European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

According to Article 49 of Directive No 2013/36, the prudential supervision of a credit institution is the responsibility of the competent authorities of the home Member State both in respect of activities carried out on its own territory and those carried out on the territory of another Member State under freedom of establishment or freedom to provide services. Nevertheless, pending further coord …

Prudential supervision

According to Article 49 of Directive No 2013/36, the prudential supervision of a credit institution is the responsibility of the competent authorities of the home Member State both in respect of activities carried out on its own territory and those carried out on the territory of another Member State under freedom of establishment or freedom to provide services. Nevertheless, pending further coordination, Member States retain responsibility, in cooperation with the competent authorities of the home Member State, for the supervision of the liquidity of the branches of credit institutions (Art. 50). Where the supervision relates to the activities of credit institutions operating, in particular through a branch, in Member States other than that in which their head offices are situated, the competent authorities of the Member States concerned collaborate closely and supply one another with all information concerning the management and ownership of those institutions that is likely to facilitate their supervision and the examination of the conditions for their authorization, and all information likely to facilitate the monitoring of such institutions, in particular with regard to liquidity, solvency, deposit guarantees, the limiting of large exposures, administrative and accounting procedures and internal control mechanisms. The competent authorities and their staff are bound by the obligation of professional secrecy (Art. 53 et seq.). However, Article 53(1) of Directive No 2013/36 does not preclude the competent authorities of the Member States from disclosing confidential information to a person who so requests in order to be able to institute civil or commercial proceedings with a view to protecting proprietary interests which were prejudiced as a result of the compulsory liquidation of a credit institution, bearing in mind that it is for the competent authorities and courts to weigh up the interest of the applicant in having the information in question and the interests connected with maintaining the confidentiality of the information covered by the obligation of professional secrecy, before disclosing each piece of confidential information requested .

The credit institution must have sufficient own funds to cover the risks related to the activity of banking. The object of prudential supervision is to ensure that that requirement is met. The amount of own funds, the constituent elements of which are defined in Article 92 of Regulation No 575/2013, is calculated on an individual basis or where appropriate, consolidated. Taking its inspiration from the ratio devised by the Basel Committee , recital 40 of the regulation sets out the minimum own fund requirements balancing the assets and off balance sheet elements depending on the degree of risk incurred . Thus, for credit risk, the credit institution's own risk must be permanently equal to or more than 8% of the total of their risk-weighted asset or off balance sheet items. A credit institution's exposure to a client or group of connected clients is considered a large exposure to risk where its value is equal to or exceeds 10% of its own funds (Regulation No 575/2013, Art. 392) and must be notified to the competent authorities (Art. 394). A credit institution may not incur an exposure to a client or group of connected clients the value of which exceed 25% of its own funds and in no circumstance may it incur large exposures which in total exceed 100% of its own funds (Art. 395). Apart from the prudential supervision of the competent authorities of the home Member State, the credit institutions must themselves have in place sound, effective and complete strategies and processes to assess and maintain on an ongoing basis the amounts, types and distribution of internal capital that they consider adequate to cover the nature and level of the risks to which they are or might be exposed (Directive No 2013/36, Art. 73). Where the competent authorities find that a credit institution does not meet the requirements of the directive, they can, by virtue of Article 104 of the directive, not only require the institutions to take the necessary actions or steps to address the situation, but also oblige them to hold own funds in excess of the minimum level laid down in Article 128 et seq. and in Regulation No 575/2013; require the reinforcement of the arrangements, processes, mechanisms and strategies implemented to comply with Articles 73 and 74; require credit institutions to apply a specific provisioning policy or treatment of assets in terms of own funds requirements; restrict or limit the business, operations or network of credit institutions; and require the reduction of the risk inherent in the activities, products and systems of credit institutions.

Case C-594/16 Enzo Buccioni, Judgment of 13 September 2018, LawLex201800001289JBJ.

Committee for regulation and best practice in banking and supervision of transaction founded in 1974 by the central bank Governors of the G10 nations. It is a permanent forum for international cooperation in the field of banking supervision, whose work has led, inter alia, to the establishment at EU level of a solvency ratio and the setting up of a mechanism to combat money laundering.

The risks incurred in the context of banking activities are credit risk, position risk, settlement and counter-party risk, large exposures, foreign exchange risk, commodities risk and operational risk. 

European Business Law

119. Prudential supervision

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119. Prudential supervision

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise