Banks not liable to accept deposits?
Significant conceptual changes to the Act on Banks and the Act on Capital Market Undertakings are expected to enter into effect in mid-2021. The regulation of supervision over groups of investment companies (securities brokers) will be transferred to the Act on Capital Market Undertakings and the definition of banks will be extended beyond the current definition.
The Ministry of Finance has prepared a draft amendment to the Act on Banks and the Act on Capital Market Undertakings, implementing EU regulations regarding the capital markets union aimed at integrating the capital markets of EU member states. The implementation responds to a series of European regulations concerning credit institutions and investment companies.
In connection with changes to EU prudential requirements, the regulation of groups of investment companies including the supervision over such groups will be embodied directly in the Act on Capital Markets Undertakings. The Act on Banks will include only the regulation of supervision over Class 1 investment companies, i.e. large investment companies exceeding the set thresholds. This change is connected with a new definition of banks. The amendment envisions two types of banks: in addition to the banks we know now, a second category of banks will include large investment companies without a licence to accept deposits and provide credits. Under the new regulations banks will have the following defining characteristics only: a banking licence, a legal form of joint stock company, and a registered office in the Czech Republic. The banking licence’s content will depend on whether it involves a bank under the legislation currently in effect or a large investment company.
Apart from the above draft amendment, the process of transposing CRR II and CRD into Czech law also involves the submission of a draft Czech National Bank decree amending the Decree on the Performance of the Activities of Banks. Changes will primarily concern the regulation of capital reserves of securities brokers and the management and control system in relation to persons included in a consolidated group: this regulation will be included in EU or industry-specific legislation. The regulatory framework for investment companies responding to IFR and IFD regulations has also been taken into account.
CRR II and CRD V change the regulatory requirements for banks and some other existing rules. Despite the fact that the deadline for adapting to the changes will not expire until the end of this year or in June next year, we recommend starting to assess the impact of new measures now to ensure that your company’s transition to modified rules does not cause any major problems.