EUROPEAN COMMISSION

Brussels, 4.2.2019

COM(2019) 39 final

2019/0018(NLE)

Proposal for a

COUNCIL DECISION

on the position to be adopted, on behalf of the European Union, within the EEA Joint Committee, concerning an amendment to Annex IX (Financial Services) to the EEA Agreement

[Capital Requirements Regulation (EU) No 575/2013 (CRR) and Directive 2013/36/EU (CRD IV)]

(Text with EEA relevance)

EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

•Consistency with existing policy provisions in the policy area

•Consistency with other Union policies

2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

•Legal basis

•Subsidiarity (for non-exclusive competence)

•Proportionality

•Choice of the instrument

3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

4.BUDGETARY IMPLICATIONS

5.OTHER ELEMENTS

•Detailed explanation of the specific provisions of the proposal

Prudential assessment of non-resident proposed acquirers (Joint declaration to the JCD) relative to Directive 2013/36/EU

The EEA Agreement does in principle not purport to regulate the relations of the Contracting Parties with third countries (see notably 16th recital of the Preamble to the EEA Agreement). The EEA Agreement does not provide for the liberalisation of capital flows or give rights regarding freedom of establishment or participation in the capital of firms as regards non-residents (see, Art. 31 and 34, 40 and 124 EEA).

The Joint declaration to the JCD consequently states that the Contracting Parties share the understanding that the incorporation into the EEA Agreement of Directive 2013/36/EU is without prejudice to national rules of general application concerning the screening for security or public order of foreign direct investment.

Exemption of certain Icelandic public credit institutions (adaptation (e) relative to Directive 2013/36/EU)

Article 2(5) CRD IV exempts certain public institutions from the scope of the Directive. Three Icelandic institutions are to be exempted from CRD IV under this provision.

Byggðastofnun (the Icelandic Regional Development Institute) is an independent institution owned by the Icelandic state. Its main function is to contribute to regional development through the implementation of the government’s regional strategies. Its operations are aimed at strengthening settlements in rural areas through the support of viable, long-term projects with diverse economic bases. The Institute supports and strengthens local development by the provision of credit and other forms of financial support, with the aim of improving economic and living conditions particularly in those regions threatened by depopulation. The institute provides additional financial support through loans with conditions to companies, individuals and municipalities enabling participation in the general economic development and stimulating innovation. The Institute’s obligations are guaranteed by the Icelandic state.Íbúðalánasjóður is the successor of Byggingarsjóðir ríkisins, which was exempted from the scope of Directive 2006/48/EC, in accordance with point 14(a) of Annex IX EEA.

Lánasjóður sveitarfélaga ohf. is a special purpose credit institution. Ownership of the institution is restricted by law to municipalities (currently 75 municipalities share ownership). The institution’s purpose is limited by law to provide credit to the municipalities and their fully-owned institutions, and only as regards investments which have wide economic meaning. The institution is analogous to KommuneKredit in Denmark, which is exempted from CRD IV pursuant to point 5 of Article 2(5).

National treatment for third-country branches and cooperation with third-country authorities (adaptations (g) and (h) relative to Directive 2013/36/EU)

Under Article 47(3) CRD IV, the Union is conferred the competence to conclude agreements with third countries according to branches of their credit institutions equal treatment on the territory of the Union.

In an EEA context, the Contracting Parties agree that the EEA Agreement does in principle not purport to regulate their relations with third countries (see notably 16th recital of the Preamble to the EEA Agreement). By incorporating CRD IV into the EEA Agreement, the EFTA States do not transfer any competence to the Union with respect to negotiating market access for third-country branches. Adaptation (g) therefore disapplies Article 47(3) as regards the EFTA States, and specifies that the EFTA States may conclude bilateral agreements with third countries regarding market access for branches.

However, in order to promote convergence in third-country policy between the Union and the EFTA States, adaptation (g) also provides that the Contracting Parties to the EEA Agreement inform and consult each other regarding negotiations of agreements with third countries in the framework of the EEA Joint Committee.

Adaptation (g) is modelled on the solutions agreed between the Union and the EFTA States under the Solvency II and MiFID regimes (see, point 1(d) and (e) and point 31ba(b) of Annex IX EEA).

Article 48 CRD IV contains rules regarding the conclusion of supervisory agreements regarding consolidated supervision between the Union and third countries. These agreements must provide for the possibility for third country supervisors to obtain information from the EU national competent or sectoral authorities (NCAs), and for European Banking Authority (EBA) to collect information received by EU NCAs from third countries’ supervisors. Since the European Union cannot conclude agreements committing the EFTA NCAs to pass information to third countries supervisors, adaptation (h) disapplies Article 48 CRD IV (similarly to the agreed solution found as regards Article 75(2) and (3) EMIR, see point 31bc(zc) of Annex IX EEA).

In order to enable the transfer of information received by EFTA NCAs from third country supervisors to EBA when it is required in order to perform its technical tasks as regards the EFTA States, adaptation (h) also provides that the EFTA States will also endeavour to include clauses in supervisory agreements allowing their NCAs to pass relevant information to EBA.

Reservation of future Union legislation (adaptations (k) and (o) relative to Directive 2013/36/EU)

In line with Article 7 EEA, only acts that have been incorporated into the EEA Agreement are binding upon the EEA EFTA States. Therefore, adaptation (k) aligns the text of Article 89(5) CRD IV to reflect that, in an EEA context, Article 89 shall cease to apply only when new Union legislation regarding disclosure obligations becomes applicable in the EEA.

Similarly, adaptation (o) adjusts the text of Article 151(1) to reflect that the transitional measures contained under Chapter 1 of Title XI CRD IV only apply until a Decision of the EEA Joint Committee incorporating the delegated act adopted pursuant to Article 460 Regulation (EU) No 575/2013 becomes applicable.

Competence to authorise systemic risk buffers (adaptation (n) relative to Directive 2013/36/EU)

Under Article 133(14) CRD IV, EU NCAs must in certain cases await the opinion of the Commission before adopting measures setting or resetting a systemic risk buffer. When the opinion is negative, those NCAs shall either comply with the opinion, or explain their reasons for not doing so.

Under Article 133(15) CRD IV, the Commission, where it is satisfied that the systemic risk buffer does not entail disproportionate adverse effects on the financial system of other Member States or the Union and drawing on an opinion from the ESRB, shall adopt an implementing act authorising the NCA to adopt the systemic risk buffer. EBA may also submit an opinion to the Commission.

Under the system set-up by points 31f and 31g of Annex IX EEA, the ESRB and EBA may issue recommendations concerning situations taking place in the EFTA States, and EBA may also perform non-binding mediation pursuant to Article 19 EBA Regulation in disagreements involving an EFTA State. The competence to adopt decisions binding in the EFTA pillar under Article 19 EBA is vested in the EFTA Surveillance Authority.

However, the functions of the Commission in the context of procedures for verification or approval of the conformity of actions undertaken by EFTA States with the rules contained in the EEA Agreement is to be carried out by an entity in the EFTA pillar, in accordance with paragraph 4(d) of Protocol 1 to the EEA Agreement. In light of the importance and complexity of decisions regarding systemic risk buffers, this competence shall, as regards the EFTA States, be vested in the Standing Committee of the EFTA States.

Adaptation (n) therefore establishes the competence of the Standing Committee of the EFTA States as regards the issuance of opinions or recommendations for the sake of clarity (as these powers are not clearly allocated in the text of paragraph 4(d) of Protocol 1 EEA), while also ensuring that the ESRB and EBA should transmit their assessments under paragraph 14 and 15 of Article 133 CRD IV, where relevant, to that Standing Committee.

Definition of ‘residential property’ in Norway (adaptation (e) relative to Regulation (EU) 575/2013)

Cooperative housing is a common living arrangement in Norway. Shareholders acquire a share in a cooperative that owns or controls the building(s) and property in which they live. Each shareholder is entitled to occupy a specific unit.

A creditor’s protection relating to a cooperative housing apartment in Norway is generally interpreted as equivalent to a direct holding. However, for the sake of legal certainty, it should be clarified that the right to inhabit an apartment in housing cooperatives in Norway is included within the definition of ‘residential property’ in CRR. Therefore, adaptation (e) adjusts the text of Article 4(1)(75) which concerns Sweden, to include the Norwegian situation.

Competence of the Commission to accept limits to large exposures, and of the Council to authorise stricter national measures in case of macroprudential or systemic risk (adaptations (i) and (j) relative to Regulation (EU) 575/2013)

Under Article 395 CRR, EU NCAs must in certain cases obtain approval of the Commission before adopting structural measures requiring credit institutions authorised in that Member State to reduce their exposures to different legal entities. The Commission, drawing on an opinion from EBA, may only reject a national measure where it entails disproportionate adverse effects on the financial system of other Member States or the Union.

Under Article 458 CRR, Member States must in certain cases be authorised by the Council before adopting certain stricter national measures aimed to counteract macroprudential and systemic risk of consequence to the national financial system and real economy. The Commission is entrusted to propose a draft measure to the Council to authorise or reject the national measure. The Council shall only reject the national measures in a limited number of circumstances, taking into account opinions from the ESRB and EBA. Other Member States may recognise national measures adopted under Article 458 CRR and apply them to branches located within the authorised Member State.

Under the system set-up by points 31f and 31g of Annex IX EEA, the ESRB and EBA may issue opinions concerning situations taking place in the EFTA States.

However, the functions of the Commission in the context of procedures for verification or approval of the conformity of actions undertaken by EFTA States with the rules contained in the EEA Agreement is to be carried out by an entity in the EFTA pillar, in accordance with paragraph 4(d) of Protocol 1 to the EEA Agreement. In light of the importance and complexity of decisions regarding structural measures limiting large exposures under Article 395, this competence shall, as regards the EFTA States, be vested in the Standing Committee of the EFTA States.

Similarly, the functions conferred to the Council under Article 458 CRR shall be exercised, as regards the EFTA States, by the Standing Committee of the EFTA States. However, this decision should be based on a proposal from the EFTA Surveillance Authority, mirroring the framework applicable in the EU.

For the sake of clarity, adaptations (i)(ii) and (j)(ii) therefore establish the competence of the Standing Committee of the EFTA States to take such decisions (as these powers are not clearly allocated, within the EFTA pillar, by paragraph 4(d) of Protocol 1 EEA), while also ensuring that EBA and, where relevant, the ESRB, should transmit their assessments under Articles 395(8) or 458(4) CRR to the Standing Committee of the EFTA States (adaptations (i)(iii) and (j)(iii)).

Application of the Basel I floor transitional provisions (recital 6 of the preamble relative to Regulation (EU) 575/2013)

CRR Article 500 implements the so-called “Basel I floor”, which was established in part 2-1-C (paragraphs 45 to 47) of the Basel II Accord. The article expired at the end of 2017. Article 152 of Directive 2006/48/EC, which have been continued in Article 500 of Regulation (EU) 575/2013, have limited the potential for unwarranted reductions in own funds from the use of internal models. Even though Article 500 has expired, the competent authority must still address the model risk.

Recital 6 of the preamble recalls that there are several provisions in the framework which allow competent authorities to address the same issue, including the possibility for measures to counterbalance unwarranted reductions in the riskweighted exposure amounts and to impose prudent margins of conservatism in the calibration of internal models.

2019/0018 (NLE)

Proposal for a

COUNCIL DECISION

on the position to be adopted, on behalf of the European Union, within the EEA Joint Committee, concerning an amendment to Annex IX (Financial Services) to the EEA Agreement

[Capital Requirements Regulation (EU) No 575/2013 (CRR) and Directive 2013/36/EU (CRD IV)]

(Text with EEA relevance)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 in conjunction with Article 218(9) thereof,

Having regard to Council Regulation (EC) No 2894/94 of 28 November 1994 concerning arrangements for implementing the Agreement on the European Economic Area 2 , and in particular Article 1(3) thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1)The Agreement on the European Economic Area 3 ('the EEA Agreement') entered into force on 1 January 1994.

(2)Pursuant to Article 98 of the EEA Agreement, the EEA Joint Committee may decide to amend, inter alia, amend Annex IX to the EEA Agreement, which contains provisions on financial services.

(3)Regulation (EU) No 575/2013 of the European Parliament and of the Council 4 and Directive 2013/36/EU of the European Parliament and of the Council 5 are to be incorporated into the EEA Agreement.

(4)Annex IX to the EEA Agreement should therefore be amended accordingly.

(5)The position of the Union within the EEA Joint Committee should therefore be based on the attached draft decision,

HAS ADOPTED THIS DECISION:

Article 1

The position to be adopted, on behalf of the Union, within the EEA Joint Committee on the proposed amendment to Annex IX (Financial Services) to the EEA Agreement, shall be based on the draft decision of the EEA Joint Committee attached to this Decision.

Article 2

This Decision shall enter into force on the date of its adoption.

Done at Brussels,

(1)    Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 , as corrected by OJ L 208, 2.8.2013, p. 68 and OJ L 321, 30.11.2013, p. 6.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/EC , as corrected by OJ L 208, 2.8.2013, p. 73..

(2)    OJ L 305, 30.11.1994, p. 6.

(3)    OJ L 1, 3.1.1994, p. 3.

(4)    Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1), as corrected by OJ L 208, 2.8.2013, p. 68, OJ L 321, 30.11.2013, p. 6 and OJ L 20, 25.1.2017, p. 2.

(5)    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/EC (OJ L 176, 27.6.2013, p. 338), as corrected by OJ L 208, 2.8.2013, p. 73 and OJ L 20, 25.1.2017, p. 1.

EUROPEAN COMMISSION

Brussels, 4.2.2019

COM(2019) 39 final

ANNEX

to the

Proposal for a Council Decision

on the position to be adopted, on behalf of the European Union, within the EEA Joint Committee, concerning an amendment to Annex IX (Financial Services) to the EEA Agreement

[Capital Requirements Regulation (EU) No 575/2013 (CRR) and Directive 2013/36/EU (CRDIV)]

ANNEX

DECISION OF THE EEA JOINT COMMITTEE
No

of

amending Annex IX (Financial services) to the EEA Agreement

THE EEA JOINT COMMITTEE,

Having regard to the Agreement on the European Economic Area (“the EEA Agreement”), and in particular Article 98 thereof,

Whereas:

(1)Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 1 , as corrected by OJ L 208, 2.8.2013, p. 68, OJ L 321, 30.11.2013, p. 6 and OJ L 20, 25.1.2017, p. 2, is to be incorporated into the EEA Agreement.

(2)Regulation (EU) 2017/2395 of the European Parliament and of the Council of 12 December 2017 amending Regulation (EU) No 575/2013 as regards transitional arrangements for mitigating the impact of the introduction of IFRS 9 on own funds and for the large exposures treatment of certain public sector exposures denominated in the domestic currency of any Member State 2 , is to be incorporated into the EEA Agreement.

(3)Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC 3 , as corrected by OJ L 208, 2.8.2013, p. 73 and OJ L 20, 25.1.2017, p. 1, is to be incorporated into the EEA Agreement.

(4)Regulation (EU) No 575/2013 and Directive 2013/36/EU refer to ‘EU parent institutions’, ‘EU parent financial holding companies’ and ‘EU parent mixed financial holding companies’, which in the context of the EEA Agreement are understood as referring to entities fulfilling the relevant definitions set out in the Regulation that are established in an EEA Contracting Party and which are not subsidiaries of any other institution set up in any other EEA Contracting Party.

(5)Directive 2013/36/EU repeals Directives 2006/48/EC 4 and 2006/49/EC 5 of the European Parliament and of the Council, which are incorporated into the EEA Agreement and which are consequently to be repealed under the EEA Agreement.

(6)The potential for unwarranted reductions in own funds requirements from the use of internal models has, inter alia, been limited by national legislation implementing Article 152 of Directive 2006/48/EC, which, by the end of 2017 was replaced by Article 500 of Regulation (EU) 575/2013. There are, however, still several other provisions in Regulation (EU) 575/2013 and Directive 2013/36/EU which allow competent authorities to address the same issue, including the possibility for measures to counterbalance unwarranted reductions in the riskweighted exposure amounts, see for instance Article 104 of Directive 2013/36/EU, and to impose prudent margins of conservatism in the calibration of internal models, see for instance Article 144 of Regulation (EU) 575/2013 and Article 101 of Directive 2013/36/EU.

(7)Annex IX to the EEA Agreement should therefore be amended accordingly,

HAS ADOPTED THIS DECISION:

Article 1

Annex IX to the EEA Agreement shall be amended as follows:

1.The text of point 14 (Directive 2006/48/EC of the European Parliament and of the Council) is replaced by the following:

‘32013 L 0036: 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/EC (OJ L 176, 27.6.2013, p. 338), as corrected by OJ L 208, 2.8.2013, p. 73 and OJ L 20, 25.1.2017, p. 1.

The provisions of the Directive shall, for the purposes of this Agreement, be read with the following adaptations:

(a)Notwithstanding the provisions of Protocol 1 to this Agreement, and unless otherwise provided for in this Agreement, the terms “Member State(s)” and “competent authorities” shall be understood to include, in addition to their meaning in the Directive, the EFTA States and their competent authorities, respectively.

(b)References to “ESCB central banks” or to “central banks” shall be understood to include, in addition to their meaning in the Directive, the national central banks of the EFTA States.

(c)References to other acts in the Directive shall apply to the extent and in the form that those acts are incorporated into this Agreement.

(d)References to the powers of EBA under Article 19 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council in the Directive shall be understood as referring, in the cases provided for in and in accordance with point 31g of this Annex, to the powers of the EFTA Surveillance Authority as regards the EFTA States.

(e)In Article 2(5), the following point shall be inserted:

“(11a)In Iceland, the ‘Byggðastofnun’, the ‘Íbúðalánasjóður’ and the ‘Lánasjóður sveitarfélaga ohf.’;”

(f)In Article 6, the following subparagraph is added to point (a):

“The competent authorities of the EFTA States cooperate with trust and full mutual respect, in particular when ensuring the flow of appropriate and reliable information between them and the parties to the ESFS and with the EFTA Surveillance Authority. Competent authorities of the EU Member States shall cooperate with the competent authorities of the EFTA States in the same manner.”

(g)Article 47(3) shall not apply as regards the EFTA States. An EFTA State may, through agreements concluded with one or more third countries, agree to apply provisions which accord to branches of a credit institution having its head office in a third country identical treatment on the territory of that EFTA State.

The Contracting Parties shall inform and consult each other prior to concluding agreements with third countries on the basis of Article 47(3) or the first paragraph of this point, as the case may be.

Whenever the European Union negotiates with one or more third countries towards the conclusion of an agreement on the basis of Article 47(3), and such an agreement pertains to obtain national treatment or effective market access for branches of credit institutions having their head office in a Member State of the European Union in the third countries concerned, the European Union shall endeavour to obtain equal treatment for branches of credit institutions having their head office in an EFTA State.

(h)Article 48 shall not apply. Where an EFTA State concludes an agreement with one or more third countries regarding the means of exercising supervision on a consolidated basis over institutions the parent undertakings of which have their head offices in a third country and institutions situated in third countries the parent undertakings of which, whether institutions, financial holding companies or mixed financial holding companies, have their head offices in that EFTA State, that agreement shall seek to ensure that EBA is able to obtain from the competent authority of that EFTA State the information received from national authorities of third countries in accordance with Article 35 of Regulation (EU) No 1093/2010.

(i)In Article 53(2), the words “or, as the case may be, the EFTA Surveillance Authority” shall be inserted before the words “in accordance with this Directive”.

(j)In Article 58(1)(d), the words “or, as the case may be, the EFTA Surveillance Authority” shall be inserted after the word “ESMA”.

(k)In Article 89(5), the words “future Union legislative acts for disclosure obligations” shall be replaced by the words “future legislative acts applicable pursuant to the EEA Agreement provide for disclosure obligations that”.

(l)In Article 114(1), as regards Liechtenstein, the words “an ESCB central bank” shall be replaced by the words “the competent authority”.

(m)In the second subparagraph of Article 117(1), the words “or the EFTA Surveillance Authority, as the case may be,” shall be inserted after the word “EBA”.

(n)In Article 133(14) and (15), the words “or, as regards the EFTA States, the Standing Committee of the EFTA States” shall be inserted after the words “the Commission”.

(o)In Article 151(1), as regards the EFTA States, the words “a decision of the EEA Joint Committee containing” shall be inserted after the words “in accordance with”.’

2.The following is inserted after point 14 (Directive 2013/36/EU of the European Parliament and of the Council):

‘14a.32013 R 0575: Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1), as corrected by OJ L 208, 2.8.2013, p. 68, OJ L 321, 30.11.2013, p. 6 and OJ L 20, 25.1.2017, p. 2, as amended by:

-32017 R 2395: Regulation (EU) 2017/2395 of the European Parliament and of the Council of 12 December 2017 (OJ L 345, 27.12.2017, p. 27).

The provisions of the Regulation shall, for the purposes of this Agreement, be read with the following adaptations:

(a)Notwithstanding the provisions of Protocol 1 to this Agreement, and unless otherwise provided for in this Agreement, the terms “Member State(s)” and “competent authorities” shall be understood to include, in addition to their meaning in the Regulation, the EFTA States and their competent authorities, respectively.

(b)References to “ESCB central banks” or to “central banks” shall be understood to include, in addition to their meaning in the Regulation, the national central banks of the EFTA States

(c)References to other acts in the Regulation shall apply to the extent and in the form that those acts are incorporated into this Agreement.

(d)References to the powers of EBA under Article 19 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council in the Regulation shall be understood as referring, in the cases provided for in and in accordance with point 31g of this Annex, to the powers of the EFTA Surveillance Authority as regards the EFTA States.

(e)In point (75) of Article 4(1), the words “Norway and” shall be inserted before the word “Sweden”.

(f)In Article 31(1)(b), as regards the EFTA States, the words “the Commission” shall read “the EFTA Surveillance Authority”.

(g)In paragraphs 1 and 2 of Article 80, the words “or, in case an EFTA State is concerned, the EFTA Surveillance Authority” shall be inserted after the words “the Commission”.

(h)In Articles 329(4), 344(2), 352(6), 358(4) and 416(5), as regards the EFTA States, the words “the decisions of the EEA Joint Committee containing” shall be inserted after the words “entry into force of”.

(i)In Article 395:

(i)in paragraphs 7 and 8, as regards the EFTA States, the words “the Council,” shall not apply;

(ii)as regards the EFTA States, the first subparagraph of paragraph 8 shall read as follows:

“The power to adopt a decision to accept or reject the proposed national measure referred to in paragraph 7 is conferred on the Standing Committee of the EFTA States.”

(iii)the first sentence of the second subparagraph of paragraph 8 shall be replaced by the following:

“Within one month of receiving the notification referred to in paragraph 7, EBA shall provide its opinion on the points mentioned in that paragraph to the Council, the Commission and the Member State concerned or, where its opinion concerns national measures proposed by an EFTA State, to the Standing Committee of the EFTA States and the EFTA State concerned.”

(j)In Article 458:

(i)as regards the EFTA States, the first subparagraph of paragraph 2 shall read as follows:

“Where the authority determined in accordance with paragraph 1 identifies changes in the intensity of macroprudential or systemic risk in the financial system with the potential to have serious negative consequences to the financial system and the real economy in a specific EFTA State and which that authority considers would better be addressed by means of stricter national measures, it shall notify the Standing Committee of the EFTA States, the EFTA Surveillance Authority, the ESRB and EBA of that fact and submit relevant quantitative or qualitative evidence of all of the following:”

(ii)as regards the EFTA States, the first subparagraph of paragraph 4 shall read as follows:

“The power to adopt an implementing act to reject the draft national measures referred to in point (d) of paragraph 2 is conferred on the Standing Committee of the EFTA States, acting on a proposal from the EFTA Surveillance Authority.”;

(iii)in the second subparagraph of paragraph 4, the following shall be added:

“Where their opinions concern draft national measures of an EFTA State, the ESRB and EBA shall provide their opinions to the Standing Committee of the EFTA States, the EFTA Surveillance Authority and the EFTA State concerned.”;

(iv)as regards the EFTA States, the third to eighth subparagraphs of paragraph 4 shall read as follows:

“Taking utmost account of the opinions referred to in the second subparagraph and if there is robust, strong and detailed evidence that the measure will have a negative impact on the internal market that outweighs the financial stability benefits resulting in a reduction of the macroprudential or systemic risk identified, the EFTA Surveillance Authority may, within one month, propose to the Standing Committee of the EFTA States to reject the draft national measures.

In the absence of an EFTA Surveillance Authority proposal within that period of one month, the EFTA State concerned may immediately adopt the draft national measures for a period of up to two years or until the macroprudential or systemic risk ceases to exist if that occurs sooner.

The Standing Committee of the EFTA States shall decide on the proposal by the EFTA Surveillance Authority within one month after receipt of the proposal and state its reasons for rejecting or not rejecting the draft national measures.

The Standing Committee of the EFTA States shall only reject the draft national measures if it considers that one or more of the following conditions are not complied with:

(a)the changes in the intensity of macroprudential or systemic risk are of such nature as to pose risk to financial stability at national level;

(b)Articles 124 and 164 of this Regulation and Articles 101, 103, 104, 105, 133, and 136 of Directive 2013/36/EU cannot adequately address the macroprudential or systemic risk identified, taking into account the relative effectiveness of those measures;

(c)the draft national measures are more suitable to address the identified macroprudential or systemic risk and do not entail disproportionate adverse effects on the whole or parts of the financial system in other Contracting Parties or in the EEA as a whole, thus forming or creating an obstacle to the functioning of the internal market;

(d)the issue concerns only one EFTA State; and

(e)the risks have not already been addressed by other measures in this Regulation or in Directive 2013/36/EU.

The assessment of the Standing Committee of the EFTA States shall take into account the opinion of the ESRB and EBA and shall be based on the evidence presented in accordance with paragraph 2 by the authority determined in accordance with paragraph 1.

In the absence of a decision of the Standing Committee of the EFTA States to reject the draft national measures within one month after receipt of the proposal by the EFTA Surveillance Authority, the EFTA State may adopt the measures and apply them for a period of up to two years or until the macroprudential or systemic risk ceases to exist if that occurs sooner.”

(v)as regards the EFTA States, paragraph 6 shall read as follows:

“Where an EFTA State recognises the measures set in accordance with this Article, it shall notify the Standing Committee of the EFTA States, the EFTA Surveillance Authority, EBA, the ESRB and the Contracting Party to the EEA Agreement authorised to apply the measures.”

(k)In Article 467(2), as regards the EFTA States, the words “the Commission has adopted a regulation” shall read “the entry into force of a decision of the EEA Joint Committee containing a regulation adopted”.

(l)In Article 497, as regards the EFTA States:

(i)in paragraphs 1 and 2, the words “the decisions of the EEA Joint Committee containing” shall be inserted after the words “entry into force of the latest of”;

(ii)in paragraph 1, the words “have been adopted” shall read “apply in the EEA”.

3.In point 31bc (Regulation (EU) No 648/2012 of the European Parliament and of the Council):

(a)the following indent is added:

‘-32013 R 0575: Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 (OJ L 176, 27.6.2013, p. 1), as corrected by OJ L 208, 2.8.2013, p. 68, OJ L 321, 30.11.2013, p. 6 and OJ L 20, 25.1.2017, p. 2.’

(b)in adaptation (zh), the following is added:

‘(v)in paragraph 5a, as regards the EFTA States, the words “the decisions of the EEA Joint Committee containing” shall be inserted after the words “entry into force of the latest of”.’

4.The following indent is added in point 31ea (Directive 2002/87/EC of the European Parliament and of the Council):

‘-32013 L 0036: Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 (OJ L 176, 27.6.2013, p. 338), as corrected by OJ L 208, 2.8.2013, p. 73 and OJ L 20, 25.1.2017, p. 1.’

5.The text of point 31 (Directive 2006/49/EC of the European Parliament and of the Council) is deleted.

Article 2

The texts of Regulations (EU) No 575/2013, as corrected by OJ L 208, 2.8.2013, p. 68, OJ L 321, 30.11.2013, p. 6 and OJ L 20, 25.1.2017, p. 2, and (EU) 2017/2395 and Directive 2013/36/EU, as corrected by OJ L 208, 2.8.2013, p. 73 and OJ L 20, 25.1.2017, p. 1, in the Icelandic and Norwegian languages, to be published in the EEA Supplement to the Official Journal of the European Union, shall be authentic.

Article 3

This Decision shall enter into force on […], provided that all the notifications under Article 103(1) of the EEA Agreement have been made 6*. 

Article 4

This Decision shall be published in the EEA Section of, and in the EEA Supplement to, the Official Journal of the European Union.

Done at Brussels, .

Joint Declaration by the Contracting Parties

to Decision No […] incorporating Directive 2013/36/EU into the EEA Agreement

[for adoption with the Decision and for publication in the OJ]

The Contracting Parties share the understanding that the incorporation into the EEA Agreement of 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/EC is without prejudice to national rules of general application concerning the screening for security or public order of foreign direct investment.

(1)    OJ L 176, 27.6.2013, p. 1.

(2)    OJ L 345, 27.12.2017, p. 27.

(3)    OJ L 176, 27.6.2013, p. 338.

(4)    OJ L 177, 30.6.2006, p. 1.

(5)    OJ L 177, 30.6.2006, p. 201.

(6) *    [No constitutional requirements indicated.] [Constitutional requirements indicated.]