Recital 1

(1)Article 18(3) of Regulation (EU) No 575/2013 covers cases of prudential consolidation of groups of undertakings that are related within the meaning of Article 22(7) of Directive 2013/34/EU of the European Parliament and of the Council ² where a parent-subsidiary relationship does not exist. In such cases, it is necessary to determine the entity at which level the requirements of Regulation (EU) No 575/2013 are to be applied on a consolidated basis. Moreover, in those cases, the most appropriate method of prudential consolidation should be the method set out in Article 22(8) and (9) of Directive 2013/34/EU (‘aggregation method’) in line with the rules set out in that Directive.