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

• (b) where the Common Equity Tier 1 capital maintained by the institution which is not used to meet the own funds requirement under Article 92(1)(c) of Capital Requirements Regulation, expressed as a percentage of the total risk exposure amount calculated in accordance with Article 92(3) of that Regulation, is within the second quartile of the combined buffer requirement, the factor shall be 0.2;

• (c) where the Common Equity Tier 1 capital maintained by the institution which is not used to meet the own funds requirement under Article 92(1)(c) of Capital Requirements Regulation expressed as a percentage of the total risk exposure amount calculated in accordance with Article 92(3) of that Regulation, is within the third quartile of the combined buffer requirement, the factor shall be 0.4;

• (d) where the Common Equity Tier 1 capital maintained by the institution which is not used to meet the own funds requirement under Article 92(1)(c) of Capital Requirements Regulation, expressed as a percentage of the total risk exposure amount calculated in accordance with Article 92(3) of that Regulation, is within the fourth (that is, the highest) quartile of the combined buffer requirement, the factor shall be 0.6;

• (e) The lower and upper bounds of each quartile of the combined buffer requirement shall be calculated as follows:

Combined buffer requirement

Lower bound of quartile = __ (Qn - 1)

4

Combined buffer requirement

Upper bound of quartile = __ Qn

4

where Qn indicates the ordinal number of the quartile concerned.

• (8) The restrictions imposed by this Regulation shall only apply to payments that result in a reduction of Common Equity Tier 1 capital or in a reduction of profits, and where a suspension of payment or failure to pay does not constitute an event of default or a condition for the commencement of proceedings under the insolvency regime applicable to the institution.

• (9) Where an institution fails to meet the combined buffer requirement and intends to distribute any of its distributable profits or undertake an action referred to in paragraph (3)(a), (b) or (c), it shall notify the Bank and provide the following information:

• (a) the amount of capital maintained by the institution, subdivided as follows:

• (i) Common Equity Tier 1 capital;

• (ii) Additional Tier 1 capital;

• (iii) Tier 2 capital;

• (b) the amount of its interim and year-end profits;

• (c) the MDA calculated in accordance with paragraph (5);

• (d) the amount of distributable profits it intends to allocate between the following:

• (i) dividend payments;

• (ii) share buybacks;

• (iii) payments on Additional Tier 1 instruments;

• (iv) the payment of variable remuneration or discretionary pension benefits, whether by creation of a new obligation to pay, or payment pursuant to an obligation to pay created at a time when the institution failed to meet its combined buffer requirements.

• (10) Institutions shall maintain arrangements to ensure that the amount of distributable profits and the MDA are calculated accurately, and shall be able to demonstrate that accuracy to the Bank on request.

• (11) For the purposes of paragraphs (1) to (3), a distribution in connection with Common Equity Tier 1 capital shall include the following:

• (a) a payment of cash dividends;

• (b) a distribution of fully or partly paid bonus shares or other capital instruments referred to in Article 26(1)(a) of the Capital Requirements Regulation;

• (c) a redemption or purchase by an institution of its own shares or other capital instruments referred to in Article 26(1)(a) of that Regulation;

• (d) a repayment of amounts paid up in connection with capital instruments referred to in Article 26(1)(a) of that Regulation;

• (e) a distribution of items referred to in points (b) to (e) of Article 26(1) of that Regulation.

Capital conservation plan

• (b) The Bank shall grant such authorisations only on the basis of the individual situation of a credit institution and taking into account the scale and complexity of the institution’s activities.

• (2) The capital conservation plan to be prepared and submitted in accordance with paragraph (1) shall include the following:

• (a) estimates of income and expenditure and a forecast balance sheet;

• (b) measures to increase the capital ratios of the institution;

• (c) a plan and timeframe for the increase of own funds with the objective of meeting the combined buffer requirement;

• (d) any other information that the Bank considers to be necessary to carry out the assessment required by paragraph (3).

• (3) The Bank shall assess the capital conservation plan, and shall approve the plan only if it considers that the plan, if implemented, would be reasonably likely to conserve or raise sufficient capital to enable the institution to meet its combined buffer requirements within a period which the Bank considers appropriate.

• (4) If the Bank does not approve the capital conservation plan in accordance with paragraph (3), it shall do at least one of the following:

• (a) require the institution to increase own funds to specified levels within specified periods;

• (b) exercise its powers under Regulation 90 to impose more stringent restrictions on distributions than those required by Regulation 129.

Part 7 Disclosure by competent authorities

General disclosure requirements

• (a) the texts of laws, regulations, administrative rules and general guidance adopted in the State in the field of prudential regulation;

• (b) the manner of exercise of the options and discretions available in European Union law;

• (c) the general criteria and methodologies it uses in the review and evaluation referred to in Regulation 85;

• (d) without prejudice to the provisions set out in—

• (i) Articles 53 to 61 of the Capital Requirements Directive,

• (ii) Regulation 51, and

• (iii) Articles 54 and 58 of Directive 2004/39/EC,

aggregate statistical data on key aspects of the implementation of the prudential framework in the State, including the number and nature of supervisory measures taken in accordance with Regulation 90(1) and of administrative penalties imposed in accordance with Regulation 53 or other financial services legislation.

• (2) The information published in accordance with paragraph (1) shall be—

• (a) sufficient to enable a meaningful comparison of the approaches adopted by the competent authorities of the different Member States,

• (b) published in accordance with technical standards adopted by the Commission, following a common format and updated regularly, and

• (c) be accessible at a single electronic location.

Specific disclosure requirements

• (a) the general criteria and methodologies adopted to review compliance with Articles 405 to 409 of that Regulation;

• (b) without prejudice to the provisions laid down in—

• (i) Articles 53 to 61 of the Capital Requirements Directive, and

• (ii) Regulation 51,

a summary description of the outcome of the supervisory review and description of the measures imposed in cases of non-compliance with Articles 405 to 409 of that Regulation, identified on an annual basis.

• (2) The Bank when exercising the discretion laid down in Article 7(3) of the Capital Requirements Regulation shall publish the following information:

• (a) the criteria it applies to determine that there is no current or foreseen material, practical or legal impediment to the prompt transfer of own funds or repayment of liabilities;

• (b) the number of parent institutions—

• (i) which benefit from the exercise of the discretion laid down in Article 7(3) of the Capital Requirements Regulation, and

• (ii) which incorporate subsidiaries in a third country;

• (c) on an aggregate basis for the State—

• (i) the total amount of own funds on the consolidated basis of the parent institution in the State, which benefits from the exercise of the discretion laid down in Article 7(3) of that Regulation,

• (ii) the percentage of total own funds on the consolidated basis of parent institutions in the State, which benefits from the exercise of the discretion laid down in Article 7(3) of that Regulation, represented by own funds, and

• (iii) the percentage of total own funds required under Article 92 of that Regulation on the consolidated basis of parent institutions in the State, which benefits from the exercise of the discretion laid down in Article 7(3) of that Regulation, represented by own funds,

which are held in subsidiaries in a third country.

• (3) The Bank when it exercises the discretion laid down in Article 9(1) of the Capital Requirements Regulation shall publish the following information:

• (a) the criteria it applies to determine that there is no current or foreseen material, practical or legal impediment to the prompt transfer of own funds or repayment of liabilities;

• (b) the number of parent institutions which benefit from the exercise of the discretion laid down in Article 9(1) of the Capital Requirements Regulation and the number of such parent institutions which incorporate subsidiaries in a third country;

• (c) on an aggregate basis for the State—

• (i) the total amount of own funds of parent institutions which benefit from the exercise of the discretion laid down in Article 9(1) of that Regulation,

• (ii) the percentage of total own funds of parent institutions which benefit from the exercise of the discretion laid down in Article 9(1) of that Regulation represented by own funds,

• (iii) the percentage of total own funds required under Article 92 of that Regulation of parent institutions which benefit from the exercise of the discretion laid down in Article 9(1) of that Regulation represented by own funds,

which are held in subsidiaries in a third country.

Part 8 Transitional provisions

Chapter 1 Transitional provisions on the supervision of institutions exercising the freedom of establishment and the freedom to provide services

Reporting requirements — transitional

• (2) The information referred to in paragraph (1) shall be provided monthly on a date specified by the Bank.

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

• (2) Before issuing a direction to an institution under paragraph (1), the Bank shall notify the institution of its intention to do so and shall give the institution an opportunity to make representations on the matter within such time limit specified by the Bank in the notification.

• (3) Where the credit institution concerned fails to comply with a direction issued under paragraph (1), the Bank shall notify the competent authorities in the home Member State of the institution concerned—

• (a) of the matters leading to the issue of the direction under paragraph (1), and

• (b) the reasons why the Bank believes that the credit institution has failed to comply with its direction.

• (4) Where the Bank is satisfied that, notwithstanding the provisions of paragraphs (1) and (3) and despite the measures taken by the home Member State concerned or because such measures have proved inadequate or are not provided for in the State, the credit institution concerned has not complied with its direction, it may, exercising its powers under financial services legislation and having informed the competent authorities in the home Member State concerned, take appropriate measures to—

• (a) prevent, or to punish, further breaches, and

• (b) in so far as is necessary, prevent that credit institution from providing further services within the State.

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

• (6) Where the Bank receives a notification from a competent authority in a host Member State pursuant to Article 153(2) of the Capital Requirements Directive, it shall at the earliest opportunity—

• (a) exercising its powers under financial services legislation, take appropriate measures to ensure that the credit institution concerned remedies its non-compliance, and

• (b) communicate to the competent authorities in the host Member State the nature of those measures.

Precautionary measures — transitional

• (2) Where the Bank takes measures under paragraph (1) it shall inform the Commission, and the competent authorities of the other Member States concerned, at the earliest opportunity.

• (3) Where the Commission issues a direction, as provided for under Article 154 of the Capital Requirements Directive, that the measures in question should be amended or terminated, the Bank shall comply with that direction without delay.

Responsibility of Bank — transitional

• (2) 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.

• (3) 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.

• (4) The Bank shall, in the exercise of its general duties (and particularly in an emergency situation), duly consider the potential impact of its decisions on the stability of the financial system in all other Member States concerned based on the information available at the relevant time.

Liquidity supervision — transitional

• (2) In discharging its responsibilities under paragraph (1), the Bank may require that branches of credit institutions authorised in other Member States provide the same information as the Bank requires from domestically authorised credit institutions for that purpose.

• (3) Without prejudice to the measures necessary for the reinforcement of the European Monetary System, the Bank shall retain complete responsibility for the measures resulting from the implementation of the State’s monetary policies and such measures shall not provide for discriminatory or restrictive treatment based on the fact that a credit institution is authorised in another Member State.

Collaboration concerning supervision — transitional

• (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, referred to in paragraph (1), 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 such institutions, in particular with regard to—

• (i) liquidity,

• (ii) solvency,

• (iii) deposit guarantees,

• (iv) the limiting of large exposures,

• (v) administrative and accounting procedures, and

• (vi) internal control mechanisms.

Designation of significant branches — transitional

• (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(1) 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 being 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 authority, 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, and this document shall be communicated to the competent authorities, or to the consolidating supervisor, referred to in paragraph (1).

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

• (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, 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 authorities 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 major sanctions and exceptional measures taken in accordance with these Regulations, including—

• (I) any imposition of a specific own fund 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 concerned, 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 ESRB, 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.

Bank to establish college of supervisors for significant branches — transitional

• (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 the reaching of a joint decision on the designation of a branch as being significant under Regulation 140 and the exchange of information under Article 60 of the Capital Requirements Directive 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 in Regulations 136 and 140.

• (4) The Bank shall keep all the members of the college, established under this Regulation, 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, informed, in a timely manner, of the actions taken in those meetings or the measures carried out every year starting from 1 January 2014.

On-the-spot checks — transitional

• (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 138.

• (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) 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.

Part 9 Provisions from statutory instruments revoked by these Regulations

Application of certain enactments

• (a) references in that section to a holder of a licence under that Act were references to the credit institution, and

• (b) references in that section to a related body of a holder of such a licence were references to an associated enterprise of the credit institution.

• (2) Section 41A of the Act of 1989 applies to and in relation to a building society that is subject to consolidated supervision by the Bank as if references in that section to a related body of a building society were references to an associated body of the building society.

• (3) Section 25 of the TSB Act applies to, and in relation to, a credit institution that is subject to consolidated supervision by the Bank as if references in that section to a trustee savings bank were references to the credit institution.

Bank not to be liable for losses incurred through insolvency or default of persons subject to supervision under these Regulations

Bank to consult competent authorities of other Member States in certain circumstances

• (a) a subsidiary of an insurance undertaking authorised in another Member State,

• (b) a subsidiary of the parent undertaking of such an insurance undertaking, or

• (c) controlled by the same person who controls such an insurance undertaking.

• (2) The Bank shall consult the competent authorities of the other Member State responsible for the supervision of credit institutions or investment firms before granting an authorisation to an insurance undertaking that is-

• (a) a subsidiary of a credit institution or investment firm authorised in another Member State,

• (b) a subsidiary of the parent undertaking of such a credit institution or investment firm, or

• (c) controlled by the same person who controls such a credit institution or investment firm.

• (3) In particular, the Bank shall—

• (a) when assessing the suitability of the shareholders, and the reputation and experience of directors involved in the management, of another entity of the same group, consult with the competent authorities referred to in paragraphs (1) and (2) of this Regulation, and

• (b) either when involved in granting an authorisation to an insurance undertaking or in assessing compliance by such an undertaking with the conditions under which it is authorised to operate, inform each of the other competent authorities of the other Member States concerned of any information regarding the suitability of shareholders, and the reputation and experience of directors, that is of relevance to those authorities.

Provision of services into another Member State

• (a) be taken as authorising a financial institution to which Regulation 32 applies 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.

Offence of providing false or misleading information — Regulations 10 to 25

• (2) A person who knowingly omits or withholds material information from the Bank on his or her own behalf, or on behalf of any other person or institution, in relation to any requirement imposed by these Regulations, commits an offence.

• (3) A person who commits an offence under this Regulation is liable—

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

• (b) on conviction on indictment, to a fine not exceeding €250,000 or imprisonment for a term not exceeding 3 years, or to both.

Provision of false or misleading information — general

• (2) A person who commits an offence under this Regulation is liable—

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

• (b) on conviction on indictment, to a fine not exceeding €250,000 or imprisonment for a term not exceeding 3 years, or to both.

Prosecution by Bank

Offences by bodies corporate

• (2) Where the affairs of a body corporate are managed by its members, subsection (1) applies in relation to the acts and defaults of a member in connection with his or her functions of management as if he or she were a director or manager of the body corporate.

Continuation of contravention of Regulations

Construction of licence holder in enactments

• (a) sections 19 to 26, section 28, sections 31 to 42 or section 58 of the Act of 1971,

• (b) section 27, sections 49 to 51, sections 90, 108, 117, 134 or 140 of the Central Bank Act 1989 (No. 16 of 1989), or

• (c) any other enactment which was in force on 1 January 1993,

shall be construed so as to include any person who, but for the application of Regulation 7(1), was or would have been required to hold a licence under section 9 of the Act of 1971.

Part 10 Consequential Amendments

Amendment of Central Bank Act 1942

• “(ap) for any purpose connected with the functions of the Bank, the Minister, the Governor or the Head of Financial Regulation or a special manager under the Central Bank and Credit Institutions (Resolution) Act 2011 , or

• (aq) to authorities or bodies charged with responsibility for maintaining the stability of the financial system in Member States through the use of macroprudential rules, or

• (ar) to reorganisation bodies or authorities aiming at protecting the stability of the financial system, or

• (as) for the purposes of contractual or institutional protection schemes as referred to in Article 113(7) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013²⁴ .”.

• (2) Section 33AK (as amended by section 5(1) of the Act of 2013) of the Act of 1942 is amended, in the definition of “Supervisory Directives” by substituting for paragraphs (p) and (q) of subsection (10) the following:

• “(p) Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC²⁵ ,

• (q) Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC²⁶ , and

• (r) 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/EC²⁷ .”.

• (3) The Act of 1942 is amended by inserting after section 33ANB the following:

“33ANC(1) This Part applies in relation to—

• (a) the commission or suspected commission by a financial holding company, mixed-financial holding company or mixed-activity holding company of a contravention of—

  • (i) a provision of the Capital Requirements Regulations or the Capital Requirements Regulation,

  • (ii) any direction given to a financial holding company, mixed-financial holding company or mixed-activity holding company, under a provision of the Regulations referred to in subparagraph (i),

  • (iii) any requirement imposed on a financial holding company, mixed-financial holding company or mixed-activity holding company under a provision of the Regulations referred to in subparagraph (i) or under any direction given to a financial holding company, mixed-financial holding company or mixed-activity holding company under a provision of those Regulations, or

  • (iv) any obligation imposed on a financial holding company, mixed-financial holding company or mixed-activity holding company by this Part or imposed by the Bank pursuant to a power exercised under this Part,

  and

• (b) participation, by a person concerned in the management of a financial holding company, mixed-financial holding company or mixed-activity holding company, in the commission by the financial holding company, mixed-financial holding company or mixed-activity holding company of such a contravention.

• (2) For the purposes of subsection (1)—

  • (a) a reference in this Part to a regulated financial service provider or a financial service provider includes a reference to a financial holding company, mixed-financial holding company or mixed-activity holding company,

  • (b) a reference in this Part to a prescribed contravention includes a reference to a contravention, by a financial holding company, mixed-financial holding company or mixed-activity holding company, of a provision, direction, requirement or obligation referred to in subsection (1), and

  • (c) a reference in this Part to a person concerned in the management of a regulated financial service provider includes a reference to a person concerned in the management of a financial holding company, mixed-financial holding company or mixed-activity holding company.

• (3) Nothing in this section limits the application of this Part in relation to matters other than those referred to in subsection (1).

• (4) In this section—

(a)‘Capital Requirements Regulations’ means European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 );

(b)‘Capital Requirements Regulation’ means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013;

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

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

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

• (4) Section 33BC (as amended by section 71 of the Act of 2013) of the Act of 1942 is amended by inserting after subsection (5) the following:

• “(6) This section does not apply where Regulation 56 the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ) applies.”.

• (5) Part 2 of Schedule 2 (as amended by section 5 of the Act of 2013) to the Act of 1942 is amended by inserting after the last item the following:

“

54	S.I. No. 158 of 2014	European Union (Capital Requirements) Regulations 2014	The whole instrument

.”.

Amendment of Central Bank Act 1971

• (a) in section 2(1) (as amended by section 5(1) of the Act of 2013)—

• (i) by substituting for the definition of “banking business” the following:

“ ‘banking business’, in relation to a person, means any business that consists of or includes-

• (a) receiving money on the person’s own account from members of the public either on deposit or as repayable funds, and

• (b) the granting of credits on own account,

but does not include such a business in so far as the business consists of or includes-

- (i) receiving money on deposit by a trader either from employees of the trader in relation to the trader’s business, or from customers of the trader in the normal course of the trader’s business,

- (ii) receiving money in respect of leasing or selling goods under a hire-purchase agreement, a leasing agreement or credit-sale agreement,

- (iii) receiving money as security or collateral or as a bond for the repayment of a debt or the performance of a contract related to goods or services,

- (iv) receiving money accepted by way of advance or part payment under a contract for the sale, hire or other provision of goods or services, and repayable only in the event that the goods or services are not in fact sold, hired or otherwise provided,

- (v) receiving money solely as a premium in respect of the issue or renewal of a life assurance policy issued by a holder of an authorisation under the European Communities (Life Assurance) Regulations 1984 ( [S.I. No. 57 of 1984](https://www.irishstatutebook.ie/1984/en/si/0057.html) ),

- (vi) receiving money accepted as a contribution within the meaning of the Pensions Acts,

- (vii) receiving money where it can be shown that-

    - (I) no part of the business activities of the person receiving the money or of any other person is financed wholly or substantially out of those funds, and

    - (II) those funds are, in the normal course of business, accepted only on a casual or incidental basis,

      or

- (viii) receiving money under financial contracts (within the meaning of the [Netting of Financial Contracts Act 1995](https://www.irishstatutebook.ie/1995/en/act/pub/0025/index.html) (No. 25 of 1995)) (which may include the acceptance of collateral);”,

• (ii) by inserting after the definition of “banking business” the following:

“ ‘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/EC²⁸ ;

‘Capital Requirements Regulation’ means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013²⁹ ;”,and

• (iii) by deleting the definition of “Recast Credit Institutions Directive”,

• (b) by inserting after section 2(1) the following:

• “(1A) In this Act, ‘competent authority’, ‘insurance undertaking’, ‘investment firm’, ‘management body’, ‘own funds’, ‘parent undertaking’, and ‘qualifying holding’ each has the meaning assigned to it by Regulation 3 of the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ).”,

• (c) in section 7 (as amended by section 5(1) and 72 of the Act of 2013)—

• (i) in subsection (4)(c), by substituting “licensed under section 10 of the Trustee Savings Banks Act 1989 ” for “certified under the Trustee Savings Banks Act 1863 to 1979”,

• (ii) in subsection (4)(d), by substituting “authorised under section 17 of the Building Societies Act 1989 ” for “, an industrial and provident society, a friendly society”,

• (iii) in subsection (4)(e), by inserting “, insofar as each is subject to regulation and controls intended to protect depositors and investors” after “such an undertaking”,

• (iv) in subsection (5)(a), by inserting “that is subject to regulation and controls intended to protect depositors and investors,” after “class of persons,”, and

• (v) in subsection (6), by substituting “European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 )” for “European Communities (Licensing and Supervision of Credit Institutions) Regulations 1992 ( S.I. No 395 of 1992 )”,

• (d) in section 9 (as amended by Regulation 3 of the European Communities (Directive 2006/48/EC) (Central Bank Acts) (Amendment) Regulations 2009 ( S.I. No. 512 of 2009 ))—

• (i) in subsection (1), by substituting “sections 9D to 9J” for “the provisions of this section”,

• (ii) by deleting subsections (1A), (2) and (3), and

• (iii) by inserting after subsection (5) the following:

• “(6) The Bank shall notify the European Banking Authority of every licence granted.”,

• (e) by inserting after section 9C (inserted by section 73 of the Act of 2013) the following:

“Programme of operations and structural organisation

9D.The Bank shall not grant a licence to an applicant unless the application for the licence is accompanied by a programme of operations setting out the types of business envisaged and the structural organisation of the applicant.

Initial capital

9E.(1) Subject to subsection (3), the Bank shall not grant a licence unless the applicant holds separate own funds, or has an initial capital, of at least €5,000,000.

• (2) Initial capital shall comprise only one or more of the items referred to in Article 26(1)(a) to (e) of the Capital Requirements Regulation.

• (3) The Bank may grant a licence to particular categories of credit institutions the initial capital of which is less than €5,000,000, subject to the following conditions:

  • (a) the applicant has an initial capital of at least €1,000,000;

  • (b) the Bank notifies the European Commission and the European Banking Authority of its reasons for exercising that option.

  Effective direction of business and place of head office

  9F.The Bank shall not grant a licence unless the applicant satisfies the Bank that-

  • (a) it is a body corporate,

  • (b) its registered office and its head office are both located in the State,

  • (c) at least 2 persons effectively direct its business, and

  • (d) the members of its management body meet the requirements of Regulation 79 of the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ).

  Shareholders and members

  9G.(1) The Bank shall not grant a licence unless the application for the licence includes the names of-

  • (a) the applicant’s shareholders or members that have qualifying holdings and of the amounts of those holdings, or

  • (b) where there are no qualifying holdings, the 20 largest shareholders or members.

• (2) In determining whether the criteria for a qualifying holding are fulfilled, the voting rights referred to in Articles 9 and 10 of Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004³⁰ in relation to information about issuers whose securities are admitted to trading on a regulated market and the conditions regarding aggregation thereof set out in Article 12(4) and (5) of that Directive shall be taken into account.

• (3) Voting rights or shares which institutions 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 of the European Parliament and of the Council of 21 April 2004³¹ 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.

• (4) The Bank shall not grant a licence if, taking into account the need to ensure the sound and prudent management of a credit institution, it is not satisfied, having regard to Regulations 15 and 16 of the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ), as to the suitability of the shareholders or members, in particular where the criteria set out in Regulation 15 are not met.

• (5) Where close links exist between the credit institution and other natural or legal persons, the Bank shall grant a licence only where those links do not prevent the effective exercise of its supervisory functions.

• (6) The Bank shall not grant a licence where the laws, regulations or administrative provisions of a third country governing one or more natural or legal persons with which the credit institution has close links, or difficulties involved in the enforcement of those laws, regulations or administrative provisions, prevent the effective exercise of its supervisory functions.

• (7) The Bank shall require credit institutions to provide it with the information they require to monitor compliance with the conditions referred to in subsections (5) and (6) on an ongoing basis.

Waiver for credit institutions permanently affiliated to central body

9H.(1) The Bank may waive the requirements set out in sections 9D, 9E and 9F(c) and (d) with regard to a credit institution referred to in Article 10 of the Capital Requirements Regulation in accordance with the conditions set out therein.

• (2) Where the Bank exercises a waiver referred to in paragraph (1)—

  • (a) Regulation 7,

  • (b) Regulations 32 and 33,

  • (c) Regulation 35(1) to (3),

  • (d) Regulations 38 to 44,

  • (e) Regulations 61 to 84, and

  • (f) Regulations 115 to 130,

  of the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ) shall apply to the whole as constituted by the central body together with its affiliated institutions.

  Refusal of authorisation

  9I.(1) Where the Bank refuses to grant a licence, it shall notify the applicant of the decision and the reasons therefor within 6 months of receipt of the application or, where the application is incomplete, within 6 months of receipt of the complete information required for the decision.

• (2) The Bank shall, in any event, take a decision to grant or refuse a licence within 12 months of the receipt of the application.

Prior consultation of competent authorities

9J.(1) The Bank shall consult the competent authorities of another Member State before granting a licence where the credit institution is—

- (*a*) a subsidiary of a credit institution authorised in that other Member State,

- (*b*) a subsidiary of the parent undertaking of a credit institution authorised in that other Member State, or

- (*c*) controlled by the same natural or legal persons as those who control a credit institution authorised in that other Member State.

• (2) The Bank shall, before granting a licence, consult the competent authority that is responsible for the supervision of insurance undertakings or investment firms in the Member State concerned where the credit institution is—

  • (a) a subsidiary of an insurance undertaking or investment firm authorised in the European Union,

  • (b) a subsidiary of the parent undertaking of an insurance undertaking or investment firm authorised in the European Union, or

  • (c) controlled by the same natural or legal persons as those who control an insurance undertaking or investment firm authorised in the European Union.

• (3) The Bank shall in particular—

  • (a) consult, in accordance with paragraphs (1) and (2), when assessing the suitability of the shareholders and the reputation and experience of members of the management body involved in the management of another entity of the same group, and

  • (b) exchange with the competent authorities of other Member States any information regarding the suitability of shareholders and the reputation and experience of members of the management body which is of relevance for the granting of an authorisation and for the ongoing assessment of compliance with operating conditions.”,

• (f) in section 11 (as amended by section 11 of the Act of 1997)—

• (i) in subparagraph (iii) of subsection (1)(b), by substituting “section 9F(b) of this Act” for “9(1A)(b) of this Act (as amended by the Central Bank Act, 1989)”,

• (ii) in subsection (1)(b), by inserting after subparagraph (viii) the following:

• “(ix) no longer fulfils the conditions under which the licence was granted,

• (x) no longer meets the prudential requirements—

  • (I) set out in Parts Three, Four or Six of the Capital Requirements Regulation, or

  • (II) imposed under Regulation 92(2)(a) or 93 of the Capital Requirements Directive,

  or can no longer be relied on to fulfil its obligations towards its creditors, and, in particular, no longer provides security for the assets entrusted to it by its depositors, or

• (xi) commits one of the breaches referred to in Regulation 55 of the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ).”,

• (iii) by inserting after subsection (2) the following:

• “(2A) The Minister’s consent shall not be withheld under subsection (2) where to do so would be inconsistent with the Capital Requirements Directive.”,

• (iv) by substituting for subsection (6) the following:

• “(6) In this section—

  • (a) an undertaking shall be treated as a fellow subsidiary of another undertaking if both are subsidiaries of the same undertaking but neither is a subsidiary of the other undertaking,

  (b)‘subsidiary undertaking’ shall be construed in accordance with Regulation 4 of the European Communities (Companies: Group Accounts) Regulations 1992 ( S.I. No. 201 of 1992 ) and, in relation to an undertaking incorporated in, or formed under the law of another, Member State, means any undertaking which is a subsidiary undertaking within the meaning of any rule or law in force in that State for the purposes of giving effect to Council Directive No. 83/349/EEC of 13 June 1983³² ,

  (c)‘control’ has the meaning it has in the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ), and

  (d)‘associated undertaking’ has the meaning it has in the European Communities (Companies: Group Accounts) Regulations, 1992 ( S.I. No. 201 of 1992 ).”,

and

• (v) by inserting after subsection (6) the following:

• “(7) The Bank shall notify the European Banking Authority of each revocation of a licence together with the reasons for such revocation.”,

• (g) in section 16(1), by substituting “European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 )” for “European Communities (Licensing and Supervision of Credit Institutions) Regulations, 1992”,

• (h) in section 26(8) (as amended by section 5 of the Act of 2013), by substituting “European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 )” for “European Communities (Licensing and Supervision of Credit Institutions) Regulations, 1992 ( S.I. No 395 of 1992 )”, and

• (i) in section 27(2) (as amended by section 5 of the Act of 2013), by substituting “European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 )” for “European Communities (Licensing and Supervision of Credit Institutions) Regulations 1992”.

Amendment of Central Bank Act 1989

Amendment of Building Societies Act 1989

• (a) in section 2 (as amended by Regulation 2(2) of the European Union (Credit Institutions) (European Supervisory Authorities) Regulations 2011 ( S.I. No. 637 of 2011 ))—

• (i) in subsection (1), by inserting after the definition of “commission” the following:

“ ‘Commission’ means European Commission;”, and

• (ii) by inserting after subsection (1) the following:

• “(1A) In this Act “competent authority”, “insurance undertaking”, “investment firm”, “management body”, “own funds”, “parent undertaking”, and “qualifying holding” each has the meaning assigned to it by Regulation 3 of the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ).”,

• (b) in section 17 (as amended by section 231 of the National Asset Management Agency Act 2009 (No. 34 of 2009))—

• (i) in subsection (4)—

• (I) by inserting “subject to sections 17A to 17F,” after “the Central Bank may,”, and

• (II) by deleting subparagraph (i) of paragraph (a),

• (ii) in subsection (10) by deleting the definitions of “the prescribed minimum” and of “qualifying capital”,

• (iii) by inserting after subsection (10) the following:

• “(11) The Central Bank shall notify the European Banking Authority of every authorisation granted.”,

• (c) by inserting after section 17 the following:

“Programme of operations and structural organisation

17A.The Central Bank shall not grant an authorisation unless the application for the authorisation is accompanied by a programme of operations setting out the types of business envisaged and the structural organisation of the society.

Initial capital

17B.(1) Subject to subsection (3), the Central Bank shall not grant an authorisation unless the society holds separate own funds or has an initial capital of at least €5,000,000.

• (2) Initial capital shall comprise only one or more of the items referred to in Article 26(1)(a) to (e) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013³³ .

• (3) The Central Bank may grant an authorisation to particular categories of building society the initial capital of which is less than €5,000,000, subject to the following conditions:

  • (a) the applicant has an initial capital of at least €1,000,000;

  • (b) the Central Bank notifies the Commission and European Banking Authority of its reasons for exercising that option.

  Effective direction of business and place of head office

  17C.The Central Bank shall not grant an authorisation unless the society satisfies the Central Bank that-

  • (a) its registered office and its head office are both located in the State,

  • (b) at least 2 persons effectively direct its business, and

  • (c) the members of its management body meet the requirements of Regulation 79 of the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ).

  Members

  17D.(1) The Central Bank shall not grant an authorisation unless the application for the authorisation includes the names of—

  • (a) the society’s members that have qualifying holdings and of the amounts of those holdings, or

  • (b) where there are no qualifying holdings, the 20 largest members.

• (2) In determining whether the criteria for a qualifying holding are fulfilled, the voting rights referred to in Articles 9 and 10 of Directive 2004/109/EC³⁴ in relation to information about issuers whose securities are admitted to trading on a regulated market and the conditions regarding aggregation thereof set out in Article 12(4) and (5) of that Directive, shall be taken into account.

• (3) Voting rights or shares which institutions 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 of the European Parliament and of the Council of 21 April 2004³⁵ , 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.

• (4) The Central Bank shall not grant an authorisation if, taking into account the need to ensure the sound and prudent management of a credit institution, it is not satisfied, having regard to Regulations 15 and 16 of the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ), as to the suitability of the members, in particular where the criteria set out in Regulation 15(1) are not met.

• (5) Where close links exist between the society and other natural or legal persons, the Central Bank shall grant an authorisation only if those links do not prevent the effective exercise of its supervisory functions.

• (6) The Central Bank shall not grant an authorisation where the laws, regulations or administrative provisions of a third country governing one or more natural or legal persons with which the society has close links, or difficulties involved in the enforcement of those laws, regulations or administrative provisions, prevent the effective exercise of their supervisory functions.

• (7) The Central Bank shall require societies to provide it with the information it requires to monitor compliance with the conditions referred to in subsections (5) and (6) on an ongoing basis.

Refusal of authorisation

17E.(1) Where the Central Bank refuses to grant an authorisation it shall notify the society of the decision and the reasons therefor within 6 months of receipt of the application or, where the application is incomplete, within 6 months of receipt of the complete information required for the decision.

• (2) The Central Bank shall, in any event, take a decision to grant or refuse an authorisation within 12 months of the receipt of the application.

Prior consultation of competent authorities

17F.(1) The Central Bank shall consult the competent authorities of another Member State before granting an authorisation where the society is—

- (*a*) a subsidiary of a credit institution authorised in that other Member State,

- (*b*) a subsidiary of the parent undertaking of a credit institution authorised in that other Member State, or

- (*c*) controlled by the same natural or legal persons as those who control a credit institution authorised in that other Member State.

• (2) The Central Bank shall, before granting an authorisation consult the competent authority that is responsible for the supervision of insurance undertakings or investment firms in the Member State concerned where the society is—

  • (a) a subsidiary of an insurance undertaking or investment firm authorised in the European Union,

  • (b) a subsidiary of the parent undertaking of an insurance undertaking or investment firm authorised in the European Union,

  • (c) controlled by the same natural or legal persons as those who control an insurance undertaking or investment firm authorised in the European Union.

• (3) The Central Bank shall, in particular—

  • (a) consult in accordance with paragraphs (1) and (2) when assessing the suitability of the shareholders and the reputation and experience of members of the management body involved in the management of another entity of the same group, and

  • (b) exchange with the competent authorities of other Member States any information regarding the suitability of shareholders and the reputation and experience of members of the management body which is of relevance for the granting of an authorisation and for the ongoing assessment of compliance with operating conditions.”,

• (d) by deleting section 18(9),

• (e) in section 40 (as amended by the European Union (Credit Institutions) (European Supervisory Authorities) Regulations 2011 ( S.I. No. 637 of 2011 ))—

• (i) in subsection (2), by inserting the following:

• “(m) a society no longer fulfils the conditions under which the authorisation was granted,

• (n) a society no longer meets the prudential requirements set out in Parts Three, Four or Six of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 or imposed under Regulations 92(2)(a) or 93 of the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ) or can no longer be relied on to fulfil its obligations towards its creditors, and, in particular, no longer provides security for the assets entrusted to it by its depositors, or

• (o) a society has committed one of the breaches referred to in Regulation 55 of the of the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ).”,

and

• (ii) in subsection (8), by inserting “, together with the reasons for such a decision” after “European Banking Authority”.,

and

• (f) in Schedule 3 by deleting paragraph 1(7).

Amendment of Trustee Savings Banks Act 1989

• (a) by repealing section 10, and

• (b) in section 57(1) (as amended by section 1 of the Trustee Savings Banks (Amendment) Act 2001 (No. 6 of 2001)) in the definition of “banking company” by substituting “European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 )” for “European Communities (Licensing and Supervision of Credit Institutions) Regulations, 1992 ( S.I. No. 395 of 1992 )”.

Amendment of Central Bank Act 1997

• “(k) Regulation 52 of the European Union (Capital Requirements) Regulations 2014 ( S.I. No.158 of 2014 );”.

Part 11 Final provisions, revocations and saver

Service of notice or other document by Bank

References to repealed Directives

Revocations

• (a) the European Communities (Licensing and Supervision of Credit Institutions) Regulations 1992 ( S.I. No. 395 of 1992 );