On July 12, 2016, the ECB published its Guide on the approach for the recognition of institution protection schemes for prudential purposes. The CRR defines an IPS as a contractual or statutory liability arrangement which protects its member institutions and ensures that they have the liquidity and solvency needed to avoid, where necessary, bankruptcy. Certain waivers or derogations of capital requirements are available for IPS member institutions under CRR. In particular, CRR provides that the ECB may, subject to certain exceptions, allow credit institutions to apply a 0% risk weight to exposures to other counterparties which are members of the same IPS with the exception of exposures giving rise to Common Equity Tier 1, Additional Tier 1 and Tier 2 items. The ECB directly supervises the largest Eurozone banks for prudential purposes and overseas the prudential supervision by national regulators of the smaller Eurozone banks. The ECB’s Guide sets out how it intends to assess compliance of an IPS and its members with the requirements set out in the CRR to grant such a waiver.

The Guide is available at: https://www.bankingsupervision.europa.eu/ecb/pub/pdf/institutional_protection_guide.en.pdf and the feedback statement is available at: https://www.bankingsupervision.europa.eu/legalframework/publiccons/pdf/institutional/feedback_statement.en.pdf