Options and national discretions - Article 144(b)
Related external information
Committee of European Banking Supervisors
Options & National Discretions
Directives 2006/48/EC and 2006/49/EC contain options and discretions that supervised institutions, supervisory authorities or national legislators can use. So, implementing the Capital Requirements Directive (CRD) will result in differences in supervisory approaches, national circumstances or individual strategies.
Competent authorities are required to disclose how they will exercise the options and discretions available in the CRD.
There is no generally accepted definition of what constitutes a 'national discretion'. So the Committee of European Banking Supervisors (CEBS) has provided consistent terminology to clarify what is meant by an 'option' and a 'national discretion' for the supervisory disclosure framework.
- 'Option' refers to a situation where competent authorities or Member States are given a choice on how to comply with a given provision selected from alternatives set out in the Directive. For example, national authorities have the option, in determining the risk weights for exposures to institutions, of using either the central government risk-weight method or the credit assessment based method.
- 'Discretion' or 'National Discretion' refers to a situation where competent authorities or Member States are given a choice as to whether to apply a given provision. For example, Member States may, at national discretion, impose sub-consolidation in cases where it is not required and, if they do so, they may set the conditions.
Not all options or national discretions that might fall within the scope of the framework and meet the above definition are necessarily of interest for supervisory disclosure purposes. The supervisory disclosure framework specifically excludes supervisory actions or decisions aimed at specific institutions. Options and discretions which are exercised for individual institutions or to a given set of institutions, rather applying generally, are not disclosed under Article 144(b). The UK does not make disclosures about discretions that it does not have the power to exercise. In particular, when the CRD refers to an institution needing to obtain a competent authority's approval or authorisation for various purposes, this authorisation or approval might be discretionary but it is not a 'national discretion'.
The list is based on the UK Handbook rules which implement Directives 2006/48/EC and 2006/49/EC.
Options & Discretions table [Excel]
Mutual Recognition of Options and National Discretions
Sometimes, the CRD explicitly provides for the possibility of mutually recognising the exercise of certain national discretions in another Member State. Mutual recognition is crucial especially for cross-border groups.
Depending on the role of the respective competent authority in the cross-border approval process (home or host perspective) there are different constellations. We have included two tables in this section to give an overview of exercising the explicit mutual recognition clauses in the different Member States – from the point of view of FSA as home supervisor and FSA as host supervisor.
Tables of mutual recognition [Excel]