European Banking Authority Final Guidelines on Internal Governance Under the Capital Requirements Directive

The European Banking Authority has published a compliance notification form on its website, seeking confirmation, by May 21, 2018, of compliance (or intention to comply) with the Final Guidelines on Internal Governance it published in September 2017.

The EBA was mandated under the Capital Requirements Directive to provide guidelines on the corporate governance arrangements, processes and mechanisms required under that Directive. CRD IV requires that institutions must have robust governance arrangements, which include a clear organizational structure with well-defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks they are or might be exposed to, adequate internal control mechanisms, including sound administration and accounting procedures and remuneration policies and practices that are consistent with and promote sound and effective risk management. The EBA consulted in October 2016 on proposed updates to its previous guidelines on internal governance, which were published in September 2011.

The finalized Guidelines cover: the role and composition of the management body and committees; the governance framework (including the firm's organizational structure in a group context and the firm's outsourcing policy); risk culture and business conduct; internal control framework and mechanisms; business continuity management; and transparency.

The Guidelines will enter into force on June 30, 2018 and will apply to national regulators across the EU, as well as to credit institutions and investment firms subject to CRD IV on an individual and consolidated basis. National regulators must notify the EBA by May 21, 2018 whether they comply or intend to comply with the Guidelines, or alternatively give reasons for non-compliance.

The new Guidelines will supersede the EBA's September 2011 guidelines on internal governance.

View the Guidelines on Internal Governance.

View the compliance notification form.