Article 1 Structure of the assessment

1.   When verifying an institution’s compliance with the requirements set out in Articles 325bh, 325bi, 325bn, 325bo, and 325bp of Regulation (EU) No 575/2013, competent authorities shall assess:

For the purposes of the first subparagraph, competent authorities shall apply the principles related to proportionality in accordance with Article 2, the quality of the documentation in accordance with Article 3, and the outsourcing arrangements in accordance with Article 4.

2.   A competent authority that identifies, as part of the assessment performed in accordance with this Regulation, significant deficiencies in the internal risk-measurement model in relation to some product classes in a given trading desk, or that cannot confirm that that model has a proven track record of being reasonably accurate in measuring the risks corresponding to those product classes, may do either of the following:

3.   A competent authority that comes to the conclusion that product classes in a given trading desk are booked back-to-back with those of another entity of the group that is outside the scope of the highest level of consolidation within the Union, and that such back-to-back booking hinders the competent authority to assess whether the internal risk-measurement model has a proven track record of being reasonably accurate in measuring risks corresponding to those product classes, may do either of the following:

4.   Where the market risk of positions corresponding to some product classes is transferred to another entity of the group that is outside the scope of the highest level of consolidation within the Union, and where the effects of such a transfer de facto resemble those of positions booked back-to-back, the competent authority may apply paragraph 3.