FRANCE Law and Practice Contributed by: Damien Luqué, Martin Jarrige de la Sizeranne and Sacha Tartarin, Lacourte Raquin Tatar
• operational risk; • interest rate risk; and • liquidity risk.
Credit institutions must also comply with liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) requirements. The LCR aims to ensure that credit institutions hold a sufficient reserve of high-quality liquid assets, which can be liqui - dated quickly if needed, to allow them to survive a period of significant liquidity stress lasting 30 calendar days. The NSFR requires credit institu - tions to maintain a stable funding profile in rela - tion to their off-balance sheet assets and activi - ties, to strengthen their resilience over a longer time horizon. In addition, credit institutions must also satis - fy additional capital requirements made up of capital buffers: the capital conservation buffer and the counter-cyclical buffer. G-SIIs are also subject to additional capital buffer requirements. 8. Insolvency, Recovery and Resolution 8.1 Legal and Regulatory Framework Insolvency The French legal framework governing insolven - cy proceedings applicable to French commercial companies is mostly codified in Book VI of the French Commercial Code, which establishes the three main types of proceedings: safeguard, judicial reorganisation and judicial liquidation. As common insolvency law is not appropriate to the situation of a credit institution’s failure, French law has set up a special framework in Book VI of the French Monetary and Financial Code. This specific regime aims to ensure the protection of the public interest and restore con - fidence in the failing institution. This dedicated framework includes a specific definition, applicable to credit institutions, of
This involves establishing and updating a risk map; reporting to the executive management, to the supervisory board and, where appropriate, to the risk committee; and implementing policies and procedures for managing and preventing the various risks to which the credit institution is exposed. Risk monitoring also involves overseeing the regulatory own funds requirements taking into account the risks faced by the credit institution. Information and data on prudential requirements (ie, own funds, liquidity, leverage, etc) must be regularly reported to the ACPR (i) on a consoli - dated basis through the reporting of financial information (FINREP) and common solvency ratio reporting (COREP), and (ii) on an individual basis through the unified reporting system for banks and equivalents (RUBA). Credit institutions are also required to report to the ACPR on an annual basis information on their internal control systems, which includes Credit institutions are required to have a mini - mum paid-up initial capital of EUR5 million. Regarding the solvency ratio, credit institutions must have a total amount of own funds equal to at least 8% of risk-weighted assets, including 4.5% in Common Equity Tier 1 (CET1). Credit institutions qualified as global systemically important institutions (G-SIIs) are subject to an increased solvency ratio representing 18% of risk weighted assets. information on its risk management. Capital and Liquidity Requirements
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