Given that many supervised credit institutions are under the control of the parent company, appropriate supervision of the parent company has proved necessary, especially if the parent company is recognized as a financial holding company (FHC) or mixed financial holding company (MFHC). A parent company qualifies as a financial holding company if more than 50% of its equity, consolidated assets, revenues, personnel or other indicator considered relevant by the banking supervisor are associated with subsidiaries that are credit institutions or financial institutions.
In order to ensure adequate supervision of credit institutions controlled by other companies and appropriate supervision of the whole group, the parent (M)FHC is also subject to the authorisation process, in accordance with the provisions of Article 73a of the Credit Institutions Act. Once authorised, the parent company is responsible for ensuring compliance with the consolidated prudential requirements for the entire supervised group. The parent (M)FHC may be exempted from the authorisation process if the conditions prescribed by law are cumulatively met and if another company takes on that responsibility within the group (Article 73a, paragraph (6) of the Credit Institutions Act and decision on documentation to be attached to the application for authorisation of the (M)FHC).
When the ECB is the supervisor of a significant banking group it is responsible for approving or exempting these parent (M)FHCs. More information on that topic is available here.
The authorisation or exemption of parent companies of less significant banking groups is the responsibility of the national supervisory authorities that supervise these groups.