Banking - CA, authorization, activities and qualifying holding Flashcards
Who are the CA’s?
MS designate the national CA’s - Iceland is FME for example
Do CA’s work together?
Yes, the national authorities shall cooperate in order to achieve convergence of supervisory tools and practices within the EU
CRD has articles on authorization for certain institutions, what are those institutions?
CI’s
Is the CRD articles regarding authorizations also for FI’s?
no, thats MiFID
If a german bank gets an authorization in its homestate what will he need to do to set up a branch in Italy?
He will not need a second one to set up a branch in germany
What is the principle of mutual recognition of authorization?
If a CI has obtained authorization it may set up branches in other states without additional authorization
Who grants a CI authorization?
The national CA (FME in iceland)
What are the conditions for authorization?
Description of planned business and activities
Initial capital (5 mil eur minimum for a bank)
Management must be fit and proper -
sheareholders must be of good reputation same for the top managers
Location of the head office is where the authorization will be granted
close links must be checked in regards to the shareholders
What are we talking about when we talk about fit and proper management?
Manegement must be fit and proper
At least two persons must direct the business
The management bodu must be of succicently good reputation and with sufficient knowledge and experience
Tell me about the location of head office condition for authorization
Location of the office should be in the state where the registered office is or in the state which granted the authorization and in which it actually carries out its business
What must a CI inform a CA about regarding shareholders?
They must be checked and CI must let know if there are shareholders that have qualifying holdings (>=10%) or where there are no qualifying holdings of the 20 largest shareholders
They must also be suitable with respect to the need to ensure sound and prudent management
What are close links in regards to authorization?
Two or more natural or legal persons are linked through:
-ownership or control of 20% or more of capital or voting rights
-other control relationship
What must a CA check in regards to close links?
Are there any close links between the CI and another person?
What is the nature of the close links?
Do the close links hinder effective supervision?
When can authorization be withdrawn?
CI dose not use the authorization for 12 months
CI has obtained authorization through false statements
CI no longer fulfils the conditions for authorization
CI no longer meets the prudential requirements of the CRR
CI can no longer be relied on to fulfil its obligations towards creditors
CI commits certain serious breaches listed in the directive
If a institution gets authorization is it for all or just certain activities?
The authorization specifies what activities are authorized. A annex in the CRD has a list of activates authorized by the home state and they are subject to mutual recognition
CIs usually always have certain types of authorization what are they?
CIs can always take deposits (1)
Are also usually authorized for points 2 - 15 also. E.g. leading, money brokering and portfolio management
What is the difference between commercial banking and investment banking?
Investment banking - compering fossar to like Arion
They do portfolio management and issuing of securities and stuff like that vs. commercial witch is more akin to what we think of when we think of banks. Take deposits and lending and stuff like that, but they can also be authorized to all of it as the CRD does not require segregation between the two
What is a qualifying holding?
Some one that has a direct or indirect holding in an undertaking which represents 10% or more of the capital or voting rights or which makes it possible to exercise a significant influence over the management of the undertaking
If a there is an individual that has been found to be “QH” what do you need to do?
There is a duty to notify the CA of existing or planned ownership of QH, planned disposal of QH or a planned increase or decrease of QH
Who must notify of a QH?
The owner of QH and the CI
CI must also inform annually about existing QH
Why do we need to verify QH?
So the CA can:
Ensure sound and prudent management of a CI
Assess the suitability of the proposed acquirer
assess the financial soundness of the proposed acquisition
When dose the CA assess the notification and how regarding QH?
The CA assess the notification against a certain criteria within 60 working days
If a CA is not a fan of the QH what can they do?
CA can oppose the oppose the plan, e.g., by suspending voting rights
When a CA gets a notification regarding QH it assess the notification against a certain criteria, what is that criteria?
MS publish a list specifying the information required for the assessment
The information that would be needed would be:
information that can show the reputation of the acquirer
reputation, knowledge and experience of the proposed management body
financial soundness of the proposed acquirer
ability of the CI to continue to comply with prudential requirements
Whether there is suspicion of money laundering or terrorist financing
