Section 7: Prudential provisions

I. - Credit institutions and finance companies are required to comply with management standards designed to guarantee their liquidity and solvency vis-à-vis depositors and, more generally, third parties, as well as the balance of their financial structure.

In particular, they must comply with coverage and risk-spreading ratios.

To comply with solvency and liquidity standards, they may be authorised to use their internal risk assessment approaches.

Credit institutions and finance companies shall notify the Autorité de contrôle prudentiel et de résolution of material transactions between the credit institutions or finance companies of a mixed group and the mixed holding company or its subsidiaries, under the conditions defined in Article L. 612-24.

II. - A branch of a credit institution referred to in I of Article L. 511-10 may apply to the Autorité de contrôle prudentiel et de résolution for a total or partial exemption from the solvency, liquidity, leverage and large exposures requirements if the following conditions are met:

1° The relevant regulations and supervision in the country of the credit institution to which the branch belongs effectively take into account the risks assumed outside that country in a manner equivalent to the provisions in force in France;

2° The credit institution to which the branch belongs undertakes itself to supervise the operations of the branch in France, in accordance with the regulations in force in its country and under the control of the competent authority in that country;

3° The credit institution to which the branch belongs confirms that it will ensure that the branch has sufficient funds in France to cover its commitments, in particular to meet its short-term liquidity requirements;

4° The credit institution to which the branch belongs undertakes to inform the Autorité de contrôle prudentiel et de résolution of any relevant developments to ensure that the conditions set out in 1° to 3° continue to be met on an ongoing basis;

5° The competent authority of the State of the credit institution to which the branch belongs agrees to the exemption requested; it confirms that the situation of the credit institution to which the branch belongs is in order; it undertakes to inform the Autorité de contrôle prudentiel et de résolution of any significant change in the above conditions and to provide it, at its request, with any information relating to the credit institution to which the branch belongs that is relevant to the monitoring of the situation of the branch.

The Autorité de contrôle prudentiel et de résolution verifies that the above conditions are met and defines the terms and conditions of the branch's exemption. It shall ensure, in the light in particular of an express attestation from the competent authority of the State of the credit institution to which the branch belongs, that French credit institutions can benefit from equivalent treatment from this authority. To define these exemption procedures, the Autorité de contrôle prudentiel et de résolution takes into account the characteristics of the branch's activities in France as well as the characteristics of the regulations of the State of the credit institution to which the branch belongs. The Autorité de contrôle prudentiel et de résolution may make exemption from the liquidity rules conditional on the nature and forecast volume of the branch's programme of operations, particularly with regard to operations involving the receipt of funds repayable from the public.

The Autorité de contrôle prudentiel et de résolution may withdraw the benefit of this article from a branch if it considers that one of the conditions is no longer met.

Where a branch benefits from this Article, the Autorité de contrôle prudentiel et de résolution may also exempt that branch from the publication requirements set out in Part Eight of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013.

The branch shall inform the Autorité de contrôle prudentiel et de résolution of any relevant developments to verify that the above conditions continue to be met on an ongoing basis.

III. - Credit institutions, finance companies, financial holding companies, mixed financial holding companies and parent undertakings of finance companies shall establish procedures for their staff to report to the Autorité de contrôle prudentiel et de résolution any breaches or infringements of the provisions of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013, of this Title or Title III of this Book or of a regulation adopted for their application or of any other legislative or regulatory provision whose infringement entails infringement of the aforementioned provisions, committed or likely to be committed within their organisation, by a specific, independent and autonomous means.

III of Article 8 and Articles 10-1 and 12 to 13-1 of Law 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of economic life are applicable to any person who has issued an alert in accordance with the first paragraph of this III.

An order of the Minister for the Economy shall define the conditions for the application of this article.