European Banking Authority Finalizes Guidelines on Designating EU Branches as Significant-Plus Branches

The European Banking Authority has published a final Report and final Guidelines on the supervision of significant branches. The Capital Requirements Directive and the Bank Recovery and Resolution Directive provide the EU legal framework for the prudential supervision of branches. The Guidelines set out how the consolidating supervisor, the home supervisor and the host supervisor should cooperate to supervise prudentially and assess recovery planning and coordinate monitoring of significant branches requiring intensified supervision. The Guidelines apply to 'significant-plus' branches of EU firms established in another EU member state, not to branches of third-country firms.

An 'intensification test' will be used to assess which branches should be designated as significant-plus branches. Significant-plus branches will be those that are assessed as important for the firm or the group or as performing critical functions or as important for the financial stability of the host Member State. A branch that is assessed to be a significant-plus branch would be subject to intensified supervision which would entail, among other things, a separate branch risk assessment, regular on-the-spot checks and inspections, extensive sharing of supervisory intelligence, coordinated application of supervisory and precautionary measures and reflection of the branch in the firm's recovery planning.

The Guidelines will apply to EU national regulators from January 1, 2018.

View the Guidelines.