(1)

On 4 April 2017 the European Central Bank (ECB) adopted Guideline (EU) 2017/697 of the European Central Bank (ECB/2017/9) (2) (hereinafter the ‘O&D Guideline’), in which it established general policies for the exercise of certain options and discretions available in Union law by national competent authorities in relation to less significant institutions. Legislation introduced since the adoption of the O&D Guideline has amended or deleted some of the options and discretions provided in Union law that were included in the O&D Guideline. Therefore, certain consequential amendments to the O&D Guideline are necessary.

(2)

As regards the outflow rates to be applied to stable retail deposits, certain factors have impeded the practical application of the discretion addressed in Article 13 of Regulation (EU) 2016/445 of the European Central Bank (ECB/2016/4) (3) and Article 7 of the O&D Guideline whereby competent authorities may authorise institutions to apply a 3 % outflow rate to stable retail deposits covered by a deposit guarantee scheme (DGS), subject to the prior approval of the European Commission in accordance with Article 24(4) and (5) of Commission Delegated Regulation (EU) 2015/61 (4). Further evidence and analysis are necessary in order to demonstrate that the run-off rates for stable retail deposits covered by a DGS as referred to in Article 24(5) of Delegated Regulation (EU) 2015/61 would be below 3 % during any stress period experienced consistent with the scenarios referred to in Article 5 of Delegated Regulation (EU) 2015/61. In the absence of such evidence and analysis, the general policy authorising the application of a 3 % outflow rate should be removed from Regulation (EU) 2016/445 and thus from the O&D Guideline.

(3)

The option granted to competent authorities under Article 12(1)(c)(i) of Delegated Regulation (EU) 2015/61 on the identification of major stock indices for the purposes of identifying the shares that may qualify as Level 2B assets in the liquidity coverage ratio should be exercised consistently for significant and less significant institutions. The discretion intends to make sure that credit institutions only include in their liquidity buffer those shares that are included in indices for which market liquidity of the underlying shares can be assumed. Since neither the significance nor the size of a credit institution directly impacts the market liquidity of the underlying shares in the relevant indices, it would not be appropriate to apply a differentiated treatment for significant and less significant institutions.

(4)

The discretion granted to competent authorities under Article 12(3) of Delegated Regulation (EU) 2015/61 to derogate from points (ii) and (iii) of paragraph 1(b) of the same Article in the case of credit institutions which in accordance with their statutes of incorporation are unable for reasons of religious observance to hold interest bearing assets should be exercised consistently for significant and less significant institutions, so as to harmonise the criteria to identify Level 2B assets with regard to corporate debt securities.

(5)

The discretion granted to competent authorities under Article 428p(10) of Regulation (EU) No 575/2013 of the European Parliament and of the Council (5) in connection with the net stable funding ratio (NSFR) requirement, according to which competent authorities may determine the required stable funding factors to be applied to off-balance-sheet exposures that are not referred to elsewhere in Chapter 4 of Title IV of Part Six of that Regulation, should be exercised in a consistent manner for both significant and less significant institutions. The policy in relation to significant institutions links the required stable funding factors in the NSFR to the outflow rates applied in the liquidity coverage ratio (LCR), while leaving flexibility for the ECB to determine different required stable funding factors. This approach strikes a balance, for the sake of simplicity and prudence, between aligning the factors to be applied in the calculation of the NSFR with the factors determined for the purposes of the LCR, while still allowing for a different treatment in cases where this linking would not properly reflect the associated funding risk. It is not necessary or appropriate to deviate from that approach in relation to less significant institutions, as the methodology for applying required stable funding factors to these off-balance-sheet exposures should not, in principle, vary across credit institutions. For the same reason, the discretion granted to competent authorities pursuant to Article 428aq(10) of Regulation (EU) No 575/2013 in connection with the NSFR calculated according to the simplified approach should be exercised in a similar manner.

(6)

The discretion granted to competent authorities under Article 428q(2) of Regulation (EU) No 575/2013 whereby they determine the term of encumbrance in relation to segregated assets in accordance with the underlying exposure of those assets should be exercised in the same way for significant and less significant institutions. Assets that have been segregated and which are not freely disposable should be considered as encumbered for a period corresponding to the term of the liabilities to the institutions’ customers to whom that segregation requirement relates, and therefore be properly funded during that period. This rationale applies regardless of the size of the institution concerned. The discretion granted to competent authorities pursuant to Article 428ar(2) of Regulation (EU) No 575/2013 in connection with the NSFR calculated according to the simplified approach should be exercised in a similar manner for the same reasons outlined above and also because there is no prudential rationale which would justify a difference of approach with respect to the NSFR calculated according to the simplified approach. The provisions implementing the options and discretions in relation to the exemption of intragroup exposures from the application of the large exposure limits set out in Article 400(2) of Regulation (EU) No 575/2013 in this Guideline should be amended and exercised consistently for significant and less significant institutions. Since the adoption of Regulation (EU) 2016/445 (ECB/2016/4) the level of the ECB’s prudential concern about credit institutions’ booking practices involving entities established in third countries has increased. The scope of this option should therefore be limited to intragroup exposures to entities established within the Union, with the effect that intragroup exposures to entities in third countries may be exempted from the relevant large exposures limits only after a prior case-by-case supervisory assessment.

(7)

In addition, the O&D Guideline should be amended to allow that, in addition to the full exemption currently available, credit institutions that comply with the relevant criteria by observing a quantitative limit on the value of the relevant exposures are able to make use of a partial exemption. Such extended application of the discretion should contribute to the maintenance of a level playing field for credit institutions in the participating Member States, as well as limit concentration risks arising from specific exposures and ensure that the same minimum standards are applied across the Single Supervisory Mechanism.

(8)

Therefore, Guideline (EU) 2017/697 (ECB/2017/9) should be amended accordingly,

(1)

Article 5 is deleted;

(2)

Article 6 is replaced by the following:

(*1)  Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council (OJ L 35, 11.2.2003, p. 1).’;"

(3)

Article 7 is deleted;

(4)

in Section IV, after the heading ‘Liquidity’, the following headings and Articles 7a to 7f are inserted:

(*2)  Commission Delegated Regulation (EU) 2015/61 of 10 October 2014 to supplement Regulation (EU) No 575/2013 of the European Parliament and the Council with regard to liquidity coverage requirement for Credit Institutions (OJ L 11, 17.1.2015, p. 1)."

(*3)  Commission Implementing Regulation (EU) 2016/1646 of 13 September 2016 laying down implementing technical standards with regard to main indices and recognised exchanges in accordance with Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms (OJ L 245, 14.9.2016, p. 5)."

(*4)  Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1).’;"

(5)

Article 8 is deleted;

(6)

the Annex is amended in accordance with Annex I to this Guideline;

(7)

Annex II is added in accordance with Annex II to this Guideline.