On 7 November 2022, the European Banking Authority (EBA) published an Opinion on the set-up and operationalisation of intermediate EU parent undertaking(s) under Article 21b of the Capital Requirements Directive IV (CRD IV).
Article 21b of the CRD IV strengthens the supervision of third-country groups with significant activities in the EU. It does this by requiring that two or more institutions (credit institutions and specified investment firms) belonging to the same third country group have one single intermediate EU parent undertaking where the total value of assets of that third country group in the EU is equal to or greater than EUR 40 bn. In certain circumstances, a Member State competent authority may approve the establishment of two intermediate parent undertakings. An intermediate parent undertaking can be a credit institution, a financial holding company or a mixed financial holding company that has received approval under Article 21a CRD IV, or an investment firm authorised in accordance with Article 5(1) of the Markets in Financial Instruments Directive II.
The grandfathering regime envisaged by Article 21b(8) CRD IV provides that third country groups with two or more institutions in the EU meeting the EUR 40 bn threshold as at 27 June 2019 shall have an intermediate parent undertaking (or two, where applicable) by 30 December 2023.
Previously the EBA developed guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate EU parent undertakings. The EBA has taken the opportunity to provide further clarification by publishing this opinion. In particular, the opinion sheds light on the two intermediate parent undertaking structure, underscoring that this is an exception to the single intermediate parent undertaking and its approval is subject to restrictive interpretation. It also provides clarifications on the application process and in respect of operationalisation reminds that shell banks are inconsistent with the EU framework.