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2.7 Bank's Subsidiaries and Affiliates (Exposures Within a Banking Group)

C 32/2013 GUI

Whenever a bank incurs an exposure to its own parent company or to other subsidiaries of its parent, particular concerns arise. Although the management of exposures should be carried out in a fully autonomous manner according to the principles of sound banking management and without regard to any considerations other than those principles, it cannot be excluded that a certain influence on credit decisions may be exercised by persons directly or indirectly holding a qualifying participation in such a bank. As a consequence thereof, this influence may be used to the detriment of the sound and prudent management of that bank. Therefore, the Central Bank has decided to set the individual limit for an exposure at 10% in such case and to fix an aggregate limit for all such exposures at 25% of a bank’s capital base.