EBA specifies new obligations in M&A transactions

The BRUBEG provides for new procedures that must be followed by parties required to notify in connection with M&A transactions, namely in the case of acquisitions of material holdings, material transfers of assets and liabilities, mergers and divisions.

Pursuant to Section 2h KWG, as amended, CRR credit institutions and (mixed) financial holding companies must undergo an approval process if they intend to acquire a material holding in another company. A holding is material if it corresponds to at least 15% of eligible capital (Section 1 Para. 9b KWG, as amended). Therefore this procedure differs from the established (and recently simplified) Regulatory Clearance of Qualifying Holdings, which is essentially based on holding at least 10% of the capital or voting rights in a regulated entity (“qualifying holding”). This represents a change in perspective: the crucial factor is the risk for the (regulated) acquirer through holdings, whereas the Regulatory Clearance of Qualifying Holdings focuses on the risk for the (regulated) target company. Naturally, both procedures can be simultaneously applicable, for example if a regulated CRR credit institution intends to acquire shares in another regulated company in a certain amount.

A similar approval procedure is provided for in Section 2i KWG, as amended, for planned mergers and divisions. The length of the two provisions (23 paragraphs and 18 paragraphs, respectively) alone indicates that these approval procedures can be very time-consuming. In contrast, the pure notification procedures for a material transfer of assets or liabilities and the notification of the divesture of a material holding (Section 24 Para. 1f, Para. 3a Nos. 8, 9 KWG, as amended) are likely to require less effort. Transfers are material if they account for at least 10% (or 15% within a group) of the total assets or liabilities of an entity (Section 1 Para. 9a KWF, as amended).

The EBA consultation paper (EBA/CP/2025/25) already specified the minimum information to be provided in these procedures and answered previously unresolved questions from the CRD VI Directive. For example, Art. 1 Para. 2 Subpara. 3 clarifies that the calculation of a material holding is not based solely on individual acquisition, but that the last twelve months must be taken into account in order to prevent circumvention through several smaller acquisitions. It also answers the question of whether the calculation of “materiality” depends on the ratio between the acquirer's eligible capital and the book value of the holding or the purchase price: Art. 1 Para. 2 Subpara. 1 of the draft refers to the higher of the two values.

In addition, many other requirements are specified. As a result, it should be noted that the introduction of new procedures and the forthcoming specifications in Delegated and Implementing Regulations will lead to considerable additional effort in connection with M&A transactions in the banking sector due to the already foreseeable density of regulations.

Deloitte analyses the increasing pressure for consolidation in the German banking market in a recent study: Study on the German banking market up to 2030 | Deloitte Germany.