S.L. 330.6 Art. 3Thresholds for identifying a financial conglomerate.

(1) For the purposes of determining whether the activities of a group mainly occur in the financial sector, the ratio of the balance sheet total of the regulated and non-regulated financial sector entities in the group to the balance sheet total of the group as a whole shall exceed forty (40) per centum.

(2) For the purposes of determining whether activities in different financial sectors are significant, for each financial sector the average of the ratio of the balance sheet total of that financial sector to the balance sheet total of the financial sector entities in the group and the ratio of the solvency requirements of the same financial sector to the total solvency requirements of the financial sector entities in the group shall exceed ten (10) per centum: Provided that for the purposes of these regulations, the smallest financial sector in a financial conglomerate is the sector with the smallest average and the most important financial sector in a financial conglomerate is the sector with the highest average. For the purposes of calculating the average and for the measurement of the smallest and the most important financial sectors, the banking sector and the investment services sector shall be considered together.

(3) Asset management companies shall be added to the sector to which they belong within the group. If they do not belong exclusively to one sector within the group, they shall be added to the smallest financial sector.

(4) Alternative investment fund managers shall be added to the sector to which they belong within the group. If they do not belong exclusively to one sector within the group, they shall be added to the smallest financial sector.

(5) Cross-sectoral activities shall also be presumed to be significant if the balance sheet total of the smallest financial sector in the group exceeds six (6) billion euro. If the group does not reach the threshold referred to in sub-regulation (2), the Authority may decide in agreement with the other relevant competent authorities not to regard the group as a financial conglomerate or not to apply the provisions of regulations 7, 8 or 9, if the Authority and the other relevant competent authorities are of the opinion that the inclusion of the group in the scope of these regulations or the application of such provisions is not necessary or would be inappropriate or misleading with respect to the objectives of supplementary supervision: Provided that decisions taken in accordance with this sub-regulation shall be notified to the other competent authorities and shall, save in exceptional circumstances, be made public by the Authority.

(6) If the group reaches the threshold referred to in sub-regulation (2), but the smallest sector does not exceed the six (6) billion euro threshold, the Authority may decide in agreement with the other relevant competent authorities not to regard the group as a financial conglomerate or not to apply the provisions of regulations 7, 8 or 9, if the Authority and the other relevant competent authorities are of the opinion that the inclusion of the group in the scope of these regulations or the application of such provisions is not necessary or would be inappropriate or misleading with respect to the objectives of supplementary supervision:

Provided that decisions taken in accordance with this sub-regulation shall be notified to the other competent authorities and shall, save in exceptional circumstances, be made public by the Authority.

(7) For the application of sub-regulations (1) to (6), the Authority, in agreement with the other relevant competent authorities, may:

(a) exclude an entity when calculating the ratios in the cases referred to in regulation 6(10) unless the entity moved from a Member State to a third country and there is evidence that the entity changed its location in order to avoid regulation; and

(b) take into account compliance with the thresholds envisaged in sub-regulations (1) and (2) for three consecutive years so as to avoid sudden regime shifts and disregard such compliance if there are significant changes in the group’s structure;

(c) exclude one or more participations in the smaller sector if such participations are decisive for the identification of a financial conglomerate and are collectively of negligible interest with respect to the objectives of supplementary supervision: Provided that where a financial conglomerate has been identified in accordance with sub-regulations (1) to (6), the decisions referred to in paragraph (a) shall be taken on the basis of a proposal made by the coordinator of that financial conglomerate.

(8) For the application of sub-regulations (1) to (4), the Authority may, in exceptional cases and in agreement with the other relevant competent authorities, replace the criterion based on balance sheet total with one or both of the following parameters:

(a) income structure;

(b) off-balance sheet activities; and

(c) total assets under management: Provided that the Authority may, alternatively, add one or both of these parameters if the Authority and the other relevant competent authorities are of the opinion that these parameters are of particular relevance for the purposes of supplementary supervision under these regulations.

(9) For the application of sub-regulations (1) to (4), if the ratios referred to in those sub-regulations fall below forty (40) per centum and ten (10) per centum respectively for conglomerates already subject to supplementary supervision, a lower ratio of thirty-five

(35) per centum and eight (8) per centum respectively shall apply for the following three years to avoid sudden regime shifts:

Provided that for the application of sub-regulation (5), if the balance sheet total of the smallest financial sector in the group falls below six (6) billion euro for conglomerates already subject to supplementary supervision, a lower figure of five (5) billion euro shall apply for the following three years to avoid sudden regime shifts: Provided further that during the period referred to in this sub-regulation, the coordinator may, with the agreement of the other relevant competent authorities, decide that the lower ratios or the lower amount referred to in this sub-regulation shall cease to apply.

(10) The calculations referred to in this regulation regarding the balance sheet shall be made on the basis of the aggregated balance sheet total of the entities of the group, according to their annual accounts. For the purposes of this calculation, undertakings in which participation is held shall be taken into account as regards the amount of their balance sheet total corresponding to the aggregated proportional share held by the group. Where consolidated accounts are available, they shall be used instead of aggregated accounts: Provided that the solvency requirements referred to in sub-regulations (2) to (5) shall be calculated in accordance with the provisions of the relevant sectoral rules.

(11) The Authority shall, on an annual basis, reassess waivers of the application of supplementary supervision and shall review the quantitative indicators set out in this regulation and risk-based assessments applied to financial groups.