New rules finalized for bank acquisitions, mergers
The European Banking Authority (EBA) has published its final draft technical standards for material acquisitions, transfers, mergers, and divisions by credit institutions. These standards introduce new supervisory tools under the Capital Requirements Directive (CRD6) to harmonize oversight across the EU.
Supervisory tools for material operations
Directive (EU) 2024/1619 (CRD6) introduces three new supervisory tools for material operations by credit institutions, financial holding companies (FHC), or mixed financial holding companies (MFHC).
These tools cover acquisitions of material holdings in financial or non-financial entities, material transfers of assets or liabilities, mergers, and divisions.
The EBA is mandated to develop Regulatory Technical Standards (RTS) specifying the minimum information required, a common assessment methodology for supervisory scrutiny, and the process for notification and prudential assessment.
Additionally, Implementing Technical Standards (ITS) establish common procedures, forms, and templates for consultation between competent authorities regarding these material operations, merging similar mandates for regulatory simplification.
Proportionality in practice
The EBA has given significant attention to proportionality within the RTS, streamlining content and adapting requirements to specific circumstances.
Information already held by competent authorities does not need resubmission, and the level of detail adjusts to the complexity and risk profile of the operation.
Reduced information is required for intra-group operations and for small, low-complexity entities involved in mergers or divisions.
Materiality thresholds, such as 15% of total eligible capital for acquisitions or 10-15% of total assets/liabilities for transfers, are clarified to ensure harmonized application of the new CRD6 regime across the EU, avoiding duplication of burden and leveraging existing company law directives.
Harmonizing oversight, demanding implementation
These comprehensive standards mark a crucial step towards harmonizing supervisory oversight of significant banking operations across the EU.
While the detailed proportionality measures are welcome, the sheer volume of new requirements will demand substantial implementation efforts from institutions.
Effective enforcement will be key to realizing the intended leveling of the playing field and strengthening financial stability.