Commission Delegated Regulation (EU) 2023/2779 of 6 September 2023 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards specifying the criteria for the identification of shadow banking entities referred to in Article 394(2) of Regulation (EU) No 575/2013

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 amending Regulation (EU) No 648/2012 (1), and in particular Article 394(4), fourth subparagraph, thereof,

Whereas:

(1) Shadow banking can lead to increased risks for financial stability. Authorisation and supervision in accordance with Union law mitigates that risk. It is, therefore, appropriate to lay down that entities that are subject to such authorisation and supervision are not to be considered shadow banking entities. For that purpose, it is necessary to specify that Union law.

(2) During the recent Covid-19 crisis, money market funds faced severe liquidity issues. This highlighted that risks associated with money market funds, particularly in stressed market conditions, are not fully mitigated by the existing prudential requirements in the Union and hence, can lead to an increased risk for financial stability. For that reason, exposures to money market funds should be regarded as exposures to shadow banking entities.

(3) Alternative investment funds employing leverage on a substantial basis entail additional risks that are not deemed to be adequately mitigated from a prudential perspective by the requirements imposed to their asset managers under Directive 2011/61/EU of the European Parliament and of the Council (2). It is therefore necessary to ensure that institutions regard alternative investment funds as shadow banking entities where those undertakings employ leverage on a substantial basis, originate loans in the ordinary course of their business, or purchase third-party lending exposures for their own account.

(4) Institutions should not consider as shadow banking entities financial institutions that are treated as institutions for the calculation of risk-weighted assets under the standardised approach set out in Article 119(5) of Regulation (EU) No 575/2013, as those financial institutions are authorised and supervised by the competent authorities and subject to prudential requirements comparable, in terms of robustness, to those applied to institutions.

(5) Due to their public or semi-public nature or their cooperative status, certain entities are explicitly excluded from the scope of Directive 2013/36/EU of the European Parliament and of the Council (3), Regulation (EU) No 648/2012 of the European Parliament and of the Council (4) and Regulation (EU) No 575/2013. For that reason, institutions should not regard those entities as shadow banking entities.

(6) Article 4 of Directive 2009/138/EC of the European Parliament and of the Council (5) excludes certain insurance and re-insurance undertakings from the scope of that Directive, due to their size. Since those undertakings are small, they do not pose significant risk to financial stability. For that reason, institutions should not regard those undertakings as shadow banking entities.

(7) Credit intermediation activities of entities that are part of a non-financial group, carried out on behalf of other entities within that non-financial group, are limited in scope. For that reason, they do not pose significant risk to financial stability and should therefore neither be identified as shadow banking entities.

(8) Entities that are included in the supervision on a consolidated basis of institutions that are subject to the prudential requirements laid down in Regulation (EU) No 575/2013 should not be identified as shadow banking entities, as risks of those entities are captured at consolidated level.

(9) The Basel Core Principles for effective banking supervision represent internationally agreed principles and a sound foundation for the regulation, supervision, governance, and risk management of a country’s banking sector. A third country institution that has been authorised and is supervised by a supervisory authority that applies those Basel Core Principles should therefore not pose a significant risk to financial stability and should not be identified as a shadow banking entity.

(10) For the same reason, subsidiaries of a parent undertaking that is authorised and supervised in accordance with the Basel Core Principles and that are included in the prudential consolidation and supervision on a consolidated basis of that parent undertaking should not be considered as shadow banking entities.

(11) Points 1, 2, 3, 6, 7, 8 and 10 of Annex I to Directive 2013/36/EU lists certain services and activities as banking services and activities. However, there are other services and activities carried out by certain entities that are very similar to those banking services and activities, where they involve maturity transformation, liquidity transformation, leverage, or credit risk transfer. Those services and activities should, for that reason, be regarded as banking services and activities for the identification of shadow banking entities.

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

(13) 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 advice 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 (6),

HAS ADOPTED THIS REGULATION:

Article 1

Criteria for identifying shadow banking entities

(a) any entity that offers banking services or performs banking activities as set out in Article 2 and is not authorised and supervised in accordance with any of the Union acts listed in the Annex to this Regulation;

(b) any undertaking for collective investment in transferable securities as defined in Article 1(2) of Directive 2009/65/EC of the European Parliament and of the Council (7) where those undertakings are authorised as money market funds as referred to in Article 4 of Regulation (EU) 2017/1131 of the European Parliament and of the Council (8);

(a) financial institutions the exposures of which are treated in accordance with Article 119(5) of Regulation (EU) No 575/2013;

(d) any entity that is part of a non-financial group whose principal activity is to carry out credit intermediation activities for its parent undertaking or its subsidiaries or other subsidiaries of its parent undertaking;

(e) any entity that is included in the supervision of an institution on a consolidated basis;

Article 2

Banking services and activities

(a) the activities referred to in points 1, 2, 3, 6, 7, 8 and 10 of Annex I to Directive 2013/36/EU;

(b) any other service or activity involving maturity transformation, liquidity transformation, leverage or credit risk transfer.

Article 3

Entry into force

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, 6 September 2023.

For the Commission The President Ursula VON DER LEYEN

(1) OJ L 176, 27.6.2013, p. 1.

(2) Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, p. 1).

(3) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).

(4) Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1).

(5) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1).

(6) 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).

(7) Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, p. 32).

(8) Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds (OJ L 169, 30.6.2017, p. 8).

(9) Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision (OJ L 83, 22.3.2013, p. 1).