The Directive answers the following questions:
- What is a financial conglomerate?
- What requirements must a financial conglomerate fulfil?
- How are financial conglomerates supervised?
A financial conglomerate is deemed to exist if, in brief, the following conditions are fulfilled:
- The financial activities of the group consist of insurance on the one hand and investment and banking on the other, in circumstances where the smaller of these two clusters of activities constitutes at least ten percent of the overall financial activities.
- At least one credit institution, investment firm or insurer from the EU is part of the group.
- If the parent undertaking of the group is not a bank, investment firm or insurer, the financial activities account for at least 40 percent of the group’s balance sheet.
The EU Commission publishes a list of the financial conglomerates in the EU.
The Directive imposes requirements in the areas of:
- intra-group transactions and risk concentration
- reporting to the various authorities involved in supervision
- administrative organisation and internal control
- assessment of the repute and expertise of directors
The Directive contains rules for the cooperation between EU authorities responsible for the supervision of conglomerates. These rules indicate what role a supervisor has (e.g. coordinator) and what duties and responsibilities this entails. The supervisors work together in the Interim Working Committee on Financial Conglomerates (IWCFC) and the Joint Forum on Financial Conglomerates (Joint Forum).
Implementation in the Netherlands
The Directive has been implemented in the Netherlands through the Financial Supervision Act (Wet op het financieel toezicht), the Decree on the Prudential Supervision of Financial Groups (Besluit prudentieel toezicht financiële groepen) and the Supplementary Prudential Supervision Regulation (Regeling aanvullend prudentieel toezicht). The latter Regulations also include the reporting forms for conglomerates.