This point 5.2.2. concerns:

1. groups where the overarching parent undertaking in Belgium or in the EEA is a Belgian credit institution;
2. groups where the overarching parent undertaking in Belgium or in the EEA is an approved Belgian (mixed) financial holding company;
3. subgroups subject to a sub-consolidation obligation where a Belgian (mixed) financial holding company has been approved;
4. groups or subgroups where a Belgian credit institution has been designated;
5. groups or subgroups where a Belgian (mixed) financial holding company has been designated.

The institution which is at the head of these groups or subgroups^[1] is referred to as the "Belgian institution responsible for the group".

The Belgian institution responsible for the group must comply (on a consolidated and/or, where applicable, sub-consolidated basis) with Articles 21, 27 to 42, 56 to 59 and 63 to 71 of the Banking Law and (i) ensure that the governance arrangements, processes and mechanisms are consistent and well-integrated on a consolidated or sub-consolidated basis, (ii) assess the influence on each other of the companies included in the consolidated whole, and (iii) obtain all data and information relevant for the supervision of the group or subgroup.

All rules relating to good governance included in this Manual apply mutatis mutandis at group or subgroup level^[2].

In practice, the Belgian institution responsible for the group should implement arrangements, processes and mechanisms to ensure sound and consistent governance for the whole group or subgroup (including subsidiaries not covered by Directive 2013/36/EU and subsidiaries established in third countries as well as offshore financial centres^[3]) on a consolidated and sub-consolidated basis. These arrangements, processes and mechanisms should be appropriate to the structure, business models and risks of the group or subgroup (application of the principle of proportionality) and should not compromise the responsibility of the decision-making bodies of the institutions comprising the group or subgroup.

Without prejudice to the governance requirements applicable on an individual basis to regulated entities within the group or subgroup, the Belgian institution responsible for the group should ensure that the governance arrangements, processes and mechanisms it has put in place at group or subgroup level cover at least the following specific governance requirements^[4]:

• Interaction between decision-making bodies: the relevant decision-making bodies within the Belgian institution responsible for the group or subgroup should interact and exchange data and information regularly with the entities within the group or subgroup. The governance arrangements, processes and mechanisms should ensure that the Belgian institution responsible for the group has sufficient data and information at its disposal to be able to assess the risk profile at group or subgroup level. This data or information must allow the group or subgroup to be supervised and steered, while remaining specific so as not to interfere with the subsidiaries’ compliance with their local obligations regarding the exchange of information. Furthermore, the statutory governing body of the Belgian institution responsible for the group or subgroup should ensure that the different group or subgroup entities (including the Belgian institution responsible for the group) receive sufficient information to get a clear perception of the general objectives, strategies and risk profile of the group or subgroup and of how the group or subgroup entity concerned is embedded in the structure and operational functioning of the group or subgroup. Such information and revisions thereof should be documented and made available to the relevant functions concerned, including the statutory governing body, business lines and independent control functions. The members of the statutory governing body of the Belgian institution responsible for the group or subgroup should keep themselves informed about the risks posed by the group’s or subgroup’s structure. Without prejudice to any local obligations regarding the exchange of information and professional secrecy, this includes receiving: (i) information on main risk drivers; (ii) regular reports assessing the responsible Belgian institution’s overall structure and evaluating the compliance of individual entities’ activities with the approved strategy for the group or subgroup as a whole; and (iii) regular reports on topics where the regulatory framework requires compliance at individual, consolidated, and/or, if applicable, sub-consolidated levels;

• Group-level risk management: the Belgian institution responsible for the group or subgroup should implement a risk management system at group or subgroup level that takes into account interdependencies, and in particular: (i) reputational risk and risks arising from intra-group transactions and risk concentrations, including contagion risks, at group or subgroup level; (ii) interdependencies between risks arising from conducting activities through different entities and in different jurisdictions; (iii) risks arising from entities in third countries; (iv) risks arising from unregulated entities; and (v) risks arising from other regulated entities;

• Risk concentration: the Belgian institution responsible for the group or subgroup should ensure that there are processes and procedures in place to identify, measure, manage, monitor and report risk concentrations;

• Intra-group transactions: the Belgian institution responsible for the group or subgroup should ensure that the risk management system of the group or subgroup and of each individual undertaking includes processes and procedures to identify, measure, monitor, manage and report significant intra-group transactions;

• Internal control system and independent control functions at group level: the Belgian institution responsible for the group or subgroup should ensure that the internal control systems within the group are consistent and should establish independent control functions at group level that can provide a holistic view of all risks at group or subgroup level;

• Intra-group outsourcing: withouvt prejudice to the outsourcing rules to be followed individually by the subsidiaries, the Belgian institution responsible for the group or subgroup should document intra-group outsourcing in order to identify which functions are outsourced to which legal entity and should ensure that the performance of critical or important functions, activities or tasks of the group or subgroup entities is not compromised by the outsourcing arrangements;

• Remuneration: the Belgian institution responsible for the group or subgroup should establish a consistent remuneration policy for the whole group, in line with the group's of subgroup’s risk management strategies. In this respect, it is recalled that, as regards remuneration, only "institutions", "financial institutions" and “institutions offering ancillary services”, as defined in Article 4(1)(3), (18) and (26) of Regulation No 575/2013 are included within the scope of regulatory consolidation. The remuneration policy of the group or subgroup, established in accordance with Belgian rules, should also extend to the foreign subsidiaries that are included within the scope of consolidation of the group or subgroup, insofar as they employ employees whose professional activities have a significant impact on the group's or subgroup’s risk profile. However, in accordance with the new Article 168/1, § 1 of the Banking Law, subsidiaries within the scope of regulatory consolidation are exempted from the application of the remuneration requirements insofar as they are subject to such requirements on the basis of rules specific to their sector;

• Management of conflicts of interest: the Belgian institution responsible for the group or subgroup should take into account the interests in the context of a conflict of interest policy at group or subgroup level on a consolidated or sub-consolidated basis. In accordance with Article 21, § 1, 3° in conjunction with Article 168, § 1 of the Banking Law, the said institution should put in place on a consolidated or sub-consolidated basis effective procedures for the identification, measurement, administration, monitoring, internal reporting and prevention of risks of conflicts of interest within the group or subgroup.

For further information, please refer to paragraphs 83 to 90 of Guidelines EBA/GL/2021/05.

^[1] This may be a Belgian parent credit institution (Art. 164, § 2, 2°), a designated credit institution governed by Belgian law (Art. 164, § 1, 6°), an approved or designated (mixed) financial holding company governed by Belgian law (Art. 164, § 1, 5° and 7°).

^[2] Article 205 provides that Belgian parent credit institutions, designated credit institutions governed by Belgian law and approved or designated (mixed) financial holding companies governed by Belgian law are responsible for compliance with the obligations relating to the consolidated supervision. Where an approved mixed financial holding company and a parent credit institution governed by Belgian law are at the head of a financial conglomerate, they should also be responsible for compliance with the obligations arising from the supplementary conglomerate supervision. A designated mixed financial holding company or a designated credit institution may also exercise such responsibility for the group as a whole, if the banking sector is the most important sector within the financial conglomerate based on Article 186, § 3.

^[3] For more precise information on the scope of consolidation of the group or subgroup and the distinction between subsidiaries that fall within the scope of Directive 2013/36/EU and those that do not, please refer to the Banking Law and to Regulation No 575/2013. As regards the applicable scope of consolidation for remuneration requirements, some exceptions apply, in accordance with Article 109(4) and (5) of Directive 2013/36/EU, Article 212 of the Banking Law, which refers to Article 71 of the same Law, and certain Annexes to the Banking Law.

^[4] Non-exhaustive list of specific requirements for the group or subgroup.