2.1 Scope
2.1.1 Institutions covered by this chapter and SSM supervision
2:4 This chapter applies to significant credit institutions[1] and other institutions (i.e. (mixed) financial holding companies[2]) that are subject to direct supervision by the ECB pursuant to Article 6(4) and (5)(b) of the SSM Regulation. It serves as a reference for suitability assessments conducted for the appointment of directors, senior managers and persons responsible for independent control functions, as well as for changes in qualifying holdings.
2:5 The suitability requirements apply to these institutions in accordance with the rules of the Single Supervisory Mechanism (hereinafter “SSM”). Specifically, this means that, although the ECB has competence for significant institutions, it is the task of the national competent authorities to assist the ECB in its supervisory activities. In this context, the services of the NBB participate in Joint Supervisory Teams and are, in certain cases, the first point of contact for the institutions. Considering this approach, the term “supervisor” in this Manual refers to the ECB in its capacity as the authority responsible for the direct supervision of the institution concerned and/or, as appropriate, to the NBB where it assists the ECB in the context of the SSM.
2:6 The main steps of the suitability procedure for significant institutions and the cooperation between the supervisors involved are summarised in the diagram below, which is taken from the ECB’s website and provides a - non-exhaustive - overview of the fit & proper process:
2:7 The final decision is taken by the ECB, and the decision-making process usually takes several weeks (see point 2.6.2. Assessment procedure). For more information on the division of powers between the NBB and the ECB, see the following link: https://www.bankingsupervision.europa.eu/banking/tasks/authorisation/html/index.en.html.
2.1.2 Persons covered by this chapter
2:8 This chapter covers the scope and assessment of the individual and, where applicable, collective suitability of persons who hold or wish to hold the following positions:
2:9 Senior managers at “N-1” level (managers who exercise a direct and decisive influence on the management of the institution but who are not members of the management committee), with the exception of branch managers, do not have to be approved by the supervisor. Of course, this does not mean that these persons should not have the fitness and propriety required for their position. The principles of this chapter also apply to them but, as they are not assessed by the supervisor, institutions are not required to submit the notification forms covered in Chapter 5 of this Manual. For further clarification, please refer to the provisions on assessing the suitability of key function holders in Guidelines EBA/GL/2021/06.
2.1.3 Cross-border context
2:10 For the application of this chapter within a cross-border context, a distinction must be made between the following three situations:
- Institutions established in the European Economic Area operating in Belgium through a branch or under the freedom to provide services => This chapter does not apply to the managers of institutions established in the European Economic Area operating in Belgium through a branch or under the freedom to provide services.
- Belgian institutions operating abroad through a branch => This chapter applies to the managers and persons responsible for independent control functions of branches of institutions authorised in Belgium operating abroad through a branch (Article 86 of the Banking Law).
- Institutions governed by the law of a non-Member State of the European Economic Area operating in Belgium through a branch => This chapter applies to the managers and the person responsible for the compliance function of branches established in Belgium of institutions governed by the law of a non-Member State of the European Economic Area (Article 335 of the Banking Law).
2.1.4 Group context
2:11 Pursuant to Article 109(2) and (3) of CRD IV, as transposed in Article 168 of the Banking Law, the consolidating institution must ensure the implementation of (and compliance with) a consistent and integrated group policy for assessing the suitability of all subsidiaries included in the prudential consolidation. Effective implementation of these obligations is further clarified in Guidelines EBA/GL/2021/06 (paragraphs 117 to 122).
2:12 The persons concerned must be suitable to hold their positions and thus meet the suitability assessment standards, at the level of both the Belgian parent company and all regulated Belgian subsidiaries. If a person holds a position requiring a suitability assessment at both parent and subsidiary level, two separate assessments need to be carried out.
[1] In this context, significant institutions are institutions meeting at least one of the significance criteria set out in the SSM Regulation. The list of institutions subject to direct supervision by the ECB can be found at https://www.bankingsupervision.europa.eu/banking/list/who/html/index.en.html. Please note that this term should not be confused with the Belgian notion of “significant credit institution” as defined in Article 3, 30° of the Banking Law.
[2] More specifically, pursuant to Article 212 of the Banking Law, the rules on suitability set out herein apply to (mixed) financial holding companies governed by Belgian law. The said Article 212 of the Banking Law declares Article 60 of the same law, which concerns fit & proper assessments, applicable to all (mixed) financial holding companies. In addition, Article 168, § 1 declares certain other governance aspects as explained in the NBB's Governance Manual applicable to approved or designated financial holding companies heading a group or subgroup.
[3] Members of the management committee are subject to the provisions of this chapter, whether or not they are directors. As a reminder, in certain types of holding companies, the management committee may be composed of directors and managers who are not members of the statutory governing body (see Article 212 of the Banking Law). Pursuant to Article 26, second paragraph, 2° of the Banking Law, a similar derogation may be requested for credit institutions, depending on their size and risk profile.
[4] The assessment must pertain to the most senior person responsible for the independent control function.