S.I. No. 158/2014 - European Union (Capital Requirements) Regulations 2014

CONTENTS

Regulation

Part 1 Preliminary and General

1.

2.

3.

Part 2 Competent Authority

4.

5.

6.

Part 3 Requirements for access to the activity of credit institutions

Chapter 1 General requirements for access to the activity of credit institutions

7.

8.

9.

Chapter 2 Qualifying holding in a credit institution

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

Part 4 Initial capital of investment firms, local firms and firms not authorised to hold client money or securities

26.

27.

28.

29.

30.

31.

Part 5 Freedom of establishment and freedom to provide services

Chapter 1 General principles

32.

Chapter 2 The right of establishment of credit institutions

33.

34.

35.

36.

37.

Chapter 3 Freedom to provide services

38.

Chapter 4 Powers of the Bank when acting as host Member State competent authority

39.

40.

41.

42.

43.

44.

Part 6 Prudential Supervision

Chapter 1 Principles of prudential supervision

Competence and duties of home and host Member States

45.

46.

47.

48.

49.

50.

51.

52.

53.

54.

55.

56.

57.

58.

59.

Chapter 2 Review Processes

Internal capital adequacy assessment process

60.

Arrangements, processes and mechanisms of institutions

General principles

61.

62.

63.

64.

65.

66.

67.

68.

69.

70.

71.

72.

73.

74.

75.

Governance

76.

77.

78.

79.

80.

81.

82.

83.

84.

Supervisory review and evaluation process

85.

86.

87.

88.

89.

Supervisory measures and powers

90.

91.

92.

93.

94.

95.

Level of application

96.

97.

98.

Chapter 3 Supervision on a consolidated basis

Principles for conducting supervision on a consolidated basis

99.

100.

101.

102.

103.

104.

105.

106.

Financial holding companies, mixed-financial holding companies and mixed-activity holding companies

107.

108.

109.

110.

111.

112.

113.

114.

Chapter 4 Capital Buffers

Buffers

115.

116.

117.

118.

119.

120.

121.

122.

123.

124.

Setting and calculating countercyclical capital buffers

125.

126.

127.

128.

Capital conservation measures

129.

130.

Part 7 Disclosure by competent authorities

131.

132.

Part 8 Transitional provisions

133.

134.

135.

136.

137.

138.

139.

140.

141.

142.

Part 9 Provisions from statutory instruments revoked by these Regulations

143.

144.

145.

146.

147.

148.

149.

150.

151.

152.

Part 10 Consequential Amendments

153.

154.

155.

156.

157.

158.

Part 11 Final provisions, revocations and saver

159.

160.

161.

162.

SCHEDULE List of activities subject to mutual recognition

S.I. No. 158 of 2014

EUROPEAN UNION (CAPITAL REQUIREMENTS) REGULATIONS 2014

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 4th April, 2014.

I, MICHAEL NOONAN, Minister for Finance, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972) and for the purpose of giving full effect to Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013¹ , hereby make the following regulations:

Part 1 Preliminary and General

Citation and commencement

• (2) Regulations 39, 40, 42, 45, 46 and 47 to 49 come into operation, and Part 8 is revoked on the date on which the liquidity coverage requirement becomes applicable in accordance with a delegated act adopted pursuant to Article 460 of the Capital Requirements Regulation.

• (3) By way of derogation from Article 162(1) of the Capital Requirements Directive Regulations 115 to 130 (other than Regulation 119), shall apply from 1 January 2016.

Scope

• (2) Regulation 28 applies to local firms.

• (3) Regulation 29 applies to the firms referred to in point (2)(c) of Article 4(1) of the Capital Requirements Regulation.

• (4) Regulation 32(3) to (8) and Chapter 3 of Part 6 apply to financial holding companies, mixed-financial holding companies and mixed-activity holding companies which have their head offices in the Union.

• (5) These Regulations do not apply to the following:

• (a) access to the activity of investment firms in so far as it is regulated by Directive 2004/39/EC;

• (b) central banks;

• (c) post office giro institutions;

• (d) credit unions and friendly societies.

• (6) The entities referred to in paragraph (5)(a), (c) and (d) shall be treated as financial institutions for the purposes of—

• (a) Regulation 32(3) to (8), and

• (b) Chapter 3 of Part 6.

Interpretation

“Act of 1942” means Central Bank Act 1942 (No. 22 of 1942);

“Act of 1971” means Central Bank Act 1971 (No. 24 of 1971);

“Act of 1989” means Building Societies Act 1989 (No. 17 of 1989);

“Act of 1997” means Central Bank Act 1997 (No. 8 of 1997);

“Act of 2013” means Central Bank (Supervision and Enforcement) Act 2013 (No. 26 of 2013);

“ancillary services undertaking” has the meaning assigned to it in point (18) of Article 4(1) of the Capital Requirements Regulation;

“assessment period” has the meaning assigned to it by Regulation 14(3);

“asset management company” has the meaning assigned to it in point (19) of Article 4(1) of the Capital Requirements Regulation;

“authorisation”, in relation to a credit institution in the State, means an authorisation or licence by the Bank to carry on the business of a credit institution in accordance with the provisions of any financial services legislation, other than an authorisation granted under section 9A of the Act of 1971;

“Bank” means Central Bank of Ireland;

“branch” has the meaning assigned to it in point (17) of Article 4(1) of the Capital Requirements Regulation;

“building society” has the same meaning as it has in section 2 of the Act of 1989;

“Capital Requirements Directive” means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC¹;

“Capital Requirements Regulation” 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 648/2012² ;

“central banks” has the meaning assigned to it in point (46) of Article 4(1) of the Capital Requirements Regulation;

“close links” has the meaning assigned to it in point (38) of Article 4(1) of the Capital Requirements Regulation;

“combined committee” has the meaning assigned to it by Regulation 64(11);

“Commission” means European Commission;

“competent authority” means the Bank or, in the case of another Member State, the body or bodies designated by that state to act as a competent authority for the purposes of the Capital Requirements Directive and the Capital Requirements Regulation;

“consolidated basis” has the meaning assigned to it in point (48) of Article 4(1) of the Capital Requirements Regulation;

“consolidated situation” has the meaning assigned to it in point (47) of Article 4(1) of the Capital Requirements Regulation;

“consolidating supervisor” has the meaning assigned to it in point (41) of Article 4(1) of the Capital Requirements Regulation;

“control” has the meaning assigned to it in point (37) of Article 4(1) of the Capital Requirements Regulation;

“court” means High Court;

“credit institution” has the meaning assigned to it in point (1) of Article 4(1) of the Capital Requirements Regulation;

“credit risk mitigation” has the meaning assigned to it in point (57) of Article 4(1) of the Capital Requirements Regulation;

“designated authority” means the authority designated by a Member State (other than the State) for the purposes of Article 458 of the Capital Requirements Regulation;

“Directive 83/349/EEC” means Seventh Council Directive 83/349/EEC of 13 June 1983 based on the Article 54(3)(g) of the Treaty on consolidated accounts³ ;

“Directive 2001/24/EC” means Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions⁴ ;

“Directive 2002/87/EC” means Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council⁵ ;

“Directive 2004/39/EC” means Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC⁶ ;

“Directive 2004/109/EC” means Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC⁷ ;

“Directive 2006/43/EC” means Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC⁸ ;

“Directive 2009/65/EC” means 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) (recast)⁹ ;

“Directive 2009/138/EC” means 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) (recast)¹⁰ ;

“discretionary pension benefits” has the meaning assigned to it in point (73) of Article 4(1) of the Capital Requirements Regulation;

“EBA” means European Banking Authority, established pursuant to Regulation (EU) No 1093/2010;

“enactment” means an Act or Statutory Instrument, or any portion of an Act or Statutory Instrument;

“ESCB” means European System of Central Banks;

“ESCB central banks” has the meaning assigned to it in point (45) of Article 4(1) of the Capital Requirements Regulation;

“ESRB” means European Stability Review Board;

“EU parent financial holding company” has the meaning assigned to it in point (31) of Article 4(1) of the Capital Requirements Regulation;

“EU parent institution” has the meaning assigned to it in point (29) of Article 4(1) of the Capital Requirements Regulation;

“EU parent mixed-financial holding company” has the meaning assigned to it in point (33) of Article 4(1) of the Capital Requirements Regulation;

“European Banking Authority” means the authority established pursuant to Regulation (EU) No 1093/2010;

“European Stability Review Board” means the body established pursuant to Regulation (EU) No 1092/2010;

“European System of Financial Supervision” has the same meaning as it has in Article 1(3) of Regulation (EU) No 1092/2010;

“financial holding company” has the meaning assigned to it in point (20) of Article 4(1) of the Capital Requirements Regulation;

“financial institution” has the meaning assigned to it in point (26) of Article 4(1) of the Capital Requirements Regulation;

“financial instrument” has the meaning assigned to it in point (50) of Article 4(1) of the Capital Requirements Regulation;

“financial services legislation” has the meaning assigned to it in section 3(1) of the Act of 2013;

“G-SII” has the meaning assigned to it by Regulation 121(1);

“home Member State” has the meaning assigned to it in point (43) of Article 4(1) of the Capital Requirements Regulation;

“host Member State” has the meaning assigned to it in point (44) of Article 4(1) of the Capital Requirements Regulation;

“initial capital” has the meaning assigned to it in point (51) of Article 4(1) of the Capital Requirements Regulation;

“institution” has the meaning assigned to it in point (3) of Article 4(1) of the Capital Requirements Regulation;

“insurance undertaking” has the meaning assigned to it in point (5) of Article 4(1) of the Capital Requirements Regulation;

“internal approaches” means the—

• (a) internal ratings based approach referred to in Article 143(1),

• (b) internal models approach referred to in Article 221,

• (c) own estimates approach referred to in Article 225,

• (d) advanced measurement approaches referred to in Article 312(2),

• (e) internal models method referred to in Articles 283 and 363, and

• (f) internal assessment approach referred to in Article 259(3),

of the Capital Requirements Regulation;

“investment firm” has the meaning assigned to it in point (2) of Article 4(1) of the Capital Requirements Regulation;

“leverage” has the meaning assigned to it in point (93) of Article 4(1) of the Capital Requirements Regulation;

“local firm” has the meaning assigned to it in point (4) of Article 4(1) of the Capital Requirements Regulation;

“management body” means an institutions body or bodies, which are appointed in accordance with the law of the State, which are empowered to set the institutions strategy, objectives and overall direction, and which oversee and monitor management decision-making, and include the persons who effectively direct the business of the institution;

“management body in its supervisory function” means the management body acting in its role of overseeing and monitoring management decision-making;

“MDA” has the meaning assigned to it in Regulation 129(2);

“Member State” means Member State of the European Union and, where relevant, includes a contracting party to the Agreement on the European Economic Area¹¹ signed at Oporto on 2 May 1992 (as adjusted by the Protocol¹² signed at Brussels on 17 March 1993), as amended;

“Minister” means Minister for Finance;

“mixed-activity holding company” has the meaning assigned to it in point (22) of Article 4(1) of the Capital Requirements Regulation;

“mixed-financial holding company” has the meaning assigned to it in point (21) of Article 4(1) of the Capital Requirements Regulation;

“national macroprudential authority” means the Bank;

“O-SII” has the meaning assigned to it in Regulation 121(1);

“operational risk” has the meaning assigned to it in point (52) of Article 4(1) of the Capital Requirements Regulation;

“own funds” has the meaning assigned to it in point (118) of Article 4(1) of the Capital Requirements Regulation;

“parent financial holding company in a Member State” has the meaning assigned to it in point (30) of Article 4(1) of the Capital Requirements Regulation;

“parent mixed-financial holding company in a Member State” has the meaning assigned to it in point (32) of Article 4(1) of the Capital Requirements Regulation;

“parent undertaking” has the meaning assigned to it in point (15) of Article 4(1) of the Capital Requirements Regulation;

“participation” has the meaning assigned to it in point (35) of Article 4(1) of the Capital Requirements Regulation;

“prescribed percentage” means 20 per cent, 33 per cent or 50 per cent;

“proposed acquirer” means any natural or legal person, or such persons acting in concert;

“qualifying holding” has the meaning assigned to it in point (36) of Article 4(1) of the Capital Requirements Regulation;

“regulated market” has the meaning assigned to it in point (92) of Article 4(1) of the Capital Requirements Regulation;

“Regulation (EU) No 1092/2010” means Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board¹³ ;

“Regulation (EU) No 1093/2010” means 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/EC¹⁴ ;

“risk of excessive leverage” has the meaning assigned to it in point (94) of Article 4(1) of the Capital Requirements Regulation;

“securitisation” has the meaning assigned to it in point (61) of Article 4(1) of the Capital Requirements Regulation;

“securitisation position” has the meaning assigned to it in point (62) of Article 4(1) of the Capital Requirements Regulation;

“securitisation special purpose entity” has the meaning assigned to it in point (66) of Article 4(1) of the Capital Requirements Regulation;

“senior management” means those natural persons who exercise executive functions within an institution and who are responsible, and accountable to the management body, for the day-to-day management of the institution;

“SSPE” means securitisation special purpose entity;

“sponsor” has the meaning assigned to it in point (14) of Article 4(1) of the Capital Requirements Regulation;

“sub-consolidated basis” has the meaning assigned to it in point (49) of Article 4(1) of the Capital Requirements Regulation;

“subsidiary” has the meaning assigned to it in point (16) of Article 4(1) of the Capital Requirements Regulation;

“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;

“systemically important institution” means an—

• (a) EU parent institution,

• (b) EU parent financial holding company,

• (c) EU parent mixed-financial holding company, or

• (d) Institution,

the failure or malfunction of which could lead to systemic risk;

“third country” means a country that is not a Member State;

“trading book” has the meaning assigned to it in point (86) of Article 4(1) of the Capital Requirements Regulation;

“TSB Act” means Trustee Savings Banks Act 1989 (No. 21 of 1989);

“UCITS management company” has the meaning assigned to it by Regulation 16.

• (2) A word or expression which is used in these Regulations and is also used in the Capital Requirements Directive has, unless the context otherwise requires, the same meaning in these Regulations as it has in the Capital Requirements Directive.

Part 2 Competent Authority

Designation of competent authority

• (2) Institutions shall provide the Bank with all the information necessary for the assessment of their compliance with these Regulations and the Capital Requirements Regulation.

• (3) Institutions shall at all times have—

• (a) internal control mechanisms, and

• (b) administrative and accounting procedures,

that permit their compliance with these Regulations and the Capital Requirements Regulation to be verified.

• (4) Institutions shall—

• (a) register all their transactions, and

• (b) document systems and processes,

which are subject to these Regulations and the Capital Requirements Regulation in such a manner that the Bank is able to check their compliance with these Regulations and the Capital Requirements Regulation at all times.

Cooperation within the European System of Financial Supervision

• (2) For the purposes of paragraph (1), the Bank shall—

• (a) as a party to the ESFS, cooperate with the competent authorities of other Member States with trust and full mutual respect, in particular when ensuring the flow of appropriate and reliable information between it and other parties to the ESFS, in accordance with the principle of sincere cooperation set out in Article 4(3) of the Treaty on European Union,

• (b) participate in the activities of the EBA and, as appropriate, in the colleges of supervisors,

• (c) make every effort to comply with those guidelines and recommendations issued by the EBA in accordance with Article 16 of Regulation (EU) No 1093/2010 and to respond to the warnings and recommendations issued by the ESRB pursuant to Article 16 of Regulation (EU) No 1092/2010, and

• (d) cooperate closely with the ESRB.

• (3) In this Regulation, “ESFS” means European System of Financial Supervision.

European Union dimension of supervision

Part 3 Requirements for access to the activity of credit institutions

Chapter 1 General requirements for access to the activity of credit institutions

Branches of credit institutions authorised in another Member State

• (a) the credit institution is authorised to carry on such business in another Member State, and

• (b) the authorisation is in accordance with the Capital Requirements Directive and the Capital Requirements Regulation.

• (2) The establishment and supervision of branches referred to in paragraph (1) shall be effected in accordance with—

• (a) Regulations 34(1) and (2) and 35,

• (b) Regulation 37,

• (c) Chapter 4 of Part 5,

• (d) Regulation 45, and

• (e) Regulations 61 to 63.

Name of credit institutions

• (2) In the event of there being any danger of confusion, the Bank may, for the purposes of clarification, require that the name of the credit institution be accompanied by certain explanatory particulars, and the credit institution shall comply with every such requirement.

Notification where Bank acts as consolidating supervisor

• (a) section 9G(7) of the Act of 1971 and section 17D(7) of the Act of 1989, and

• (b) Regulations 61(1) and 97(2),

and, in particular, regarding the legal and organisational structure of the group and its governance.

Chapter 2 Qualifying holding in a credit institution

Restrictions on acquiring and disposing of qualifying holdings in credit institutions

• (2) A proposed acquirer who has a qualifying holding in a credit institution shall not, without having previously notified the Bank in writing of the information in paragraph (3), directly or indirectly increase the size of the holding where, as a result of the increase—

• (a) the percentage of the capital of, or the voting rights in, the credit institution that the proposed acquirer holds would reach or exceed a prescribed percentage, or

• (b) in the case of a proposed acquirer that is a company or other body corporate, the credit institution would become the proposed acquirer’s subsidiary.

• (3) A notification under paragraph (1) or (2) shall include the following information:

• (a) the size of the intended holding;

• (b) sufficient information to enable the Bank to consider the proposed acquisition concerned against the criteria in paragraphs (1) and (2) of Regulation 15, and in particular information regarding—

• (i) the identity of the proposed acquirer,

• (ii) the individuals to be responsible for the management of the proposed acquisition,

• (iii) how the proposed acquisition is to be financed (including details of any proposed issue of financial instruments), and

• (iv) the structure of the resulting group;

• (c) the information referred to in paragraph (4).

• (4) A notification under paragraph (1) or (2) shall include the information, and any document, required by the form of notification published by the Bank on 25 May 2009 entitled “Acquiring Transaction Notification Form”, as amended or updated from time to time by the Bank and which shall be made available on the official website of the Bank.

Application to court where no notification given

• (a) requiring the person to provide the Bank with the information required under Regulation 10, and

• (b) requiring the Bank to carry out an assessment in accordance with Regulations 15 and 16.

• (2) An application under paragraph (1) shall be on notice to the Bank and the Bank shall be entitled to appear, be heard and adduce evidence at the hearing of the application.

• (3) Notice of an application under paragraph (1) shall be served on the Bank at least 14 days before the date of hearing of the application.

• (4) An affidavit giving the names and addresses of, and the places and dates of service on, all persons who have been served with the notice of application, grounding affidavit and exhibits (if any) shall be filed by the applicant at least 4 days before the application is heard.

• (5) Where any person who ought under this Regulation to have been served has not been so served, the affidavit shall state that fact and the reason for it.

• (6) Where the Bank carries out an assessment on foot of an order under paragraph (1) and it is satisfied that no grounds exist to oppose the application in accordance with Regulation 18 it may—

• (a) lift a suspension of voting rights under Regulation 21(2), and

• (b) retrospectively validate the exercise of voting rights during such a suspension.

Notification in case of divestiture

• (2) A person shall not, without having previously notified the Bank in writing, directly or indirectly dispose of part of a qualifying holding in a credit institution if, as a result of the disposal—

• (a) the percentage of the capital of, or the voting rights in, the credit institution that the person holds would fall to, or below, a prescribed percentage, or

• (b) in the case of a person that is a company or other body corporate, the credit institution would cease to be the person’s subsidiary.

Credit institutions to provide information on certain acquisitions and disposals

• (2) If a credit institution becomes aware of a disposal of, or a reduction in the size of, a holding in it that results in the holding ceasing to be a qualifying holding or falling to, or below, a prescribed percentage, the credit institution shall inform the Bank in writing of the disposal or reduction without delay.

Period for assessment of proposed acquisition

• (2) For the purposes of paragraph (1), a notification is completed if it gives all the information (whether in the notification itself or as an attachment) required by Regulation 10(3) and (4) to be provided for the assessment of the proposed acquisition concerned.

• (3) Within 60 working days after the date of the written acknowledgement referred to in paragraph (1), the Bank shall carry out the assessment of the proposed acquisition (in these Regulations referred to as the “assessment period”) concerned in accordance with Regulation 15.

• (4) In its acknowledgement of receipt of a notification referred to in paragraph (1), the Bank shall inform the proposed acquirer concerned of the date on which the assessment period will end.

• (5) During the assessment period in relation to a proposed acquisition, but no later than the 50th working day of that period, the Bank may request any further information necessary to complete the assessment of the acquisition.

• (6) Where the Bank makes such a request it shall acknowledge the receipt of any information received in response to the request within 2 working days.

• (7) A request under paragraph (5) shall be made in writing and shall specify or describe the additional information needed.

• (8) Subject to paragraph (10), where the Bank makes a request under paragraph (5) the assessment period is to be taken to be interrupted for the shorter of—

• (a) the period between the date of the request and the date of the receipt of a response from the proposed acquirer concerned, and

(b)20 working days.

• (9) The Bank may make further requests for further information to complete or clarify information already supplied but such a further request does not interrupt the assessment period.

• (10) The Bank may, by written notice to the proposed acquirer concerned, extend to 30 working days the interruption, referred to in paragraph (8), in relation to a proposed acquisition if the proposed acquirer—

• (a) is situated or regulated in a third country; or

• (b) is a natural or legal person not subject to supervision under—

• (i) Directive 2004/39/EC,

• (ii) Directive 2009/65/EC,

• (iii) Directive 2009/138/EC, or

• (iv) the Capital Requirements Directive.

Assessment of proposed acquisition

• (2) In assessing a proposed acquisition, the Bank shall—

• (a) have regard to the likely influence of the proposed acquirer on the credit institution concerned, and

• (b) assess the suitability of the proposed acquirer and the financial soundness of the proposed acquisition concerned against all of the following criteria:

• (i) the reputation of the proposed acquirer;

• (ii) the reputation, knowledge, skills and experience, as set out in Regulation 79, of any member of the management body and any member of senior management who will direct the business of the credit institution as a result of the proposed acquisition;

• (iii) the financial soundness of the proposed acquirer, in particular in relation to the type of business pursued and envisaged in the credit institution in which the acquisition is proposed;

• (iv) whether the credit institution will be able to comply and continue to comply with the prudential requirements of these Regulations, the Capital Requirements Regulation and where applicable other European Union law, in particular—

• (I) Directive 2002/87/EC, and

• (II) Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009¹⁵ ;

• (v) whether the group of which it will become a part has a structure that makes it possible to exercise effective supervision, effectively exchange information among the competent authorities and determine the allocation of responsibilities among the competent authorities;

• (vi) whether there are reasonable grounds to suspect that, in connection with the proposed acquisition, money laundering or terrorist financing (within the meaning of Article 1 of Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005¹⁶ ) is being or has been committed or attempted, or that the proposed acquisition could increase the risk of money laundering or terrorist financing.

• (3) The Bank shall neither impose any prior conditions in respect of the level of holding that must be acquired nor examine a proposed acquisition in terms of the economic needs of the market.

• (4) Where 2 or more proposals to acquire or increase qualifying holdings in the same credit institution have been notified to the Bank, the Bank shall treat the proposed acquirers concerned in a non-discriminatory manner.

Bank to cooperate with competent authorities of other Member States in certain cases

• (a) a credit institution, insurance undertaking, reinsurance undertaking, investment firm, or a management company within the meaning of Article 2(1)(b) of Directive 2009/65/EC (in these Regulations referred to as a "UCITS management company") authorised in another Member State or in a sector other than that in which the acquisition is proposed,

• (b) the parent undertaking of a credit institution, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or in a sector other than that in which the acquisition is proposed, or

• (c) a natural or legal person controlling a credit institution, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or in a sector other than that in which the acquisition is proposed.

• (2) The Bank shall, without undue delay, provide competent authorities in other Member States with any information that is essential or relevant for the assessment of a proposed acquisition. The Bank shall communicate all relevant information upon request and all essential information on its own initiative.

• (3) A decision by the Bank, in the case of a proposed acquisition in a credit institution authorised by the Bank, shall indicate any views or reservations expressed by the competent authorities responsible for the proposed acquirer concerned.

• (4) In this Regulation, “reinsurance undertaking” has the meaning assigned to it in point (6) of Article 4(1) of the Capital Requirements Regulation.

Bank may fix period for completion of acquisition, etc.

Notice of Bank’s decision

• (2) Subject to any other law, the Bank shall publish an appropriate statement of the reasons for the decision if the proposed acquirer concerned so requests. The Bank may in its discretion publish such a statement even without any request by the proposed acquirer.

• (3) Where the Bank does not give notice in writing within the assessment period in relation to a proposed acquisition that it opposes the acquisition, the acquisition is deemed to have been approved.

Bank may oppose certain acquisitions

• (a) there are reasonable grounds for doing so on the basis of the criteria in paragraphs (1) and (2) of Regulation 15,

• (b) the information provided by the proposed acquirer concerned in its notification under paragraph (1) or (2) of Regulation 10 is incomplete, or

• (c) the proposed acquirer has not provided information in response to a request under paragraph (5) or (9) of Regulation 14.

Decision to oppose proposed acquisition to be appealable

Circumstances in which proposed acquisition may be concluded

• (a) the proposed acquirer has notified the Bank of the acquisition in accordance with paragraph (1) or (2) of Regulation 10,

• (b) the Bank has acknowledged that notification, in accordance with Regulation 14(1), and

• (c) either—

• (i) the assessment period in relation to the acquisition has ended and the Bank has not notified the proposed acquirer that it opposes the acquisition, or

• (ii) the Bank has notified the proposed acquirer that it does not oppose the acquisition.

• (2) Where an acquisition is made other than in accordance with paragraph (1) any exercise of voting rights based on the acquisition of the holding concerned is suspended.

Effect of section 201 of Companies Act 1963

Credit institutions to provide information about shareholdings, etc.

Powers in relation to certain persons with qualifying holdings

• (2) Before issuing a direction under paragraph (1), the Bank shall notify the persons concerned of its intention to issue the direction and shall give the persons an opportunity to make such representations on the matter as they may wish to make within a period specified by the Bank in the notification.

• (3) A direction issued under paragraph (1) is an appealable decision for the purposes of Part VIIA of the Act of 1942.

• (4) Where the Bank is of the opinion that a direction under paragraph (1) has not been complied with by the persons concerned, or has not been complied with within the specified period of time, the Bank may, without prejudice to any of its other functions, do any one or more of the following:

• (a) issue a direction to the credit institution concerned under section 21 (as amended by the Central Bank and Financial Services Authority of Ireland Act 2004 (No. 21 of 2004)) of the Act of 1971 (and for that purpose the references in that section to ‘holder of a licence’ and ‘holder’ shall be read as a reference to a credit institution and the references to ‘banking business’ and ‘banking’ shall be read as references to the taking of deposits or granting of credit by a credit institution) or section 45 of the Act of 2013;

• (b) apply to the court in a summary manner—

• (i) for an injunction prohibiting the persons concerned from issuing directions to directors or to any manager, secretary, officer or staff of, or persons engaged by, the credit institution and prohibiting any director, manager, secretary, officer or staff, or any other person acting on behalf of the credit institution from seeking directions from, or consulting, the persons concerned, or from acting on such directions without the consent of the Bank,

• (ii) to suspend the exercise by the persons concerned of any interest in or voting rights attaching to shares held by those persons in the credit institution concerned,

• (iii) for an order from the court requiring the persons concerned to dispose of some or all of their shareholdings, interests or rights in the credit institution within a period specified by the court, or

• (iv) for such other order as the court considers appropriate.

• (5) Where the court is satisfied that it is desirable, because of the nature or the circumstances of the case, or having regard to the interests of justice, then the whole or any part of proceedings before it under this Regulation may be heard otherwise than in public.

Criteria for qualifying holdings

• (a) Regulation 10(1) and (2),

• (b) Regulation 12,

• (c) Regulation 13, and

• (d) Regulation 23,

are fulfilled, the voting rights referred to in Articles 9, 10 and 11 of Directive 2004/109/EC, and the conditions regarding aggregation thereof set out in Article 12(4) and (5) of that Directive, shall be taken into account.

• (2) In determining whether the criteria for a qualifying holding as referred to in Regulations 13 and 23 are fulfilled, voting rights or shares which institutions may hold as a result of providing the underwriting of financial instruments or placing of financial instruments on a firm commitment basis included under point 6 of Section A of Annex I to Directive 2004/39/EC shall not be taken into account, provided that those rights are not exercised or otherwise used to intervene in the management of the issuer and are disposed of within one year of acquisition.

Part 4 Initial capital of investment firms, local firms and firms not authorised to hold client money or securities

Initial capital for investment, local and other firms

• (a) investment firms,

• (b) local firms, and

• (c) firms referred to in subparagraph (2)(c) of Article 4(1) of the Capital Requirements Regulation,

comprises one or more of the items referred to in subparagraphs (a) to (e) of Article 26(1) of the Capital Requirements Regulation.

• (2) Investment firms, other than those referred to in Regulation 27, shall have initial capital of €730,000.

Initial capital for particular types of investment firms

• (a) holds client moneys or securities, and

• (b) offers one or more of the services in paragraph (3),

the firm shall have initial capital of €125,000.

• (2) Where an investment firm is not authorised in respect of one, or more, of the following:

• (a) to hold client money or securities;

• (b) to deal for its own account;

• (c) to underwrite issues on a firm commitment basis;

the firm shall have initial capital of €50,000.

• (3) The services referred to in paragraph (1)(b) are the following:

• (a) the reception and transmission of investors’ orders for financial instruments;

• (b) the execution of investors’ orders for financial instruments;

• (c) the management of individual portfolios of investments in financial instruments.

• (4) The Bank may allow an investment firm which executes investors’ orders for financial instruments to hold such instruments for its own account where the following conditions are met:

• (a) such positions arise only as a result of the firms failure to match investors’ orders precisely;

• (b) the total market value of all such positions is subject to a maximum holding of 15 per cent of the firms initial capital;

• (c) the firm meets the requirements in Articles 92 to 95, and Part 4, of the Capital Requirements Regulation;

• (d) such positions are incidental and provisional in nature and strictly limited to the time required to carry out the relevant transaction.

• (5) The holding of non-trading-book positions in financial instruments in order to invest own funds shall not be considered as dealing for its own account for the purposes of paragraphs (1) and (2).

Initial capital for local firms

• (a) the freedom to provide services or activities, or

• (b) the freedom of establishment,

under Part 9 of the European Communities (Markets in Financial Instruments) Regulations 2007 ( S.I. No. 60 of 2007 ).

Coverage for firms not authorised to hold client money or securities

• (a) initial capital of €50,000;

• (b) professional indemnity insurance covering the whole territory of the European Union or some other comparable guarantee against liability arising from professional negligence, with minimum cover of not less than €1,000,000 in respect of each such claim and, in the aggregate, of not less than €1,500,000 for all such claims in any calendar year;

• (c) a combination of initial capital and professional indemnity insurance in a form resulting in a level of coverage equivalent to that referred to in subparagraph (a) or (b).

• (2) Where a firm referred to in subparagraph (2)(c) of Article 4(1) of the Capital Requirements Regulation is also registered under the European Communities (Insurance Mediation) Regulations 2005 ( S.I. No. 13 of 2005 ), it shall comply with Regulation 17 of those Regulations, and have coverage in one of the following forms:

• (a) initial capital of €25,000;

• (b) professional indemnity insurance covering the whole territory of the European Union or some other comparable guarantee against liability arising from professional negligence of not less than €500,000 in respect of each such claim and, in the aggregate, of not less than €750,000 for all such claims in any year;

• (c) a combination of initial capital and professional indemnity insurance in a form resulting in a level of coverage equivalent to that referred to in subparagraph (a) or (b).

Own funds of investment firms and firms covered by Regulation 28

Grandfathering provision

• (2) The own funds of firms referred to in paragraph (1), shall not fall below the highest reference level calculated after 23 March 1993 where that reference level shall be the average daily level of own funds calculated over a six-month period preceding the date of calculation, which shall be calculated every 6 months in respect of the corresponding preceding period.

• (3) Where control of an investment firm, or a firm referred to in Regulation 28, is taken by a person other than the person who controlled it on or before 31 December 1995, the own funds of that investment firm, or firm referred to in Regulation 28, shall attain at least the level specified for them in Regulation 26(2), 27(1) or (2), or 28, except in the case of a first transfer by inheritance made after 31 December 1995, subject to the approval of the Bank and for a period of not more than 10 years from the date of that transfer.

• (4) Where there is a merger of—

(a)2 or more investment firms,

(b)2 or more firms of the type referred to in Regulation 28, or

• (c) a combination of investment firms and firms referred to in Regulation 28,

subject to paragraph (5) the own funds of the resulting firm need not attain the level specified in Regulation 26(2), 27(1) or (2), or 28.

• (5) Where, during any period, the level specified in Regulation 26(2), 27(1) or (2), or 28 has not been attained, the own funds of the firm resulting from a merger specified in paragraph (4) shall not fall below the total own funds of the merged firms at the time of the merger.

• (6) Where the Bank considers it necessary to ensure the solvency of firms referred to in paragraph (1), that such firms should have own funds of not less than the initial capital levels specified for them in Regulations 26(2), 27(1) or (2), or 28, paragraphs (1) to (5) shall not apply.

Part 5 Freedom of establishment and freedom to provide services

Chapter 1 General principles

Mutual recognition of provision of banking services

• (a) Regulation 34(1) and (2),

• (b) Regulation 35,

• (c) Regulation 38(1) and (2), and

• (d) Chapter 4 of Part 5,

are complied with in full.

• (2) A credit institution referred to in paragraph (1) shall, in so far as its operations or proposed operations within the State are concerned, comply with all relevant requirements of these Regulations and with the provisions of any enactment relating to the activities set out in the Schedule.

• (3) A financial institution which is a subsidiary of a credit institution, or which is a jointly owned subsidiary of 2 or more credit institutions, may carry on business in any Member State by establishing a branch or by any other means if, but only if, the following conditions are fulfilled:

• (a) the memorandum and articles of association of the financial institution expressly permit it to undertake any one or more of the activities set out at reference numbers 2 to 12 of the Schedule;

• (b) each parent undertaking of the financial institution is authorised as a credit institution in the Member State of incorporation of the financial institution;

• (c) the financial institution carries on the activities in question in the Member State in which it is incorporated;

• (d) the parent undertaking or the parent undertakings together, as the case may be, of the financial institution hold at least 90 per cent of the voting rights attaching to the shares in the financial institution;

• (e) each parent undertaking of the financial institution provides a written declaration, with the consent of the competent authorities of the Member State in which the parent undertaking is authorised, to the effect that the parent undertaking, or the parent undertakings jointly and severally, guarantee the liabilities of the financial institution in every case;

• (f) the parent undertaking or the parent undertakings together, as the case may be, of the financial institution satisfy the competent authorities referred to in subparagraph (e) that it is or they are in a position to, and will, ensure that the financial institution is run on a sound and prudent basis;

• (g) the notification and other requirements of these Regulations are complied with;

• (h) the financial institution 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—

• (i) Chapter 3 of Part 6, and

• (ii) Articles 11 to 24 of the Capital Requirements Regulation, in particular for the purposes of the minimum own funds requirements set out in Article 92 of the Capital Requirements Regulation for the control of large exposures provided for in Part 4 of the Capital Requirements Regulation and for the purposes of the limitation of holdings provided for in Articles 89 and 90 of that Regulation.

• (4) A financial institution, which carries on a business in accordance with paragraph (3), shall provide the Bank with a certificate issued by the competent authorities of the Member State in which each parent undertaking is authorised, attesting to and verifying that the conditions set out in paragraph (3) are being complied with in full by each parent undertaking and the financial institution concerned.

• (5) The provisions of paragraph (3) shall cease to apply to a financial institution, which carries on a business in accordance with that paragraph, immediately upon any of the conditions set out in that paragraph ceasing to be complied with by any parent undertaking or financial institution concerned and, in the event of that happening, the Bank may—

(a)(i) direct the financial institution to cease, within a specified period of time, undertaking in the State any one or more of the activities referred to in the Schedule and the financial institutions concerned shall comply with such direction, or

• (ii) direct that the provision in the State of any one or more of those activities, by a financial institution, shall be subject to such conditions and requirements as the Bank may set out in writing, which, in the opinion of the Bank, are in the interests of the orderly and proper regulation of financial services or financial markets in the State or in the interests, generally, of the public good, and the financial institution concerned shall comply with such direction,

or

• (b) take any other appropriate measure under financial services legislation.

• (6) For the purposes of these Regulations and for the purpose of the mutual recognition of the provision of banking services in the European Union, the Bank may give a certificate, in such form and containing such particulars as the Bank decides, which shall form part of the notification referred to in Regulations 33 and 38.

• (7) The Bank shall ensure that each financial institution incorporated in the State, which carries on a business in accordance with paragraph (3), shall, where appropriate, be supervised in accordance with these Regulations as if the financial institution concerned were a credit institution to which these Regulations apply.

• (8) Paragraphs (3) to (7) shall apply with any necessary modifications to subsidiaries of a financial institution referred to in paragraph (3).

Chapter 2 The right of establishment of credit institutions

Provisions relating to the establishment of a branch in another Member State

• (a) the name of the Member State in which the branch is to be situated;

• (b) a scheme setting out—

• (i) the proposed programme of operations of the branch,

• (ii) the business to be engaged in, and

• (iii) the manner in which the activities of the branch will be organised;

• (c) the names of the persons who will be responsible for the management of the branch;

• (d) the address in the Member State in which the branch is to be so situated and at which the Bank may serve a notice.

• (2) Subject to paragraph (5), the Bank shall transmit the information to the competent authorities of the Member State concerned not later than 3 months after the receipt of the information from the credit institution concerned and shall inform that credit institution that it has so transmitted that information.

• (3) The Bank shall also transmit to the competent authorities in the Member State concerned a statement setting out the amount and composition of the own funds and the sum of own funds requirement of the credit institution under Article 92 of the Capital Requirements Regulation.

• (4) This Regulation shall apply in the case of a financial institution, referred to in Regulation 32(3), which proposes to establish a branch in another Member State except that, in the case of paragraph (3), the statement shall, in lieu of stating the information required to be transmitted under that paragraph, set out details of the amount and composition of own funds of the financial institution and the total risk exposure amounts, calculated in accordance with Article 92(3) and (4) of the Capital Requirements Regulation, of the credit institution which is its parent undertaking.

• (5) The Bank shall refuse to transmit the information to the competent authorities of another Member State in any case in which the Bank is of the opinion that the credit institution or financial institution concerned, taking into account the activities envisaged, does not possess sufficient financial resources or adequate managerial capacity to carry on business in that other Member State.

• (6) Where the Bank exercises its functions in accordance with paragraph (5), it shall inform the credit institution or financial institution concerned in writing of the reasons for the refusal within 3 months of receipt from the institution of all of the information required under paragraph (1).

• (7) A decision of the Bank under paragraph (5) to refuse to transmit the information to the competent authorities of the Member State concerned is an appealable decision for the purposes of Part VIIA of the Act of 1942.

• (8) In this Regulation, “information” means the information referred to in paragraph (1).

Provisions relating to the establishment in the State of a branch from another Member State

• (2) The credit institution or financial institution concerned may establish the branch and commence operations—

• (a) as soon as it is informed by the Bank under paragraph (1) of the matters to which that paragraph relates, or

• (b) on the expiry of the 2 month period referred to in that paragraph,

whichever event first occurs.

• (3) Branches which have commenced their activities, in accordance with the provisions in force in the State, before 1 January 1993, shall be—

• (a) presumed to have been subject to the procedure set out in—

• (i) Regulation 33, relating to the establishment of a branch in another Member State, and

• (ii) paragraphs (1) and (2),

and

• (b) governed, on and from that date, by Regulation 35 in addition to Regulation 32, Chapter 4 of Part 5 and Regulation 50.

Change in information provided under Regulation 33

• (a) a credit institution or financial institution carrying on activities in accordance with Regulation 34 proposes to alter any of the information to which subparagraph (b), (c) or (d) of Regulation 33(1) relates, or,

• (b) in the case of such a credit institution, there is to be a material change in the legislative provisions in the Member State in which it is authorised affecting the protection of depositors within that Member State,