The consultation runs until 17 May 2021. It details the criteria to determine the period of time and the measures for institutions to return to compliance with those limits.
The guidelines clarify that any breach of the large exposure limits of Article 395(1) of the Capital Requirements Regulation should always be considered as an exceptional case.
Competent authorities should consider at least the following three criteria:
- whether the breach was a rare event;
- whether the institution could foresee the event when it had applied a proper and effective risk management; and
- whether it was caused by reasons beyond the institution’s control.
If the breach does not fulfil those criteria, the competent authority should not grant the institution more than three months to restore compliance with the large exposure limit.
When an institution is granted more than three months to comply with the limits, it should present a compliance plan to the competent authority with a number of measures as listed in the guidelines.
In 2021 EIOPA intends to complete the priorities stemming from the previous plan, while allowing for flexibility to continue monitoring and mitigating the impact from the Covid-19 pandemic. Similarly to the previous plans, the priority areas fall within the following building blocks:
- Practical implementation of the common supervisory culture and further development of supervisory tools;
- Risks to the internal market and the level playing field which may lead to supervisory arbitrage; and
- Supervision of emerging risks.
EIOPA also identified three new priorities for 2021 and will take the following actions:
- Take step-by-step measures for integrating the environmental, social and governance risks into prudential and conduct supervision;
- Address supervisory concerns arising from the recent market development of multi-employer IORP providers; and
- Further analyse and identify potential risks to the internal market following the identification of inconsistencies in the way national competent authorities treat reinsurance undertakings with the head office located in third countries.
The scope of application of the Facility shall refer to policy areas of European relevance structured in six pillars:
- green transition;
- digital transformation;
- smart, sustainable and inclusive growth, including economic cohesion, jobs, productivity, competitiveness, research,
- development and innovation, and a well-functioning internal market with strong SMEs;
- social and territorial cohesion;
- health, and economic, social and institutional resilience, with the aim of, inter alia, increasing crisis preparedness and
- crisis response capacity; and
- policies for the next generation, children and the youth, such as education and skills.