority to the Commission.

(8) The European Banking Authority has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the opinion of the Banking Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council (3).

(9) Delegated Regulation (EU) No 241/2014 should therefore be amended accordingly,

HAS ADOPTED THIS REGULATION:

Article 1

Delegated Regulation (EU) No 241/2014 is amended as follows:

Article 2

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 11 March 2015

For the Commission The President Jean-Claude JUNCKER

(1) OJ L 176, 27.6.2013, p. 1.

(2) Commission Delegated Regulation (EU) No 241/2014 of 7 January 2014 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards for Own Funds requirements for institutions (OJ L 74, 14.3.2014, p. 8).

(3) Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC (OJ L 331, 15.12.2010, p. 12).