ECB Seeks EU Banking M&A With New Supervisory Guide

Latham & Watkins LLP

The Guide is intended to provide fresh clarity on the ECB’s approach to assessing proposed M&A transactions and enhance the transparency and predictability of supervisory actions.

Key Points:

Under the Guide, the ECB will:

..Not automatically penalise proposed M&A transactions by applying higher capital requirements; the starting point for capital will be the weighted average of the two banks’ Pillar 2 capital requirements and Pillar 2 guidance prior to the consolidation transaction

..Generally permit the use of bad will (i.e., the accounting gain generated by the acquisition of assets at a price lower than their fair value aka negative goodwill) to meet regulatory capital requirements

..Accept the temporary use of existing internal models to determine regulatory capital requirements, subject to credible model mapping and rollout plans to address the specific internal model issues created through the merger.

Please see full Alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Latham & Watkins LLP | Attorney Advertising

Written by:

Latham & Watkins LLP

Latham & Watkins LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.