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

the credit institution or financial institution, as the case may be, shall, in the case of subparagraph (a), notify both the competent authorities in its home Member State and the Bank and, in the case of subparagraph (b), notify the Bank accordingly.

• (2) Any notification required by this Regulation shall be made in writing by the institution concerned at least one month before the proposed changes are made.

• (3) Where the Bank is acting in its capacity as the competent authority of the host Member State, it may, where it considers it necessary to do so, inform the institution of any change in enactments and regulatory provisions applying to the conduct of the institution’s banking business or of the proposed operations of the branch in the State arising on foot of any change of information received under this Regulation.

• (4) Where a financial institution carrying on business in accordance with Regulation 32 no longer fulfils any one or more of the conditions set out in paragraph (3) of that Regulation, it shall immediately inform the Bank in writing of that fact.

Existing branches

• (a) is authorised to act as a credit institution in its home Member State, and

• (b) has established a branch in the State,

shall be treated for the purpose of these Regulations as if the requirements of these Regulations had been complied with in relation to its establishment of the branch.

• (2) A credit institution incorporated in the State which, immediately before the commencement of these Regulations—

• (a) has a subsisting authorisation from the Bank, and

• (b) has established a branch in another Member State,

shall be treated for the purposes of these Regulations as if the requirements of these Regulations had been complied with in relation to its establishment of the branch.

Information about refusals

Chapter 3 Freedom to provide services

Notification procedure

• (2) The Bank shall, not later than one month after the date of receipt of the notification referred to in paragraph (1), send that notification to the competent authorities of the host Member State in which it proposes to carry on the business.

• (3) The notification referred to in paragraph (1) shall not be required if, on 1 January 1993, the credit institution or financial institution concerned already carried on any business in the Member State concerned by means of the provision of services in that Member State.

• (4) The notification referred to in paragraph (1) shall be required on the first occasion only on which the credit institution or financial institution proposes to carry on a particular activity, set out in the Schedule.

• (5) Nothing in this Regulation shall—

• (a) be taken as authorising a financial institution carrying on activities in accordance with 32(3) to carry on the business of accepting deposits inside or outside the State, or

• (b) remove any existing requirements on a credit institution to seek the permission of the Bank under financial services legislation to carry on business outside the State either generally or in respect of any particular class or classes of activities.

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

Reporting requirements

• (2) Where information is required of a credit institution under paragraph (1), the institution shall comply with such requirement—

• (a) annually, or

• (b) within such period as may be specified by the Bank in its request.

• (3) Information, referred to in paragraph (1), required of a credit institution shall only be required for—

• (a) information or statistical purposes,

• (b) the application of Regulation 47(1), or

• (c) supervisory purposes in accordance with this Chapter.

Measures taken by the competent authorities of the home Member State in relation to activities carried out in the host Member State

• (a) that a credit institution having a branch or providing services within the State does not comply with these Regulations or with the Capital Requirements Regulation, or

• (b) that there is a material risk that the credit institution referred to in subparagraph (a) will not comply with these Regulations or with the Capital Requirements Regulation,

it shall inform the competent authorities of the home Member State.

• (2) Where the Bank considers that the competent authorities of a home Member State have not fulfilled their obligations or will not fulfil their obligations pursuant to Article 41(1) of the Capital Requirements Directive, it may refer the matter to the EBA and request the EBA’s assistance in accordance with Article 19 of Regulation (EU) No 1093/2010.

• (3) Where the Bank receives a notification from a competent authority in a host Member State pursuant to Article 41(1) of the Capital Requirements Directive, it shall without delay take all appropriate measures using financial services legislation to ensure that the credit institution concerned—

• (a) remedies its non-compliance, or

• (b) takes measures to avert the risk of non-compliance.

• (4) Measures taken under paragraph (3) may include, without limitation, directing the credit institution concerned to cease providing part of its, or all of its, services or activities within the State.

• (5) The Bank shall communicate the measures taken under paragraph (3) to the competent authorities of the host Member State without delay.

• (6) A decision by the Bank to take measures under paragraph (3) is an appealable decision for the purposes of Part VIIA of the Act of 1942.

Reasons and communication

• (a) the freedom to provide services, or

• (b) the freedom of establishment,

shall be properly reasoned and communicated, in writing, by the Bank to the credit institution concerned.

Precautionary measures

• (2) Any precautionary measures under paragraph (1) shall be proportionate to their purpose to protect against financial instability that would seriously threaten the collective interests of depositors, investors and clients in the State and such precautionary measures—

• (a) may include a suspension of payment, and

• (b) shall not result in a preference for the creditors of the credit institution in the State over creditors in other Member States.

• (3) The Bank may apply to the court in a summary manner for an order confirming any precautionary measure taken by it under paragraph (1).

• (4) Any precautionary measure taken under paragraph (1) shall cease to have effect when the administrative or judicial authorities of the home Member State take reorganisation measures under Article 3 of Directive 2001/24/EC.

• (5) The Bank shall terminate precautionary measures taken under paragraph (1) when it considers that those measures have become obsolete under Regulation 40, unless they cease to have effect in accordance with paragraph (4).

• (6) The Bank shall without undue delay inform, in writing—

• (a) the Commission,

• (b) the EBA, and

• (c) the competent authorities of the Member State concerned,

of precautionary measures taken under paragraph (1).

• (7) Where the Bank objects to precautionary measures taken pursuant to a national law measure equivalent to this Regulation by the competent authorities of a host Member State, it may refer the matter to the EBA and request its assistance in accordance with Article 19 of Regulation (EU) No 1093/2010.

• (8) A decision by the Bank to take precautionary measures under paragraph (1) is an appealable decision for the purposes of Part VIIA of the Act of 1942.

• (9) In this Regulation, “precautionary measures” include such measures which the Bank considers it necessary to take—

• (a) in the collective interests of depositors, investors or clients in the State,

• (b) in the interests of the proper and orderly regulation of the financial markets in the State, or

• (c) pending measures by the competent authorities of the home Member State or reorganisation measures referred to in Article 3 of Directive 2001/24/EC.

Measures following withdrawal of authorisation

• (2) Where the Bank is informed in accordance with Article 45 of the Capital Requirements Directive by a home Member State competent authority of the withdrawal of the authorisation of a credit institution, it shall take appropriate measures to prevent the credit institution concerned from initiating further transactions within the State to safeguard the interests of depositors.

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Part 6 Prudential Supervision

Chapter 1 Principles of prudential supervision

Competence and duties of home and host Member States

Competence of the Bank

• (2) Where the prudential supervision of institutions, including the supervision of activities such institutions carry out in accordance with Articles 33 and 34 of the Capital Requirements Directive, is the responsibility of the competent authorities of the home Member State, nothing in these Regulations shall prevent the Bank from exercising powers or performing functions conferred on it in its capacity as a host Member State authority.

• (3) Nothing in paragraph (1) shall prevent—

• (a) the competent authorities of other Member States from exercising powers conferred on host Member State competent authorities by the Capital Requirements Directive, in respect of branches of institutions authorised by the Bank,

• (b) supervision on a consolidated basis.

Collaboration concerning supervision

• (a) institutions incorporated in the State which operate, in particular, through a branch in another Member State,

• (b) institutions incorporated in another Member State which operate, in particular, through a branch in the State.

• (2) The Bank shall supply the competent authorities of other Member States with—

• (a) all information concerning the management and ownership of institutions that is likely to facilitate their supervision and the examination of the conditions for their authorisation, and

• (b) all information likely to facilitate the monitoring of institutions, in particular with regard to—

• (i) liquidity,

• (ii) solvency,

• (iii) deposit guarantees,

• (iv) the limiting of large exposures,

• (v) other factors that may influence the systemic risk posed by the institution,

• (vi) administrative and accounting procedures, and

• (vii) internal control mechanisms.

• (3) The Bank shall provide the competent authorities of host Member States immediately with any information and findings pertaining to liquidity supervision of an institution (in accordance with Part Six of the Capital Requirements Regulation and Chapter 3 of Part 6) of the activities performed by the institution through its branches, to the extent that such information and findings are relevant to the protection of depositors or investors in the host Member State.

• (4) The Bank shall inform the competent authorities of all host Member States immediately where liquidity stress occurs or can reasonably be expected to occur, in relation to an institution, and that information shall also include details about the planning and implementation of a recovery plan, referred to in Regulation 61, and about any prudential supervision measures taken in that context.

• (5) The Bank shall communicate and explain, upon request, to the competent authorities of host Member States how information and findings relating to an institution provided to it by the host Member State have been taken into account.

• (6) Where the Bank receives information, which corresponds to information referred to in paragraphs (3), (4) and (5), from the competent authority of another Member State and is of the opinion that the home Member State competent authority has failed to apply appropriate measures to address the matter within a reasonable time, the Bank may, after informing the relevant home Member State competent authority concerned and the EBA, take such appropriate measures including, without limitation, such measures under financial services legislation it considers appropriate to—

• (a) prevent further breaches in order to protect the interests of depositors, investors and others to whom the services are provided, or

• (b) protect the stability of the financial services system.

• (7) Where contacted in its capacity as the competent authority of a home Member State with information equivalent to that referred to in paragraph (6), the Bank may refer the matter to the EBA and request its assistance in accordance with Article 19 of Regulation (EU) No 1093/2010 where it disagrees with measures to be taken by a host Member State competent authority.

• (8) The Bank may refer to the EBA situations where a request for collaboration, in particular to exchange information, with the competent authorities of another Member State has been rejected or has not been acted upon within a reasonable time.

Designation of branch of institution in State as significant

• (a) the competent authorities of the Member State in which the institution is authorised, or

• (b) a competent authority that is a consolidating supervisor in relation to the institution where Article 112 of the Capital Requirements Directive applies,

that the branch be considered as significant.

• (2) A request by the Bank under paragraph (1) shall include reasons for considering the branch in the State as significant, with particular regard to the following:

• (a) whether the market share, in terms of deposits, of the branch in the State exceeds 2 per cent;

• (b) the likely effect of a suspension or closure of the operations of the institution on systemic liquidity, and the payment and clearing and settlement systems, in the State;

• (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 State.

• (3) The Bank shall do everything within its power to reach a joint decision with the competent authorities, or consolidating supervisor, referred to in paragraph (1), to which the relevant request was made on the designation of a branch as significant.

• (4) Where a joint decision, under paragraph (3), has not been reached within 2 months of making the relevant request, the Bank may, within a further period of 2 months, determine that the branch is significant and the Bank shall take into account any views and reservations of the competent authorities, or consolidating supervisor, referred to in paragraph (1), to which the relevant request was made.

• (5) A decision under paragraph (3) or a determination under paragraph (4) shall be set out in a document by the Bank that shall also contain the reasons for the decision or determination, and this document shall be communicated to the competent authorities, or to the consolidating supervisor, referred to in paragraph (1).

• (6) If, within 2 months, any of the competent authorities concerned refer a request made by the Bank under paragraph (1) to the EBA in accordance with Article 19 of Regulation (EU) No 1093/2010, the Bank shall defer making any determination under paragraph (4) pending the decision of the EBA.

• (7) A determination by the Bank under paragraph (4) shall be in conformity with a decision of the EBA in accordance with Article 19(3) of Regulation (EU) No 1093/2010 following a referral in accordance with that Regulation.

• (8) The Bank may not refer a request made in accordance with paragraph (1) to the EBA after the end of the 2 month period or after a joint decision has been reached in accordance with paragraph (3).

• (9) Where the competent authorities of a home Member State fail to consult with the Bank in equivalent circumstances to those described in Regulation 48(8) and (9), or consults the Bank and the Bank is not satisfied that the operational steps required by Regulation 74(11) are adequate, the Bank may refer the matter to the EBA and request the EBA’s assistance in accordance with Article 19 of Regulation (EU) No 1093/2010.

Designation of branch of an institution in another Member State as significant

• (a) the Bank is responsible for the supervision of an institution controlled by one or more EU parent financial holding companies or is the consolidating supervisor,

• (b) the institution or EU parent institution has a branch in a host Member State, and

• (c) the Bank receives a request from the competent authorities of the host Member State to designate the branch as significant,

the Bank shall do everything in its power to reach a joint decision on the designation of the branch as significant with those competent authorities.

• (2) In endeavouring to reach a joint decision in accordance with paragraph (1), the Bank may request the competent authorities that made the request referred to in paragraph (1)(c) to provide any information that the Bank considers necessary, in particular with regard to—

• (a) whether the market share, in terms of deposits, of the branch concerned in the host Member State exceeds 2 per cent,

• (b) the likely impact of a suspension or closure of the operations of the 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.

• (3) A joint decision taken pursuant to paragraph (1) shall be set out in a document that shall also contain the reasons for the decision, and this document shall be communicated to the competent authorities referred to in that paragraph.

• (4) Nothing in this Regulation affects the rights and responsibilities of the Bank under financial services legislation.

• (5) Where—

• (a) the Bank is responsible for the supervision of an institution or the consolidated supervision of an EU parent institution or institutions controlled by an EU parent financial holding company, and

• (b) a branch in another Member State of the institution, EU parent institution or institution controlled by an EU parent financial holding company has been designated as significant,

the Bank shall, insofar as that information is relevant to a branch in that host Member State, provide the competent authority of the host Member State with the following information:

• (i) any information that the Bank has on any adverse developments in those institutions or in other entities of the group which could seriously affect the institutions;

• (ii) any information that the Bank has on any significant penalties or exceptional measures it has taken in accordance with these Regulations, including—

• (I) any imposition of a specific own funds requirement under Regulation 92, and

• (II) any imposition of a limitation on the use of the Advanced Measurement Approach for the calculation of the own funds requirements under Article 312(2) of the Capital Requirements Regulation.

• (6) The Bank is responsible for the planning and coordination of supervisory activities in cooperation with the competent authorities, and if necessary with the ESCB central banks, in preparation for and during emergency situations (including adverse developments in institutions or in financial markets) using, where possible, existing defined channels of communication.

• (7) Where—

• (a) an emergency (including adverse developments in financial markets) arises which potentially jeopardises the market liquidity and the stability of the financial system in a Member State where entities of a group have been authorised or where significant branches are established, and

• (b) the Bank is responsible for the supervision of an institution or is responsible for the exercise of supervision on a consolidated basis,

the Bank shall—

• (i) as soon as is practicable, alert the other central banks concerned, the EBA and the administrative authorities of central governments concerned with financial supervision policy, and

• (ii) communicate to the bodies mentioned in subparagraph (i), all information that is essential for the performance of their tasks.

• (8) The Bank shall communicate to the competent authorities of the host Member State, where significant branches are established—

• (a) the results of the risk assessments of institutions with such branches referred to in Regulation 85 and, where applicable, Regulation 101(2), and

• (b) decisions under Regulations 92 and 93 in so far as those assessments and decisions are relevant to the branch.

• (9) The Bank shall consult the competent authorities of the host Member State, where significant branches are established, about operational steps required under Regulation 74(11) where relevant for liquidity risks in the host Member State’s currency.

Bank to establish college of supervisors for significant branches

• (a) Regulation 104 does not apply, and

• (b) the Bank is responsible for the supervision of an institution with significant branches in other Member States,

the Bank shall establish and chair a college of supervisors to facilitate cooperation with the competent authorities of those other Member States and the establishment and functioning of the college shall be based on written arrangements determined, after consultation with those competent authorities, by the Bank.

• (2) The Bank shall decide which competent authorities participate in a meeting or in an activity of the college.

• (3) The decision of the Bank, under paragraph (2), shall take account of the relevance of the supervisory activity to be planned or coordinated for those authorities, in particular the potential impact on the stability of the financial system in the Member States concerned, and the obligations referred to in Regulations 6 and 48(5) to (9).

• (4) The Bank shall keep all the members of the college, established under this Regulation, fully informed, in advance of—

• (a) the organisation of,

• (b) the main issues to be discussed at, and

• (c) the activities to be considered at,

meetings of the college.

• (5) The Bank shall also keep all the members of the college, established under this Regulation, fully informed, in a timely manner, of the actions taken in those meetings or the measures carried out in respect of each year commencing on, and after, 1 January 2014.

On-the-spot checking and inspection of branches established in another Member State

• (a) having informed the competent authorities of that Member State, and

• (b) for the purposes of on-the-spot checks of the information referred to in Regulation 46.

• (2) The Bank for the purpose of the inspection of branches referred to in paragraph (1), may have recourse to one of the procedures set out in Regulation 106.

• (3) Where it considers it relevant for reasons of stability of the financial system in the State and for supervisory purposes, the Bank may carry out, on a case-by-case basis, on-the-spot checks and inspections of the activities carried out by branches of institutions, authorised in another Member State, operating in the State, and require information from a branch to, and, where required, the branch shall, provide such information, about its activities.

• (4) Prior to the carrying out of the checks and inspections referred to in paragraph (3), the Bank shall consult the competent authorities of the home Member State and, having carried out such checks and inspections, the Bank shall communicate to the competent authorities of the home Member State the information obtained and findings that are relevant for the risk assessment of the institution or the stability of the financial system in the State.

• (5) Where contacted in its capacity as the competent authority of a home Member State in the circumstances referred to in paragraph (4), the Bank shall take into account information and those findings communicated to it in determining its supervisory examination programme referred to in Regulation 87 and shall have regard to the stability of the financial system in the host Member State.

• (6) The competent authorities in another Member State may, having notified the Bank, inspect or investigate the business of an institution, supervised by those authorities, which has a place of business in the State, at that place of business, for the purpose of verifying any information provided to that authority by virtue of Article 50 of the Capital Requirements Directive in either of the following manners:

• (a) by inspection of the institution, at that place of business or otherwise, by the authority concerned;

• (b) by inspection of the institution, at that place of business or otherwise, by a person authorised in that behalf by that authority concerned.

Processing of personal data

Duty of persons responsible for the legal control of annual and consolidated accounts

• (a) is liable to constitute a material breach—

• (i) of the laws, regulations or administrative provisions which lay down the conditions governing authorisation, or

• (ii) of the laws, regulations or administrative provisions which specifically govern pursuit of the activities of institutions,

or

• (b) is liable to affect the ongoing functioning of the institution, or

• (c) is liable to lead to a refusal by the auditor to certify the accounts of the institution or to the expression of reservations by the auditor.

• (2) The auditor referred to in paragraph (1) shall communicate to the Bank any facts or decisions concerning an institution, of which he or she becomes aware while conducting an audit of that institution, where there are close links resulting from a control relationship with the institution for which the auditor conducts an audit.

• (3) Any communication by an auditor under paragraph (1) or (2), made in good faith, shall not constitute a breach of any restriction on disclosure of information imposed by contract or by any legislative, regulatory or administrative provision and shall not involve the auditor in liability of any kind.

• (4) Any communication by an auditor under paragraph (1) or (2) shall be made simultaneously to the management body of the institution concerned unless there are compelling reasons not to do so.

• (5) In this Regulation, "auditor" means any person authorised in accordance with Directive 2006/43/EC and performing in an institution the tasks described in—

• (a) Article 51 of Council Directive 78/660/EEC of 25 July 1978¹⁸ ,

• (b) Article 37 of Council Directive 83/349/EEC,

• (c) Article 73 of Directive 2009/65/EC, or

• (d) any other statutory task.

Administrative penalties and other administrative measures

• (a) institutions established in the State;

• (b) financial holding companies established in the State;

• (c) mixed-financial holding companies established in the State;

• (d) mixed-activity holding companies established in the State;

• (e) staff of the entities referred to in subparagraphs (a) to (d);

• (f) third parties to whom the entities referred to in subparagraphs (a) to (d) have outsourced operational functions or activities.

Administrative penalties and other administrative measures for breaches of authorisation requirements and requirements for acquisitions of qualifying holdings

• (a) a public statement that identifies the natural person, institution, financial holding company or mixed-financial holding company responsible, and the nature of the breach concerned;

• (b) an order requiring a natural or legal person responsible for the contravention to cease, and desist from, the conduct concerned;

• (c) in the case of a body corporate or unincorporated body, administrative pecuniary penalties of up to 10 per cent of the total annual net turnover including the gross income consisting of—

• (i) interest receivable and similar income,

• (ii) income from shares and other variable or fixed-yield securities, and

• (iii) commissions or fees receivable

in accordance with Article 316 of the Capital Requirements Regulation, of the undertaking in the preceding business year;

• (d) in the case of a natural person, administrative pecuniary penalties of up to €5,000,000;

• (e) administrative pecuniary penalties of up to twice the amount of the benefit derived from the contravention where that benefit can be determined;

• (f) suspension of the voting rights of the shareholder or shareholders held responsible for the contraventions referred to in paragraph (2).

• (2) The contraventions referred to in paragraph (1) are the following:

• (a) carrying out the business of taking deposits or other repayable funds from the public without being an authorised or licensed credit institution, as appropriate, in breach of the Act of 1971,

• (b) commencing activities as a credit institution without obtaininga licence or authorisation, as appropriate, in breach of the Act of 1971,

• (c) acquiring, directly or indirectly, a qualifying holding in a credit institution or further increasing, directly or indirectly, such a qualifying holding in a credit institution as a result of which the proportion of the voting rights or of the capital held would reach or exceed the prescribed percentages referred to in Regulation 10(2) or so that the credit institution would become its subsidiary—

• (i) without notifying the Bank in writing,

• (ii) during the assessment period, or

• (iii) where the Bank has opposed the acquisition or further increase;

• (d) disposing, directly or indirectly, of a qualifying holding in a credit institution or reducing a qualifying holding so that the proportion of the voting rights or of the capital held would fall below the prescribed percentages referred to in Regulation 12 or so that the credit institution would cease to be a subsidiary, without notifying in writing the Bank.

• (3) Where the undertaking referred to in paragraph (1)(c) is a subsidiary of a parent undertaking, the relevant gross income, referred to in that paragraph, shall be the gross income resulting from the consolidated account of the ultimate parent undertaking in the preceding business year.

• (4) Notwithstanding the definition of regulated financial service provider as provided for in the Act of 1942, a person that engages in conduct listed in paragraph (2) shall be treated as a regulated financial services provider for the purposes of Part IIIC of the Act of 1942.

Other provisions on administrative penalties

• (a) a public statement that identifies the natural person, institution, financial holding company or mixed-financial holding company responsible, and the nature of the breach concerned;

• (b) an order requiring the natural or legal person responsible to cease, and desist from, the conduct concerned;

• (c) in the case of an institution, withdrawal of the licence or authorisation of the institution in accordance with the enactment under which the licence or authorisation was granted;

• (d) subject to Regulation 150, a temporary ban against a member of the institutions management body or any other natural person, who is held responsible, from exercising functions in institutions;

• (e) subject to paragraph (2), in the case of a legal person, administrative pecuniary penalties of up to 10 per cent of the total annual net turnover including the gross income consisting of—

• (i) interest receivable and similar income,

• (ii) income from shares and other variable or fixed-yield securities, and

• (iii) commissions or fees receivable,

in accordance with Article 316 of the Capital Requirements Regulation, of the undertaking in the preceding business year;

• (f) in the case of a natural person, administrative pecuniary penalties of up to €5,000,000;

• (g) administrative pecuniary penalties of up to twice the amount of the profits gained or losses avoided because of the breach where those can be determined.

• (2) Where an undertaking referred to in paragraph (1)(e) is a subsidiary of a parent undertaking, the relevant gross income shall be the gross income resulting from the consolidated account of the ultimate parent undertaking in the preceding business year.

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

• (a) an institution has obtained a licence or an authorisation through false statements or any other irregular means;

• (b) an institution, on becoming aware of any acquisitions or disposals of holdings in their capital that cause holdings to exceed or fall below one of the prescribed percentages referred to in Regulation 10(2), or 12, fails to inform the Bank of those acquisitions or disposals in breach of Regulation 13;

• (c) an institution listed on a regulated market as referred to in the list to be published by ESMA in accordance with Article 47 of Directive 2004/39/EC does not, at least annually, inform the Bank of the names of shareholders and members possessing qualifying holdings and the sizes of such holdings in breach of Regulation 23;

• (d) an institution fails to have in place governance arrangements required by the Bank in accordance with Regulations 61 and 62;

• (e) an institution fails to report information, or provides incomplete or inaccurate information, on compliance with the obligation to meet own funds requirements set out in Article 92 of the Capital Requirements Regulation to the Bank in breach of Article 99(1) of that Regulation;

• (f) an institution fails to report information, or provides incomplete or inaccurate information to the Bank, in relation to the data referred to in Article 101 of the Capital Requirements Regulation;

• (g) an institution fails to report information, or provides incomplete or inaccurate information, about a large exposure to the Bank in breach of Article 394(1) of the Capital Requirements Regulation;

• (h) an institution fails to report information, or provides incomplete or inaccurate information, on liquidity to the Bank in breach of Article 415(1) and (2) of the Capital Requirements Regulation;

• (i) an institution fails to report information, or provides incomplete or inaccurate information, on the leverage ratio to the Bank in breach of Article 430(1) of the Capital Requirements Regulation;

• (j) an institution repeatedly or persistently fails to hold liquid assets in breach of Article 412 of the Capital Requirements Regulation;

• (k) an institution incurs an exposure in excess of the limits set out in Article 395 of the Capital Requirements Regulation;

• (l) an institution is exposed to the credit risk of a securitisation position without satisfying the conditions set out in Article 405 of the Capital Requirements Regulation;

• (m) an institution fails to disclose information, or provides incomplete or inaccurate information, in breach of Article 431(1), (2) or (3) or Article 451(1) of the Capital Requirements Regulation;

• (n) an institution makes payments to holders of instruments included in the own funds of the institution in breach of Regulation 129 or in cases where Articles 28, 51 or 63 of the Capital Requirements Regulation prohibit such payments to holders of instruments included in own funds;

• (o) an institution is found liable for a serious breach of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (No. 6 of 2010);

• (p) an institution allows persons who fail to comply with Regulation 79 to become, or remain, a member of the management body.

• (4) In this Regulation—

“ESMA” means the European Securities and Markets Authority established pursuant to Regulation (EU) No 1095/2010;

“Regulation (EU) No 1095/2010” means Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC¹⁹ .

Publication of administrative penalties

• (a) the type and nature of the breach, and

• (b) the identity of the natural or legal person on whom the penalty is imposed,

without undue delay after that person is informed of those penalties.

• (2) Where the Bank publishes penalties against which there is an appeal, the Bank shall, without undue delay, also publish on its official website information on the appeal status and outcome thereof.

• (3) The Bank shall publish the administrative penalties, referred to in paragraph (1), on an anonymous basis in the following circumstances:

• (a) where the penalty is imposed on a natural person and, following an obligatory prior assessment, publication of personal data is found to be disproportionate;

• (b) where publication would jeopardise the stability of financial markets or an ongoing criminal investigation;

• (c) where publication would cause, insofar as it can be determined, disproportionate damage to the institutions or natural persons involved.

• (4) Where the circumstances referred to in paragraph (3)(a) are likely to cease within a reasonable period of time, publication under paragraph (1) may be postponed for such a period of time.

• (5) The Bank shall ensure that information published under paragraph (1) or (2) remains on its official website for at least 5 years but personal data shall not be retained on the official website of the Bank any longer than for the period necessary.

• (6) Paragraphs (1), (2) and (3) do not apply where publication involves the disclosure of confidential information the disclosure of which is prohibited by the Rome Treaty, the ESCB Statute or the Supervisory Directives (within the meaning of section 33AK(10) of the Act of 1942).

• (7) In this Regulation, “ESCB Statute” means the Statute of the European System of Central Banks and of the European Central Bank as set out in Protocol (No. 3) (annexed by the Treaty on European Union done at Maastricht on 7 February 1992) to the Rome Treaty.

Exchange of information on penalties and maintenance of central database by EBA

• (2) Where the Bank assesses good repute for the purposes of—

• (a) the Act of 1971,

• (b) the Act of 1989,

• (c) theTSB Act, or

• (d) Regulations 79(1) and 109,

it shall consult the EBA database of administrative penalties.

• (3) The Bank shall check, subject to national law, the existence of a relevant conviction in the criminal record of the person concerned and for those purposes, information shall be exchanged in accordance with Council Decision 2009/316/JHA of 6 April 2009²⁰ and Council Framework Decision 2009/315/JHA of 26 February 2009²¹ .

Effective application of penalties and exercise of powers to impose penalties by Bank

• (a) the gravity and the duration of the breach;

• (b) the degree of responsibility of the natural or legal person responsible for the breach;

• (c) the importance of profits gained or losses avoided, insofar as they can be determined, by the natural or legal person responsible for the breach;

• (d) the losses for third parties, insofar as they can be determined, caused by the breach;

• (e) the level of cooperation with the Bank of the natural or legal person responsible for the breach;

• (f) previous breaches by the natural or legal person responsible for the breach;

• (g) any potential systemic consequences of the breach.

Reporting of breaches

• (2) The mechanisms referred to in paragraph (1) shall include at least the following:

• (a) specific procedures for the receipt of reports on breaches and their follow-up;

• (b) protection of personal data concerning both the person who reports the breaches and the natural person who is allegedly responsible for a breach, in accordance with the Data Protection Acts 1988 and 2003.

• (3) The Bank shall require institutions to have in place appropriate procedures for their employees to report breaches internally through a specific, independent and autonomous channel.

Chapter 2 Review Processes

Internal capital adequacy assessment process

Internal Capital

• (2) The strategies and processes, referred to in paragraph (1), shall be subject to regular internal review to ensure that they remain comprehensive and proportionate to the nature, scale and complexity of the activities of the institution concerned.

Arrangements, processes and mechanisms of institutions

General principles

Internal governance and recovery plans

• (a) a clear organisational structure with well-defined, transparent and consistent lines of responsibility;

• (b) effective processes to identify, manage, monitor and report the risks they are, or might be, exposed to;

• (c) adequate internal control mechanisms, including but not limited to—

• (i) sound administration and accounting procedures, and

• (ii) remuneration policies and practices that are consistent with and promote sound and effective risk management.

• (2) The Bank may direct an institution in writing to furnish to it, within a period specified in the direction, such information in relation to the arrangements, referred to in paragraph (1), as the Bank may require and the institution shall comply with that direction.

• (3) The governance arrangements, processes and mechanisms, referred to in paragraph (1) shall—

• (a) be comprehensive and proportionate to the nature, scale and complexity of the risks inherent in the business model and the institutions activities, and

• (b) take into account the technical criteria established in Regulations 64 to 83.

• (4) Having regard to the nature of the business of an institution, the Bank shall direct each institution to prepare a recovery plan setting out actions that could be taken to facilitate the continuation, or secure the business or part of the business, of the institution in a situation where the institution is experiencing financial instability.

• (5) A direction, issued by the Bank under paragraph (4), shall set out the following:

• (a) all terms of the direction, including any specification of a date by which, or a period within which, any provision made by it is to be complied with;

• (b) any incidental, consequential or supplemental provisions for implementing the direction and ensuring that it is fully and effectively carried out.

• (6) A recovery plan, under this Regulation, shall not assume that financial support will be available from the State or the Fund.

• (7) An institution shall—

• (a) comply with a direction under paragraph (4), and

• (b) shall submit its recovery plan to the Bank for assessment and, where the Bank so directs, that institution shall demonstrate to the Bank that the plan can be implemented.

• (8) The Bank may direct an institution—

• (a) to provide any additional information or analysis necessary to assess that institution’s recovery plan, and

• (b) to make specified changes to the plan that the Bank considers necessary to ensure that the plan can be implemented.

• (9) Institutions shall comply with any direction given by the Bank under paragraph (8).

• (10) An institution that fails to comply with a direction under this Regulation commits an offence and is liable—

• (a) on summary conviction, to a class A fine, or

• (b) on conviction on indictment, to a fine not exceeding €500,000.

• (11) Where an offence under this Regulation is committed by an institution, and is proved to have been committed with the consent or connivance, or to be attributable to any wilful neglect, of a person who, when the offence is committed, is—

• (a) a director, manager, secretary or other officer of the authorised credit institution or a person purporting to act in that capacity, or

• (b) a member of the committee of management or other controlling authority of the institution or a person purporting to act in that capacity,

that person is taken to have also committed an offence and may be proceeded against and punished in accordance with paragraph (12).

• (12) A person referred to in paragraph (11) is liable—

• (a) on summary conviction, to a class A fine or to imprisonment for a term not exceeding 12 months, or both, or

• (b) on conviction on indictment, to a fine not exceeding €500,000 or to imprisonment for a term not exceeding 3 years, or both.

• (13) An institution shall maintain its recovery plan, and keep it up to date in accordance with any regulatory or technical standards issued by the EBA in accordance with Articles 10 to 15 of Regulation (EU) No 1093/2010.

• (14) Prior to giving a direction under paragraph (4), the Bank shall—

• (a) have regard to whether the failure of the specific institution due to its size, to its business model, to its interconnectedness to other institutions, or to the financial system in general will have a negative effect on financial markets, on other institutions or on funding conditions, and

• (b) consult with the national macroprudential authority.

• (15) The Bank shall inform the EBA, in advance of the organisation of a meeting to discuss a recovery plan, of the main issues to be discussed and of the activities to be considered.

• (16) The Bank may direct an institution to implement its recovery plan, or any part of it, where the Bank is of the opinion that the actions contained in that plan or part are necessary or desirable.

• (17) In this Regulation, “Fund” has the meaning assigned to it by section 10 of the Central Bank and Credit Institutions (Resolution) Act 2011 (No. 27 of 2011).

Resolution plans

• (2) The resolution authority may direct an institution to provide such information and analysis as the resolution authority requires for the preparation of a resolution plan.

• (3) Prior to, and in, exercising its powers under paragraph (1), the resolution authority shall—

• (a) have regard to whether the failure of the specific institution due to its size, to its business model, to its interconnectedness to other institutions, or to the financial system in general will have a negative effect on financial markets, on other institutions or on funding conditions, and

• (b) consult with the national macroprudential authority.

• (4) The resolution authority shall inform the EBA, in advance of the organisation of a meeting to discuss a resolution plan, of the main issues to be discussed and of the activities to be considered.

• (5) An institution that fails to comply with a direction under this Regulation commits an offence and is liable—

• (a) on summary conviction, to a class A fine, or

• (b) on conviction on indictment, to a fine not exceeding €500,000.

• (6) Where an offence under this Regulation is committed by an institution, and is proved to have been committed with the consent or connivance, or to be attributable to any wilful neglect, of a person who, when the offence is committed, is—

• (a) a director, manager, secretary or other officer of the authorised credit institution or a person purporting to act in that capacity, or

• (b) a member of the committee of management or other controlling authority of the institution or a person purporting to act in that capacity,

that person is taken to have also committed an offence and may be proceeded against and punished in accordance with paragraph (7).

• (7) A person referred to in paragraph (6) is liable—

• (a) on summary conviction, to a class A fine or to imprisonment for a term not exceeding 12 months, or both, or

• (b) on conviction on indictment, to a fine not exceeding €500,000 or to imprisonment for a term not exceeding 3 years, or both.

• (8) Part 8 of the Central Bank and Credit Institutions (Resolution) Act 2011 shall not apply to an institution that is subject to Regulation 61 and this Regulation.

• (9) Section 5 of the Central Bank and Credit Institutions (Resolution) Act 2011 (No. 27 of 2011) applies to the functions of the resolution authority under this Regulation.

• (10) In this Regulation, “resolution authority” means the Bank.

Oversight of remuneration policies

• (2) The Bank shall collect information on the number of natural persons per institution that are remunerated €1 million or more per financial year, in pay brackets of €1 million, including—

• (a) their job responsibilities,

• (b) the business area involved, and

• (c) the main elements of salary, bonus, long-term award and pension contribution.

• (3) The Bank shall provide the EBA with the information collected under paragraphs (1) and (2).

Technical criteria concerning the organisation and treatment of risks

Treatment of risks — risk committee and combined committee

• (2) Institutions shall ensure that their management bodies shall devote sufficient time to consideration of risk issues.

• (3) Institutions shall ensure that their management bodies shall be actively involved in, and ensure that adequate resources are allocated to—

• (a) the management of all material risks addressed in these Regulations and in the Capital Requirements Regulation,

• (b) the valuation of assets of the institution,

• (c) the use of external credit ratings, and

• (d) internal models relating to the risks referred to in subparagraph (a).

• (4) Institutions shall establish and maintain reporting lines to its management body that cover all material risks and risk management policies and changes thereof.

• (5) The Bank may, having had regard to the—

• (a) size,

• (b) internal organisation, and

• (c) nature, the scope and the complexity of its activities,

designate an institution as significant.

• (6) Institutions that are designated as significant by the Bank under paragraph (5) shall establish and maintain a risk committee.

• (7) A risk committee, established and maintained pursuant to paragraph (6), shall be composed of members of the management body who—

• (a) do not perform any executive function in the institution concerned, and

• (b) have appropriate knowledge, skills and expertise to understand and monitor the risk strategy and the risk appetite of the institution.

• (8) Institutions shall ensure that their risk committee-

• (a) advises the management body on the institutions overall current and future risk appetite and strategy, and

• (b) assists the management body in overseeing the implementation of that strategy by senior management.

• (9) Notwithstanding paragraph (8), the management body of an institution shall retain overall responsibility for risks in the institution concerned.

• (10) Where an institution establishes and maintains a risk committee pursuant to paragraph (6), that institution shall ensure—

• (a) that its risk committee shall review whether prices of liabilities and assets offered to clients take into account the institutions business model and risk strategy,

• (b) where prices do not properly reflect risks in accordance with the business model and risk strategy, that its risk committee presents a remedy plan to the management body, and

• (c) where a remedy plan is presented by the risk committee under subparagraph (b), that the management body takes the necessary appropriate action based on the contents of the plan.

• (11) Where an institution is not designated as significant under Regulation 64(5), the Bank may, taking into account the nature, scale and complexity of the risks inherent in the business model, require an institution to establish a risk committee and may allow this committee to be combined with the audit committee (“combined committee”), as referred to in Article 41 of Directive 2006/43/EC.

• (12) Institutions shall ensure that the members of—

• (a) a risk committee established and maintained pursuant to, or

• (b) a combined committee, referred to in,

paragraph (11), shall have the knowledge, skills and expertise required for the risk committee or, in the case of a combined committee, for the risk committee and the audit committee.

• (13) Institutions shall ensure that the management body in its supervisory function and, where established, the risk committee or combined committee, as the case may be, have adequate access to information on the risk situation of the institution and, if necessary and appropriate, to the risk management function and to external expert advice.

• (14) Institutions shall ensure that its management body in its supervisory function and, where established, its risk committee or combined committee, as the case may be, determines—

• (a) the nature,

• (b) the amount,

• (c) the format, and

• (d) the frequency,

of the information on risk which it is to receive that is adequate to fulfil its obligations under this Regulation.

• (15) Institutions shall ensure that in order to assist in the establishment of sound remuneration policies and practices, their risk committee or combined committee, as the case may be, without prejudice to the tasks of the remuneration committee, examines whether incentives provided by the remuneration system take into consideration risk, capital, liquidity and the likelihood and timing of earnings.

• (16) Subject to paragraphs (17) and (18), institutions authorised in the State shall establish and maintain a risk management function.

• (17) Subject to paragraph (22), institutions shall ensure that its risk management function—

• (a) is independent from its operational functions, and

• (b) has sufficient authority, stature, resources and access to the management body.

• (18) Institutions shall ensure that its risk management function—

• (a) identifies, measures and properly reports all material risks in the institution,

• (b) is actively involved in elaborating the institutions risk strategy and in all material risk management decisions,

• (c) has the capacity to deliver a complete view of the whole range of risks of the institution, and

• (d) shall have, where necessary, the authority to—

• (i) report directly to the management body in its supervisory function, independent from senior management,

• (ii) raise concerns and warn the management body, where appropriate, where specific risk developments affect or may affect the institution,

without prejudice to the responsibilities of the management body in its supervisory or managerial functions pursuant to these Regulations and the Capital Requirements Regulation.

• (19) Subject to paragraph (20), institutions shall—

• (a) appoint a head of its risk management function, and

• (b) ensure that the person appointed under subparagraph (a) is an independent senior manager with distinct responsibility for the risk management function.

• (20) Where the nature, scale and complexity of the activities of an institution do not justify a specially appointed person, that institution may appoint another senior person within the institution to fulfil that function, provided there is no conflict of interest.

• (21) Institutions shall ensure that the head of its risk management function—

• (a) is not removed without the prior approval of the management body in its supervisory function, and

• (b) has direct access to the management body in its supervisory function, where necessary.

• (22) This Regulation is without prejudice to the application of Regulation 36(2) of the European Communities (Markets in Financial Instruments) Regulations 2007 (No. 60 of 2007) to investment firms.

Internal approaches for calculating own funds requirements

• (2) Paragraph (1) is without prejudice to the fulfilment of criteria laid down in Part Three, Title I, Chapter 3, Section 1 of the Capital Requirements Regulation.

• (3) The Bank shall, taking into account the nature, scale and complexity of the activities of institutions, monitor that those institutions do not solely or mechanistically rely on external credit ratings for assessing the creditworthiness of an entity or financial instrument.

• (4) The Bank may require institutions to—

• (a) develop an internal specific risk assessment capacity,

• (b) develop or increase their use of internal models for calculating own funds requirements for specific risk of debt instruments in the trading book, and

• (c) develop or increase their use of internal models to calculate own funds requirements for default and migration risk,

where their exposures to specific risk are material in absolute terms and where they have a large number of material positions in debt instruments of different issuers.

• (5) In deciding whether to exercise its powers under paragraph (4), the Bank shall take into account the institution’s size, internal organisation and the nature, scale and complexity of its activities.

• (6) Paragraphs (4) and (5) are without prejudice to the fulfilment of the criteria laid down in Part Three, Title IV, Chapter 5, Sections 1 to 5 of the Capital Requirements Regulation.

Supervisory benchmarking of internal approaches for calculating own funds requirements

• (a) risk weighted exposure amounts, or

• (b) own fund requirements, except for operational risk,

the institutions concerned shall comply with the reporting obligations in paragraph (2).

• (2) Where permitted by the Bank to use internal approaches for the calculations, referred to in paragraph (1), institutions shall report the results of the calculations of their internal approaches for their exposures or positions that are included in the benchmark portfolios to the Bank in accordance with paragraph (3).

• (3) Institutions shall submit the results of their calculations, referred to in paragraph (1), to the Bank and the EBA at an appropriate frequency, as determined by the Bank, and at least annually, in accordance with the template developed by the EBA under paragraph (8) of Article 78 of the Capital Requirements Directive.

• (4) When submitting the results, referred to in paragraph (3), to the Bank, institutions shall also submit an explanation of the methodologies used to produce them.

• (5) Where the Bank has decided to develop specific benchmark portfolios, referred to in Article 78(2) of the Capital Requirements Directive, it shall do so in consultation with the EBA.

• (6) Institutions shall report the results of the calculations concerning the portfolios, referred to in paragraph (5), separately from the results of the calculations for the EBA portfolios.

• (7) The Bank shall, on the basis of the information submitted by institutions in accordance with paragraphs (2) and (3), monitor the range of risk weighted exposure amounts or own funds requirements, as applicable, except for operational risk, for the exposures or transactions in the benchmark portfolio resulting from the internal approaches of those institutions.

• (8) The Bank shall, at least annually, make an assessment of the quality of those approaches, referred to in paragraph (7), paying particular attention to:

• (a) those approaches that exhibit significant differences in own fund requirements for the same exposure,

• (b) approaches where there is particularly high or low diversity, and

• (c) approaches where there is a significant and systematic under-estimation of own funds requirements.

• (9) Where, after considering the information provided by institutions pursuant to this Regulation, the Bank identifies situations where—

• (a) particular institutions diverge significantly from the majority of their peers, or

• (b) there is little commonality in approach leading to a wide variance of results,

the Bank shall investigate the reasons for those situations and, if it can be clearly identified that any institutions approach leads to an underestimation of own funds requirements which is not attributable to differences in the underlying risks of the exposures or positions, shall take such corrective measures as it considers appropriate including under financial services legislation.

• (10) The Bank shall ensure that measures taken under paragraph (9) shall comply with the principle that such measures must maintain the objectives of an internal approach and therefore do not—

• (a) lead to standardisation or preferred methods,

• (b) create wrong incentives, or

• (c) cause herd behaviour.

• (11) The corrective measures referred to in paragraph (9) are in addition to, and not in substitution for, financial services legislation.

Credit and counterparty risk

• (a) credit-granting is based on sound and well-defined criteria and that the process for approving, amending, renewing and re-financing credits is clearly established,

• (b) subject to paragraph (2), they have internal methodologies that enable them to assess the credit risk of exposures to individual obligors, securities or securitisation positions and credit risk at the portfolio level,

• (c) the ongoing administration and monitoring of the various credit risk-bearing portfolios and exposures, including for identifying and managing problem credits and for making adequate value adjustments and provisions, is operated through effective systems, and

• (d) diversification of credit portfolios is adequate having regard to the target markets and overall credit strategy of the institution concerned.

• (2) Internal methodologies referred to in paragraph (1)(b) shall, in particular, not rely solely or mechanistically on external credit ratings.

• (3) Where own funds requirements are based on—

• (a) a rating by an external credit assessment institution, or

• (b) the fact that an exposure is unrated,

this shall not exempt institutions from additionally considering other relevant information for assessing their allocation of internal capital.

• (4) In this Regulation, “external credit assessment institution” has the meaning assigned to it in point (98) of Article 4(1) of the Capital Requirements Regulation.

Residual risk

Concentration risk