BPFI response to the EBA consultation on the calculation of the €30bn threshold for credit institution authorisation
Banking and Payments Federation Ireland (BPFI) has responded to the European Banking Authority (EBA) second consultation on the draft Regulatory Technical Standard (RTS) relating to the calculation of the €30bn threshold under the Capital Requirements Directive (CRD).
This RTS is fundamental for both firms and supervisors determining the category under which a firm will be classified within the new Investment Firms Regime (IFR), which has recently entered into force.
The response largely focussed on the following key areas:
- The introduction of a more proportionate regulatory regime for small investment firms is a positive step forward, which can boost the EU’s overall capital markets landscape.
- We are concerned that the change in the calculation of the €30bn threshold within the new RTS could negatively impact a number of key EU policy objectives, like the development of a strong Capital Markets Union (CMU).
- If adopted in its current form, the updated draft RTS will create un-level playing field between small investment firms operating in the EU and that this will make the EU a less attractive market for investment firms
- We therefore recommend amending the draft RTS so that it only includes in the calculation the assets of EU undertakings and the EU assets of non-EU firms, in each case where they are conducting the relevant MiFID activities
- This solution would ensure that the test focuses on the entities which present the greatest risk to the Union from a prudential perspective, whilst also ensuring that groups do not avoid the Class 1 authorisation requirement by establishing multiple entities or branches across the EU to avoid the 30bn threshold.