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Having regard to the proposal from the Commission, - page 21 / 23

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17.11.2009

EN

Official Journal of the European Union

L 302/117

(d) point 15 is replaced by the following:

‘15. Credit institutions shall develop methodologies for the identification, measurement, management and monitoring of funding positions. Those method­ ologies shall include the current and projected material cash-flows in and arising from assets, liabilities, off-balance-sheet items, including contin­ gent liabilities and the possible impact of reputa­ tional risk.

  • 16.

    Credit institutions shall distinguish between pledged and unencumbered assets that are available at all times, in particular during emergency situa­ tions. They shall also take into account the legal entity in which assets reside, the country where assets are legally recorded either in a register or in an account as well as their eligibility and shall moni­ tor how assets can be mobilised in a timely manner.

  • 17.

    Credit institutions shall also have regard to existing legal, regulatory and operational limitations to potential transfers of liquidity and unencumbered assets amongst entities, both within and outside the EEA.

  • 18.

    A credit institution shall consider different liquidity risk mitigation tools, including a system of limits and liquidity buffers in order to be able to with­ stand a range of different stress events and an adequately diversified funding structure and access to funding sources. Those arrangements shall be reviewed regularly.

  • 19.

    Alternative scenarios on liquidity positions and on risk mitigants shall be considered and the assump­ tions underlying decisions concerning the funding position shall be reviewed regularly. For these pur­ poses, alternative scenarios shall address, in particu­ lar, off-balance sheet items and other contingent liabilities, including those of SSPEs or other special purpose entities, in relation to which the credit institution acts as sponsor or provides material liquidity support.

  • 20.

    Credit institutions shall consider the potential impact of institution-specific, market-wide and combined alternative scenarios. Different time hori­ zons and varying degrees of stressed conditions shall be considered.

  • 21.

    Credit institutions shall adjust their strategies, inter­ nal policies and limits on liquidity risk and develop effective contingency plans, taking into account the outcome of the alternative scenarios referred to in point 19.

22. In order to deal with liquidity crises, credit institu­ tions shall have in place contingency plans setting out adequate strategies and proper implementation measures in order to address possible liquidity

shortfalls. Those plans shall be regularly tested, updated on the basis of the outcome of the alterna­ tive scenarios set out in point 19, be reported to and approved by senior management, so that inter­ nal policies and processes can be adjusted accordingly.’;

41. in Annex IX, Part 3, Section 2, the following point is added:

‘7a. Competent authorities shall, furthermore, take the nec­ essary measures to ensure that, with regard to credit assessments relating to structured finance instruments, the ECAI is committed to make available publicly the explanation how the performance of pool assets affects its credit assessments.’;

  • 42.

    Annex XI is amended as follows:

    • (a)

      in point 1, point (e) is replaced by the following: ‘(e) the exposure to, measurement and management of

liquidity risk by the credit institutions, including the development of alternative scenario analyses, the management of risk mitigants (in particular the level, composition and quality of liquidity buffers) and effective contingency plans;’;

(b) the following point is inserted:

‘1a. For the purposes of point 1(e), the competent authorities shall regularly carry out a comprehen­ sive assessment of the overall liquidity risk manage­ ment by credit institutions and promote the development of sound internal methodologies. While conducting those reviews, the competent authorities shall have regard to the role played by credit institutions in the financial markets. The com­ petent authorities in one Member State shall duly consider the potential impact of their decisions on the stability of the financial system in all other Member States concerned.’;

43. in point 3 of Part 2 of Annex XII, points (a) and (b) are replaced by the following:

‘(a) summary information on the terms and conditions of the main features of all own-funds items and compo­ nents thereof, including instruments referred to in Article 57(ca), instruments the provisions of which pro­ vide an incentive for the credit institution to redeem them, and instruments subject to Article 154(8) and (9);

(b) the amount of the original own funds, with separate dis­ closure of all positive items and deductions; the overall amount of instruments referred to in Article 57(ca) and instruments the provisions of which provide an incen­ tive for the credit institution to redeem them, shall also be disclosed separately; those disclosures shall each specify instruments subject to Article 154(8) and (9);’.

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