WHAT IS THE AIM OF THE DIRECTIVE?
- Directive 2002/87/EC seeks to enhance the effective supervision of financial conglomerates – large financial groups that are active in different financial sectors (banking/investment services and insurance), often across borders.
- The directive’s overall aim is to contribute to greater financial stability and consumer protection in the European Union (EU).
KEY POINTS
The directive sets out specific requirements:
- on solvency, with an overall requirement integrating all of the sectoral solvency requirements to which the group is subject, to prevent the same capital being used more than once as a buffer against risk in different entities in the same conglomerate (multiple gearing of capital) and to prevent downstreaming by parent companies, whereby they issue debt and then use the proceeds as equity for their regulated subsidiaries (excessive leveraging);
- on the suitability and professionalism of the conglomerate’s management;
- to ensure appropriate risk management and internal control systems within the conglomerate;
- stipulating that a single supervisory authority should be appointed to coordinate the overall supervision of a conglomerate, which may involve many different authorities dealing with different parts of the conglomerate’s activities;
- on information sharing and cooperation among the supervisors (including those in non-EU countries) of the regulated entities in a financial conglomerate;
- on financial supervisors’ powers to oversee conglomerates’ parent entities, such as holding companies, to allow supervisors to obtain better information at an earlier stage and be better equipped to intervene in the event of a financial conglomerate running into trouble;
- on developing technical standards so that institutions that are part of a financial conglomerate apply the appropriate calculation methods for determining required capital on a consolidated basis (see summary) and report to their supervisors on intragroup transactions and risk concentration.
Amending Directive (EU) 2023/2864 inserts an article into Directive 2002/87/EC requiring EU Member States, from 10 January 2030, to ensure that, when making public any information, the regulated entities submit that information at the same time to the collection body, and notify the European Securities and Markets Authority (ESMA) thereof for the purposes of making it accessible on the European single access point, set up under Regulation (EU) 2023/2859.
FROM WHEN DOES THE DIRECTIVE APPLY?
Directive 2002/87/EC had to be transposed into national law by 10 August 2004. The rules contained in the directive should apply from the same date.
BACKGROUND
For further information, see:
MAIN DOCUMENT
Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council (OJ L 35, 11.2.2003, pp. 1–27).
Successive amendments to Directive 2002/87/EC have been incorporated into the original text. This consolidated version is of documentary value only.
RELATED DOCUMENTS
Regulation (EU) 2023/2859 of the European Parliament and of the Council of 13 December 2023 establishing a European single access point providing centralised access to publicly available information of relevance to financial services, capital markets and sustainability (OJ L, 2023/2859, 20.12.2023).
See consolidated version.
