Scope of prudential consolidation

Does the answer to Q&A 2019_4711 also apply to those cases where a consolidated requirement is triggered by Regulation (EU) 2019/2033 (IFR)?

Q&A 4711 explains that the application of the requirements set out in Article 22 CRR shall not result in an undue multiplication in the number of sub-consolidating layers within a banking group, except when it is justified by supervisory considerations. Therefore, where the structural organisation of the group comprises institutions arranged in a chain of subsidiaries, Article 22 CRR shall apply to the last subsidiary institution in the Union which is the (direct or indirect) parent undertaking in accordance with Article 4(1)(15) CRR of a subsidiary (or of an undertaking in which the subsidiary institution holds a participation) established in a third country.   The Q&A answers to those cases where the sub-consolidated requirement is triggered by Article 22 CRR. Different from that situation, here, a consolidated requirement in the last layer of the banking group in the Union is not triggered by Article 22 CRR but is instead triggered by Article 7 IFR. It is not clear whether the rationale of the answer to Q&A 2019_4711 also holds in this situation.   In the terms of Q&A 2019_4711, the group structure is as follows: A significant institution (SI) has a direct subsidiary institution (S1) in the same Member State. S1 has a second subsidiary institution (S2) in the same Member State. S2 has a subsidiary (S3) in another EU Member State that is a financial institution pursuant to Article 4(1)(26) CRR, as amended by the IFR, and a Union parent investment holding company pursuant to Article 4(1)(57) IFR. S3 has one subsidiary investment firm in the EU and subsidiaries in a third country that are either investment firms or other financial institutions. The participations in such subsidiaries are the main asset on the balance sheet of S3.   The IFR imposes requirements at the consolidated level of a Union parent investment holding company (S3), thereby already providing a consolidating layer in the banking group in the Union in which the third country subsidiaries of S3 are included: Article 7(1) IFR, “Union parent investment firms, Union parent investment holding companies and Union parent mixed financial holding companies shall comply with the obligations laid down in Parts Two, Three, Four, Six and Seven on the basis of their consolidated situation. [..]”; and Article 7(3) IFR, “Union parent investment firms, Union parent investment holding companies and Union parent mixed financial holding companies shall comply with the obligations laid down in Part Five on the basis of their consolidated situations”.   It is not clear whether the existence of the consolidated requirement pursuant to Article 7 IFR at the level of S3 may be regarded as equivalent to the sub-consolidated requirement under Article 22 CRR such that, under the same argument as in Q&A 4711, the sub-consolidated requirement pursuant to Article 22 CRR would not be triggered at the level of the (subsidiary) institutions higher up in the banking group in the Union – i.e. S2 or higher.