The EACB welcomes the opportunity to comment on the EBA draft RTS on the identification of a group of connected clients under Article 4 paragraph 1 number 39 of CRR.
While the overall structure and articulation of requirements between GLs and RTS is clear, we notice that a number of criteria for determining the circumstances that give rise to a group of connected clients (GCC) have been unduly tightened, despite the fact that in the executive summary it is mentioned that no substantial changes would be intended. At the same time the wording used in certain instances is not sufficiently clear to provide a good basis to implement mandatory approaches instead of indicative ones.
We recommend a number of clarifications and to maintain overall a less prescriptive approach, as based on practical experience it would be more appropriate to leave certain situations described in the paper as indicative.
We also see that there is no extensive elaboration why the ‘consolidated’ large exposure rules can also be applied on an individual basis toward subsidiaries and – if this is the case – what issues emerge when looking at the group of connected clients. The particulars of internal intra-group relations are not sufficiently taken into account and elaborated upon.
Without adjustments, we foresee:
- Increased compliance cost to identify and maintain all relevant exposures for the individual large exposure reporting
- Complications in the analysis on the possibility of exemptions and fulfilling the conditions for exemptions, and maintenance thereof
- The risk of undue constraints in intra group funding due to restriction set by the large exposure regime.