Regulatory Alerts2025-06-09
Matters Related to the Capital Treatment of Significant Investments in Insurance Entities
The Prudential Authority issued Directive D2/2025 to mandate the threshold deduction treatment for banks' significant investments in insurance entities, requiring prior written approval and specific capital calculation methods. Banks must exclude post-acquisition reserves from consolidated capital, apply the treatment to initial investments held at historic cost with downward adjustments for impairments, and report value variations biannually using a prescribed template. This framework prevents double counting and contagion between banking and insurance sectors, with all affected institutions required to comply by 31 July 2025 or request extensions.
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