Roundtable on the Review of the FCD Jitka Svobodová CNB, Financial Market Regulation Division Brussels, 8 September 2008 The Scope of the Financial Conglomerates Directive

Supervision over the financial market in Czech Republic Since 1 April 2006 the supervision has been integrated into the Czech National Bank The CNB performs supervision of the banking sector, the capital market, the insurance industry, pension funds, credit unions and electronic money institutions, regulated markets, as well as foreign exchange supervision The CNB approves bond issuance conditions and securities prospectuses and grants consents to takeover bid announcements and squeeze-outs At the end of 2007, the CNB was supervising a total of 23 banks and building societies, 19 credit unions, 34 insurance companies, 10 pension funds, 21 depositories, 121 open-end mutual funds, 31 non-bank investment firms and almost 3,000 non-bank foreign exchange entities

Supervision at the level of the financial conglomerate The CNB  the coordinator - Petr Kellner (PPF)  a relevant competent authority - Erste Bank, RZB – UNIQA, Wüstenrot, Wüstenrot und Württembergische Group and Generali

Financial conglomerate – Petr Kellner (PPF) The insurance-led financial conglomerate qualified in 2006 A natural person as a mixed financial holding company at the head of the group Several sub-conglomerates with mixed financial holding companies at the head of subgroups

The scope of the capital adequacy calculation All of MFHCs included in the scope of the calculation In the case of insurance-led financial conglomerates solvency requirements for insurance undertaking should be used  none technical provisions - the required solvency margins zero The CNB practical approach  MFHCs should be in all cases treated as an entity from the banking sector – the banking regulation is more appropriate to the character of MFHCs

PPF after the business combination with Generali Remains in control of banks and financial institutions Retains its participation in the holding company which controls insurance undertakings, investment firms and financial institutions (insurance activities are more significant) The holding company and its subsidiaries are parts of a different financial conglomerate The parent undertaking + its subsidiaries from the banking sector + the holding company in which the parent undertaking holds a participation A financial conglomerate or a group of a financial holding company? Key characteristics

Threshold for FCs already subject to supplementary supervision Art. 3(6) of FCD - for the following three years  A lower ratio of 35 % and 8 % respectively (instead of 40 % and 10 %)  A lower figure of EUR 5 billion (instead of EUR 6 billion) to avoid sudden regime shifts An insurance holding company a mixed financial holding company (at the head of the insurance-led sub-conglomerate) An insurance holding company a mixed-activity insurance holding company

A convenient approach? To take also into consideration intended changes in the sub- group structure before ceasing the supplementary supervision on the financial conglomerate level The following three years could be the appropriate period for the clarification of the character of the holding company The balance between effectiveness and flexibility in the application of FCD could be preserved

Thank you for your attention