5.5 Application of supervisory measures and sanctions

The consolidating supervisor or the home competent authority should apply supervisory measures as provided for in Articles 104 and 105 of Directive 2013/36/EU to the institution based on the SREP findings and the specific findings of the branch risk assessment when measures are applied in relation to the risks taken by the institution through a significant-plus branch or deficiencies identified in such a branch.

Without prejudice to Article 41 of Directive 2013/36/EU, the consolidating supervisor and the home and host competent authorities should coordinate the application of supervisory measures and precautionary measures taken in relation to the significant-plus branch, within the framework of colleges of supervisors, considering in particular the following:

• (a) the type of the measures to be taken;
• (b) the timing of the measures and their duration;
• (c) the scope of the measures in terms of the exposures concerned or governance or any other relevant issues, or individuals, if addressed to individuals; and
• (d) links to the supervisory findings highlighted in the branch risk assessment.

The consolidating supervisor and the home and host competent authorities should regularly inform each other about any macroprudential measures, or any other measures applied to institutions or branches for the purpose of safeguarding financial stability, that might be relevant to the institution or the significant-plus branch.

The consolidating supervisor or the home competent authority should consider the information regarding macroprudential measures received in accordance with the previous paragraph for the purpose of deciding whether to extend the measures to the entire institution under the provisions on voluntary reciprocity for macroprudential measures set out by the European Systemic Risk Board (ESRB)¹⁴ .

¹⁴ See the ESRB’s Recommendation on the assessment of cross-border effects of and voluntary reciprocity for macroprudential policy measures (ESRB/2015/2).

When deciding on reciprocating macroprudential measures applied in a host Member State to an institution operating through a branch, the consolidating supervisor or the home competent authority should also consider the following:

• (a) the type, scope and nature of the macroprudential measures, and whether they are ‘Pillar 1 type measures’ (e.g. changes to risk weights in accordance with Article 124 of Regulation (EU) No 575/2013) or ‘Pillar 2 type measures’ (e.g. a risk weight floor applied in accordance with Article 103 of Directive 2013/36/EU);
• (b) the scope and nature of the operations of the branch, and in particular whether its operations or exposures would have been affected by the macroprudential measure, if operations or exposures were undertaken by an institution when operating in the host Member State through a subsidiary rather than a branch;
• (c) the macroprudential framework and any existing macroprudential measures in the home Member State that are applicable to the institution (and therefore to its branches), and whether these are aimed at addressing the same risk as the measures applied by the host competent authority;
• (d) the recommendations of the ESRB setting minimum standards for reciprocity in macroprudential matters¹⁵ .

¹⁵ Ibid.