40.16 Principle 7: The supervisor has the power to: (i) approve or reject (or recommend to the responsible authority the approval or rejection of) and impose prudential conditions on major acquisitions or investments by a bank (including the establishment of cross-border operations), against prescribed criteria; (ii) and determine that corporate affiliations or structures do not expose the bank to undue risks or hinder effective supervision.

40.17 Essential criteria:

(1) Laws or regulations clearly define:

(a) what types and amounts (absolute and/or in relation to a bank's capital) of acquisitions and investments need prior supervisory approval; and

(b) cases for which notification after the acquisition or investment is sufficient. Such cases are primarily activities closely related to banking and where the investment is small relative to the bank's capital.

(2) Laws or regulations provide criteria by which to judge individual bank proposals for acquisitions and investments.