Czech Republic Delays Implementation of Banking Regulation Updates Amid Legislative Delays
The Czech Republic’s implementation of CRR II and CRD V has been delayed due to legislative delays, leaving financial institutions scrambling to prepare for a zero-period between the force and effect of laws.
Key Changes Introduced by the Amendment
- The cancellation of the principle of responsible banks, credit unions, and securities brokers
- Financial institutions will no longer be responsible for fulfilling prudential requirements on a consolidated basis if they are controlling financial holding entities
- Certain financial holding entities will fall under the supervisory authority’s direct competence
- Transfer of regulation regarding group companies to the Capital Requirements Regulation (CRR II)
- Effective from the end of June 2021, replacing individual national regulations that have been in effect
- Institutions must be aware of this duplicity until the amendment to the Act on Banks takes effect
- New duty for financial institutions to report loans provided to members of statutory bodies, supervisory boards, management boards, and their related parties
- Gains new powers regarding auditors for the Czech National Bank (CNB)
- The CNB can request that a bank replace its auditor if it failed to inform the CNB about certain negative findings during the audit
Background on the Delayed Implementation
The Ministry of Finance’s bill aimed at implementing EU regulation on prudential requirements primarily affecting the banking sector was delayed. The parliament failed to pass the amendment within the expected deadline, with deputies set to discuss it again after being referred back to the chamber by the senate.
Banks and financial institutions were initially scheduled to comply with the amended Act on Banks from the end of 2020 or mid-2021. However, due to legislative delays, the amendment is now likely to enter into force when promulgated in the Collection of Laws, making it essential for institutions to closely monitor developments.
What This Means for Financial Institutions
If you are unsure whether your institution is fully compliant with the new legal regulations or meets the requirements of the Czech National Bank, our regulatory specialists are available to provide assistance. It is crucial for financial institutions to be aware of these changes and take necessary steps to ensure compliance before the amendment takes effect.
Note: The article will be updated as more information becomes available.