Notice No. 3/2019

Notice No. 3/2019 .................................................................................................................................................................................................. Published in: DR, 2nd Series, No. 212, Part E, of 05-11-2019 Mod. 99999939/T – 01/14

Index Text of the Notice

Text of the Notice

Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms ('Regulation (EU) No 575/2013') adopted at the European Union level the prudential regulatory framework known as 'Basel III', having direct application in all Member States.

The aforementioned Regulation (EU) No 575/2013 defines its subjective scope of application by reference to institutions subject to supervision under Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on the access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms ('Directive 2013/36/EU').

Following the transposition of Directive 2013/36/EU in some Member States, changes have been registered in the list of credit institutions, notably through the loss of qualification of some entities as credit institutions, which ultimately had consequences on the attribution of the Community passport. In fact, it was verified that some credit institutions operating in Portugal via branch under the Community passport lost their qualification in their home Member States, which resulted in the cessation of that passport and, consequently, the authorization to carry out activity in Portugal under the same.

Thus, having lost the qualification of credit institution in the home Member State, these entities came to assume the legal qualification of financial institutions. Under the current legal framework provided for in the General Regime of Credit Institutions and Financial Companies, approved by Decree-Law No. 298/92 of 31 December ('RGICSF'), such financial institutions may be authorized to establish branches in Portugal.

Branches of financial institutions from the European Union that do not benefit from the Community passport do not have a harmonized regime at the European Union level, so it is up to the national level to define the regime applicable to them.

It thus becomes essential to expressly provide for the respective prudential regime applicable to such branches of financial institutions, which should – depending on the activity to be developed – correspond to one of the types of financial company in Article 6 of RGICSF – consequently, applying to them the corresponding prudential regime.

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In this regard, the Bank of Portugal Notice No. 11/2014 of 22 December is amended so that its scope of application includes an express reference to branches of financial institutions with headquarters abroad.

This Notice was preceded by a hearing of the interested parties.

In these terms, the Bank of Portugal, using the competence conferred upon it by Article 17 of its Organic Law, by paragraph 1 of Article 99, by paragraph 2 of Article 121-A and by Article 189 of the General Regime of Credit Institutions and Financial Companies, approved by Decree-Law No. 298/92 of 31 December, promotes the following amendment:

Article 1. Amendment to Bank of Portugal Notice No. 11/2014

Articles 1, 3, 5, 6, 7, 8, 9 and 10 of Bank of Portugal Notice No. 11/2014 of 22 December shall have the following wording:

'Article 1. […] This Notice aims to regulate the application of the prudential requirements established in Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 ('Regulation (EU) No 575/2013') to the following entities: a) […]; b) […]; c) […]; d) […]; e) […]; f) […]; g) Branches of financial institutions with headquarters abroad covered by paragraph 1 of Article 189 of the General Regime of Credit Institutions and Financial Companies, approved by Decree-Law No. 298/92 of 31 December.

Article 3. […]

1. The entities referred to in Article 1 must comply with the obligations fixed in this Notice on an individual basis.
2. […].

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Article 5. […] The provisions of this Notice do not prevent the entities referred to in Article 1 from maintaining own funds and their respective components beyond what is required in this Notice, or adopting more rigorous measures than those set out therein.

Article 6. […]

1. The entities referred to in Article 1 must observe the provisions of Part II of Regulation (EU) No 575/2013 regarding the calculation of own funds, as well as the characteristics of the instruments included therein.
2. The entities referred to in Article 1 must also observe the provisions of Part X of Regulation (EU) No 575/2013, regarding transitional provisions, in accordance with the stipulated in Notice No. 6/2013.

Article 7. […]

1. The entities referred to in Article 1 must permanently observe the own funds requirements established in Article 92 of Regulation (EU) No 575/2013, specifically by maintaining the minimum own funds ratios provided for in paragraph 1 of that Article.
2. In determining the own funds requirements, the entities referred to in Article 1 must also observe the provisions of Part III of Regulation (EU) No 573/2013 applicable to credit institutions, without prejudice to the provisions of the following paragraph.
3. The reporting requirements provided for in Chapter 2 of Title I of Part III of Regulation (EU) No 575/2013, applicable to the entities referred to in Article 1, are defined by Bank of Portugal Instruction.

Article 8. […] The entities referred to in Article 1 are subject to the application of the requirements established in Part IV of Regulation (EU) No 575/2013, and must observe the regulation issued by the Bank of Portugal regarding this matter that is applicable to credit institutions.

Article 9. […] The entities referred to in Article 1 ensure that their short-term and long-term obligations are adequately fulfilled based on a diversity of appropriate funding sources.

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Article 10. […]

1. For the purposes of the provisions in Articles 6, 7 and 8, the entities referred to in Article 1 must observe the regulatory and implementing technical standards adopted by the European Commission associated with the provisions of Regulation (EU) No 575/2013 that are applicable to them under the aforementioned Articles, without prejudice to the provisions of the following paragraph.
2. The Bank of Portugal defines by Instruction the regulatory and implementing technical standards adopted by the European Commission under Parts II, III and IV of Regulation (EU) No 575/2013 that are not applicable to the entities referred to in Article 1.'

Article 2. Entry into force

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

22 October 2019. – The Governor, Carlos da Silva Costa.