Law on the Legal Status and Supervision of Credit Institutions and Stockbroking Firms
`competent authority` means an authority or body officially recognised under national law empowered by national law to supervise institutions under the supervisory system in force in the Member State concerned; In order to ensure that risks and mitigations arising from securitisation activities and investments of institutions are duly reflected in the own funds requirements of institutions, it is necessary to include rules providing for a risk-sensitive and prudential treatment of such activities and investments. To that end, a clear and comprehensive definition of securitisation is necessary for all transactions or systems where the credit risk associated with a risk position or set of exposures is divided into tranches. A risk that creates a direct obligation to pay for a transaction or system that is not the case. used to finance or operate physical assets should not be considered as securitisation risk, even if the transaction or system involves payment obligations of different age. This Regulation should be without prejudice to the possibility for competent authorities to impose specific requirements as part of the supervisory review and evaluation process under Directive 2013/36/EU, which should be tailored to the specific risk profile of institutions. Assuming that a Belgian company is considered a credit institution, the prohibition on dealing on own account extends to all subsidiaries (Belgian and foreign) falling within the “scope of consolidation” of the credit institution. Proprietary trading activities prohibited in connection with the “consolidation” of the credit institution must be discontinued or transferred to an “affiliate” outside the “scope of consolidation” of the credit institution. Where own-account trading activities are transferred to a related company governed by Belgian law, that undertaking must be authorised as a stockbroker in accordance with the Law of 6 April 1995. The new Banking Act does not define the term “affiliated enterprise”, but specifies that it will have the meaning ascribed to it in the Royal Decrees implementing Article 106 § 1 of the new Banking Act, which have not yet been published. The prudent assessment of the trading book provisions should apply to all instruments measured at fair value, whether contained in the trading book or in institutions` other trading books. It should be clarified that, where the application of a prudent assessment would result in a lower carrying amount than that actually recognised in the accounts, the absolute value of the difference should be deducted from own funds. firms which are not authorised to provide the ancillary services referred to in point 1 of Section B of Annex I to Directive 2004/39/EC, which provide only one or more of the investment services and activities listed in points (1), (2), (4) and (5) of Section A of Annex I to that Directive and which are not authorised to hold their clients` funds or securities; and who, for this reason, incur debt at any time with those customers; The new definition of own funds and regulatory capital requirements should be introduced in such a way as to take into account the fact that there are different starting points and national circumstances, with initial deviations from the new standards decreasing during the transitional period.
In order to ensure adequate continuity of the level of own funds, instruments issued under a recapitalisation measure in accordance with State aid rules and issued before the date of application of this Regulation will be grandfathered for the duration of the transitional period. State aid dependency should be reduced as much as possible in the future. However, where State aid is necessary in certain situations, this Regulation should provide a framework to address those situations. In particular, this Regulation should specify the treatment to be given to capital instruments issued under a recapitalisation measure under State aid rules. The possibility for institutions to benefit from such treatment should be subject to strict conditions. To the extent that such treatment allows for derogations from the new quality criteria for capital instruments, such derogations should be limited as far as possible. In the treatment of existing capital instruments issued as part of a recapitalisation measure under State aid rules, a clear distinction should be made between capital instruments that meet the requirements of this Regulation and capital instruments that do not. In the latter case, appropriate transitional provisions should therefore be laid down in this Regulation.
The “scalable” nature of this regulation allows institutions to choose between three different complex approaches to credit risk. In order to allow small institutions, in particular, to opt for the more risk-sensitive IRB approach, the relevant provisions should be interpreted in such a way that exposure categories include all risk categories directly or indirectly assimilated to them in this Regulation. In principle, competent authorities should not distinguish between the three approaches to the supervisory process, i.e. institutions operating in accordance with the provisions of the Standard Approach should not be subject to stricter supervision for this reason alone. In view of the devastating effects of the recent financial crisis, the general objectives of this Regulation are to promote economically useful banking activities serving the general interest and to discourage unsustainable financial speculation without any real added value. This requires a comprehensive reform of the way savings are channelled into productive investment. In order to ensure a sustainable and diversified banking environment in the Union, competent authorities should have the power to impose higher capital requirements on systemically important institutions which, by reason of their activities, may pose a threat to the global economy. Credit risk mitigation techniques should be better recognised within a framework of rules to ensure that solvency is not affected by unjustified accounting. The bank guarantees currently used by the Member States concerned to mitigate credit risk should, as far as possible, be taken into account in the acceptable approach, but also in the other approaches.