EBA finalises revised internal governance guidelines with greater proportionality for banks and third-country branches

The European Banking Authority (EBA) has published revised internal governance guidelines reflecting changes introduced by the Capital Requirements Directive VI (CRD VI), with simpler and more proportionate provisions than the consultation draft. The final text reduces detail in accountability documentation and diversity monitoring, clarifies conflicts of interest provisions and tailors expectations for third-country branches. The branch provisions add governance detail to the CRD VI regime, alongside the EBA’s earlier work on booking arrangements and harmonised supervisory reporting. Institutions should maintain a mapping of duties approved by the management body, supported by concise individual statements for executive management body members, senior management and key function holders. Existing document repositories may support this work, including group systems accessible to subsidiaries, and the individual statement template remains optional. Branch governance expectations distinguish between Class 1 and Class 2 branches, with greater flexibility for Class 2 internal control arrangements. Branches should have at least two people located in the relevant member state effectively directing their business and retain sufficient resources to avoid becoming empty shells. Conflicts provisions preserve the prohibition on combining supervisory chair and chief executive officer roles within the same institution, while requiring safeguards for permitted combinations across group entities. A former chief executive becoming chair within two years should be subject to measures addressing conflicts arising from oversight of previous executive decisions, rather than a blanket prohibition on the transition. The final text also removes the detailed list of diversity indicators while retaining expectations to monitor gender representation, equal treatment and the gender pay gap.