Circumstances Under Which The Authority Considered The Financial Firms In Difficulty Or May Come Into Financial Difficulties, Detection Rules, Regulations

Original Language Title: Apstākļu, kādos iestāde uzskatāma par nonākušu finanšu grūtībās vai, iespējams, nonāks finanšu grūtībās, konstatēšanas normatīvie noteikumi

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Financial and capital market Commission, the provisions of regulations no 187 in 2015 3. November (financial and capital market Commission Council meeting Protocol No. 41 4 p.)
Circumstances under which the Authority considered the financial firms in difficulty or may come into financial difficulties establishing regulations Issued in accordance with the provisions of the credit institutions and investment firms restoration and settlement law article 3, fourth paragraph i. General questions 1. "conditions under which the Authority considered the financial firms in difficulty or may come into financial difficulties, the regulations establish rules" (hereinafter-the rules) shall define the circumstances when a credit institution or investment firm (hereinafter the authority) using the prudential supervision of credit institutions and investment firms restoration and adjustment Act (hereinafter Act) Article 103 in the first part of the financial and capital market Commission, for information, to assess whether it has come financial difficulties or may come into financial difficulties in article 39 of the law on the meaning of the third paragraph, as well as the criteria for evaluation should be carried out. 2. An assessment of whether the authority has reached financial difficulties or may come into financial difficulties, the conducts occur as the following conditions: 2.1.-any credit institution of the law of credit institutions the first paragraph of article 88 of the conditions; 2.2. investment brokerage company, have any of the conditions that may significantly affect the investment brokerage company's future operations. 3. to establish that the authority has reached financial difficulties or may come into financial difficulties, the authority shall evaluate the financial position of directly and indirectly related criteria relating to the following areas: 3.1. own capital; 3.2. liquidity; 3.3. Management; 3.4. the ability to function normally in daily work. 4. In assessing whether the institution has come into financial difficulties or may come into financial difficulties, in addition to take into account the macroeconomic development and market indicators (such as the ability of the authority to raise resources in the interbank market with other market participants equivalent conditions).
II. Equity 5. Assessing the institution's assets and liabilities, as well as the capacity of the institution in the near term (up to one year) to fulfill its binding equity requirements, evaluate the following criteria: 5.1 or the institution's own funds correspond to the level of authority mandatory statutory minimum and additional own funds requirements; 5.2. is not impaired asset quality, which can lead to institution binding minimum and additional own funds requirement is not complied with; 5.3. do the authorities shall not be less than the active liabilities. 6. in order to establish whether a body meets the provisions referred to in paragraph 5 of the criteria assessed by the relevant authority, additional criteria, including: 6.1 or institutions the cost of funding the long-term (over one year) is increasing; 6.2. in the short term (up to one year) the authority will need to comply with off-balance-sheet commitments, which would result in significant losses; 6.3. is there was a significant negative macroeconomic environment events, including adverse interest rate, real estate values, or changes of economic growth; 6.4. do not significantly worsened the image of the institution, which reflect the various market indicators (such as the ability of the authority to raise resources in the interbank market with other market participants equivalent conditions).
III. Liquidity 7. Finding that the authority will most likely not be able to meet regulatory requirements or liquidity to repay its debts and to fulfil the obligations prescribed period, based on the following criteria: 7.1. significant adverse events that affect the liquidity position of the Authority's development and its funding profile sustainability; 7.2. significant permanent adverse liquidity reserve of the authority and its liquid assets and potential funding sources (counterbalancing capacity). Liquid assets and potential funding sources for the dynamic assessment covers: 7.2.1 high confidence cash inflows, including credit lines granted, 7.2.2. any expected incoming cash amounts, could restore 7.2.3. funding (including the period up to the end of the period, and new funding the nature and form of the instrument), the availability of long-term funding 7.2.4., 7.2.5. large-scale counterparties and exceptional liquidity lines granted reduction or termination; 7.3. permanent institutions finance spending increase to unacceptable levels, specifically reflected in funding acquisition costs increase, compared with similar institutions; 7.4. the significant adverse changes to the Authority's existing and future commitments. Authorities in the context of existing and future assessments include: 7.4.1. expected and emergency cash outflows, including authorities additional counterparty collateral requests or requests for early discharge of their obligations, as well as the initial signs of a possible massive withdrawals of deposits from credit institutions and the planned emergency 7.4.2. security requirements, as well as central counterparties and other counterparties of the negative changes to the authority in relation to security 7.4.3., any possible obligations, including those related to the credit and liquidity line; 7.5. any indication that body has difficulty making payments through clearing and settlement systems; 7.6. the events that probably could seriously impair the reputation of the institution, in particular to one or more of the rating agencies dramatically lowering the rating as a result could be a significant reduction in funding or would fail to restore the funding, or enabled to external ratings based on contractual obligations. 8. in addition to the provisions of paragraph 7, the criteria set out in the authority shall take into account the following criteria: 8.1. have significant negative macroeconomic environment events that could compromise the institution's liquidity and long-term viability, including unfavourable interest rates, real estate values, or changes of economic growth; 8.2. the significant deterioration in the image of the authorities, which reflects the market permanent market indicators of the signs, including the display base (for example, credit default swaps and the subordinated debt interest increase), which indicates that the authority may occur or the authority will face liquidity problems that may threaten its long-term viability.
IV. Management authority observe the 9 criteria of significant shortcomings in the management of the authority and in conjunction with other criteria relating to equity and liquidity, may indicate a body falling into financial difficulties, including: 9.1. significant errors or discrepancies in the financial statements of the monitoring or, especially if it results in an external auditor disclaims an opinion is an opinion or with a note; 9.2. the management of long-term (over one year) was unable to make important decisions; 9.3. the serious shortcomings in the management of successive periods in accordance with financial and capital market Commission 1 November 2012, the legislative provision no. 233 "internal control framework, regulations of the terms" point 7, causing a negative impact on the authority of prudenciāl, including: 9.3.1. inadequate strategic planning and an acceptable level of risk and risk management system, as a result of the body not to identify, manage and report the risks to which the institution is or might be exposed to 9.3.2. substantial, failures, shortcomings and issues which were not appropriate and timely reported to management and to the regulatory requirements of 9.3.3. inadequate internal control mechanism, 9.3.4. significant damage to reputation as a result of the Authority's Board and to the members of the Council and who fulfil the basic functions, does not meet the eligibility and the eligibility criteria, 9.3.5. significant legal proceedings or disputes with respect to the Board and Council members, as well as another person who performs the basic functions of the authority by appointment or their dependents, 9.3.6. significant non-compliance with the regulations provided for remuneration.
V. the ability to function normally in daily working mode

10. The assessment of whether the authority has come or may come into financial difficulties, also take into account other conditions that can adversely affect the operational capability of the institutions to provide financial and investment services, the same regulatory capital and liquidity requirements, if they are not random and can not be timely and effectively prevented. Following intrinsic characteristics can include: 10.1 authorities inability to continue to meet their obligations to creditors permanent limitations, particularly the inability to guarantee depositors ' assets entrusted to safety; 10.2. the Authority's inability to make or receive payments and thus continue its operations permanent limitations; 10.3. market and depositors trust authority authorities of operational risk loss, as a result, the authority is no longer able to conduct business (as evidenced by the business partners and other interested parties do not wish to do business or to invest in its capital, as well as the existing business partners of the intention to terminate the contract, including a massive withdrawal of deposits by credit institutions).
Informative reference to the European banking authority guidelines rules contain provisions that the European banking authority document EB/PN/2015/07 "guidelines for the interpretation of the conditions under which the Authority considered the body that become or may become insolvent in accordance with the EU directive in 2014/59/article 32 paragraph 6". Financial and capital market Commission President k. Zakuli States