Credit institutions must in principle fulfil solvency requirements on an individual and a consolidated basis. Consequently credit Institutions should guarantee the availability of a minimum amount of regulatory capital in relation to the amount of assets. These regulations therefore make an important contribution towards reducing the risk of an insolvency.
A possible exemption from these solvency requirements in any case exists for credit institutions that are also subject to consolidated supervision. This section describes the details relating to the procedure and the application process for exemption (a waiver) from the application of the solvency requirements on an individual basis.
Credit institutions must, if they wish to make use of a waiver, receive the approval of the relevant competent supervisory authority (the European Central Bank or the Financial Market Authority) for a waiver regarding solvency requirements on an individual basis.
The exemption comprises of the following provisions as set out in Article 7 (1) of Regulation (EU) No 575/2013 (CRR):
According to Article 30b BWG an exemption on an individual basis applies solely to the conditions of the CRR, and not, however to the provisions of the BWG.
A timeframe of six months shall generally apply for this procedure from the date of submission of the complete application.
If the institution also intends to apply for an exemption in accordance with Article 30c BWG in conjunction with Article 8 CRR then this should if possible be applied for at the same time as this procedure.
An approval in accordance with Article 7 CRR does not constitute an exemption from reporting requirements pursuant to Article 100 CRR – additional reporting requirements (e.g. repurchase agreements and encumbrance of assets) as well as Article 101 CRR – specific reporting obligations (e.g. losses from exposures to immovable property).
A waiver in accordance with Article 7 (1) CRR can only be approved for domestic, fully consolidated subsidiaries (see definition Article 4 no. 16 CRR in conjunction with Article 18 (1) CRR), provided that the superordinated institution holds more than 50 % of the voting rights attached to the units or shares of the subsidiary or is entitled to appoint or remove the majority of the members of the management body of the subsidiary (cf. Article 30 para. 1 nos. 1-3 BWG).
Subsidiaries, which have been excluded from the scope of consolidation pursuant to Article 19 CRR (“de minimis”) are not entitled to apply for an exemption. A waiver pursuant to Article 7 (3) CRR (exemption for parent institutions) can only be granted for domestic parent institutions.
An approval in accordance with Article 7 CRR can be made conditional by the Financial Market Authority on the group recovery plan to be drawn up in accordance with Article 15 BaSAG having been checked. In this case the group recovery plan must be submitted as an annex to the application for approval in accordance with Article 7 CRR.
The FMA reserves the right to place additional requirements or to request additional proof from the institutions during the authorisation process.