Supervision of Financial Conglomerates in the Banking Union

In this chapter, the position of financial conglomerates within the European Banking Union is discussed. Financial conglomerates are typically large and complex groups, that combine banking and/or investment activities with other regulated and/or unregulated activities and usually operate across borders. The fact that their activities are not limited to banking activities, raises an interesting but complex question with respect to their regulation and supervision as conglomerates, in addition to the sectoral regulation and supervision, these groups and the individual entities in these groups operate under. The background and evolution of financial conglomerates and conglomerate supervision are discussed, as well as the manner in which it is embedded in financial supervision in Europe. Furthermore, the evolution of the sectoral group and consolidated supervision is being discussed, including the inception of the SSM and the challenges of supervision under the SSM, in particular where the conglomerate is under the direct supervision of the ECB. An additional layer of complexity is formed by the requirements that apply to resolution. The Financial Conglomerates Directive itself does not deal with the resolution of conglomerates and due to the sectoral approach to EU financial services regulation, the legal requirements need to be derived from the interplay between the sectoral regimes, that is partly European and partly national. The chapter is completed with conclusions, reflecting on the complex interaction between the different sectoral frameworks, difference and inconsistencies between frameworks, specificities of the various sectors and the need for a thorough assessment of the requirements that apply to conglomerates and their interaction.