Circular NBB_2021_27: Transposition of EBA Guidelines on Suitability of Management Body and Key Function Holders

NBB_2021_27 – 16 November 2021 Circular – Page 1/3 Boulevard de Berlaimont 14 – BE-1000 Brussels Phone +32 2 221 54 65 Company number: 0203.201.340 RPM (Trade Register) Brussels www.nbb.be Circular Brussels, 16 November 2021 Reference: NBB_2021_27 Contact person:
Catherine Terrier
Phone +32 2 221 45 32 catherine.terrier@nbb.be EBA Guidelines of 2 July 2021 on the assessment of the suitability of members of the management body and key function holders (EBA/GL/2021/06) Scope  credit institutions and their branches abroad,  stockbroking firms and their branches abroad,  branches established in Belgium of credit institutions and stockbroking firms governed by the law of States that are not members of the European Economic Area,  financial holding companies and mixed financial holding companies governed by Belgian law. For reasons of coherence and in order to ensure a level playing field, an as broad as possible cross-sectoral approach will be pursued with regard to the suitability requirements. Although Guidelines EBA/GL/2021/06 are explicitly addressed to credit institutions and stockbroking firms, they contain good practices that deserve to be widely adopted. Therefore, as indicated in its Fit & Proper Manual, the Bank also recommends other institutions to apply, mutatis mutandis and where possible, the good practices contained in these Guidelines, within the limits of the respective supervisory laws and taking into account the specific proportionality variables set out in the aforementioned Manual. Summary/Objectives This Circular transposes the Guidelines of the European Banking Authority (EBA) of 2 July 2021 on the assessment of the suitability of members of the management body and key function holders (EBA/GL/2021/06) into the Belgian prudential framework. These Guidelines were published on 2 July 2021 and replace, for the financial institutions within their scope, Guidelines EBA/GL/2017/12 of 26 September 2017 with effect from 31 December 2021. The revised Guidelines EBA/GL/2021/06, like their previous version, constitute a reference framework. They accompany and supplement the legal provisions on suitability assessment and should be applied and complied with by the financial institutions within their scope, as explained in this Circular. This Circular applies from 31 December 2021 and replaces, for the financial institutions within its scope, the second point of Circular NBB_2018_25, which concerns the transposition of Guidelines EBA/GL/2017/12.

Circular – Page 2/3 NBB_2021_27 – 16 November 2021 Dear Sir, Dear Madam, The suitability of members of the management body and key function holders is one of the most essential elements in the prudential regulatory framework. The regulations and prudential expectations in this area are therefore regularly tightened in order to cope with new developments in the field. For example, new provisions have recently been introduced in Directive 2013/36/EU 1 (“CRD”) to take into account recent developments in the suitability assessment that are related to the fight against money laundering and terrorist financing, on the one hand, and the pursuit of greater diversity and gender balance, on the other. Consequently, the joint EBA and ESMA Guidelines on the assessment of the suitability of members of the management body and key function holders also needed to be amended. These revised Guidelines explicitly clarify that the knowledge, experience and skill requirements of members of the management body and key function holders include identifying, managing and mitigating money laundering and financing of terrorism risk. In addition, these Guidelines also stress the importance of a gender-balanced composition of the management body. Institutions should aim at an appropriate representation of all genders within the management body and ensure that the principle of equal opportunities is respected when selecting members of the management body. Finally, the new text also provides guidance on fit & proper aspects related to the recovery and resolution framework introduced by the Bank Recovery and Resolution Directive ("BRRD") 2, by providing further specifications on how the suitability assessment by competent authorities and resolution authorities should be conducted in the context of resolution. The revised Guidelines EBA/GL/2021/06 enter into application on 31 December 2021 and replace, for the institutions within their scope, Guidelines EBA/GL/2017/12 on the same subject. These Guidelines, like their previous version, provide guidance for the concrete supervision of the assessment of the suitability of members of the management body and key function holders. They accompany and supplement the legal provisions on suitability assessment and should be applied and complied with in full by the institutions within their scope. It should however be noted that the method set out in the said Guidelines for calculating the number of directorships held within the same group to verify compliance with the limitation on directorships, differs from that described in Article 62, § 9 of the Banking Law 3. The rules of the Banking Law should be followed in this respect. Certain aspects of the aforementioned Guidelines will be further explained or clarified in the coming months in the Bank’s Fit & Proper Manual, which was introduced by Circular NBB_2018_25. However, this further clarification is without prejudice to the fact that institutions should apply the said Guidelines in
their entirety as from the date of entry into force of this Circular. This Circular is applicable from 31 December 2021 and replaces, for the institutions within its scope, the second point of Circular NBB_2018_25, which concerns the same subject. A copy of this Circular will be sent to your institution's accredited statutory auditor(s). 1 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC. 2 Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council. 3 Law of 25 April 2014 on the legal status and supervision of credit institutions and stockbroking firms.

NBB_2021_27 – 16 November 2021 Circular – Page 3/3 Yours faithfully, Pierre Wunsch Governor
Annex - only available through www.nbb.be:
 EBA Guidelines of 2 July 2021 on the assessment of the suitability of members of the management body and key function holders (EBA/GL/2021/06)