On 15 January 2021, the European Banking Authority (EBA) issued a consultation paper on draft guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate EU parent undertakings as laid down in the CRD IV.

Article 21b of the CRD IV sets out a requirement for institutions belonging to third country groups to have an intermediate EU parent undertaking (IPU) established in the EU, where the total value of assets in the EU of the third-country group is equal to or greater than EUR 40 billion. The EBA believes that a common methodology for calculating the total value of assets in the EU as well as consistent supervisory expectations are essential for ensuring a consistent application of the IPU requirement. The draft guidelines are designed to provide guidance to the institutions that are part of third-country groups operating in the EU and to the competent authorities responsible for supervision over the institutions and branches belonging to the third country groups.

The draft guidelines:

• Clarify the relevant dates for the calculation of the total value of the assets in the EU, taking into account the fluctuation in the value of assets.
• Specify that for the purpose of the application of the IPU requirement, the total value of assets in the EU of the third country group should be calculated as an average over the last four quarters. This value should be monitored on a quarterly basis and communicated to relevant competent authorities.
• Specifies that institutions belonging to third country groups should assess at least annually whether the threshold is expected to be breached within the three year horizon, based on the strategic planning of the third-country group and the projections of assets.
• Provides that for the purpose of both the quarterly assessments and the annual forward-looking monitoring, institutions and branches belonging to a third-country group should exchange between each other all necessary information.
• Specifies certain procedural aspects related to the monitoring of the threshold by competent authorities and the establishment of the IPU where necessary. In particular, clarification is provided on the notifications required by Article 21b(6) of the CRD IV, namely that these are to be provided to the EBA on an annual basis. Also, certain exceptional situations are specified where competent authorities may set out timelines for the establishment of an IPU, no longer than up to two years from reaching the threshold.

The deadline for comments on the consultation paper is 15 March 2021. A public hearing will take place on 26 February 2021.