The implementation of CRR II and CRD V has been delayed. The amendment introduces changes to the responsibility of banks, credit unions and securities brokers and new authorisations of the Czech National Bank. Financial institutions must prepare themselves for a zero period between the force and effect of laws.
In previous issues, we informed you about the Ministry of Finance’s bill to implement the EU regulation of prudential requirements affecting mainly the banking sector. The parliament did not manage to pass the amendment within the expected deadline, and after having been referred back to the chamber by the senate, deputies will discuss it again.
Banks were supposed to proceed in accordance with the amendment to the Act on Banks from the end of 2020, or mid-2021. As a result of legislative delays, the amendment is likely to enter into effect on the date it is promulgated in the Collection of Laws. We therefore recommend monitoring legislative process developments closely.
One of the major changes introduced by the amendment is the cancellation of the principle of responsible banks, credit unions and securities brokers. This change relates to the fulfilment of prudential requirements pertaining to financial holding entities on a consolidated basis if the entities are controlling the financial institutions. According to the amendment, financial institutions will no longer bear responsibility for the fulfilment of duties across the entire group. Moreover, certain financial holding entities will fall under the supervisory authority’s direct competence.
Another change is the transfer of the regulation of the range of group companies that are part of a consolidated group to the Capital Requirements Regulation (“CRR II”), effective from the end of June 2021;individual national regulations that have so far been in effect no longer apply. It is necessary to pay attention to this duplicity until the amendment to the Act on Banks enters into effect.
Under the amendment, financial institutions will have a new duty to report loans provided to members of statutory bodies, supervisory board, management boards and their related parties.
A new power will be added to the Czech National Bank with respect to auditors. The CNB shall be authorised to request that a bank replace its auditor if this auditor did not fulfil its duty to inform the CNB about certain negative findings during the bank’s audit.
If you are uncertain whether you are fully in line with the new legal regulations or the Czech National Bank’s requirements, our regulatory specialists will be happy to assist you.