Activities of Othmar KARAS related to 2021/0341(COD)
Shadow reports (1)
REPORT on the proposal for a directive of the European Parliament and of the Council amending Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches, and environmental, social and governance risks, and amending Directive 2014/59/EU
Amendments (32)
Amendment 91 #
Proposal for a directive
Recital 1 a (new)
Recital 1 a (new)
Amendment 92 #
Proposal for a directive
Recital 3
Recital 3
(3) The provision of banking services in the Union is conditional upon the credit institution’s having previous authorisation and a physical presence through a legal person or a branch in its territory. Only in that way credit institutions may be subject to effective prudential regulation and supervision that are necessary to minimise the risk of failure and, when it occurs, to manage that failure in order to prevent it from spreading in a disorderly manner and leading to the collapse of the financial system (contagion risk by e.g. a bank run or a bank failure triggered by imprudent lending). The provision of banking services in the Union without such physical presence would increase the presence and prevalence in the financial markets where credit institutions are closely involved of risk segments not subject to Union’s prudential regulation and supervision, that may eventually threaten the financial stability of the Union or of its individual Member States. The financial crisis of 2008-2009 is the latest historical precedent, which underlines how small market segments may become the source of significant threats to the financial stability of the Union and its Member States if left outside the scope of prudential regulation and supervision. Hence, it is necessary to lay down an explicit requirement in Union law that undertakings established in a third country and seeking to provide banking services in the Union should at least establish a branch in a Member State and that such branch be authorised in accordance with Union legislation, unless the undertaking wishes to provide banking services in the Union through a subsidiary. However, that requirement to establish a branch should not apply to cases of reverse solicitation of services, as in this case it is the customer that approaches the undertaking in the third country to solicit the provision of the service. Additionally, this requirement should also not apply to cases of interbank and interdealer transactions as well as for MiFID services and the accommodating ancillary services for the sole purpose of providing MiFID services.
Amendment 110 #
Proposal for a directive
Recital 33
Recital 33
(33) The long-term nature and the profoundness of the transition towards a sustainable, climate-neutral and circular economy will entail significant changes in the business models of institutions. The adequate adjustment of the financial sector, and of credit institutions in particular, is necessary to achieve the objective of net- zero greenhouse gas emissions in the Union’s economy by 2050, while maintaining the inherent risks under control. Competent authorities should, therefore, be enabled to assess this process and intervene in cases where institutions’ manage climate risks, as well as risks stemming from environmental degradation and biodiversity loss, in a way that endangers the stability of the individual institutions, or the financial stability overall. Competent authorities should also monitor and be empowered to act, when there is a misalignment of institutions’ business models and strategies with the relevant Union policy objectives and broader transition trends towards a sustainable economy, resulting in risks to their business models and strategies, or to the financial stability. Climate and, more broadly, environmental risks, should be considered together with social risks and governance risks under one category of risks to enable a comprehensive and coordinated integration of these factors, as they are often intertwined. ESG risks are closely linked with the concept of sustainability, as ESG factors represent the main three pillars of sustainability.
Amendment 118 #
Proposal for a directive
Recital 38
Recital 38
(38) The purpose of assessing the suitability of members of management bodies is to ensure that those members are qualified for their role and are of good repute. Having the primary responsibility for assessing the suitability of each member of the management body, institutions should carry out the suitability assessment, followed by a verification by the competent authorities that may perform it before or after the member of the management body takes up the position. Specifically small and non-complex institutions should be given more flexibility in line with the principle of proportionality. However, due to the risks posed by large institutions resulting in particular from potential contagion effects, unsuitable members of management body should be prevented from influencing the running of such large institutions with potential serious detrimental effects. It is therefore appropriate that, safe in exceptional circumstances, the competent authorities assess the suitability of members of the management body of large institutions before those members exercise their duties. In any case, the assessment of members of management bodies should be without prejudice to provisions of the Member States in regards to the appointment by representation of employees or by regional or local elected bodies or where the management body has no competence in the process of appointing members.
Amendment 122 #
Proposal for a directive
Recital 39
Recital 39
(39) Not only members of the management body, but also key function holders have a significant influence in ensuring the sound and prudent management of an institution on a day-to- day basis. Because Directive 2013/36/EU does not currently define key function holders, Member States have diverging practices across the Union, which impedes an effective and efficient supervision and prevents a level playing field. It is therefore necessary to define key function holders. In addition, the responsibility for assessing the suitability of key function holders should primarily belong to institutions. Specifically small and non- complex institutions should be given more flexibility in line with the principle of proportionality. However, due to the risks posed by the activities of large institutions, the suitability of the heads of internal control functions and the chief financial officer in such large institutions should be assessed by competent authorities before those persons take up their positions. In any case, the assessment of key function holders should be without prejudice to provisions of the Member States in regards to the appointment by representation of employees or by regional or local elected bodies or where the management body has no competence in the process of appointing key function holders.
Amendment 143 #
Proposal for a directive
Article 1 – paragraph 1 – point 1 – point c
Article 1 – paragraph 1 – point 1 – point c
(9a) ‘key function holders’ means persons who have significant influence over the direction of the institution but are not members of the management body, including the heads of internal control functions and the chief financial officer, where those heads or that officer are not members of the management body;
Amendment 152 #
Proposal for a directive
Article 1 – paragraph 1 – point 2
Article 1 – paragraph 1 – point 2
Directive 2013/36/EU
Article 4 – paragraph 4 – subparagraph 3 – point b – point i
Article 4 – paragraph 4 – subparagraph 3 – point b – point i
(i) institutions they have directly supervised, including their direct or indirect parent undertakings, subsidiaries or affiliates, over at least the two preceding years from the date when taking up any new role for members of the governance bodies and the preceding six months for staff;
Amendment 155 #
Proposal for a directive
Article 1 – paragraph 1 – point 2
Article 1 – paragraph 1 – point 2
Directive 2013/36/EU
Article 4 – paragraph 4 – subparagraph 3 – point b – point ii
Article 4 – paragraph 4 – subparagraph 3 – point b – point ii
(ii) firms that provide services to any of the undertakings referred to in point (i) that were directly supervised over at least the two preceding years from the date when taking up any new role for members of the governance bodies and the preceding six months for staff, unless they are strictly precluded from taking part in any provision of those services while the prohibition referred to herein remains in force.
Amendment 176 #
Proposal for a directive
Article 1 – paragraph 1 – point 6
Article 1 – paragraph 1 – point 6
Directive 2013/36/EU
Article 21c – paragraph 1
Article 21c – paragraph 1
1. Member States shall require undertakings established in a third country as referred to in Article 47(1) and (2) to establish a branch in their territory and apply for authorisation in accordance with Title VI to commence or continue conducting the activities referred to in paragraph (1)1 of that Article in the relevant Member State.
Amendment 177 #
Proposal for a directive
Article 1 – paragraph 1 – point 6
Article 1 – paragraph 1 – point 6
Directive 2013/36/EU
Article 21c – paragraph 2
Article 21c – paragraph 2
2. WhereThe requirement laid down in paragraph 1 of this Article shall not apply where the undertaking established in the third country provides the relevant service or activity to a customer or counterparty established or situated in the Union that is: (a) a retail client, an eligible counterparty or a professional client within the meaning of Sections I and II of Annex II to Directive 2014/65/EU established or situated in the Union, provided that such client or counterparty approaches an undertaking established in a third country at its own exclusive initiative for the provision of any service or activity referred to in Article 47(1), the requirement laid down in paragraph 1 of this Article shall not apply to the provision to that person of the relevant service or activity, including a relationship specifically relat; (b) a credit institution as defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013; (c) an undertaking of the same group as that of the undertaking established toin the provision of that service or activitthird country. Without prejudice to pointragroup relationships (c), where a third country undertaking, including solicits a (potential) client or counterparty referred to in point (a) directly or indirectly through an entity acting on its own behalf or having close links with such third- country undertaking or through any other person acting on behalf of such undertaking, solicits clients or potential clients in the Union, it shall not be deemed to beas a service provided at the own exclusive initiative of the client. or counterparty.
Amendment 181 #
Proposal for a directive
Article 1 – paragraph 1 – point 6
Article 1 – paragraph 1 – point 6
Directive 2013/36/EU
Article 21c – paragraph 3
Article 21c – paragraph 3
3. An initiative by a client or counterparty as referred to in paragraph 2 shall not entitle the third-country undertaking to market other categories of products, activities or services than those that the client or counterparty had solicited, other than through a third country branch established in a Member State and with the exception of any services, activities or products necessary for the provision of the service, product or activity solicited by the client or counterparty.;
Amendment 243 #
Proposal for a directive
Article 1 – paragraph 1 – point 8
Article 1 – paragraph 1 – point 8
Directive 2013/36/EU
Article 47 – paragraph 1 – point a
Article 47 – paragraph 1 – point a
(a) any of the activities listed inreferred to in points 2 to 6 and 13 to 15 of Annex I to this Directive by an undertaking established in a third country that would qualify as a credit institution or that would fulfil the criteria laid down in points (i) to (iii) of Article 4(1), point b, of Regulation (EU) 575/2013, if it were established in the Union;
Amendment 250 #
Proposal for a directive
Article 1 – paragraph 1 – point 8
Article 1 – paragraph 1 – point 8
(b) the activitiesy referred to in Article 4(1), point (b), of Regulation (EU) 575/2013, by an undertaking established in a third country that fulfils any of the criteria laid down in points (i) to (iii) of that pointpoint 1 of Annex I to this Directive, by an undertaking established in a third country.
Amendment 255 #
Proposal for a directive
Article 1 – paragraph 1 – point 8
Article 1 – paragraph 1 – point 8
Directive 2013/36/EU
Article 47 – paragraph 2
Article 47 – paragraph 2
2. By derogation from paragraph 1, where thean undertaking in the third country is not a credit institution or an undertaking that meets the criteria of paragraph 1, point (b), the carrying out of any of the activitiestablished in a third country providing activities and services listed in Annex 1, Section A of Directive 2014/65/EU and the services listed in Annex I1, points (4), (5), and (7) to (15), to this Directive by that undertaking in a Member State shall be subject to Title II, Chapter IV, of Directive 2014/65/EU. Section B of Directive 2014/65/EU for the sole purpose of conducting the activities and services listed in Annex 1, Section A of Directive 2014/65/EU, shall not be included into the scope outlined in paragraph 1.
Amendment 270 #
Proposal for a directive
Article 1 – paragraph 1 – point 8
Article 1 – paragraph 1 – point 8
(c a) the conditions under which competent authorities may rely on information that has already been provided in the process of any prior branch authorisation.
Amendment 275 #
Proposal for a directive
Article 1 – paragraph 1 – point 8
Article 1 – paragraph 1 – point 8
Directive 2013/36/EU
Article 48f – paragraph 4
Article 48f – paragraph 4
4. Competent authorities may waive the liquidity requirement laid down in this Article for qualifying third country branches and for non-qualifying third country branches where assessments under Article 48b are still ongoing.
Amendment 343 #
Proposal for a directive
Article 1 – paragraph 1 – point 14 – point b
Article 1 – paragraph 1 – point 14 – point b
Directive 2013/36/EU
Article 76 – paragraph 2 – subparagraph 2
Article 76 – paragraph 2 – subparagraph 2
Member States shall ensure that the management body develops specific plans and quantifiable targets to monitor and address the risks arising in the short, medium and long-term from the misalignment of the business model and strategy of the institutions, with the relevant Union policy objectives or broader transition trends towards a sustainable economy in relation to environmental, social and governance factors.;
Amendment 362 #
Proposal for a directive
Article 1 – paragraph 1 – point 17
Article 1 – paragraph 1 – point 17
Directive 2013/36/EU
Article 87 a – paragraph 4
Article 87 a – paragraph 4
4. Competent authorities shall assess and monitor developments of institutions’ practices concerning their environmental, social and governance strategy and risk management, including the plans to be prepared in accordance with Article 76, as well as the progress made and the risks to adapt their business models to the relevant policy objectives of the Union or broader transition trends towards a sustainable economy, taking into account sustainability related product offering, transition finance policies, related loan origination policies, and environmental, social and governance related targets and limits.
Amendment 369 #
Proposal for a directive
Article 1 – paragraph 1 – point 17
Article 1 – paragraph 1 – point 17
Directive 2013/36/EU
Article 87 a – paragraph 5 – subparagraph 1 – point b
Article 87 a – paragraph 5 – subparagraph 1 – point b
(b) the content of plans to be prepared in accordance with Article 76, which shall include specific timelines and intermediate quantifiable targets and milestones, in order to address the risks from misalignment of the business model and strategy of institutions with the relevant policy objectives of the Union, or broader transition trends towards a sustainable economy in relation to environmental, social and governance factors;
Amendment 398 #
Proposal for a directive
Article 1 – paragraph 1 – point 19
Article 1 – paragraph 1 – point 19
Directive 2013/36/EU
Article 91 – paragraph 13
Article 91 – paragraph 13
13. This Article and Articles 91a to 91d shall be without prejudice to provisions of the Member States on the representation of employees in the management body, the appointment by regional or local elected bodies or the appointments where the management body does not have any competence in the process of selecting and appointing its members.’;
Amendment 403 #
Proposal for a directive
Article 1 – paragraph 1 – point 20
Article 1 – paragraph 1 – point 20
Directive 2013/36/EU
Article 91 a – paragraph 2 – subparagraph 1
Article 91 a – paragraph 2 – subparagraph 1
2. TheSmall, non-complex institutions within the meaning of Art. 4 (1) No. 145 CRR II, may assess the suitability of members of the management body after those members take up their positions. All other entities shall assess the suitability of members of the management body before those members take up their positions. Where the entities conclude, based on the suitability assessment, that the member concerned does not fulfil the criteria and requirements set out in paragraph 1, the entities shall: (a) ensure that the member concerned does not take up the position considered, in the case that the suitability assessment is completed before those members take up their positions; (b) remove such members from the management body or to take the measures necessary to ensure that such members are suitable for the position concerned, in the case that those members take up their positions before the completion of the assessment.
Amendment 437 #
Proposal for a directive
Article 1 – paragraph 1 – point 20
Article 1 – paragraph 1 – point 20
Directive 2013/36/EU
Article 91 b – paragraph 3 – subparagraph 2
Article 91 b – paragraph 3 – subparagraph 2
Competent authorities shall complete the assessment referred to in paragraph 1 within 840 working days (‘assessment period’) as from the date of the written acknowledgement referred to in the first subparagraph of this paragraph.
Amendment 455 #
Proposal for a directive
Article 1 – paragraph 1 – point 20
Article 1 – paragraph 1 – point 20
4. Competent authorities that request from the entities additional information or documentation, including interviews or hearings, may extend the assessment period for a maximum of 420 working days. However, the assessment period shall not exceed 1260 working days. Request for additional information or documentation shall be made in writing and shall be specific. The entities shall acknowledge receipt of request for additional information or documentation within two working days and provide the requested additional information or documentation within 10 working days as of the date of the written acknowledgement of the request from competent authorities.
Amendment 475 #
Proposal for a directive
Article 1 – paragraph 1 – point 20
Article 1 – paragraph 1 – point 20
Directive 2013/36/EU
Article 91 b – paragraph 8 – subparagraph 1 – point e
Article 91 b – paragraph 8 – subparagraph 1 – point e
(e) relevant subsidiary that qualifies as a large institution;
Amendment 482 #
Proposal for a directive
Article 1 – paragraph 1 – point 20
Article 1 – paragraph 1 – point 20
Directive 2013/36/EU
Article 91 c – paragraph 2
Article 91 c – paragraph 2
2. Where the entities conclude, based on the assessment referred to in paragraph 1, that the person does not fulfil the requirements set out in that paragraph, they shall not appoint that person as a key function holder. The entities shallSmall, non-complex institutions within the meaning of Art. 4 (1) No. 145 CRR II, may assess the suitability of key function holders after those persons take up their positions. All other entities shall assess the suitability of key function holders before those persons take up their positions. Where the entities conclude, based on the assessment referred to in paragraph 1, that the person does not fulfil the requirements set out in that paragraph, the entities shall: (a) ensure that the person concerned does not take up the position considered, in the case that the assessment referred to in paragraph 1 is completed before those persons take up their positions; (b) remove such persons from their positions or to take allthe measures necessary to ensure the appropriate functioning of that position. at such persons are suitable for the position concerned, in the case that those persons take up their positions before the completion of the assessment.
Amendment 486 #
Proposal for a directive
Article 1 – paragraph 1 – point 20
Article 1 – paragraph 1 – point 20
Directive 2013/36/EU
Article 91 d – paragraph 1 – point e
Article 91 d – paragraph 1 – point e
(e) relevant subsidiary that qualifies as a large institution.
Amendment 491 #
Proposal for a directive
Article 1 – paragraph 1 – point 20
Article 1 – paragraph 1 – point 20
Directive 2013/36/EU
Article 91 d – paragraph 3 – subparagraph 2
Article 91 d – paragraph 3 – subparagraph 2
Competent authorities shall assess the suitability of the heads of internal control functions and chief financial officer within 830 working days (‘assessment period’) as from the date of the written acknowledgement referred to in the first subparagraph.
Amendment 496 #
Proposal for a directive
Article 1 – paragraph 1 – point 20
Article 1 – paragraph 1 – point 20
Directive 2013/36/EU
Article 91 d – paragraph 4
Article 91 d – paragraph 4
4. Competent authorities that request from the entities referred to paragraph 1 additional information or documentation, including interviews or hearings, may extend the assessment period for maximum 410 working days. However, the assessment period shall not exceed 1240 working days. Request for additional information or documentation shall be made in writing and shall be specific. The entities referred to paragraph 1 shall acknowledge receipt of request for additional information or documentation within two working days and provide the requested additional information or documentation within 10 working days as of the date of the written acknowledgement of the request from competent authorities.
Amendment 524 #
Proposal for a directive
Article 1 – paragraph 1 – point 25 – point a – point ii
Article 1 – paragraph 1 – point 25 – point a – point ii
Directive 2013/36/EU
Article 104 – paragraph 1 – point m
Article 104 – paragraph 1 – point m
(m) require institutions to reduce the risks arising from the institutions’ misalignment with relevant policy objectives of the Union and broader transition trends relating to environmental, social and governance factors over the short, medium and long term, including through adjustments to their business models, governance strategies and risk management.;
Amendment 531 #
Proposal for a directive
Article 1 – paragraph 1 – point 26 – point b
Article 1 – paragraph 1 – point 26 – point b
Directive 2013/36/EU
Article 104 a – paragraph 6 – subparagraph 1 – introductory part
Article 104 a – paragraph 6 – subparagraph 1 – introductory part
6. Where an institution becomes bound by the output floor, the following shall apply to avoid the double counting of risks in pillar II:
Amendment 533 #
Proposal for a directive
Article 1 – paragraph 1 – point 26 – point b
Article 1 – paragraph 1 – point 26 – point b
Directive 2013/36/EU
Article 104 a – paragraph 6 – subparagraph 1 – point a
Article 104 a – paragraph 6 – subparagraph 1 – point a
(a) the nominal amount of additional own funds required by the institution’s competent authority in accordance with Article 104(1), point (a), to address risks other than the risk of excessive leverage shall not increase as a result of the institutions’ becoming bound by the output floor;
Amendment 535 #
Proposal for a directive
Article 1 – paragraph 1 – point 26 – point b
Article 1 – paragraph 1 – point 26 – point b
Directive 2013/36/EU
Article 104 a – paragraph 6 – subparagraph 1 – point b
Article 104 a – paragraph 6 – subparagraph 1 – point b
(b) the institution’s competent authority shall, without undue delay, and no later than by6 months before the end date of the next review and evaluation process, review the additional own funds it required from the institution in accordance with Article 104(1), point (a), and remove any parts thereof that would double-count the risks that are already fully covered by the fact that the institution is bound by the output floor.