Regulatory Alerts2013-07-29
Final Draft Regulatory Technical Standards on Calculation Methods for Financial Conglomerates
The European Supervisory Authorities issued final draft Regulatory Technical Standards to ensure consistent application of capital adequacy calculation methods for financial conglomerates under the Financial Conglomerates Directive and Capital Requirements Regulation. The document establishes technical principles requiring the elimination of multiple gearing and intra-group own funds creation, while mandating that excess own funds are only included if they are transferable across entities without legal or practical impediments. It defines three specific calculation methods—accounting consolidation, deduction and aggregation, and a combination thereof—to determine supplementary capital requirements and address deficits at the conglomerate level.