Recital 8

(8)Financial holding companies and mixed financial holding companies that are parent undertakings of banking groups should remain subject to the identification and approval mechanism introduced by Directive (EU) 2019/878 of the European Parliament and of the Council ⁸ . That mechanism enables competent authorities to bring certain financial holding companies and mixed financial holding companies under the direct scope of their supervision and of their supervisory powers pursuant to Directive 2013/36/EU and Regulation (EU) No 575/2013 of the European Parliament and of the Council ⁹ to ensure compliance on a consolidated basis. Under specific circumstances, competent authorities should have the discretion to exempt from approval a financial holding company or mixed financial holding company set up for the purpose of holding participations in undertakings. In addition, to cater for the specificities of certain banking groups, the consolidating supervisor should be able to allow financial holding companies or mixed financial holding companies which are exempted from approval to be excluded from the perimeter of consolidation of a banking group. However, the power to exclude those entities from the perimeter of consolidation of a banking group should only be exercised in exceptional circumstances, where all the conditions set out in the applicable law are complied with and, to that end, the banking group concerned should demonstrate that the holding entity that should be excluded is not involved in, or relevant for, the management of that banking group.