Financial Conglomerates Regulations
News    ·   19-07-2013

AUTHOR: Louis de Gabriele, Malcolm Falzon

Legal notice 183 of 2013: The purpose of these regulations is to implement the provisions of the Financial Conglomerates Directive as currently in force and as amended from time to time, that is more specifically Directive 2011/89/EU (the “ Amending Directive”). The original Financial Conglomerates Directive made provision for the application of supplementary supervision by national authorities in the case of financial conglomerates, in particular in the case of banking and insurance supervision. The aim was that of controlling group risks and the risk arising from double gearing, whereby a number of companies pool their overall risk by placing capital with each other.

On the other hand, the Amending Directive aims at ensuring appropriate supplementary supervision of financial entities in a financial conglomerate whilst also adapting financial supervision to the new European supervisory structure.

The major amendments introduced by these regulations are the following:

  1. inclusion of asset management companies in the threshold tests for identifying a conglomerate;
  2. a waiver for smaller groups if the relevant supervisor assesses the group risks to be negligible;
  3. allowing for risk-based assessments, in addition to existing definitions relating to size, in identifying financial conglomerates; and
  4. allowing for supervision which supplements but does not substitute sectoral supervision when a group is headed by a financial or insurance holding company.

The Amending Directive also amends the Capital Requirements Directive and the Directive on Supplementary Supervision of Insurance Undertakings in Insurance Groups. 

Please click here to read the full legal notice.

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