Bank of Portugal Notice No. 2/2017

Bank of Portugal Notice No. 2/2017 .................................................................................................................................................................................................. Published in the Official Journal, II Series, No. 29, Part E, on 09-02-2017. Mod. 99999910/T – 01/14 Index Text of the Notice Text of the Notice Bank of Portugal Notice No. 9/2014, of 3 November (“Notice No. 9/2014”), regulates the exercise of certain options provided for in Regulation (EU) No 575/2013 of the European Parliament and of the Council, of 26 June, on prudential requirements for credit institutions and investment firms (“Regulation (EU) No 575/2013”). Among these are the so-called exemptions from the large exposure limit, the definition of which is the exclusive competence of the Bank of Portugal, having been delegated to it under the option attributed to Member States by Article 493(3) of Regulation (EU) No 575/2013, exercised by the national legislator through Article 18(4) of Decree-Law No 157/2014, of 24 October.

For its part, the entry into force of European Central Bank Regulation (EU) 2016/445, of 14 March 2016, on the manner of exercising the powers and options provided for in Union law, has harmonized the exercise of certain options provided for in Regulation (EU) No 575/2013 in jurisdictions participating in the Single Supervisory Mechanism, including the so-called exemptions from the large exposure limit. However, it follows from Article 9(7) of European Central Bank Regulation (EU) 2016/445 that the large exposure exemptions defined in that Regulation are not applicable to Member States that have exercised the option provided for in Article 493(3) of Regulation (EU) No 575/2013, as is the case with Portugal.

With the aim of contributing to greater uniformity with the prudential framework established by the European Central Bank, it is considered appropriate to amend Bank of Portugal Notice No. 9/2014, in order to reduce the exempted amount from the large exposure limit regarding exposure to covered bonds covered by Articles 129(1), (3) and (6) of Regulation (EU) No 575/2013, and to clarify the exemption provided for in Article 493(3)(e) of Regulation (EU) No 575/2013, safeguarding with these changes, and without regulating new exemptions, the necessary stability and predictability that the large exposure regime must observe.

In these terms, the Bank of Portugal, using the competence conferred upon it by Article 17 of its Organic Law, by Article 99(1) of the General Regime of Credit Institutions and Financial Companies, approved by Decree-Law No 298/92, of 31 December, and also by Article 18(4) of Decree-Law No 157/2014, of 24 October, determines the following:

Bank of Portugal Notice No. 2/2017 .................................................................................................................................................................................................. Article 1. Amendment to Notice No. 9/2014 Article 5 of Bank of Portugal Notice No. 9/2014, of 3 November, shall read as follows:

“Article 5. […] 1- […]. 2- Covered bonds covered by the provisions of Articles 129(1), (3) and (6) of Regulation (EU) No 575/2013 shall be considered at 20% of their respective value. 3- […]. 4- […]. a) Assets representing credit and other risks on credit institutions incurred by credit institutions, one of which operates on a non-competitive basis, and grants or guarantees loans, under legislative programs or their statutes, with a view to promoting specific sectors of the economy in any form of government supervision and restrictions on the use of loans, provided that their risk positions arise from these loans transmitted to beneficiaries through credit institutions or from guarantees of these loans; b) […]; 5- […].”

Article 2. Entry into force This Notice enters into force on the day following its publication.

31 January 2017 – The Governor, Carlos da Silva Costa.