4.2 Consistency and continuity between the authorisation and the going-concern supervisory assessment

In accordance with the CAM, competent authorities should assess the application for authorisation as a credit institution consistently with the prudential requirements and the supervisory assessment methodologies applied in going concern. They should avoid assessment practices that promote contradictory approaches between the different phases of the credit institution’s lifecycle.

For this purpose, in order to avoid duplication and inconsistency of regulation, these Guidelines should be read in the light of the provisions of the legislative acts referred to in Article 1(2) of the EBA's founding Regulation, as well as the associated Delegated and Implementing acts, RTS, ITS, Guidelines and Recommendations, adopted under these legislative acts, which are relevant to the CAM, and cross-refer to them whenever appropriate and opportune.

Competent authorities’ assessment should focus on ensuring the sound and prudent management of the credit institution as of the first day of access to the market.

To ensure that this objective is met, competent authorities should only grant the authorisation when they are satisfied that all authorisation requirements are met. This notwithstanding, competent authorities should take into consideration the technical and operational adjustments that the credit institution might be subject to during its set-up phase. To ensure that these circumstances are duly taken into account, competent authorities may apply conditions precedent and/or obligations subsequent or restrictions, or clarify their expectations as to specific areas of supervisory focus in accordance with paragraphs 26–29 below.

Competent authorities may, at their own discretion, impose on the applicant credit institution conditions precedent and/or obligations subsequent at the time of issuance of the authorisation. The imposition of such conditions precedent and/or obligations subsequent should be subject to the competent authorities’ positive assessment that all requirements for granting the authorisation are met in substance and that they are satisfied with granting the authorisation. In order to ensure clarity and legal certainty, competent authorities should describe such conditions precedent and/or obligations subsequent clearly and well when applying them.

Consistently with paragraph 26, competent authorities may only apply conditions precedent relating to formal and non-substantive aspects of authorisation requirements, which in practice may only be satisfied by the applicant credit institution after the competent authority’s positive assessment of the fulfilment in substance of all authorisation requirements. By way of illustration, formal or non-substantive aspects of the authorisation requirements may include, depending on the circumstances, the submission of a piece of documentation formally adopted by the applicant, or the formal finalisation of a procedure internal to the applicant, or ICT system tests to check their full functioning in practice.

In accordance with the requirements and the limits set out in paragraphs 26 and 27, conditions precedent may be attached to the authorisation by the competent authorities in relation to matters where the applicant or the entity is required to undertake an action or to refrain from an action before the authorisation becomes effective. Competent authorities should set out a deadline for compliance and clearly indicate that the authorisation will only become effective once the condition has been fulfilled. So long as the condition is not fulfilled, the applicant credit institution cannot perform banking activities or use the name ‘bank’, ‘savings bank’ or other banking names.

Consistently with paragraph 26, competent authorities may impose obligations subsequent on the applicant credit institution in order to deal with matters occurring after the authorisation is granted. Such obligations subsequent may only be imposed by the competent authorities where, despite the applicant credit institution’s fulfilment of all the authorisation requirements in substance, compliance with one or more of them on an ongoing basis needs to be specifically monitored and enforced if warranted. Accordingly, competent authorities should clarify that, whilst failure to fulfil an obligation will not make the initial issuance of the authorisation ineffective per se, their non-compliance should be addressed by supervisory tools or result in the application of enforcement measures and/or sanctions. By way of example, obligations can be imposed in relation to matters which are considered to be implementing measures of the authorisation, such as reporting obligations or ensuring that members of the management body demonstrate adequate specific knowledge (e.g. undertaking training).

Without prejudice to the compliance with all the requirements for authorisation by the applicant credit institution, and subject to the positive assessment as to the granting of the authorisation, competent authorities, at their own discretion, may – at the time of the issuance of the authorisation – impose restrictions on the scope of some or all activities that the credit institution will be authorised to perform. Competent authorities may impose restrictions on some or all banking activities of the applicant credit institution in the same authorising document or separately from it. A restrictive undertaking of some or all banking activities by the applicant credit institution can either be put forward by the applicant credit institution in the application or may be the result of the comprehensive assessment by the competent authority.

In order to ensure clarity and legal certainty, competent authorities should clearly define such restrictions. By way of example, competent authorities may apply restrictions to the authorisation imposing a requirement to only take deposits up to a specific amount per depositor, or to only issue specific types of securities or to issue securities to only specific types of investors. The lifting of the applied restrictions should be subject to a proportionate assessment by the competent authority consistently with paragraph 18.

Subject to the meeting of all the requirements for granting the authorisation, competent authorities – at the moment of the issuance of the authorisation - may draw the attention of the applicant credit institution to specific areas of supervisory focus and illustrate their expectations in the same authorising document or separately from it. Competent authorities should provide reasons, and carefully set out the issue and the pursued objectives. The competent authority’s expectations, despite not being legally binding, should serve as guidance to the credit institution in going-concern.

Where the applicant credit institution belongs to a banking group and compliance with prudential requirements laid down in Parts Two to Eight CRR is required by the applicant credit institution or by its parent undertaking on the basis of their consolidated situation, competent authorities should review the analysis submitted by the applicant pursuant to Article 4, letter

• (f) of the RTS on information for authorisation , with a view to assessing its completeness and comprehensiveness. Where the competent authority is also the consolidated supervisor, it should also examine any effect on the applicable prudential requirements at consolidated level.

Competent authorities should identify the existence of any obstacles, having regard in particular to the existence of close links pursuant to Article 14(3) CRD, that could prevent the effective exercise of the supervisory functions, including, where applicable, on a consolidated basis, and consider any relevant information, circumstance or situation in accordance with Article 12 of the RTS on information for authorisation .