Action required for financial holdings: authorisation or dispensation
The Dutch Central Bank calls on Dutch financial holding companies to apply for an authorisation or dispensation to comply with the new requirements implemented further to CRD V. Existing financial holdings are requested to do so before 28 June 2021. The background of the approval requirement is that financial holdings are from the entry into force date of CRD V made directly subject to the provisions of supervision on consolidated basis applying to the banking group replacing the rules that the compliance with the consolidated supervision was enforced via the licensed bank(s) in the group.
The Dutch implementation act prudential requirements (Implementatiewet kapitaalvereisten 2020, Implementing Act) implementing directive 2019/878/EU (CRD V), entered into force on 29 December 2020, introducing a new set of rules for consolidated supervision of banking groups. The Implementing Act amends the Dutch Financial Supervision Act (AFS) to introduce a new section 3.6.2 (articles 3:280a and further).
In short, in the situation that a group including one or more banks or investment firms has a holding company, prudential consolidation must be applied at the holding level. The new rules introduce an authorisation obligation at the level of the holding company ensuring that, at the holding level, it may be held responsible for the application of the prudential requirements on a consolidated basis within the group.
The authorisation requirement applies to Dutch financial holding company or mixed parent holdings and other (mixed) financial holdings with their registered seat in the Netherlands, subject to the prudential requirements of the Capital Requirements Regulation and the AFS on a consolidated basis.
Note this is also the case if the holding company has its seat in the Netherlands even if all the other group companies are established outside the Netherlands.
Authorisation is only granted if the following conditions are met:
- the internal arrangements and distribution of tasks within the group headed by the financial holding are adequate for the purpose of complying with the requirements imposed by CRD V and the prudential rules which are applicable on a consolidated or sub-consolidated basis;
- the structural organisation of the group of the financial holding (e.g. the shareholder structure) does not obstruct or otherwise prevent effective supervision; and
- the financial holding has at least two natural persons determining the day-to-day policy of the financial holding, which are fit and proper for this task.
If the financial holding company holds or will hold a qualifying holding in a bank, in respect of which the financial holding company holds a declaration of no-objection (DNO) from the European Central Bank (ECB) or is in the process of requesting such DNO, a new assessment of (part of) the DNO may be required if the ECB is of the opinion that there is reasonable cause to do so. Such reasonable cause may consist of a change in the financial position of the financial holding since the DNO has been granted.
An exemption of the authorisation requirement is possible if certain criteria are met (as specified in article 3:280c AFS):
- the main activity of the (mixed) financial holding company in relation to banks, CRR investment firms or financial institutions is to acquire interests in subsidiaries;
- the financial holding company has not been designated as a resolution entity; and
- the financial holding company does not take any administrative, operational or financial decisions that affect the group.
The exemption is granted simultaneously with the designation of a bank in the group of the financial holding to be responsible for compliance with the requirements on a consolidated basis. In making its assessment, DNB shall also assess whether there is no impediment to effective supervision on a consolidated basis.
In a news item of 9 March 2021, the DNB sets out the procedure to apply for an authorisation (or dispensation) for (Dutch) financial holding companies. In the case of a significant bank in the group, the approval is to be applied for with the ECB, in other cases, the DNB.
Financial holding companies already existing on 27 June 2019 have until 28 June 2021 to apply for approval.
Should you require any assistance in the field of Financial Regulatory, please contact your trusted adviser of our Financial Regulatory Team.
Wendy PronkSenior Associate Attorney at law
Wendy Pronk, attorney at law, is a member of the Banking & Finance practice group in our Amsterdam office. She focuses on advice and legal proceedings in financial regulatory matters.T: +31 20 578 53 15 M: +31 6 10 61 79 95 E: firstname.lastname@example.org