Reporting obligations under Article 3 of the CIR

Whether, and to what extent, will the reporting obligations concerning Relevant Legal Entities (RLEs) under Article 3 of the CIR also apply where a recently acquired RLE is expected, with a high degree of certainty, to cease to exist as a legal entity prior to the adoption of the resolution plan as a result of a legal merger. Additionally, how should this acquired entity be treated for the purposes of resolution planning and related reporting obligations during the interim period between its acquisition and its absorption through merger? We wonder if resolution authorities (RAs) may waive the reporting obligations for this acquired entity for the first reporting cycle after acquisition. Against this background, does the framework require or allow a reclassification of the acquired entity (which used to be a Liquidation entity before acquisition with no reporting obligations) as an RLE immediately upon acquisition, implying inclusion in the group’s resolution plan and submission of the applicable reporting templates? Alternatively, may the acquired entity continue to be treated as a liquidation entity until the legal merger is completed, with its status and standalone reporting obligations remaining unchanged during the interim period? Clarification is sought on whether, in the context of M&A transactions, resolution authorities are expected to adjust the entity’s classification upon acquisition, or whether they may maintain the pre-acquisition status until legal integration is finalised.

This question arises from a scenario in which a resolution entity acquires a smaller credit institution that was previously designated as a “liquidation entity” by authorities. Following the acquisition, the entity becomes part of the acquirer’s resolution group and may meet the criteria for a “relevant legal entity” (RLE), for example due to size thresholds or the provision of critical functions. However, a legal merger (absorption) is planned only at a later stage (e.g. the following year). The issue is therefore whether the acquired subsidiary should be classified as an RLE during this interim period, thereby becoming subject to the associated  reporting requirements, or whether it can retain its prior classification as a liquidation entity until the merger is completed. In case the acquired subsidiary will be classified as an RLE, can it be waived from reporting obligations in the interim period between acquisition and legal merger? Clarification is sought on how these principles apply in this transitional context.