4.2 Supervisory intensification test for significant branches

The consolidating supervisor and the home and host competent authorities should cooperate on the basis of the following paragraphs and endeavour to make a common assessment and arrive at a common conclusion on whether a branch that has been determined to be significant in accordance with Article 51 of Directive 2013/36/EU also satisfies the intensification test and should therefore be deemed a ‘significant-plus’ branch for the purposes of these guidelines and be subject to the intensified supervision referred to in Section 5. This common conclusion should be communicated to the institution and the EU parent institution by the consolidating supervisor and the home competent authority.

The consolidating supervisor and the home and host competent authorities should agree on the timeline and the process for the performance of the intensification test, and on the preparation of the common conclusion on whether this test is satisfied.

The consolidating supervisor and the home and host competent authorities should endeavour to perform their common assessment of whether the conditions of the intensification test are satisfied making use of information already available from COREP and FINREP, as well as other information already collected from the institution, including from the institution’s or the group’s ICAAP or ILAAP. For that purpose and without prejudice to Article 28 of Commission Delegated Regulation (EU) 2016/98, the consolidating supervisor and the home and host competent authorities should also exchange within the college framework any further information necessary.

Where dissenting views on the outcome of the intensification test arise among the authorities and a common conclusion is prevented, the authorities should file with the EBA a request as referred to in Article 31(c) of the EBA Regulation along with all information necessary for the EBA to form an opinion on the disputed issues and assist the authorities in coming to a common conclusion. All the competent authorities involved should take into account the EBA’s opinion and settle the issue accordingly.

The consolidating supervisor or the home competent authority should ensure that a branch that satisfies the intensification test is duly noted in the mapping of the institution or the group and that information is communicated to the supervisory college as appropriate.

The consolidating supervisor and the home and host competent authorities should review their common conclusion on the outcome of the intensification test at least annually and update it. For the review and the update, paragraphs 20-23 and Section 4.2.2 apply.

Competent authorities should ensure that a branch no longer satisfying the intensification test remains a significant branch for the purposes of Article 51 of Directive 2013/36/EU unless reassessed otherwise under the provisions of that Article, as the assessment procedures remain separate.

4.2.2 Criteria for the intensification test

The consolidating supervisor and the home and host competent authorities should perform the intensification test having regard to the size, scope, nature and systemic importance of the branch’s activities in the host Member State and to its significance for the institution or the group.

The consolidating supervisor and the home and host competent authorities should consider that a significant branch should be further assessed only if that branch is providing critical functions within the meaning of Directive 2014/59/EU on the basis of information from the (group) recovery or the (group) resolution plan, in the following areas:

• (a) retail banking;
• (b) corporate banking;
• (c) payments, clearing, settlement;
• (d) custody;
• (e) intra-financial system borrowing and lending; or
• (f) investment banking.

The consolidating supervisor and the home and host competent authorities should consider whether a significant branch that provides critical functions also satisfies the following conditions:

• (a) the branch is important for the institution or for the group; or
• (b) the branch is of significant importance to the financial stability of the host Member State.

A significant branch providing critical functions should be considered important for the institution or for the group where the branch meets one or more of the conditions referred to in Article 7(2)(a)-(e) of Commission Delegated Regulation (EU) 2016/1075 either for the institution or for the group.

Competent authorities should also consider a significant branch important for the institution or the group where, on the basis of any information submitted by the institution or the EU parent undertaking including for the purposes of the ICAAP, ILAAP, recovery plan or any other planning, the branch has been referred to as being important, either for the institution or for the group.

For the purposes of the assessment of whether a significant branch providing critical functions should be considered of significant importance to the financial stability of the host Member State, competent authorities should consider if the branch meets any of the following criteria:

• (a) the market share of the branch in terms of deposits exceeds 4% in the host Member State;
• (b) the branch total assets (assets associated with the branch) form a significant part of the GDP of the host Member State (i.e. are greater than 4% of GDP);
• (c) the branch total assets (assets associated with the branch) form a significant part of the total assets of the host Member State banking system (i.e. are greater than 4% of total assets of the host Member State banking system); or
• (d) the branch can be considered systemically important on similar grounds to other systemically important institutions (O-SII) based on the assessment specified in the EBA guidelines¹¹ when applied to branch-specific data, where they are available. Given the extent of the integration of branches and the support received from institutions, competent authorities could also consider setting higher thresholds for O-SII scoring for the purpose of identifying branches that satisfy the intensification test.

¹¹ EBA Guidelines on the criteria to determine the conditions of application of Article 131(3) of Directive 2013/36/EU in relation to the assessment of other systemically important institutions (EBA/GL/2014/10).