The European Banking Authority (EBA) has published Consultation Paper: Guidelines on connected clients under Article 4(1)(39) of Regulation (EU) No 575/2013. These draft Guidelines review and update the Guidelines on the implementation of the revised large exposures regime issued by the Committee of European Banking Supervisors on 11 December 2009. In these draft Guidelines, the EBA clarifies that institutions in the EU should make use of their clients’ consolidated financial statements in order to assess connections based on control. The draft Guidelines also provide a non-exhaustive list of indicators of control that should be used by institutions for assessing those clients to which EU accounting rules do not apply (e.g. natural persons, central governments, and clients which prepare consolidated financial statements in accordance with the accounting rules of a third country). Guidance is also provided on the use of an alternative approach for assessing the existence of groups of connected clients of entities directly controlled by or directly interconnected with central governments. Regarding the assessment of economic dependency, the draft Guidelines develop further the non-exhaustive list of situations of economic dependency which was included in the 2009 CEBS Guidelines and reinforce this definition to make clear that if the failure of a client leads to ‘repayment difficulties’ of another client, an institution is to consider these clients as connected. The consultation deadline is 26 October 2016. A public hearing will take place at the EBA premises on 5 September 2016.
View EBA consults on connected client guidelines under CRR, 26 July 2016