AI Summary of Article 396 Compliance with large exposures requirements
This document outlines the protocol for institutions exceeding the exposure limits set out in Article 395(1). In exceptional cases, such institutions must promptly notify the competent authorities, who may grant a temporary reprieve for compliance. The authorities can consider exceeding the 100% limit of the institution's Tier 1 capital on a case-by-case basis.
Should an extension beyond three months be required, the institution is obliged to submit a compliance restoration plan, monitored by the competent authority. Additionally, guidelines from the EBA will delineate criteria for identifying exceptional circumstances, suitable compliance timelines, and necessary remedial measures to ensure institutional adherence.
Article 396 Compliance with large exposures requirements
1. If, in an exceptional case, exposures exceed the limit set out in Article 395(1), the institution shall report the value of the exposure without delay to the competent authorities which may, where the circumstances warrant it, allow the institution a limited period of time in which to comply with the limit.
Where the amount of EUR 150 million referred to in Article 395(1) is applicable, the competent authorities may allow the 100 % limit in terms of the institution's Tier 1 capital to be exceeded on a case-by-case basis.
Where, in the exceptional cases referred to in the first and second subparagraph of this paragraph, a competent authority allows an institution to exceed the limit set out in Article 395(1) for a period longer than three months, the institution shall present a plan for a timely return to compliance with that limit to the satisfaction of the competent authority and shall carry out that plan within the period agreed with the competent authority. The competent authority shall monitor the implementation of the plan and shall require a more rapid return to compliance if appropriate.