On February 19, 2016, the European Central Bank launched a consultation on its proposed guide to the recognition of institutional protection schemes for prudential purposes. Under the Capital Requirements Regulation an IPS is a contractual or statutory liability arrangement of a group of banks which protects member institutions, in particular, by ensuring their liquidity and solvency. Certain waivers or relaxation 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. 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 proposed guidelines set out how it intends to assess compliance of an IPS and its members with the requirements set out in the CRR. Responses to the consultation should be submitted by April 15, 2016. Once finalized, the final guidelines will be incorporated into the ECB Guide on options and discretions available in Union law (which is currently being finalized).

The proposed guide is available at: https://www.bankingsupervision.europa.eu/legalframework/publiccons/pdf/institutional/pub_con_doc_institutional_protection.en. pdf?5f2f68175cfd4938e56e5fe520efbe4e.

The ECB’s consultation webpage is available at: https://www.bankingsupervision.europa.eu/legalframework/publiccons/html/institutional_protection.en.html