2000L0012 — EN — 27.10.2000 — 001.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B DIRECTIVE 2000/12/EC OFTHE EUROPEAN PARLIAMENT AND OFTHE COUNCIL
of 20 March 2000
relating to the taking up and pursuit of the business of credit institutions
(OJ L 126, 26.5.2000, p. 1)
Amended by:
Official Journal
No page date
►M1Directive 2000/28/EC of the European Parliament and of the Council of
18 September 2000 L 275 37 27.10.2000
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DIRECTIVE 2000/12/EC OFTHE EUROPEAN PARLIAMENT
AND OFTHE COUNCIL
of 20 March 2000
relating to the taking up and pursuit of the business of credit
institutions
THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN
UNION,
Having regard to the Treaty establishing the European Community, and
in particular the first and third sentences of Article 47(2) thereof,
Having regard to the proposal from the Commission,
Having regard to the opinion of the Economic and Social Committee(1),
Acting in accordance with the procedure laid down in Article 251 of the
Treaty(2),
Whereas:
(1) Council Directive 73/183/EEC of 28 June 1973 on the abolition
of restrictions on freedom of establishment and freedom toprovide services in respect of self-employed activities of banksand other financial institutions(
3), first Council Directive (77/780/
EEC) of 12 December 1977 on the coordination of laws,
regulations and administrative provisions relating to the taking
up and pursuit of the business of credit institutions(4), Council
Directive 89/299/EEC of 17 April 1989 on the own funds ofcredit institutions(
5), second Council Directive 89/646/EEC of 15
December 1989 on the coordination of laws, regulations andadministrative provisions relating to the taking up and pursuit of
the business of credit institutions(
6), Council Directive 89/647/
EEC of 18 December 1989 on a solvency ratio for creditinstitutions(
7), Council Directive 92/30/EEC of 6 April 1992 on
the supervision of credit institutions on a consolidated basis(8),
and Council Directive 92/121/EEC of 21 December 1992 on the
monitoring and control of large exposures of credit institutions(9)
have been frequently and substantially amended. For reasons ofclarity and rationality, the said Directives therefore, should becodified and combined in a single text.
(2) Pursuant to the Treaty, any discriminatory treatment with regard
to establishment and to the provision of services, based either onnationality or on the fact that an undertaking is not established in
the Member State where the services are provided, is prohibited.
(3) In order to make it easier to take up and pursue the business of
credit institutions, it is necessary to eliminate the most obstructive
differences between the laws of the Member States as regards therules to which these institutions are subject.
(4) This Directive constitutes the essential instrument for the
achievement of the internal market, a course determined by theSingle European Act and set out in timetable form in the
Commission's White Paper, from the point of view of both the2000L0012 — EN — 27.10.2000 — 001.001 — 2
(1) OJ C 157, 25.5.1998, p. 13.
(2) Opinion of the European Parliament of 18 January 2000 (not yet published in
the Official Journal) and Council Decision of 13 March 2000 (not yet
published in the Official Journal).
(3) OJ L 194, 16.7.1973, p. 1.
(4) OJL 322,17.12.1977,p. 30. Directive as last amended byDirective 98/33/EC
(OJ L 204, 21.7.1998, p. 29).
(5) OJ L 124, 5.5.1989, p. 16. Directive as last amended by Directive 92/30/EEC
(OJ L 110, 28.4.1992, p. 52).
(6) OJ L 386, 30.12.1989, p. 1. Directive as last amended by Directive 95/26/EC
(OJ L 168, 18.7.1995, p. 7).
(7) OJ L 386, 30.12.1989, p. 14. Directive as last amended by Directive 98/33/
EC.
(8) OJ L 110, 28.4.1992, p. 52.
(9) OJ L 29, 5.2.1993, p. 1. Directive as amended by the 1994 Act of Accession.
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freedom of establishment and the freedom to provide financial
services, in the field of credit institutions.
(5) Measures to coordinate credit institutions must, both in order to
protect savings and to create equal conditions of competition
between these institutions, apply to all of them. Due regard must
be had, where applicable, to the objective differences in theirstatutes and their proper aims as laid down by national laws.
(6) The scope of those measures should therefore be as broad as
possible, covering all institutions whose business is to receiverepayable funds from the public, whether in the form of depositsor in other forms such as the continuing issue of bonds and other
comparable securities and to grant credits for their own account.
Exceptions must be provided for in the case of certain creditinstitutions to which this Directive cannot apply. The provisionsof this Directive shall not prejudice the application of nationallaws which provide for special supplementary authorisationspermitting credit institutions to carry on specific activities or
undertake specific kinds of operations.
(7) The approach which has been adopted is to achieve only the
essential harmonisation necessary and sufficient to secure themutual recognition of authorisation and of prudential supervisionsystems, making possible the granting of a single licencerecognised throughout the Community and the application ofthe principle of home Member State prudential supervision.
Therefore, the requirement that a programme of operations must
be produced should be seen merely as a factor enabling thecompetent authorities to decide on the basis of more preciseinformation using objective criteria. A measure of flexibility maynone the less be possible as regards the requirements on the legal
form of credit institutions of the protection of banking names.
(8) Equivalent financial requirement for credit institutions are
necessary to ensure similar safeguards for savers and fair
conditions of competition between comparable groups of creditinstitutions. Pending further coordination, appropriate structuralratios should be formulated that will make it possible within theframework of cooperation between national authorities to
observe, in accordance with standard methods, the position of
comparable types of credit institutions. This procedure shouldhelp to bring about the gradual approximation of the systems ofcoefficients established and applied by the Member States. It isnecessary, however to make a distinction between coefficientsintended to ensure the sound management of credit institutions
and those established for the purposes of economic and monetary
policy.
(9) The principles of mutual recognition and home Member State
supervision require that Member States' competent authoritiesshould not grant or should withdraw authorisation where factorssuch as content of the activities programmes, the geographicaldistribution or the activities actually carried on indicate clearly
that a credit institution has opted for the legal system of one
Member State for the purpose of evading the stricter standards inforce in another Member State within whose territory it carries onor intends to carry on the greater part of its activities. A creditinstitution which is a legal person must be authorised in the
Member State in which it has its registered office. A credit
institution which is not a legal person must have its head office inthe Member State in which it has been authorised. In addition,Member States must require that a credit institution's head officealways be situated in its home Member State and that it actuallyoperates there.
(10) The competent authorities should not authorise or continue the
authorisation of a credit institution where they are liable to be
prevented from effectively exercising their supervisory functionsby the close links between that institution and other natural orlegal persons. Credit institutions already authorised must alsosatisfy the competent authorities in that respect. The definition of‘close links’ in this Directive lays down minimum criteria. That2000L0012 — EN — 27.10.2000 — 001.001 — 3
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does not prevent Member States from applying it to situations
other than those envisaged by the definition. The sole fact ofhaving acquired a significant proportion of a company's capital
does not constitute participation, within the meaning of ‘close
links’, if that holding has been acquired solely as a temporaryinvestment which does not make it possible to exercise influenceover the structure or financial policy of the institution.
(11) The reference to the supervisory authorities' effective exercise of
their supervisory functions covers supervision on a consolidatedbasis which must be exercised over a credit institution where theprovisions of Community law so provide. In such cases, the
authorities applied to for authorisation must be able to identify the
authorities competent to exercise supervision on a consolidatedbasis over that credit institution.
(12) The home Member State may also establish rules stricter than
those laid down in Article 5(1), first subparagraph and (2), andArticles 7, 16, 30, 51 and 65 for institutions authorised by itscompetent authorities.
(13) The abolition of the authorisation requirement with respect to the
branches of Community credit institutions necessitates theabolition of endowment capital.
(14) By virtue of mutual recognition, the approach chosen permits
credit institutions authorised in their home Member States tocarry on, throughout the Community, any or all of the activities
listed in Annex I by establishing branches or by providing
services. The carrying-on of activities not listed in the said Annexenjoys the right of establishment and the freedom to provideservices under the general provisions of the Treaty.
(15) It is appropriate, however to extend mutual recognition to the
activities listed in Annex I when they are carried on by financialinstitutions which are subsidiaries of credit institutions, providedthat such subsidiaries are covered by the consolidated supervision
of their parent undertakings and meet certain strict conditions.
(16) The host Member State may, in connection with the exercise of
the right of establishment and the freedom to provide services,
require compliance with specific provisions of its own national
laws or regulations on the part of institutions not authorised ascredit institutions in their home Member States and with regard toactivities not listed in Annex I provided that, on the one hand,such provisions are compatible with Community law and are
intended to protect the general good and that, on the other hand,
such institutions or such activities are not subject to equivalentrules under this legislation or regulations of their home MemberStates.
(17) The Member States must ensure that there are no obstacles to
carrying on activities receiving mutual recognition in the samemanner as in the home Member State, as long as the latter do notconflict with legal provisions protecting the general good in the
host Member State.
(18) There is a necessary link between the objective of this Directive
and the liberalisation of capital movements being brought about
by other Community legislation. In any case the measures
regarding the liberalisation of banking services must be inharmony with the measures liberalising capital movements.
(19) The rules governing branches of credit institutions having their
head office outside the Community should be analogous in allMember States. It is important at the present time to provide thatsuch rules may not be more favourable than those for branches ofinstitutions from another Member State. It should be specified
that the Community may conclude agreements with third
countries providing for the application of rules which accordsuch branches the same treatment throughout its territory, accountbeing taken of the principle of reciprocity. The branches of creditinstitutions authorised in third countries do not enjoy the freedomto provide services under the second paragraph of Article 49 of2000L0012 — EN — 27.10.2000 — 001.001 — 4
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the Treaty or the freedom of establishment in Member States
other than those in which they are established. However, requestsfor the authorisation of subsidiaries or of the acquisition of
holdings made by undertakings governed by the laws of third
countries are subject to a procedure intended to ensure thatCommunity credit institutions receive reciprocal treatment in thethird countries in question.
(20) The authorisations granted to credit institutions by the competent
national authorities pursuant to this Directive have Community-wide, and no longer merely nationwide, application. Existingreciprocity clauses have therefore no effect. A flexible procedure
is therefore needed to make it possible to assess reciprocity on a
Community basis. The aim of this procedure is not to close theCommunity's financial markets but rather, as the Communityintends to keep its financial markets open to the rest of the world,to improve the liberalisation of the global financial markets in
other third countries. To that end, this Directive provides for
procedures for negotiating with third countries and, as a lastresort, for the possibility of taking measures involving thesuspension of new applications for authorisation or the restrictionof new authorisations.
(21) It is desirable that agreement should be reached, on the basis of
reciprocity, between the Community and third countries with aview to allowing the practical exercise of consolidated super-
vision over the largest possible geographical area.
(22) Responsibility for supervising the financial soundness of a credit
institution, and in particular its solvency, rests with the competent
authorities of its home Member State. The host Member State's
competent authorities retain responsibility for the supervision ofliquidity and monetary policy. The supervision of market riskmust be the subject of close cooperation between the competentauthorities of the home and host Member States.
(23) The smooth operation of the internal banking market requires not
only legal rules but also close and regular cooperation betweenthe competent authorities of the Member States. For the
consideration of problems concerning individual credit institu-
tions the ‘groupe de contact’ (contact group) set up between thebanking supervisory authorities remains the most appropriateforum. That group is a suitable body for the mutual exchange ofinformation provided for in Article 28.
(24) That mutual information procedure does not in any case replace
the bilateral collaboration established by Article 28. Thecompetent host Member State authorities can, without prejudice
to their powers of proper control, continue either, in an
emergency, on their own initiative or following the initiative ofthe competent home Member State authorities, to verify that theactivities of a credit institution established within their territoriescomply with the relevant laws and with the principles of soundadministrative and accounting procedures and adequate internal
control.
(25) It is appropriate to allow the exchange of information between the
competent authorities and authorities or bodies which, by virtue
of their function, help to strengthen the stability of the financialsystem. In order to preserve the confidential nature of theinformation forwarded, the list of addressees must remain withinstrict limits.
(26) Certain behaviour, such as fraud and insider offences, is liable to
affect the stability, including the integrity, of the financial system,even when involving institutions other than credit institutions.
(27) It is necessary to specify the conditions under which such
exchanges of information are authorised.
(28) Where it is stipulated that information may be disclosed only with
the express agreement of the competent authorities, these may,where appropriate, make their agreement subject to compliancewith strict conditions.2000L0012 — EN — 27.10.2000 — 001.001 — 5
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(29) Exchanges of information between, on the one hand, the
competent authorities and, on the other, central banks and otherbodies with a similar function in their capacity as monetary
authorities and, where appropriate, other public authorities
responsible for supervising payment systems should also beauthorised.
(30) For the purpose of strengthening the prudential supervision of
credit institutions and protection of clients of credit institutions, it
should be stipulated that an auditor must have a duty to reportpromptly to the competent authorities, wherever, as provided forby this Directive, he becomes aware, while carrying out his tasks,of certain facts which are liable to have a serious effect on the
financial situation or the administrative and accounting organisa-
tion of a credit institution. Having regard to the aim in view, it isdesirable for the Member State to provide that such a duty shouldapply in all circumstances where such facts are discovered by anauditor during the performance of his tasks in an undertakingwhich has close links with a credit institution. The duty of
auditors to communicate, where appropriate, to the competent
authorities certain facts and decisions concerning a creditinstitution which they discover during the performance of theirtasks in a non-financial undertaking does not in itself change thenature of their tasks in that undertaking nor the manner in which
they must perform those tasks in that undertaking.
(31) Common basic standards for the own funds of credit institutions
are a key factor in the creation ofan internal banking market sinceown funds serve to ensure the continuity of credit institutions and
to protect savings. Such harmonisation strengthens the super-
vision of credit institutions and contributes to further coordinationin the banking sector.
(32) Such standards must apply to all credit institutions authorised in
the Community.
(33) The own funds of a credit institutions can serve to absorb losses
which are not matched by a sufficient volume of profits. The ownfunds also serve as an important yardstick for the competent
authorities, in particular for the assessment of the solvency of
credit institutions and for other prudential purposes.
(34) Credit institutions, in an internal banking market, engage in direct
competition with each other, and the definitions and standards
pertaining to own funds must therefore be equivalent. To that end,
the criteria for determining the composition of own funds mustnot be left solely to Member States. The adoption of commonbasic standards will be in the best interests of the Community inthat it will prevent distortions of competition and will strengthenthe Community banking system.
(35) The definition of own funds laid down in this Directive provides
for a maximum of items and qualifying amounts, leaving it to thediscretion of each Member State to use all or some of such itemsor to adopt lower ceilings for the qualifying amounts.
(36) This Directive specifies the qualifying criteria for certain own
funds items, and the Member States remain free to apply morestringent provisions.
(37) At the initial stage common basic standards are defined in broad
terms in order to encompass all the items making up own funds inthe different Member States.
(38) According to the nature of the items making up own funds, this
Directive distinguishes between on the one hand, items consti-tuting original own funds and, on the other, those constitutingadditional own funds.
(39) To reflect the fact that items constituting additional own funds are
not of the same nature as those constituting original own funds,the amount of the former included in own funds must not exceedthe original own funds. Moreover, the amount of certain items ofadditional own funds included must not exceed one half of theoriginal own funds.2000L0012 — EN — 27.10.2000 — 001.001 — 6
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(40) In order to avoid distortions of competition, public credit
institutions must not include in their own funds guaranteesgranted them by the Member States or local authorities.
(41) Whenever in the course of supervision it is necessary to determine
the amount of the consolidated own funds of a group of credit
institutions, the calculation shall be effected in accordance withthis Directive.
(42) The precise accounting technique to be used for the calculation of
own funds, the solvency ratio, and for the assessment of theconcentration of exposures must take account of the provisions ofCouncil Directive 86/635/EEC of 8 December 1986 on the annual
accounts and consolidated accounts of banks and other financial
institutions(
1), which incorporates certain adaptations of the
provisions of Council Directive 83/349/EEC of 13 June 1983based on Article 44(2)(g) of the Treaty on consolidatedaccounts(
2).
(43) The provisions on own funds form part of the wider international
effort to bring about approximation of the rules in force in major
countries regarding the adequacy of own funds.
(44) The Commission will draw up a report and periodically examine,
with the aim of tightening them, the provisions on own funds andthus achieving greater convergence on a common definition ofown funds. Such convergence will allow the alignment ofCommunity credit institutions' own funds.
(45) The provisions on solvency ratios are the outcome of workcarried
out by the Banking Advisory Committee which is responsible for
making suggestions to the Commission with a view to
coordinating the coefficients applicable in the Member States.
(46) The establishment of an appropriate solvency ratio plays a central
role in the supervision of credit institutions.
(47) A ratio which weights assets and off-balance-sheet items
according to the degree of credit risk is a particularly usefulmeasure of solvency.
(48) The development of common standards for own funds in relation
to assets and off-balance-sheet items exposed to credit risk is,accordingly, an essential aspect of the harmonisation necessary
for the achievement of the mutual recognition of supervision
techniques and thus the completion of the internal bankingmarket.
(49) In that respect, the provisions on a solvency ratio must be
considered in conjunction with other specific instruments alsoharmonising the fundamental techniques of the supervision ofcredit institutions.
(50) In an internal banking market, institutions are required to enter
into direct competition with one another and the common
solvency standards in the form of a minimum ratio prevent
distortions of competition and strengthen the Community bankingsystem.
(51) This Directive provides for different weightings to be given to
guarantees issued by different financial institutions. The Commis-sion accordingly undertakes to examine whether this Directivetaken as a whole significantly distorts competition between credit
institutions and insurance undertakings and, in the light of that
examination, to consider whether any remedial measures arejustified.
(52) Annex III lays down the treatment of off-balance-sheet items in
the context of the calculation of credit institutions' capitalrequirements. With a view to the smooth functioning of theinternal market and in particular with a view to ensuring a level2000L0012 — EN — 27.10.2000 — 001.001 — 7
(1) OJ L 372, 31.12.1986, p. 1.
(2) OJ L 193, 18.7.1983, p. 1. Directive as last amended by Directive 90/605/
EEC (OJ L 317, 16.11.1990, p. 60).
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playing field Member States are obliged to strive for uniform
assessment of contractual netting agreements by their competentauthorities. Annex III takes account of the work of an
international forum of banking supervisors on the supervisory
recognition of bilateral netting, in particular the possibility ofcalculating the own-funds requirements for certain transactions onthe basis of a net rather than a gross amount provided that thereare legally binding agreements which ensure that the credit risk is
confined to the net amount. For internationally active credit
institutions and groups of credit institutions in a wide range ofthird countries, which compete with Community credit institu-tions, the rules adopted on the wider international level will resultin a refined supervisory treatment of over-the-counter (OTC)derivative instruments. This refinement results in a more
appropriate compulsory capital cover taking into account the
risk-reducing effects of supervisorily recognised contractualnetting agreements on potential future credit risks. The clearingof OTC derivative instruments provided by clearing houses actingas a central counterparty plays an important role in certain
Member States. It is appropriate to recognise the benefits from
such a clearing in terms of a reduction of credit risk and relatedsystemic risk in the prudential treatment of credit risk. It isnecessary for the current and potential future exposures arisingfrom cleared OTC derivatives contracts to be fully collateralisedand for the risk of a build-up of the clearing house's exposures
beyond the market value of posted collateral to be eliminated in
order for cleared OTC derivatives to be granted for a transitionalperiod the same prudential treatment as exchange-traded deriva-tives. The competent authorities must be satisfied as to the levelof the initial margins and variation margins required and the
quality of and the level of protection provided by the posted
collateral. For credit institutions incorporated in the MemberStates, Annex III creates a similar possibility for the recognitionof bilateral netting by the competent authorities and thereby offersthem equal conditions of competition. The rules are both wellbalanced and appropriate for the further reinforcement of the
application of prudential supervisory measures to credit institu-
tions. The competent authorities in the Member States shouldensure that the calculation of add-ons is based on effective ratherthan apparent national amounts.
(53) The minimum ratio provided for in this Directive reinforces the
capital of credit institutions in the Community. A level of 8 % has
been adopted following a statistical survey of capital requirementsin force at the beginning of 1988.
(54) The essential rules for monitoring large exposures of credit
institutions should be harmonised. Member States should still be
able to adopt provisions more stringent than those provided for by
this Directive.
(55) The monitoring and control of a credit institution's exposures is an
integral part of its supervision. Excessive concentration ofexposures to a single client or group of connected clients may
result in an unacceptable risk of loss. Such a situation may be
considered prejudicial to the solvency of a credit institution.
(56) In an internal banking market, credit institutions are engaged in
direct competition with one another and monitoring requirementsthroughout the Community should therefore be equivalent. To
that end, the criteria applied to determining the concentration of
exposures must be the subject of legally binding rules atCommunity level and cannot be left entirely to the discretion ofthe Member States. The adoption of common rules will thereforebest serve the Community's interests, since it will preventdifferences in the conditions of competition, while strengthening
the Community's banking system.
(57) The provisions on a solvency ratio for credit institutions include a
list of credit risks which may be incurred by credit institutions.That list should therefore be used also for the definition ofexposures for the purposes of limits to large exposures. It is not,2000L0012 — EN — 27.10.2000 — 001.001 — 8
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however, appropriate to refer on principle to the weightings or
degrees of risk laid down in the said provisions. Those weightingsand degrees of risk were devised for the purpose of establishing a
general solvency requirement to cover the credit risk of credit
institutions. In the context of the regulation of large exposures,the aim is to limit the maximum loss that a credit institution mayincur through any single client or group of connected clients. It istherefore appropriate to adopt a prudent approach in which, as a
general rule, account is taken of the nominal value of exposures,
but no weightings or degrees of risk are applied.
(58) When a credit institution incurs an exposure to its own parent
undertaking or to other subsidiaries of its parent undertaking,
particular prudence is necessary. The management of exposures
incurred by credit institutions must be carried out in a fullyautonomous manner, in accordance with the principles of soundbanking management, without regard to any considerations otherthan those principles. The provision of this Directive require that
where the influence exercised by persons directly or indirectly
holding a qualifying participation in a credit institution is likely tooperate to the detriment of the sound and prudent management ofthat institution, the competent authorities shall take appropriatemeasures to put an end to that situation. In the field of largeexposures, specific standards should also be laid down for
exposures incurred by a credit institution to its own group, and in
such cases more stringent restrictions are justified than for otherexposures. More stringent restrictions need not, however beapplied where the parent undertaking is a financial holdingcompany or a credit institution or where the other subsidiaries are
either credit or financial institutions or undertakings offering
ancillary banking services, provided that all such undertakings arecovered by the supervision of the credit institution on aconsolidated basis. In such cases the consolidated monitoring ofthe group of undertakings allows for an adequate level ofsupervision, and does not require the imposition of more stringent
limits on exposure. Under this approach banking groups will also
be encouraged to organise their structures in such a way as toallow consolidated monitoring, which is desirable because a morecomprehensive level of monitoring is possible.
(59) In order to be effective, supervision on a consolidated basis must
be applied to all banking groups, including those the parentundertakings of which are not credit institutions. The competentauthorities must hold the necessary legal instruments to be able toexercise such supervision.
(60) In the case of groups with diversified activities the parent
undertakings of which control at least one credit institutionsubsidiary, the competent authorities must be able to assess thefinancial situation of a credit institution in such a group. Pending
subsequent coordination, the Member States may lay down
appropriate methods of consolidation for the achievement of theobjective of this Directive. The competent authorities must atleast have the means of obtaining from all undertakings within agroup the information necessary for the performance of theirfunction. Cooperation between the authorities responsible for the
supervision of different financial sectors must be established in
the case ofgroupsof undertakings carrying on a range of financialactivities.
(61) The Member States can, furthermore, refuse or withdraw banking
authorisation in the case of certain group structures consideredinappropriate for carrying on banking activities, in particularbecause such structures could not be supervised effectively. Inthis respect the competent authorities have the powers mentionedin the first subparagraph of Article 7(1), Article 7(2), point (c) of
Article 14(l), and Article 16 of this Directive, in order to ensure
the sound and prudent management of credit institutions.
(62) The Member States can equally apply appropriate supervision
techniques to groupswith structures not covered by this Directive.2000L0012 — EN — 27.10.2000 — 001.001 — 9
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If such structures become common, this Directive should be
extended to cover them.
(63) Supervision on a consolidated basis must take in all activities
defined in Annex I. All undertakings principally engaged in suchactivities must therefore be included in supervision on aconsolidated basis. As a result, the definition of financial
institutions must be widened in order to cover such activities.
(64) Directive 86/635/EEC, together with Directive 83/349/EEC,
established the rules of consolidation applicable to consolidated
accounts published by credit institutions. It is therefore possible to
define more precisely the methods to be used in prudentialsupervision exercised on a consolidated basis.
(65) Supervision of credit institutions on a consolidated basis must be
aimed at, in particular, protecting the interests of the depositors ofthe said institutions and ensuring the stability of the financialsystem.
(66) The examination of problems connected with matters covered by
this Directive as well as by other Directive on the business ofcredit institutions requires cooperation between the competentauthorities and the Commission within a banking advisory
committee, particularly when conducted with a view to closer
coordination. The Banking Advisory Committee of the competentauthorities of the Member States does not rule out other forms ofcooperation between authorities which supervise the taking upand pursuit of the business of credit institutions and, in particular,cooperation within the ‘groupe de contact’ (contact group) set up
between the banking supervisory authorities.
(67) Technical modifications to the detailed rules laid down in this
Directive may from time to time be necessary to take account of
new developments in the banking sector. The Commission shall
accordingly make such modifications as are necessary, afterconsulting the Banking Advisory Committee, within the limits ofthe implementing powers conferred on the Commission by theTreaty. The measures necessary for the implementation of this
Directive should be adopted in accordance with Council Decision
1999/468/EC of 28 June 1999 laying down the procedures for theexercise of implementing powers conferred on the Commis-sion(
1).
(68) Article 36(1) of this Directive permits joint and several
commitments of borrowers in the case of credit institutionsorganised as cooperative societies or funds to be treated as ownfunds items under Article 34(2)(7). The Danish Government hasexpressed a strong interest in having its few mortgage credit
institutions organised as cooperative societies or funds converted
into public limited liability companies. In order to facilitate theconversion or to make it possible, a temporary derogationallowing them to include part of their joint and severalcommitments as own funds is required. This temporary deroga-tion should not adversely affect competition between credit
institutions.
(69) The application of a 20 % weighting to credit institutions'
holdings of mortgage bonds may unsettle a national financial
market on which such instruments play a preponderant role. In
this case, provisional measures are taken to apply a 10 % riskweighting. The market for securitisation is undergoing rapiddevelopment. It is therefore desirable that the Commission shouldexamine with the Member States the prudential treatment of
asset-backed securities and put forward, before 22 June 1999,
proposals aimed at adapting existing legislation in order to definean appropriate prudential treatment for asset-backed securities.The competent authorities may authorise a 50 % weighting toassets secured by mortgages on offices or on multipurposecommercial premises until 31 December 2006. The property to2000L0012 — EN — 27.10.2000 — 001.001 — 10
(1) OJ L 184, 17.7.1999, p. 23.
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which the mortgage relates must be subject to rigorous assessment
criteria and regular revaluation to take account of the develop-ments in the commercial property market. The property must be
either occupied or let by the owner. Loans for property
development are excluded from this 50 % weighting.
(70) In order to ensure harmonious application of the provisions on
large exposures, Member States should be allowed to provide for
the two-stage application of the new limits. For smaller credit
institutions, a longer transitional period may be warrantedinasmuch as too rapid an application of the 25 % rule couldreduce their lending activity too abruptly.
(71) Moreover, the harmonisation of the conditions relating to the
reorganisation and winding-up of credit institutions is alsoproceeding.
(72) The arrangements necessary for the supervision of liquidity risks
will also have to be harmonised.
(73) This Directive must no affect to obligations of the Member States
concerning the deadlines for transposition set out in Annex V,Part B,
HAVE ADOPTED THIS DIRECTIVE:2000L0012 — EN — 27.10.2000 — 001.001 — 11
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CONTENTS
Page
TITLE I DEFINITIONS AND SCOPE .......................... 12
Article 1 Definitions .. ........................................ 12
Article 2 Scope .. ............................................. 14
Article 3 Prohibition for undertakings other than credit institutions from
carrying on the business of taking deposits or other repayable
funds from the public .................................. 15
TITLE II REQUIREMENTS FOR ACCESS TO THE TAKING UP
AND PURSUIT OFTHE BUSINESS OFCREDIT INSTI-
TUTIONS ........................................... 16
Article 4 Authorisation ........................................ 16
Article 5 Initial capital . ........................................ 16
Article 6 Management body and place of the head office of credit
institutions ... ........................................ 16
Article 7 Shareholders and members ............................. 17
Article 8 Programme of operations and structural organisation .. ...... 17
Article 9 Economic needs ...................................... 17
Article 10 Authorisation refusal .................................. 17
Article 11 Notification of the authorisation to the Commission ... ...... 17
Article 12 Prior consultation with the competent authorities of other
Member States ....................................... 17
Article 13 Branches of credit institutions authorised in another Member
State ............................................... 18
Article 14 Withdrawal of authorisation ............................ 18
Article 15 Name .. ............................................. 18
Article 16 Qualifying holding in a credit institution . ................. 18
Article 17 Procedures and internal control mechanisms ... ............ 19
TITLE III PROVISIONS CONCERNING THE FREEDOM OF
ESTABLISHMENT AND THE FREEDOM TO PROVIDE
SERVICES .......................................... 19
Article 18 Credit institutions ... .................................. 19
Article 19 Financial institutions .................................. 19
Article 20 Exercise of the right of establishment ... ................. 20
Article 21 Exercise of the freedom to provide services ... ............ 21
Article 22 Power of the competent authorities of the host Member State . 21
TITLE IV RELATIONS WITH THIRD COUNTRIES .............. 22
Article 23 Notification of the subsidiaries of third countries' undertakings
and conditions of access to the markets of these countries ... . 22
Article 24 Branches of credit institutions having their head offices outside
the Community ....................................... 23
Article 25 Cooperation with third countries' competent authorities regarding
supervision on a consolidated basis ...................... 23
TITLE V PRINCIPLES AND TECHNICAL INSTRUMENTS FOR
PRUDENTIAL SUPERVISION ........................ 24
Chapter 1 Principles of prudential supervision .................... 24
Article 26 Competence of control of the home Member State .......... 242000L0012 — EN — 27.10.2000 — 001.001 — 12
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Page
Article 27 Competence of the host Member State ... ................. 24
Article 28 Collaboration concerning supervision ..................... 24
Article 29 On-the-spot verification of branches established in another
Member State ........................................ 24
Article 30 Exchange of information and professional secrecy .......... 24
Article 31 Duty of persons responsible for the legal control of annual and
consolidated accounts .................................. 26
Article 32 Power of sanction of the competent authorities . ............ 27
Article 33 Right to apply to the courts ............................. 27
Chapter 2 Technical instruments of prudential supervision .......... 27
Section 1 Own funds ........................................... 27
Article 34 General principles ... .................................. 27
Article 35 Other items .. ........................................ 28
Article 36 Other provisions concerning own funds .. ................. 29
Article 37 Calculation of own funds on a consolidated basis ........... 29
Article 38 Deductions and limits ................................. 30
Article 39 Provision of proof to the competent authorities . ............ 30
Section 2 Solvency ratio ........................................ 30
Article 40 General principles ... .................................. 30
Article 41 The numerator: own funds . ............................. 30
Article 42 The denominator: risk-adjusted assets and off-balance-sheet
items ............................................... 30
Article 43 Risk weightings ...................................... 31
Article 44 Weighting of claims for regional governments or local authorities
of the Member States .................................. 33
Article 45 Other weighting ...................................... 33
Article 46 Administrative bodies and non-commercial undertakings ..... 33
Article 47 Solvency ratio level . .................................. 33
Section 3 Large exposures ...................................... 34
Article 48 Reporting of large exposures ............................ 34
Article 49 Limits on large exposures . ............................. 34
Article 50 Supervision on a consolidated or unconsolidated basis of large
exposures ... ........................................ 36
Section 4 Qualifiying holdings outside the financial sector ............ 36
Article 51 Limits to non-financial qualifying holdings ................ 36
Chapter 3 Supervision on a consolidated basis ..................... 37
Article 52 Supervision on a consolidated basis of credit institutions ..... 37
Article 53 Competent authorities responsible for exercising supervision on a
consolidated basis ... .................................. 38
Article 54 Form and extent of consolidation . ....................... 39
Article 55 Information to be supplied by mixed-activity holding companies
and their subisidiaries ................................. 39
Article 56 Measures to facilitate supervision on a consolidated basis ... . 40
TITLE VI BANKING ADVISORY COMMITTEE ................. 41
Article 57 Composition and tasks of the Banking Advisory Committee . . 412000L0012 — EN — 27.10.2000 — 001.001 — 13
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Page
Article 58 Examination of the requirements for authorisation .......... 41
Article 59 Observation ratios ... .................................. 41
TITLE VII POWERS OFEXECUTION ........................... 42
Article 60 Technical adaptations .................................. 42
TITLE VIII TRANSITIONAL AND FINAL PROVISIONS ........... 42
Chapter 1 Transitional provisions ............................... 42
Article 61 Transitional provisions regarding Article 36 ... ............ 42
Article 62 Transitional provisions regarding Article 43 ... ............ 43
Article 63 Transitional provisions regarding Article 47 ... ............ 44
Article 64 Transitional provisions regarding Article 49 ... ............ 44
Article 65 Transitional provisions regarding Article 51 ... ............ 45
Chapter 2 Final provisions ...................................... 45
Article 66 Commission information .. ............................. 45
Article 67 Repealed Directives . .................................. 45
Article 68 Implementation ....................................... 45
Article 69 Addressees .. ........................................ 45
ANNEX I List of activities subject to mutual recognition . ............ 46
ANNEX II Classification of off-balance-sheet items . ................. 47
ANNEX III The treatment of off-balance-sheet items . ................. 48
ANNEX IV Types of off-balance-sheet items .. ....................... 52
ANNEX V Part A Repealed Directives, together with their successive amendments
(referred to in Article 67) . ............................. 53
ANNEX V Part B Deadlines for implementation (referred to in Article 67) ..... 54
ANNEX VI Correlation table ...................................... 552000L0012 — EN — 27.10.2000 — 001.001 — 14
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TITLE I
DEFINITIONS AND SCOPE
Article 1
Definitions
For the purpose of this Directive:
1. ‘credit institution’ shall mean:
(a) an undertaking whose business is to receive deposits or other
repayable funds from the public and to grant credits for its ownaccount; or
(b) an electronic money institution within the meaning of Directive
2000/46/EC of the European Parliament and of the Council of
18 September 2000 on the taking up, pursuit and prudential
supervision of the business of electronic money institutions(
1).
Forthe purposesof applying the supervision on a consolidated basis,
shall be considered as a credit institution, a credit institutionaccording to the first paragraph and any private or publicundertaking which corresponds to the definition in the first
paragraph and which has been authorised in a third country.
For the purposes of applying the supervision and control of large
exposures, shall be considered as a credit institution, a credit
institution according to the first paragraph, including branches of acredit institution in third countries and any private or publicundertaking, including its branches, which corresponds to thedefinition in the first paragraph and which has been authorised in a
third country;
2. ‘authorisation’ shall mean an instrument issued in any form by the
authorities by which the right to carry on the business of a credit
institution is granted;
3. ‘branch’ shall mean a place of business which forms a legally
dependent part of a credit institution and which carries out directlyall or some of the transactions inherent in the business of creditinstitutions; any number of places of business set up in the sameMember State by a credit institution with headquarters in anotherMember State shall be regarded as a single branch;
4. ‘competent authorities’ shall mean the national authorities which
are empowered by law or regulation to supervise credit institutions;
5. ‘financial institution’ shall mean an undertaking other than a credit
institution, the principal activity of which is to acquire holdings or
to carry on one or more of the activities listed in points 2 to 12 of
Annex I;
6. ‘home Member State’ shall mean the Member State in which a
credit institution has been authorised in accordance with Articles 4to 11;
7. ‘host Member State’ shall mean the Member State in which a credit
institution has a branch or in which it provides services;
8. ‘control’ shall mean the relationship between a parent undertaking
and a subsidiary, as defined in Article 1 of Directive 83/349/EEC, ora similar relationship between any natural or legal person and anundertaking;
9. ‘participation’ for the purposes of supervision on a consolidated
basis shall mean the ownership, direct or indirect, of 20 % or moreof the voting rights or capital of an undertaking;2000L0012 — EN — 27.10.2000 — 001.001 — 15
(1) OJ L 275, 27.10.2000, p. 39.▼M1
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10. ‘qualifiying holding’ shall mean a direct or indirect holding in an
undertaking which represents 10 % or more of the capital or of thevoting rights or which makes it possible to exercise a significant
influence over the management of the undertaking in which a
holding subsists.
11. ‘initial capital’ shall mean capital as defined in Article 34(2)(1) and
(2);
12. ‘parent undertaking’ shall mean a parent undertaking as defined in
Articles 1 and 2 of Directive 83/349/EEC.
It shall, for the purposes of supervision on a consolidated basis and
control of large exposures, mean a parent undertaking within themeaning of Article 1(1) of Directive 83/349/EEC and any under-taking which, in the opinion of the competent authorities, effectively
exercises a dominant influence over another undertaking;
13. ‘subsidiary’ shall mean a subsidiary undertaking as defined in
Articles 1 and 2 of Directive 83/349/EEC.
It shall, for the purposes of supervision on a consolidated basis and
control of large exposures, mean a subsidiary undertaking within themeaning of Article 1(1) of Directive 83/349/EEC and any under-taking over which, in the opinion of the competent authorities, a
parent undertaking effectively exercises a dominant influence.
All subsidiaries of subsidiary undertakings shall also be considered
subsidiaries of the undertaking that is their original parent;
14. ‘Zone A’ shall comprise all the Member States and all other
countries which are full members of the Organisation for EconomicCooperation and Development (OECD) and those countries whichhave concluded special lending arrangements with the International
Monetary Fund (IMF) associated with the Fund's general arrange-
ments to borrow (GAB). Any country which reschedules its externalsovereign debt is, however, precluded from Zone A for a period offive years;
15. ‘Zone B’ shall comprise all countries not in Zone A;
16. ‘Zone A credit institutions’ shall mean all credit institutions
authorised in the Member States, in accordance with Article 4,
including their branches in third countries, and all private and public
undertakings covered by the definitions in point 1, first subpara-graph and authorised in other Zone A countries, including theirbranches;
17. ‘Zone B credit institutions’ shall mean all private and public
undertakings authorised outside Zone A covered by the definition inpoint 1, first subparagraph, including their branches within theCommunity;
18. ‘non-bank sector’ shall mean all borrowers other than credit
institutions as defined in points 16 and 17, central governmentsand central banks, regional governments and local authorities, theEuropean Communities, the European Investment Bank (EIB) and
multilateral development banks as defined in point 19;
19. ‘multilateral development banks’ shall mean the International Bank
for Reconstruction and Development, the International Finance
Corporation, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the Council ofEurope Resettlement Fund, the Nordic Investment Bank, theCaribbean Development Bank, the European Bank for Reconstruc-tion and Development, the European Investment Fund and the Inter-American Investment Corporation;
20. ‘“full-risk”, “medium-risk”, “medium/low-risk” and “low-risk” off-
balance-sheet items’ shall mean the items described in Article 43(2)and listed in Annex II;
21. ‘financial holding company’ shall mean a financial institution, the
subsidiary undertakings of which are either exclusively or mainlycredit institutions or financial institutions, one at least of suchsubsidiaries being a credit institution;2000L0012 — EN — 27.10.2000 — 001.001 — 16
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22. ‘mixed-activity holding company’ shall mean a parent undertaking,
other than a financial holding company or a credit institution thesubsidiaries of which include at least one credit institution;
23. ‘ancillary banking services undertaking’ shall mean an undertaking
the principal activity of which consists in owning or managingproperty, managing data-processing services, or any other similar
activity which is ancillary to the principal activity of one or more
credit institutions;
24. ‘exposures’ for the purpose of applying Articles 48, 49 and 50 shall
mean the assets and off-balance-sheet items referred to in Article 43
and in Annexes II and IV thereto, without application of theweightings or degrees of risk there provided for; the risks referred toin Annex IV must be calculated in accordance with one of themethods set out in Annex III, without application of the weightingsfor counterparty risk; all elements entirely covered by own funds
may, with the agreement of the competent authorities, be excluded
from the definition of exposures provided that such own funds arenot included in the calculation of the solvency ratio or of othermonitoring ratios provided for in this Directive and in otherCommunity acts; exposures shall not include:
— in the case of foreign exchange transactions, exposures incurred
in the ordinary course of settlement during the 48 hoursfollowing payment, or
— in the case of transactions for the purchase or sale of securities,
exposures incurred in the ordinary course of settlement during
the five working days following payment or delivery of the
securities, whichever is the earlier;
25. ‘group of connected clients’ shall mean:
— two or more natural or legal persons who, unless it is shown
otherwise, constitute a single risk because one of them, directlyor indirectly, has control over the other or others or
— two or more natural or legal persons between whom there is no
relationship of control as defined in the first indent but who areto be regarded as constituting a single risk because they are so
interconnected that, if one of them were to experience financial
problems, the other or all of the others would be likely toencounter repayment difficulties;
26. ‘close links’ shall mean a situation in which two or more natural or
legal persons are linked by:
(a) participation, which shall mean the ownership, direct or by way
of control, of 20 % or more of the voting rights or capital of an
undertaking, or
(b) control, which shall mean the relationship between a parent
undertaking and a subsidiary, in all the cases referred to in
Article 1(1) and (2) of Directive 83/349/EEC, or a similar
relationship between any natural or legal person and anundertaking; any subsidiary undertaking of a subsidiary under-taking shall also be considered a subsidiary of the parentundertaking which is at the head of those undertakings.
A situation in which two or more natural or legal persons are
permanently linked to one and the same person by a controlrelationship shall also be regarded as constituting a close linkbetween such persons.
27. ‘recognised exchanges’ shall mean exchanges recognised by the
competent authorities which:
(i) function regularly,
(ii) have rules, issued or approved by the appropriate authorities of
the home country of the exchange, which define the conditionsfor the operation of the exchange, the conditions of access tothe exchange as well as the conditions that must be satisfied bya contract before it can effectively be dealt on the exchange,
(iii) have a clearing mechanism that provides for contracts listed in
Annex IV to be subject to daily margin requirements providing2000L0012 — EN — 27.10.2000 — 001.001 — 17
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an appropriate protection in the opinion of the competent
authorities.
Article 2
Scope
1. This Directive concerns the taking up and pursuit of the business
of credit institutions. This Directive shall apply to all credit institutions.
2. Articles 25 and 52 to 56 shall also apply to financial holding
companies and mixed-activity holding companies which have their headoffices in the Community.
The institutions permanently excluded by paragraph 3, with the
exception, however, of the Member States' central banks, shall betreated as financial institutions for the purposes of Articles 25 and 52 to
56.
3. This Directive shall not apply to:
— the central banks of Member States,
— post office giro institutions,— in Belgium, the ‘Institut de Réescompte et de Garantie/Herdiscon-
tering- en Waarborginstituut’,
— in Denmark, the ‘Dansk Eksportfinansieringsfond’, the ‘Danmarks
Skibskreditfond’, and ‘Dansk Landbrugs Realkreditfond’,
— in Germany, the ‘Kreditanstalt für Wiederaufbau’, undertakings
which are recognised under the ‘Wohnungsgemeinnützigkeitsgesetz’as bodies of State housing policy and are not mainly engaged inbanking transactions, and undertakings recognised under that law asnon-profit housing undertakings,
— in Greece, the ‘ Ελληνική Τράπεζα Βιοµηχανικής Αναπτύξεως, ’,
(Elliniki Trapeza Viomichanikis Anaptyxeos), the ‘ Ταµείο Παρα-
καταθηκών και ∆ανείων ’ (Tamio Parakatathikon kai Danion), and
the ‘Ταχυδροµικό Ταµιευτήριο ’ (Tachidromiko Tamieftirio),
— in Spain, the ‘Instituto de Crédito Oficial’,— in France, the ‘Caisse des dépôts et consignations’,
— in Ireland, credit unions and the friendly societies,
— in Italy, the ‘Cassa depositi e prestiti’,— in the Netherlands, the ‘Netherlandse Investeringsbank voor
Ontwikkelingslanden NV’, the ‘NV Noordelijke Ontwikkelings-maatschappij’, the ‘NV Industriebank Limburgs Instituut voor
Ontwikkeling en Financiering’ and the ‘Overijsselse Ontwikkelings-
maatschappij NV’,
— in Austria, undertakings recognised as housing associations in the
public interest and the ‘Österreichische Kontrollbank AG’,
— in Portugal, ‘Caixas Económicas’ existing on 1 January 1986 with
the exception of those incorporated as limited companies and of the‘Caixa Económica Montepio Geral’,
— in Finland, the ‘Teollisen yhteistyön rahasto Oy/Fonden för
industriellt samarbete AB’, and the ‘Kera Oy/Kera Ab’,
— in Sweden, the ‘Svenska Skeppshypotekskassan’,— in the United Kingdom, the National Savings Bank, the Common-
wealth Development Finance Company Ltd, the AgriculturalMortgage Corporation Ltd, the Scottish Agricultural SecuritiesCorporation Ltd, the Crown Agents for overseas governments andadministrations, credit unions and municipal banks.
4. The Council, acting on a proposal from the Commission, which,
for this purpose, shall consult the Committee referred to in Article 57
(hereinafter referred to as the ‘Banking Advisory Committee’) shalldecide on any amendments to the list in paragraph 3.
5. Credit institutions situated in the same Member State and
permanently affiliated, on 15 December 1977, to a central body whichsupervises them and which is established in that same Member State,2000L0012 — EN — 27.10.2000 — 001.001 — 18
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may be exempted from the requirements of Articles 6(1), 8 and 59 if, no
later than 15 December 1979, national law provides that:
— the commitments of the central body and affiliated institutions are
joint and several liabilities or the commitments of its affiliated
institutions are entirely guaranteed by the central body,
— the solvency and liquidity of the central body and of all the affiliated
institutions are monitored as a whole on the basis of consolidatedaccounts,
— the management of the central body is empowered to issue
instructions to the management of the affiliated institutions.
Credit institutions operating locally which are affiliated, subsequent to
15 December 1977, to a central body within the meaning of the first
subparagraph, may benefit from the conditions laid down therein if theyconstitute normal additions to the network belonging to that centralbody.
In the case of credit institutions other than those which are set up in
areas newly reclaimed from the sea or have resulted from scission ormergers of existing institutions dependent or answerable to the centralbody, the Council, acting on a proposal from the Commission, whichshall for this purpose, consult the Banking Advisory Committee, may
lay down additional rules for the application of the second subparagraph
including the repeal of exemptions provided for in the first subpara-graph, where it is of the opinion that the affiliation of new institutionsbenefiting from the arrangements laid down in the second subparagraphmight have an adverse effect on competition. The Council shall decideby a qualified majority.
6. A credit institution which, as defined in the first subparagraph of
paragraph 5, is affiliated to a central body in the same Member Statemay also be exempted from the provisions of Article 5, and also Articles
40 to 51, and 65 provided that, without prejudice to the application of
those provisions to the central body, the whole as constituted by thecentral body together with its affiliated institutions is subject to theabovementioned provisions a consolidated basis.
In case of exemption, Articles 13, 18, 19, 20(1) to (6), 21 and 22 shall
apply to the whole as constituted by the central body together with itsaffiliated institutions.
Article 3
Prohibition for undertakings other than credit institutions from
carryingonthebusinessoftakingdepositsorotherrepayablefunds
from the public
The Member States shall prohibit persons or undertakings that are not
credit institutions from carrying on the business of taking deposits orother repayable fundsfrom the public. This prohibition shall not apply tothe taking of deposits or other funds repayable by a Member State or by
a Member State's regional or local authorities or by public international
bodies of which one or more Member States are members or to casesexpressly covered by national or Community legislation, provided thatthose activities are subject to regulations and controls intended to protectdepositors and investors and applicable to those cases.
TITLE II
REQUIREMENTS FOR ACCESS TO THE TAKING UP AND
PURSUIT OFTHE BUSINESS OFCREDIT INSTITUTIONS
Article 4
Authorisation
Member States shall require credit institutions to obtain authorisation
before commencing their activities. They shall lay down the require-ments for such authorisation subject to Articles 5 to 9, and notify themto both the Commission and the Banking Advisory Committee.2000L0012 — EN — 27.10.2000 — 001.001 — 19
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Article 5
Initial capital
1. Without prejudice to other general conditions laid down by
national law, the competent authorities shall not grant authorisationwhen the credit institution does not possess separate own funds or incases where initial capital is less than EUR 5 million.
Member States may decide that credit institutions which do not fulfil the
requirement of separate own funds and which were in existence on 15
December 1979 may continue to carry on their business. They may
exempt such credit institutions from complying with the requirementcontained in the first subparagraph of Article 6(1).
2. The Member States shall, however, have the option of granting
authorisation to particular categories of credit institutions the initial
capital of which is less than that prescribed in paragraph 1. In such
cases:
(a) the initial capital shall not be less than EUR 1 million,
(b) the Member States concerned must notify the Commission of their
reasons for making use of the option provided for in this paragraph,
(c) when the list referred to in Article 11 is published, the name of each
credit institution that does not have the minimum capital prescribed
in paragraph 1 shall be annotated to that effect.
3. A credit institution's own funds may not fall below the amount of
initial capital required by paragraphs 1 and 2 at the time of itsauthorisation.
4. The Member States may decide that credit institutions already in
existence on 1 January 1993, the own funds of which do not attain the
levels prescribed for initial capital in paragraphs 1 and 2, may continueto carry on their activities. In that event, their own funds may not fallbelow the highest level reached with effect from 22 December 1989.
5. If control of a credit institution falling within the category referred
to in paragraph 4 is taken by a natural or legal person other than the
person who controlled the institution previously, the own funds of that
institution must attain at least the level prescribed for initial capital inparagraphs 1 and 2.
6. In certain specific circumstances and with the consent of the
competent authorities, where there is a merger of two or more credit
institutions falling within the category referred to in paragraph 4, the
own funds of the institution resulting from the merger may not fallbelow the total own funds of the merged institutions at the time of themerger, as long as the appropriate levels pursuant to paragraphs 1 and 2have not been attained.
7. If, in the cases referred to in paragraphs 3, 4 and 6, the own funds
should be reduced, the competent authorities may, where the
circumstances justify it, allow an institution a limited period in whichto rectify its situation or cease its activities.
Article 6
Management bodyandplace of the head office of credit institutions1. The competent authorities shall grant an authorisation to the credit
institution only when there are at least two persons who effectively
direct the business of the credit institution.
Moreover, the authorities concerned shall not grant authorisation if these
persons are not of sufficiently good repute or lack sufficient experienceto perform such duties.
2. Each Member State shall require that:
— any credit institution which is a legal person and which, under its
national law, has a registered office have its head office in the sameMember State as its registered office,2000L0012 — EN — 27.10.2000 — 001.001 — 20
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— any other credit institution have its head office in the Member State
which issued its authorisation and in which it actually carries on itsbusiness.
Article 7
Shareholders and members
1. The competent authorities shall not grant authorisation for the
taking-up of the business of credit institutions before they have beeninformed of the identities of the shareholders or members, whetherdirect or indirect, natural or legal persons, that have qualifying holdings,
and of the amounts of those holdings.
For the purpose of the definition of qualifying holding in the context of
this Article, the voting rights referred to in Article 7 of CouncilDirective 88/627/EEC(
1) shall be taken into consideration.
2. The competent authorities shall refuse authorisation if, taking into
account the need to ensure the sound and prudent management of a
credit institution, they are not satisfied as to the suitability of the
abovementioned shareholders or members.
3. Where close links exist between the credit institution and other
natural or legal persons, the competent authorities shall grantauthorisation only if those links do not prevent the effective exerciseof their supervisory functions.
The competent authorities shall also refuse authorisation if the laws,
regulations or administrative provisions of a non-member countrygoverning one or more natural or legal persons with which the creditinstitution has close links, or difficulties involved in their enforcement,prevent the effective exercise of their supervisory functions.
The competent authorities shall require credit institutions to provide
them with the information they require to monitor compliance with the
conditions referred to in this paragraph on a continuous basis.
Article 8
Programme of operations and structural organisation
Member States shall require applications for authorisation to be
accompanied by a programme of operations setting out, inter alia , the
types of business envisaged and the structural organisation of the
institution.
Article 9
Economic needs
Member States may not require the application for authorisation to be
examined in terms of the economic needs of the market.
Article 10
Authorisation refusal
Reasons shall be given whenever an authorisation is refused and the
applicant shall be notified thereof within six months of receipt of theapplication or, should the latter be incomplete, within six months of theapplicant's sending the information required for the decision. A decisionshall, in any case, be taken within 12 months of the receipt of theapplication.2000L0012 — EN — 27.10.2000 — 001.001 — 21
(1) Council Directive 88/627/EEC of 12 December 1988 on the information to be
published when a major holding in a listed company is acquired or disposed
of (OJ L 348, 17.12.1988, p. 62).
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Article 11
Notification of the authorisation to the Commission
Every authorisation shall be notified to the Commission. Each credit
institution shall be entered in a list which the Commission shall publish
in theOfficial Journal of the European Communities and shall keep up
to date.
Article 12
Prior consultation with the competent authorities of other Member
States
There must be prior consultation with the competent authorities of the
other Member State involved on the authorisation of a credit institution
which is:
— a subsidiary of a credit institution authorised in another Member
State, or
— a subsidiary of the parent undertaking of a credit institution
authorised in another Member State, or
— controlled by the same persons, whether natural or legal, as control a
credit institution authorised in another Member State.
Article 13
Branches of credit institutions authorised in another Member State
Host Member States may not require authorisation or endowment capital
for branches of credit institutions authorised in other Member States.
The establishment and supervision of such branches shall be effected as
prescribed in Articles 17, 20(l) to (6) and Articles 22 and 26.
Article 14
Withdrawal of authorisation
1. The competent authorities may withdraw the authorisation issued
to a credit institution only where such an institution:
(a) does not make use of the authorisation within 12 months, expressly
renounces the authorisation or has ceased to engage in business formore than six months, if the Member State concerned has made noprovision for the authorisation to lapse in such cases;
(b) has obtained the authorisation through false statements or any other
irregular means;
(c) no longer fulfils the conditions under which authorisation was
granted;
(d) no longer possesses sufficient own funds or can no longer be relied
on to fulfil its obligations towards its creditors, and in particular no
longer provides security for the assets entrusted to it;
(e) falls within one of the other cases where national law provides for
withdrawal of authorisation.
2. Reasons must be given for any withdrawal of authorisation and
those concerned informed thereof; such withdrawal shall be notified to
the Commission.
Article 15
Name
For the purpose of exercising their activities, credit institutions may,
notwithstanding any provisions concerning the use of the words ‘bank’,
‘savings bank’ or other banking names which may exist in the host
Member State, use throughout the territory of the Community the samename as they use in the Member State in which their head office issituated. In the event of there being any danger of confusion, the hostMember State may, for the purposes of clarification, require that thename be accompanied by certain explanatory particulars.2000L0012 — EN — 27.10.2000 — 001.001 — 22
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Article 16
Qualifiying holding in a credit institution
1. The Member States shall require any natural or legal person who
proposes to hold, directly or indirectly a qualifying holding in a creditinstitution first to inform the competent authorities, telling them of thesize of the intended holding. Such a person must likewise inform thecompetent authorities if he proposes to increase his qualifying holdingso that the proportion of the voting rights or of the capital held by him
would reach or exceed 20 %, 33 % or 50 % or so that the credit
institution would become his subsidiary.
Without prejudice to the provisions of paragraph 2, the competent
authorities shall have a maximum of three months from the date of the
notification provided for in the first subparagraph to oppose such a planif, in view of the need to ensure sound and prudent management of thecredit institution, they are not satisfied as to the suitability of the personreferred to in the first subparagraph. If they do not oppose the plan
referred to in the first subparagraph, they may fix a maximum period for
its implementation.
2. If the acquirer of the holdings referred to in paragraph 1 is a credit
institution authorised in another Member State or the parent undertaking
of a credit institution authorised in another Member State or a natural orlegal person controlling a credit institution authorised in anotherMember State and if, as a result of that acquisition, the institution, inwhich the acquirer proposes to hold a holding would become a
subsidiary or subject to the control of the acquirer, the assessment of the
acquisition must be the subject of the prior consultation referred to inArticle 12.
3. The Member States shall require any natural or legal person who
proposes to dispose, directly or indirectly, of a qualifying holding in acredit institution first to inform the competent authorities, telling them ofthe size of his intended holding. Such a person must likewise inform thecompetent authorities if he proposes to reduce his qualifying holding sothat the proportion of the voting rights or of the capital held by him
would fall below 20 %, 33 % or 50 % or so that the credit institution
would cease to be his subsidiary.
4. On becoming aware of them, credit institutions shall inform the
competent authorities of any acquisitions or disposals of holdings intheir capital that cause holdings to exceed or fall below one of thethresholds referred to in paragraphs 1 and 3.
They shall also, at least once a year, inform them of the names of
shareholders and members possessing qualifying holdings and the sizesof such holdings as shown, for example, by the information received atthe annual general meetings of shareholders and members or as a resultof compliance with the regulations relating to companies listed on stock
exchanges.
5. The Member States shall require that, where the influence
exercised by the persons referred to in paragraph 1 is likely to operate
to the detriment of the prudent and sound management of the institution,the competent authorities shall take appropriate measures to put an endto that situation. Such measures may consist for example in injunctions,sanctions against directors and managers, or the suspension of theexercise of the voting rights attaching to the shares held by the
shareholders or members in question.
Similar measures shall apply to natural or legal persons failing to
comply with the obligation to provide prior information, as laid down in
paragraph 1. If a holding is acquired despite the opposition of the
competent authorities, the Member States shall, regardless of any othersanctions to be adopted, provide either for exercise of the correspondingvoting rights to be suspended, or for the nullity of votes cast or for thepossibility of their annulment.
6. For the purposes of the definition of qualifying holding and other
levels of holding set out in this Article, the voting rights referred to inArticle 7 of Directive 88/627/EEC shall be taken into consideration.2000L0012 — EN — 27.10.2000 — 001.001 — 23
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Article 17
Procedures and internal control mechanisms
Home Member State competent authorities shall require that every credit
institution have sound administrative and accounting procedures andadequate internal control mechanisms.
TITLE III
PROVISIONS CONCERNINGTHE FREEDOM OF ESTABLISH-
MENT AND THE FREEDOM TO PROVIDE SERVICES
Article 18
Credit institutions
The Member States shall provide that the activities listed in Annex I
may be carried on within their territories, in accordance with Articles
20(1) to (6), 21(1) and (2), and 22, either by the establishment of a
branch or by way of the provision of services, by any credit institutionauthorised and supervised by the competent authorities of anotherMember State, provided that such activities are covered by theauthorisation.
Article 19
Financial institutions
The Member States shall also provide that the activities listed in Annex I
may be carried on within their territories, in accordance with Articles20(1) to (6), 21(1) and (2), and 22, either by the establishment of abranch or by way of the provision of services, by any financialinstitution from another Member State, whether a subsidiary of a credit
institution or the jointly-owned subsidiary of two or more credit
institutions, the memorandum and articles of association of which permitthe carrying on of those activities and which fulfils each of the followingconditions:
— the parent undertaking or undertakings must be authorised as credit
institutions in the Member State by the law of which the subsidiary is
governed,
— the activities in question must actually be carried on within the
territory of the same Member State,
— the parent undertaking or undertakings must hold 90 % or more of
the voting rights attaching to shares in the capital of the subsidiary.
— the parent undertaking or undertakings must satisfy the competent
authorities regarding the prudent management of the subsidiary andmust have declared, with the consent of the relevant home Member
State competent authorities, that they jointly and severally guarantee
the commitments entered into by the subsidiary,
— the subsidiary must be effectively included, for the activities in
question in particular, in the consolidated supervision of the parent
undertaking, or of each of the parent undertakings, in accordancewith Articles 52 to 56, in particular for the calculation of thesolvency ratio, for the control of large exposures and for purposes ofthe limitation of holdings provided for in Article 51.
Compliance with these conditions must be verified by the competent
authorities of the home Member State and the latter must supply thesubsidiary with a certificate of compliance which must form part of the
notification referred to in Articles 20(1) to (6), and 21(1) and (2).
The competent authorities of the home Member State shall ensure the
supervision of the subsidiary in accordance with Articles 5(3), 16, 17,26, 28, 29, 30, and 32.
The provisions mentioned in this Article shall apply mutatis mutandis to
subsidiaries, subject to the necessary modifications. In particular, thewords ‘credit institution’ should be read as ‘financial institutionfulfilling the conditions laid down in Article 19’ and the word‘authorisation’ as ‘memorandum and articles of association’.2000L0012 — EN — 27.10.2000 — 001.001 — 24
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The second subparagraph of Article 20(3) shall read: ‘The home
Member State competent authorities shall also communicate the amountof own funds of the subsidiary financial institution and the consolidated
solvency ratio of the credit institution which is its parent undertaking’.
If a financial institution eligible under this Article should cease to fulfil
any of the conditions imposed, the home Member State shall notify the
competent authorities of the host Member State and the activities carried
on by that institution in the host Member State become subject to thelegislation of the host Member State.
Article 20
Exercise of the right of establishment
1. A credit institution wishing to establish a branch within the
territory of another Member State shall notify the competent authoritiesof its Member State.
2. The Member State shall require every credit institution wishing to
establish a branch in another Member State to provide the followinginformation when effecting the notification referred to in paragraph 1:
(a) the Member State within the territory of which it plans to establish a
branch;
(b) a programme of operations setting out, inter alia , the types of
business envisaged and the structural organisation of the branch;
(c) the address in the host Member State from which documents may be
obtained;
(d) the names of those responsible for the management of the branch.
3. Unless the competent authorities of the home Member State have
reason to doubt the adequacy of the administrative structure or thefinancial situation of the credit institution, taking into account theactivities envisaged, they shall within three months of receipt of theinformation referred to in paragraph 2 communicate that information tothe competent authorities of the host Member State and shall inform the
institution accordingly.
The home Member State competent authorities shall also communicate
the amount of own funds and the solvency ratio of the credit institution.
Where the competent authorities of the home Member State refuse to
communicate the information referred to in paragraph 2 to thecompetent authorities of the host Member State, they shall give reasonsfor their refusal to the institution concerned within three months of
receipt of all the information. That refusal or failure to reply shall be
subject to a right to apply to the courts in the home Member State.
4. Before the branch of a credit institution commences its activities
the competent authorities of the host Member State shall, within two
months of receiving the information mentioned in paragraph 3, preparefor the supervision of the credit institution in accordance with Article 22and if necessary indicate the conditions under which, in the interest ofthe general good, those activities must be carried on in the host Member
State.
5. On receipt of a communication from the competent authorities of
the host Member State, or in the event of the expiry of the periodprovided for in paragraph 4 without receipt of any communication from
the latter, the branch may be established and commence its activities.
6. In the event of a change in any of the particulars communicated
pursuant to paragraph 2(b), (c) or (d), a credit institution shall give
written notice of the change in question to the competent authorities of
the home and host Member States at least one month before making thechange so as to enable the competent authorities of the home MemberState to take a decision pursuant to paragraph 3 and the competentauthorities of the host Member State to take a decision on the changepursuant to paragraph 4.2000L0012 — EN — 27.10.2000 — 001.001 — 25
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7. Branches which have commenced their activities, in accordance
with the provisions in force in their host Member States, before 1January 1993, shall be presumed to have been subject to the procedure
laid down in paragraphs 1 to 5. They shall be governed, from the
abovementioned date, by paragraph 6, and by Articles 18, 19, 22 and 29.
Article 21
Exercise of the freedom to provide services
1. Any credit institution wishing to exercise the freedom to provide
services by carrying on its activities within the territory of anotherMember State for the first time shall notify the competent authorities ofthe home Member State, of the activities on the list in Annex I which itintends to carry on.
2. The competent authorities of the home Member State shall, within
one month of receipt of the notification mentioned in paragraph 1, sendthat notification to the competent authorities of the host Member State.
3. This Article shall not affect rights acquired by credit institutions
providing services before 1 January 1993.
Article 22
Power of the competent authorities of the host Member State
1. Host Member States may, for statistical purposes, require that all
credit institutions having branches within their territories shall report
periodically on their activities in those host Member States to thecompetent authorities of those host Member States.
In discharging the responsibilities imposed on them in Article 27, host
Member States may require that branches of credit institutions from
other Member States provide the same information as they require fromnational credit institutions for that purpose.
2. Where the competent authorities of a host Member State ascertain
than an institution having a branch or providing services within its
territory is not complying with the legal provisions adopted in that State
pursuant to the provisions of this Directive involving powers of the hostMember State's competent authorities, those authorities shall require theinstitution concerned to put an end to that irregular situation.
3. If the institution concerned fails to take the necessary steps, the
competent authorities of the host Member State shall inform the
competent authorities of the home Member State accordingly. Thecompetent authorities of the home Member State shall, at the earliestopportunity, take all appropriate measures to ensure that the institutionconcerned puts an end to that irregular situation. The nature of those
measures shall be communicated to the competent authorities of the host
Member State.
4. If, despite the measures taken by the home Member State or
because such measures prove inadequate or are not available in theMember State in question, the institution persists in violating the legal
rules referred to in paragraph 2 in force in the host Member State, the
latter State may, after informing the competent authorities of the homeMember State, take appropriate measures to prevent or to punish furtherirregularities and, in so far as is necessary, to prevent that institutionfrom initiating further transactions within its territory. The MemberStates shall ensure that within their territories it is possible to serve the
legal documents necessary for these measures on credit institutions.
5. The provisions of paragraph 1 to 4 shall not affect the power of
host Member States to take appropriate measures to prevent or to punishirregularities committed within their territories which are contrary to the
legal rules they have adopted in the interest of the general good. This
shall include the possibility of preventing offending institutions frominitiating any further transactions within their territories.
6. Any measure adopted pursuant to paragraph 3, 4 and 5 involving
penalties or restrictions on the exercise of the freedom to provide2000L0012 — EN — 27.10.2000 — 001.001 — 26
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services must be properly justified and communicated to the institution
concerned. Every such measure shall be subject to a right of appeal tothe courts in the Member State the authorities of which adopted it.
7. Before following the procedure provided for in paragraph 2, 3 and
4, the competent authorities of the host Member State may, inemergencies, take any precautionary measures necessary to protect theinterests of depositors, investors and others to whom services are
provided. The Commission and the competent authorities of the other
Member States concerned must be informed of such measures at theearliest opportunity.
The Commission may, after consulting the competent authorities of the
Member States concerned, decide that the Member State in question
must amend or abolish those measures.
8. Host Member States may exercise the powers conferred on them
under this Directive by taking appropriate measures to prevent or to
punish irregularities committed within their territories. This shall include
the possibility of preventing institutions from initiating furthertransactions within their territories.
9. In the event of the withdrawal of authorisation the competent
authorities of the host Member State shall be informed and shall take
appropriate measures to prevent the institution concerned from initiatingfurther transactions within its territory and to safeguard the interests ofdepositors. Every two years the Commission shall submit a report onsuch cases to the Banking Advisory Committee.
10. The Member States shall inform the Commission of the number
and type of cases in which there has been a refusal pursuant to Article20(1) to (6) or in which measures have been taken in accordance withparagraph 4 of this Article. Every two years the Commission shall
submit a report on such cases to the Banking Advisory Committee.
11. Nothing in this Article shall prevent credit institutions with head
offices in other Member States from advertising their services throughall available means of communication in the host Member State, subject
to any rules governing the form and the content of such advertising
adopted in the interest of the general good.
TITLE IV
RELATIONS WITH THIRD COUNTRIES
Article 23
Notification of the subsidiaries of third countries' undertakings and
conditions of access to the markets of these countries
1. The competent authorities of the Member States shall inform the
Commission:
(a) of any authorisation of a direct or indirect subsidiary one or more
parent undertakings of which are governed by the laws of a thirdcountry. The Commission shall inform the Banking AdvisoryCommittee accordingly;
(b) whenever such a parent undertaking acquires a holding in a
Community credit institution such that the latter would become itssubsidiary. The Commission shall inform the Banking AdvisoryCommittee accordingly.
When authorisation is granted to the direct or indirect subsidiary of one
or more parent undertakings governed by the law of third countries, thestructure of the group shall be specified in the notification which thecompetent authorities shall address to the Commission in accordance
with Article 11.
2. The Member States shall inform the Commission of any general
difficulties encountered by their credit institutions in establishingthemselves or carrying on banking activities in a third country.2000L0012 — EN — 27.10.2000 — 001.001 — 27
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3. The Commission shall periodically draw up a report examining the
treatment accorded to Community credit institutions in third countries,in the terms referred to in paragraphs 4 and 5, as regards establishment
and the carrying-on of banking activities, and the acquisition of holdings
in third-country credit institutions. The Commission shall submit thosereports to the Council, together with any appropriate proposals.
4. Whenever it appears to the Commission, either on the basis of the
reports referred to in paragraph 3 or on the basis of other information,that a third country is not granting Community credit institutionseffective market access comparable to that granted by the Community tocredit institutions from that third country, the Commission may submit
proposals to the Council for the appropriate mandate for negotiation
with a view to obtaining comparable competitive opportunities forCommunity credit institutions. The Council shall decide by a qualifiedmajority.
5. Whenever it appears to the Commission, either on the basis of the
reports referred to in paragraph 3 or on the basis of other informationthat Community credit institutions in a third country do not receivenational treatment offering the same competitive opportunities as are
available to domestic credit institutions and the conditions of effective
market access are not fulfilled, the Commission may initiate negotia-tions in order to remedy the situation.
In the circumstances described in the first subparagraph, it may also be
decided at any time, and in addition to initiating negotiations, inaccordance with the procedure laid down in Article 60(2), that thecompetent authorities of the Member States must limit or suspend theirdecisions regarding requests pending at the moment of the decision or
future requests for authorisations and the acquisition of holdings by
direct or indirect parent undertakings governed by the laws of the thirdcountry in question. The duration of the measures referred to may notexceed three months.
Before the end of that three-month period, and in the light of the results
of the negotiations, the Council may, acting on a proposal from theCommission, decide by a qualified majority whether the measures shallbe continued.
Such limitations or suspension may not apply to the setting up of
subsidiaries by credit institutions or their subsidiaries duly authorised in
the Community, or to the acquisition of holdings in Community credit
institutions by such institutions or subsidiaries.
6. Whenever it appears to the Commission that one of the situations
described in paragraphs 4 and 5 obtains, the Member States shall informit at its request:
(a) of any request for the authorisation of a direct or indirect subsidiary
one or more parent undertakings of which are governed by the lawsof the third country in question;
(b) whenever they are informed in accordance with Article 16 that such
an undertaking proposes to acquire a holding in a Community creditinstitution such that the latter would become its subsidiary.
This obligation to provide information shall lapse whenever an
agreement is reached with the third country referred to in paragraph 4
or 5 or when the measures referred to in the second and third
subparagraphs of paragraph 5 cease to apply.
7. Measures taken pursuant to this Article comply with the
Community's obligations under any international agreements, bilateral
or multilateral, governing the taking-up and pursuit of the business ofcredit institutions.
Article 24
Branches of credit institutions having their head offices outside the
Community
1. Member States shall not apply to branches of credit institutions
having their head office outside the Community, when commencing or2000L0012 — EN — 27.10.2000 — 001.001 — 28
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carrying on their business, provisions which result in more favourable
treatment than that accorded to branches of credit institutions havingtheir head office in the Community.
2. The competent authorities shall notify the Commission and the
Banking Advisory Committee of all authorisations for branches grantedto credit institutions having their head office outside the Community.
3. Without prejudice to paragraph 1, the Community may, through
agreements concluded in accordance with the Treaty with one or morethird countries, agree to apply provisions which, on the basis of theprinciple of reciprocity, accord to branches of a credit institution having
its head office outside the Community identical treatment throughout the
territory of the Community.
Article 25
Cooperation with third countries' competent authorities regarding
supervision on a consolidated basis
1. The Commission may submit proposals to the Council, either at
the request ofa Member State oron its own initiative, for the negotiation
of agreements with one or more third countries regarding the means of
exercising supervision on a consolidated basis over:
— credit institutions the parent undertakings of which have their head
offices situated in a third country, and
— credit institutions situated in third countries the parent undertakings
of which, whether credit institutions or financial holding companies,
have their head offices in the Community.
2. The agreements referred to in paragraph 1 shall in particular seek
to ensure both:
— that the competent authorities of the Member States are able to
obtain the information necessary for the supervision, on the basis oftheir consolidated financial situations, of credit institutions or
financial holding companies situated in the Community and which
have as subsidiaries credit institutions or financial institutionssituated outside the Community, or holding participation in suchinstitutions,
— that the competent authorities of third countries are able to obtain the
information necessary for the supervision of parent undertakings the
head offices of which are situated within their territories and whichhave as subsidiaries credit institutions or financial institutionssituated in one or more Member States or holding participation insuch institutions.
3. The Commission and the Banking Advisory Committee shall
examine the outcome of the negotiations referred to in paragraph 1 andthe resulting situation.
TITLE V
PRINCIPLES AND TECHNICAL INSTRUMENTS FOR
PRUDENTIAL SUPERVISION
CHAPTER 1
PRINCIPLES OFPRUDENTIAL SUPERVISION
Article 26
Competence of control of the home Member State
1. The prudential supervision of a credit institution, including that of
the activities it carries on accordance with Articles 18 and 19, shall bethe responsibility of the competent authorities of the home Member
State, without prejudice to those provisions of this Directive which give
responsibility to the authorities of the host Member State.
2. Paragraph 1 shall not prevent supervision on a consolidated basis
pursuant to this Directive.2000L0012 — EN — 27.10.2000 — 001.001 — 29
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Article 27
Competence of the host Member State
Host Member States shall retain responsibility in cooperation with the
competent authorities of the home Member State for the supervision of
the liquidity of the branches of credit institutions pending further
coordination. Without prejudice to the measures necessary for thereinforcement of the European Monetary System, host Member Statesshall retain complete responsibility for the measures resulting from theimplementation of their monetary policies. Such measures may notprovide for discriminatory or restrictive treatment based on the fact that
a credit institution is authorised in another Member State.
Article 28
Collaboration concerning supervision
The competent authorities of the Member States concerned shall
collaborate closely in order to supervise the activities of credit
institutions operating, in particular by having established branchesthere, in one or more Member States other than that in which their headoffices are situated. They shall supply one another with all informationconcerning the management and ownership of such credit institutions
that is likely to facilitate their supervision and the examination of the
conditions for their authorisation, and all information likely to facilitatethe monitoring of such institutions, in particular with regard to liquidity,solvency, deposit guarantees, the limiting of large exposures, adminis-trative and accounting procedures and internal control mechanisms.
Article 29
On-the-spotverificationofbranchesestablishedinanotherMember
State
1. Host Member States shall provide that, where a credit institution
authorised in another Member State carries on its activities through a
branch, the competent authorities of the home Member State may, afterhaving first informed the competent authorities of the host MemberState, carry out themselves or through the intermediary of persons theyappoint for that purpose on-the-spot verification of the informationreferred to in Article 28.
2. The competent authorities of the home Member State may also, for
purposes of the verification of branches, have recourse to one of the
other procedures laid down in Article 56(7).
3. This Article shall not affect the right of the competent authorities
of the host Member State to carry out, in the discharge of theirresponsibilities under this Directive, on-the-spot verifications ofbranches established within their territory.
Article 30
Exchange of information and professional secrecy
1. The Member States shall provide that all persons working or who
have worked for the competent authorities, as well as auditors or experts
acting on behalf of the competent authorities, shall be bound by the
obligation of professional secrecy. This means that no confidentialinformation which they may receive in the course of their duties may bedivulged to any person or authority whatsoever, except in summary orcollective form, such that individual institutions cannot be identified,without prejudice to cases covered by criminal law.
Nevertheless, where a credit institution has been declared bankrupt or is
being compulsorily wound up, confidential information which does notconcern third parties involved in attempts to rescue that credit institutionmay be divulged in civil or commercial proceedings.
2. Paragraph 1 shall not prevent the competent authorities of the
various Member States from exchanging information in accordance withthis Directive and with other Directives applicable to credit institutions.2000L0012 — EN — 27.10.2000 — 001.001 — 30
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That information shall be subject to the conditions of professional
secrecy indicated in paragraph 1.
3. Member States may conclude cooperation agreements, providing
for exchanges of information, with the competent authorities of thirdcountries or with authorities or bodies of third countries as defined inparagraphs 5 and 6 only if the information disclosed is subject to
guarantees of professional secrecy at least equivalent to those referred to
in this Article. Such exchange of information must be for the purpose ofperforming the supervisory task of the authorities or bodies mentioned.
Where the information originates in another Member State, it may not be
disclosed without the express agreement of the competent authoritieswhich have disclosed it and, where appropriate, solely for the purposesfor which those authorities gave their agreement.
4. Competent authorities receiving confidential information under
paragraphs 1 or 2 may use it only in the course of their duties:
— to check that the conditions governing the taking-up of the business
of credit institutions are met and to facilitate monitoring, on a non-consolidated or consolidated basis, of the conduct of such business,especially with regard to the monitoring of liquidity, solvency, large
exposures, and administrative and accounting procedures and
internal control mechanisms, or
— to impose sanctions, or
— in an administrative appeal against a decision of the competent
authority, or
— in court proceedings initiated pursuant to Article 33 or to special
provisions provided for in this in other Directives adopted in the fieldof credit institutions.
5. Paragraphs 1 and 4 shall not preclude the exchange of information
within a Member State, where there are two or more competentauthorities in the same Member State, or between Member States,
between competent authorities and:
— authorities entrusted with the public duty of supervising other
financial organisations and insurance companies and the authoritiesresponsible for the supervision of financial markets,
— bodies involved in the liquidation and bankruptcy of credit
institutions and in other similar procedures,
— persons responsible for carrying out statutory audits of the accounts
of credit institutions and other financial institutions,
in the discharge of their supervisory functions, and the disclosure to
bodies which administer deposit-guarantee schemes of informationnecessary to the exercise of their functions. The information receivedshall be subject to the conditions of professional secrecy indicated inparagraph 1.
6. Notwithstanding paragraphs 1 to 4, Member States may authorise
exchanges of information between, the competent authorities and:
— the authorities responsible for overseeing the bodies, involved in the
liquidation and bankruptcy of credit institutions and other similarprocedures, or
— the authorities responsible for overseeing persons charged with
carrying out statutory audits of the accounts of insurance under-takings, credit institutions, investment firms and other financialinstitutions.
Member States which have recourse to the provisions of the first
subparagraph shall require at least that the following conditions are met:
— the information shall be for the purpose of performing the
supervisory task referred to in the first subparagraph,
— information received in this context shall be subject to the conditions
of professional secrecy imposed in paragraph 1,
— where the information originates in another Member State, it may
not be disclosed without the express agreement of the competent2000L0012 — EN — 27.10.2000 — 001.001 — 31
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authorities which have disclosed it and, where appropriate, solely for
the purposes for which those authorities gave their agreement.
Member States shall communicate to the Commission and to the other
Member States the name of the authorities which may receiveinformation pursuant to this paragraph.
7. Notwithstanding paragraphs 1 to 4, Member States may, with the
aim of strengthening the stability, including integrity, of the financialsystem, authorise the exchange of information between the competentauthorities and the authorities or bodies responsible under law for the
detection and investigation of breaches of company law.
Member States which have recourse to the provision in the first
subparagraph shall require at least that the following conditions are met:
— the information shall be for the purpose of performing the task
referred to in the first subparagraph,
— information received in this context shall be subject to the conditions
of professional secrecy imposed in paragraph 1,
— where the information originates in another Member State, it may
not be disclosed without the express agreement of the competentauthorities which have disclosed it and, where appropriate, solely forthe purposes for which those authorities gave their agreement.
Where, in a Member State, the authorities or bodies referred to in the
first subparagraph perform their task of detection or investigation withthe aid, in view of their specific competence, of persons appointed forthat purpose and not employed in the public sector, the possibility of
exchanging information provided for in the first subparagraph may be
extended to such persons under the conditions stipulated in the secondsubparagraph.
In order to implement the third indent of the second subparagraph, the
authorities or bodies referred to in the first subparagraph shall
communicate to the competent authorities which have disclosed theinformation, the names and precise responsibilities of the persons towhom it is to be sent.
Member States shall communicate to the Commission and to the other
Member States the names of the authorities or bodies which may receiveinformation pursuant to this paragraph.
Before 31 December 2000, the Commission shall draw up a report on
the application of the provisions of this paragraph.
8. This Article shall not prevent a competent authority from
transmitting:
— to central banks and other bodies with a similar function in their
capacity as monetary authorities,
— where appropriate to other public authorities responsible for
overseeing payment systems,
information intended for the performance of their task, nor shall it
prevent such authorities or bodies from communicating to the competent
authorities such information as they may need for the purposes of
paragraph 4. Information received in this context shall be subject to theconditions of professional secrecy imposed in this Article.
9. In addition, notwithstanding the provisions referred to in
paragraphs 1 and 4, the Member States may, by virtue of provisionslaid downby law, authorise the disclosure ofcertain information to otherdepartments of their central government administrations responsible forlegislation on the supervision of credit institutions financial institutions,investment services and insurance companies and to inspectors acting on
behalf of those departments.
However, such disclosures may be made only where necessary for
reasons of prudential control.
However, the Member States shall provide that information received
under paragraphs 2 and 5 and that obtained by means of the on-the-spotverification referred to in Article 29(1) and (2) may never be disclosed2000L0012 — EN — 27.10.2000 — 001.001 — 32
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in the cases referred to in this paragraph except with the express consent
of the competent authorities which disclosed the information or of thecompetent authorities of the Member State in which on-the-spot
verification was carried out.
10. This Article shall not prevent the competent authorities from
communicating the information referred to in paragraphs 1 to 4 to aclearing house or other similar body recognised under national law forthe provision of clearing or settlement services for one of their MemberStates' markets if they consider that it is necessary to communicate the
information in order to ensure the proper functioning of those bodies in
relation to defaults or potential defaults by market participants. Theinformation received in this context shall be subject to the conditions ofprofessional secrecy imposed in paragraph 1. The Member States shall,however, ensure that information received under paragraph 2 may not be
disclosed in the circumstances referred to in this paragraph without the
express consent of the competent authorities which disclosed it.
Article 31
Duty of persons responsible for the legal control of annual and
consolidated accounts
1. Member States shall provide at least that:
(a) any person authorised within the meaning of Council Directive 84/
253/EEC(
1), performing in a credit institution the task described in
Article 51 of Council Directive 78/660/EEC(2), or Article 37 of
Council Directive 83/349/EEC, or Article 31 of Directive 85/611/
EEC(3), or any other statutory task, shall have a duty to report
promptly to the competent authorities any fact or decisionconcerning that institution of which he has become aware whilecarrying out that task which is liable to:
— constitute a material breach of the laws, regulations or
administrative provisions which lay down the conditionsgoverning authorisation or which specifically govern pursuit ofthe activities of credit institutions, or
— affect the continuous functioning of the credit institution, or— lead to refusal to certify the accounts or to the expression of
reservations;
(b) that person shall likewise have a duty to report any fact and
decisions of which he becomes aware in the course of carrying out a
task asdescribed in (a) in an undertaking having close links resultingfrom a control relationship with the credit institution within whichhe is carrying out the abovementioned task.
2. The disclosure in good faith to the competent authorities, by
persons authorised within the meaning of Directive 84/253/EEC, of anyfact or decision referred to in paragraph 1 shall not constitute a breach of
any restriction on disclosure of information imposed by contract or by
any legislative, regulatory or administrative provision and shall notinvolve such persons in liability of any kind.2000L0012 — EN — 27.10.2000 — 001.001 — 33
(1) Eighth Council Directive (84/253/EEC) of 10 April 1984 based on Article
44(2)(g) of the Treaty on the approval of persons responsible for carrying out
the statutory audits of accounting documents (OJ L 126, 12.5.1984, p. 20).
(2) Fourth Council Directive (78/660/EEC) of 25 July 1978 based on Article
44(2)(g) of the Treaty on the annual accounts of certain types of companies
(OJ L 222, 14.8.1978, p. 11). Directive as last amended by Directive 1999/60/
EC (OJ L 62, 26.6.1999, p. 65).
(3) Council Directive 85/611/EEC of 20 December 1985 on the coordination of
laws, regulations and administrative provisions relating to undertakings for
collective investment in transferable securities (UCITS) (OJ L 375,
31.12.1985, p. 3). Directive as last amended by Directive 95/26/EC (OJ L
168, 18.7.1995, p. 7).
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Article 32
Power of sanction of the competent authorities
Without prejudice to the procedures for the withdrawal of authorisations
and the provisions of criminal law, the Member States shall provide thattheir respective competent authorities may, as against credit institutionsor those who effectively control the business of credit institutions which
breach laws, regulations or administrative provisions concerning the
supervision or pursuit of their activities, adopt or impose in respect ofthem penalties or measures aimed specifically at ending observedbreaches or the causes of such breaches.
Article 33
Right to apply to the courts
Member States shall ensure that decisions taken in respect of a credit
institution in pursuance of laws, regulations and administrativeprovisions adopted in accordance with this Directive may be subjectto the right to apply to the courts. The same shall apply where nodecision is taken within six months of its submission in respect of an
application for authorisation which contains all the information required
under the provisions in force.
Article 33a
Article 3 of Directive 2000/46/EC shall apply to credit institutions.
CHAPTER 2
TECHNICAL INSTRUMENTS OFPRUDENTIAL SUPERVISION
Section 1
Own funds
Article 34
General principles
1. Wherever a Member State lays down by law, regulation or
administrative action a provision in implementation of Community
legislation concerning the prudential supervision of an operative credit
institution which uses the term or refers to the concept of own funds, itshall bring this term or concept into line with the definition given inparagraphs 2, 3 and 4 and Articles 35 to 38.
2. Subject to the limits imposed in Article 38, the unconsolidated own
funds of credit institutions shall consist of the following items:
(1) capital within the meaning of Article 22 of Directive 86/635/EEC, in
so far as it has been paid up, plus share premium accounts butexcluding cumulative preferential shares;
(2) reserves within the meaning of Article 23 of Directive 86/635/EEC
and profits and losses brought forward as a result of the applicationof the final profit or loss. The Member States may permit inclusionof interim profits before a formal decision has been taken only ifthese profits have been verified by persons responsible for the
auditing of the accounts and if it is proved to the satisfaction of the
competent authorities that the amount thereof has been evaluated inaccordance with the principles set out in Directive 86/635/EEC andis net of any foreseeable charge or dividend;
(3) funds for general banking risks within the meaning of Article 38 of
Directive 86/635/EEC;
(4) revaluation reserves within the meaning of Article 33 of Directive
78/660/EEC;
(5) value adjustments within the meaning of Article 37(2) of Directive
86/635/EEC;2000L0012 — EN — 27.10.2000 — 001.001 — 34
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(6) other items within the meaning of Article 35;
(7) the commitments of the members of credit institutions set up as
cooperative societies and the joint and several commitments of the
borrowers of certain institutions organised as funds, as referred to in
Article 36(1);
(8) fixed-term cumulative preferential shares and subordinated loan
capital as referred to in Article 36(3).
The following items shall be deducted in accordance with Article 38:
(9) own shares at book value held by a credit institution;
(10) intangible assets within the meaning of Article 4(9) (‘Assets’) of
Directive 86/635/EEC;
(11) material losses of the current financial year;(12) holdings in other credit and financial institutions amounting to
more than 10 % of their capital, subordinated claims and the
instruments referred to in Article 35 which a credit institution holds
in respect of credit and financial institutions in which it hasholdings exceeding 10 % of the capital in each case.
Where shares in another credit or financial institution are held
temporarily for the purposes of a financial assistance operationdesigned to reorganise and save that institution, the competent
authority may waive this provision;
(13) holdings in other credit and financial institutions of up to 10 % of
their capital, the subordinated claims and the instruments referredto in Article 35 which a credit institution holds in respect of creditand financial institutions other than those referred to in point (12)in respect of the amount of the total of such holdings, subordinated
claims and instruments which exceed 10 % of that credit
institution's own funds calculated before the deduction of itemsin point (12) and in this point.
Pending subsequent coordination of the provisions on consolidation,
Member States may provide that, for the calculation of unconsolidatedown funds, parent companies subject to supervision on a consolidatedbasis need not deduct their holdings in other credit institutions orfinancial institutions which are included in the consolidation. This
provision shall apply to all the prudential rules harmonised by
Community acts.
3. The concept of own funds as defined in points (1) to (8) of
paragraph 2 embodies a maximum number of items and amounts. Theuse of those items and the fixing of lower ceilings, and the deduction ofitems other than those listed in points (9) to (13) of paragraph 2 shall beleft to the discretion of the Member States. Member States shallnevertheless be obliged to consider increased convergence with a view
to a common definition of own funds.
To that end, the Commission shall, by 1 January 1996 at the latest,
submit a report to the European Parliament and to the Council on the
application of this Article and Articles 35 to 39, accompanied, whereappropriate, by such proposals for amendment as it shall deemnecessary. Not later than 1 January 1998, the European Parliamentand the Council shall, acting in accordance with the procedure laid downin Article 251 of the Treaty and after consultation of the Economic and
Social Committee, examine the definition of own funds with a view to
the uniform application of the common definition.
4. The items listed in points (1) to (5) of paragraph 2 must be
available to a credit institution for unrestricted and immediate use tocover risks or losses as soon as these occur. The amount must be net ofany foreseeable tax charge at the moment of its calculation or besuitably adjusted in so far as such tax charges reduce the amount up towhich these items may be applied to cover risks or losses.2000L0012 — EN — 27.10.2000 — 001.001 — 35
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Article 35
Other items
1. The concept of own funds used by a Member State may include
other items provided that, whatever their legal or accounting designa-
tions might be, they have the following characteristics:
(a) they are freely available to the credit institution to cover normal
banking risks where revenue or capital losses have not yet beenidentified;
(b) their existence is disclosed in internal accounting records;
(c) their amount is determined by the management of the credit
institution, verified by independent auditors, made known to thecompetent authorities and placed under the supervision of the latter.
2. Securities of indeterminate duration and other instruments that
fulfil the following conditions may also be accepted as other items:
(a) they may not be reimbursed on the bearer's initiative or without the
prior agreement of the competent authority;
(b) the debt agreement must provide for the credit institution to have the
option of deferring the payment of interest on the debt;
(c) the lender's claims on the credit institution must be wholly
subordinated to those of all non-subordinated creditors;
(d) the documents governing the issue of the securities must provide for
debt and unpaid interest to be such as to absorb losses, whilst
leaving the credit institution in a position to continue trading;
(e) only fully paid-up amounts shall be taken into account.
To these may be added cumulative preferential shares other than those
referred to in point 8 of Article 34(2).
Article 36
Other provisions concerning own funds
1. The commitments of the members of credit institutions set up as
cooperative societies referred to in point 7 of Article 34(2), shall
comprise those societies' uncalled capital; together with the legal
commitments of the members of those cooperative societies to makeadditional non-refundable payments should the credit institution incur aloss, in which case it must be possible to demand those paymentswithout delay.
The joint and several commitments of borrowers in the case of credit
institutions organised as funds shall be treated in the same way as the
preceding items.
All such items may be included in own funds in so far as they are
counted as the own funds of institutions of this category under nationallaw.
2. Member States shall not include in the own funds of public credit
institutions guarantees which they or their local authorities extend tosuch entities.
3. Member States or the competent authorities may include fixed-
term cumulative preferential shares referred to in point (8) of Article
34(2) and subordinated loan capital referred to in that provision in ownfunds, if binding agreements exist under which, in the event of thebankruptcy or liquidation of the credit institution, they rank after theclaims of all other creditors and are not to be repaid until all other debts
outstanding at the time have been settled.
Subordinated loan capital must also fulfil the following criteria:
(a) only fully paid-up funds may be taken into account;
(b) the loans involved must have an original maturity of at least five
years, after which they may be repaid; if the maturity of the debt isnot fixed, they shall be repayable only subject to five years' notice2000L0012 — EN — 27.10.2000 — 001.001 — 36
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unless the loans are no longer considered as own funds or unless the
prior consent of the competent authorities is specifically required forearly repayment. The competent authorities may grant permission
for the early repayment of such loans provided the request ismade at
the initiative of the issuer and the solvency of the credit institution inquestion is not affected;
(c) the extent to which they may rank as own funds must be gradually
reduced during at least the last five years before the repayment date;
(d) the loan agreement must not include any clause providing that in
specified circumstances, other than the winding-up of the credit
institution, the debt will become repayable before the agreedrepayment date.
Article 37
Calculation of own funds on a consolidated basis
1. Where the calculation is to be made on a consolidated basis, the
consolidated amounts relating to the items listed under Article 34(2)
shall be used in accordance with the rules laid down in Articles 52 to 56.Moreover, the following may, when they are credit (‘negative’) items,be regarded as consolidated reserves for the calculation of own funds:
— any minority interests within the meaning of Article 21 of Directive
83/349/EEC, where the global integration method is used,
— the first consolidation difference within the meaning of Articles 19,
30 and 31 of Directive 83/349/EEC,
— the translation differences included in consolidated reserves in
accordance with Article 39(6) of Directive 86/635/EEC,
— any difference resulting from the inclusion of certain participating
interests in accordance with the method prescribed in Article 33 of
Directive 83/349/EEC.
2. Where the above are debit (‘positive’) items, they must be
deducted in the calculation of consolidated own funds.
Article 38
Deductions and limits
1. The items referred to in points (4) to (8) of Article 34(2), shall be
subject to the following limits:
(a) the total of the items in points (4) to (8) may not exceed a maximum
of 100 % of the items in points (1) plus (2) and (3) minus (9), (10)and (11);
(b) the total of the items in points (7) and (8) may not exceed a
maximum of 50 % of the items in points (1) plus (2) and (3) minus(9), (10) and (11);
(c) the total of the items in points (12) and (13) shall be deducted from
the total of the items.
2. The competent authorities may authorise credit institutions to
exceed the limit laid down in paragraph 1 in temporary and exceptional
circumstances.
Article 39
Provision of proof to the competent authorities
Compliance with the conditions laid down in Article 34(2), (3) and (4)
and Articles 35 to 38 must be proved to the satisfaction of the competentauthorities.2000L0012 — EN — 27.10.2000 — 001.001 — 37
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Section 2
Solvency ratio
Article 40
General principles
1. The solvency ratio expresses own funds, as defined in Article 41,
as a proportion of total assets and off-balance-sheet items, risk-adjustedin accordance with Article 42.
2. The solvency ratios of credit institutions which are neither parent
undertakings as defined in Article 1 of Directive 83/349/EEC, norsubsidiaries of such undertakings shall be calculated on an individualbasis.
3. The solvency ratios of credit institutions which are parent
undertakings shall be calculated on a consolidated basis in accordancewith the methods laid down in this Directive and in Directive 86/635/EEC.
4. The competent authorities responsible for authorising and super-
vising a parent undertaking which is a credit institution may also requirethe calculation of a subconsolidated or unconsolidated ratio in respect ofthat parent undertaking and of any of its subsidiaries which are subjectto authorisation and supervision by them. Where such monitoring of the
satisfactory allocation of capital within a banking group is not carried
out, other measures must be taken to attain that end.
5. Without prejudice to credit institutions' compliance with the
requirements of paragraphs 2, 3 and 4, and of Article 52(8) and (9), the
competent authorities shall ensure that ratios are calculated not less thantwice each year, either by credit institutions themselves, which shallcommunicate the results and any component data required to thecompetent authorities, or by the competent authorities, using datasupplied by the credit institutions.
6. The valuation of assets and off-balance-sheet items shall be
effected in accordance with Directive 86/635/EEC.
Article 41
The numerator: own funds
Own funds as defined in this Directive shall form the numerator of the
solvency ratio.
Article 42
The denominator: risk-adjusted assets and off-balance-sheet items
1. Degrees of credit risk, expressed as percentage weightings, shall be
assigned to asset items in accordance with Articles 43 and 44, and
exceptionally Articles 45, 62 and 63. The balance-sheet value of eachasset shall then be multiplied by the relevant weighting to produce arisk-adjusted value.
2. In the case of the off-balance-sheet items listed in Annex II, a two-
stage calculation as prescribed in Article 43(2) shall be used.
3. In the case of the off-balance-sheet items referred to in Article
43(3), the potential costs of replacing contracts in the event of
counterparty default shall be calculated by means of one of the twomethods set out in Annex III. Those costs shall be multiplied by therelevant counterparty weightings in Article 43(1), except the 100 %weightings as provided for there shall be replaced by 50 % weightings to
produce risk-adjusted values.
4. The total of the risk-adjusted values of the assets and off-balance-
sheet items mentioned in paragraphs 2 and 3 shall be the denominator ofthe solvency ratio.2000L0012 — EN — 27.10.2000 — 001.001 — 38
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Article 43
Risk weightings
1. The following weightings shall be applied to the various categories
of asset items, although the competent authorities may fix higherweightings as they see fit:
(a) Zero weighting
(1) cash in hand and equivalent items;
(2) asset items constituting claims on Zone A central governments
and central banks;
(3) asset items constituting claims on the European Communities;
(4) asset items constituting claims carrying the explicit guarantees
of Zone A central governments and central banks or of the
European Communities;
(5) asset items constituting claims on Zone B central governments
and central banks denominated and funded in the national
currencies of the borrowers;
(6) asset items constituting claims carrying the explicit guarantees
of Zone B central governments and central banks denominated
and funded in the national currency common to the guarantor
and the borrower;
(7) asset items secured to the satisfaction of the competent
authorities, by collateral in the form of Zone A central
government or central bank securities or securities issued bythe European Communities or by cash deposits placed with thelending institution or by certificates of deposit or similarinstruments issued by and lodged with the latter;
(b) 20 % weighting
(1) asset items constituting claims on the EIB;
(2) asset items constituting claims on multilateral development
banks;
(3) asset items constituting claims carrying the explicit guarantee
of the EIB;
(4) asset items constituting claims carrying the explicit guarantees
of multilateral development banks;
(5) asset items constituting claims on Zone A regional govern-
ments or local authorities, subject to Article 44;
(6) asset items constituting claims carrying the explicit guarantees
of Zone A regional governments or local authorities, subject toArticle 44;
(7) asset items constituting claims on Zone A credit institutions but
not constituting such institutions' own funds;
(8) asset items constituting claims with a maturity of one year or
less, on Zone B credit institutions, other than securities issued
by such institutions which are recognised as components oftheir own funds;
(9) asset items carrying the explicit guarantees of Zone A credit
institutions;
(10) asset items constituting claims with a maturity of one year or
less carrying the explicit guarantees of Zone B credit
institutions;
(11) asset items secured, to the satisfaction of the competent
authorities, by collateral in the form of securities issued by the
EIB or by multilateral development banks;
(12) cash items in the process of collection;
(c) 50 % weighting
(1) loans fully and completely secured, to the satisfaction of the
competent authorities, by mortgages on residential propertywhich is or will be occupied or let by the borrower, and loans2000L0012 — EN — 27.10.2000 — 001.001 — 39
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fully and completely secured, to the satisfaction of the
competent authorities, by shares in Finnish residential housingcompanies, operating in accordance with the Finnish Housing
Company Act of 1991 or subsequent equivalent legislation, in
respect of residential property which is or will be occupied or letby the borrower;
‘mortgage-backed securities’ which may be treated as loans
referred to in the first subparagraph or in Article 62(1), if thecompetent authorities consider, having regard to the legalframework in force in each Member State, that they are
equivalent in the light of the credit risk. Without prejudice to the
types of securities which may be included in and are capable offulfilling the conditions in this point 1, ‘mortgage-backedsecurities’ may include instruments within the meaning ofSection B(1)(a) and (b) of the Annex to Council Directive 93/22/
EEC(
1). The competent authorities must in particular be
satisfied that:
(i) such securities are fully and directly backed by a pool of
mortgages which are of the same nature as those defined inthe first subparagraph or in Article 62(1) and are fullyperforming when the mortgage-backed securities arecreated;
(ii) an acceptable high-priority charge on the underlying
mortgage-asset items is held either directly by investors inmortgage-backed securities or on their behalf by a trustee ormandated representative in the same proportion to thesecurities which they hold;
(2) prepayments and accrued income: these assets shall be subject to
the weighting corresponding to the counterparty where a credit
institution is able to determine it in accordance with Directive
86/635/EEC. Otherwise, where it is unable to determine thecounterparty, it shall apply a flat-rate weighting of 50 %;
(d) 100 % weighting
(1) asset items constituting claims on Zone B central governments
and central banks except where denominated and funded in the
national currency of the borrower;
(2) asset items constituting claims on Zone B regional governments
or local authorities;
(3) asset items constituting claims with a maturity of more than one
year on Zone B credit institutions;
(4) asset items constituting claims on the Zone A and Zone B non-
bank sectors;
(5) tangible ‘Assets’ within the meaning of Article 4(10) of
Directive 86/635/EEC;
(6) holdings of shares, participation and other components of the
own funds of other credit institutions which are not deductedfrom the own funds of the lending institutions;
(7) all other assets except where deducted from own funds.
2. The following treatment shall apply to off-balance-sheet items
other than those covered in paragraph 3. They shall first be groupedaccording to the risk groupings set out in Annex II. The full value of thefull-risk items shall be taken into account, 50 % of the value of the
medium-risk items and 20 % of the medium/low-risk items, while the
value of low-risk items shall be set at zero. The second stage shall be tomultiply the off-balance-sheet values, adjusted as described above, bythe weightings attributable to the relevant counterparties in accordancewith the treatment of asset items prescribed in paragraph 1 and Article44. In the case of asset sale and repurchase agreements and outright2000L0012 — EN — 27.10.2000 — 001.001 — 40
(1) Council Directive 93/22/EEC of 10 May 1993 on investment services in the
securities field (OJ L 141, 11.6.1993, p. 27). Directive as last amended by
Directive 97/9/EC (OJ L 84, 26.3.1997, p. 22).
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forward purchases, the weightings shall be those attaching to the assets
in question and not to the counterparties to the transactions. The portionof unpaid capital subscribed to the European Investment Fund may be
weighted at 20 %.
3. The methods set out in Annex III shall be applied to the off-
balance-sheet items listed in Annex IV except for:
— contracts traded on recognised exchanges,
— foreign-exchange contracts (except contracts concerning gold) with
an original maturity of 14 calendar days or less.
Until 31 December 2006, the competent authorities of Member States
may exempt from the application of the methods set out in Annex IIIover-the-counter (OTC) contracts cleared by a clearing house where thelatter acts as the legal counterparty and all participants fully collateralise
on a daily basis the exposure they present to the clearing house, thereby
providing a protection covering both the current exposure and thepotential future exposure. The competent authorities must be satisfiedthat the posted collateral gives the same level of protection as collateralwhich complies with paragraph 1(a)(7) and that the risk of a build-up ofthe clearing house's exposures beyond the market value of posted
collateral is eliminated. Member States shall inform the Commission of
the use they make of this option.
4. Where off-balance-sheet items carry explicit guarantees, they shall
be weighted as if they had been incurred on behalf of the guarantorrather than the counterparty. Where the potential exposure arising fromoff-balance-sheet transactions is fully and completely secured, to thesatisfaction of the competent authorities, by any of the asset itemsrecognised as collateral in paragraph 1(a)(7) and (b)(11), weightings of
0 % or 20 % shall apply depending on the collateral in question.
The Member States may apply a 50 % weighting to off-balance-sheet
items which are sureties or guarantees having the character of credit
substitutes and which are fully guaranteed, to the satisfaction of the
competent authorities, by mortgages meeting the conditions set out inparagraph 1(c)(1), subject to the guarantor having a direct right to suchcollateral.
5. Where asset and off-balance-sheet items are given a lower
weighting because of the existence of explicit guarantees or collateralacceptable to the competent authorities, the lower weighting shall applyonly to that part which is guaranteed or which is fully covered by the
collateral.
Article 44
Weightingofclaimsforregionalgovernmentsorlocalauthoritiesof
the Member States
1. Notwithstanding the requirements of Article 43(1)(b), the Member
States may fix a weighting of 0 % for their own regional governmentsand local authorities if there is no difference in risk between claims onthe latter and claims on their central governments because of therevenue-raising powers of the regional governments and local authoritiesand the existence of specific institutional arrangements the effect of
which is to reduce the chances of default by the latter. A zero-weighting
fixed in accordance with these criteria shall apply to claims on and off-balance-sheet items incurred on behalf of the regional governments andlocal authorities in question and claims on others and off-balance-sheetitems incurred on behalf of others and guaranteed by those regional
governments and local authorities or secured, to the satisfaction of the
competent authorities concerned, by collateral in the form of securitiesissued by those regional governments or local authorities.
2. The Member States shall notify the Commission if they believe a
zero-weighting to be justified according to the criteria laid down inparagraph 1. The Commission shall circulate that information. OtherMember States may offer the credit institutions under the supervision oftheir competent authorities the possibility of applying a zero-weightingwhere they undertake business with the regional governments or local2000L0012 — EN — 27.10.2000 — 001.001 — 41
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authorities in question or where they hold claims guaranteed by the
latter, including collateral in the form of securities.
Article 45
Other weighting
1. Without prejudice to Article 44(1) the Member States may apply a
weighting of 20 % to asset items which are secured, to the satisfaction ofthe competent authorities concerned, by collateral in the form ofsecurities issuedby Zone A regional governments orlocal authorities, bydeposits placed with Zone A credit institutions other than the lending
institution, or by certificates of deposit or similar instruments issued by
such credit institutions.
2. The Member States may apply a weighting of 10 % to claims on
institutions specialising in the inter-bank and public-debt markets in
their home Member States and subject to close supervision by the
competent authorities where those asset items are fully and completelysecured, to the satisfaction of the competent authorities of the homeMember States, by a combination of asset items mentioned in Article43(1)(a) and (b) recognised by the latter as constituting adequatecollateral.
3. The Member States shall notify the Commission of any provisions
adopted pursuant to paragraphs 1 and 2 and of the grounds for suchprovisions. The Commission shall forward that information to theMember States. The Commission shall periodically examine the
implications of those provisions in order to ensure that they do not
result in any distortions of competition.
Article 46
Administrative bodies and non-commercial undertakings
For the purposes of Article 43 (1)(b), the competent authorities may
include within the concept of regional governments and local authoritiesnon-commercial administrative bodies responsible to regional govern-
ments or local authorities or authorities which, in the view of the
competent authorities, exercise the same responsibilities as regional andlocal authorities.
The competent authorities may also include within the concept of
regional governments and local authorities, churches and religious
communities constituted in the form of a legal person under public law,in so far as they raise taxes in accordance with legislation conferring onthem the right to do so. However, in this case the option set out inArticle 44 shall not apply.
Article 47
Solvency ratio level
1. Credit institutions shall be required permanently to maintain the
ratio defined in Article 40 at a level of at least 8 %.
2. Notwithstanding paragraph 1, the competent authorities may
prescribe higher minimum ratios as they consider appropriate.
3. If the ratio falls below 8 % the competent authorities shall ensure
that the credit institution in question takes appropriate measures torestore the ratio to the agreed minimum as quickly as possible.
Section 3
Large exposures
Article 48
Reporting of large exposures
1. A credit institution's exposure to a client or group of connected
clients shall be considered a large exposure where its value is equal to orexceeds 10 % of its own funds.2000L0012 — EN — 27.10.2000 — 001.001 — 42
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2. A credit institution shall report every large exposure within the
meaning of paragraph 1 to the competent authorities. Member Statesshall provide that reporting is to be carried out, at their discretion, in
accordance with one of the following two methods:
— reporting of all large exposures at least once a year, combined with
reporting during the year of all new large exposures and anyincreases in existing large exposures of at least 20 % with respect to
the previous communication,
— reporting of all large exposures at least four times a year.
3. Exposures exempted under Article 49(7)(a), (b), (c), (d), (f), (g)
and (h) need not, however, be reported as laid down in paragraph 2. The
reporting frequency laid down in the second indent to paragraph 2 maybe reduced to twice a year for the exposures referred to in Article49(7)(e) and (i), and also in paragraphs 8, 9 and 10.
4. The competent authorities shall require that every credit institution
have sound administrative and accounting procedures and adequate
internal control mechanisms for the purpose of identifying and recording
all large exposures and subsequent changes to them, as defined andrequired by this Directive, and for that of monitoring those exposures inthe light of each credit institution's own exposure policies.
Where a credit institution invokes paragraph 3, it shall keep a record of
the grounds advanced for at least one year after the event giving rise to
the dispensation, so that the competent authorities may establish whether
it is justified.
Article 49
Limits on large exposures
1. A credit institution may not incur an exposure to a client or group
of connected clients the value of which exceed 25 % of its own funds.
2. Where that client or group of connected clients is the parent
undertaking or subsidiary of the credit institution and/or one or moresubsidiaries of that parent undertaking, the percentage laid down inparagraph 1 shall be reduced to 20 %. Member States may, however,
exempt the exposures incurred to such clients from the 20 % limit if they
provide for specific monitoring of such exposures by other measures orprocedures. They shall inform the Commission and the BankingAdvisory Committee of the content of such measures or procedures.
3. A credit institution may not incur large exposures which in total
exceed 800 % of its own funds.
4. Member States may impose limits more stringent than those laid
down in paragraphs 1, 2 and 3.
5. A credit institution shall at all times comply with the limits laid
down in paragraphs 1, 2 and 3 in respect of its exposures. If in anexceptional case exposures exceed those limits, that fact must bereported without delay to the competent authorities which may, wherethe circumstances warrant it, allow the credit institution a limited periodof time in which to comply with the limits.
6. Member States may fully or partially exempt from the application
of paragraphs 1, 2 and 3 exposures incurred by a credit institution to itsparent undertaking, to other subsidiaries of that parent undertaking or toits own subsidiaries, in so far as those undertakings are covered by thesupervision on a consolidated basis to which the credit institution itselfis subject, in accordance with this Directive or with equivalent standards
in force in a third country.
7. Member States may fully or partially exempt the following
exposures from the application of paragraphs 1, 2 and 3:
(a) asset items constituting claims on Zone A central governments or
central banks;
(b) asset items constituting claims on the European Communities;2000L0012 — EN — 27.10.2000 — 001.001 — 43
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(c) asset items constituting claims carrying the explicit guarantees of
Zone A central governments or central banks or of the EuropeanCommunities;
(d) other exposures attributable to, or guaranteed by, Zone A central
governments or central banks or the European Communities;
(e) asset items constituting claims on and other exposures to Zone B
central governments or central banks which are denominated and,where applicable, funded in the national currencies of theborrowers;
(f) asset items and other exposures secured, to the satisfaction of the
competent authorities, by collateral in the form of Zone A centralgovernment or central bank securities, or securities issued by theEuropean Communities or by Member State regional or local
authorities for which Article 44 lays down a zero weighting for
solvency purposes;
(g) asset items and other exposures secured, to the satisfaction of the
competent authorities, by collateral in the form of cash deposits
placed with the lending institution or with a credit institution whichis the parent undertaking or a subsidiary of the lending institution;
(h) asset items and other exposures secured, to the satisfaction of the
competent authorities, by collateral in the form of certificates of
deposit issued by the lending institution or by a credit institutionwhich is the parent undertaking or a subsidiary of the lendinginstitution and lodged with either of them;
(i) asset items constituting claims on and other exposures to credit
institutions, with a maturity of one year or less, but not constitutingsuch institutions' own funds;
(j) asset items constituting claims on and other exposures to those
institutions which are not credit institutions but which fulfil theconditions referred to in Article 45(2), with a maturity of one yearor less, and secured in accordance with the same paragraph;
(k) bills of trade and other similar bills, with a maturity of one year or
less, bearing the signatures of other credit institutions;
(l) debt securities as defined in Article 22(4) of Directive 85/611/EEC;
(m) pending subsequent coordination, holdings in the insurance
companies referred to in Article 51(3) up to 40 % of the ownfunds of the credit institution acquiring such a holding;
(n) asset items constituting claims on regional or central credit
institutions with which the lending institution is associated in anetwork in accordance with legal or statutory provisions and which
are responsible, under those provisions, for cash-clearing operations
within the network;
(o) exposures secured, to the satisfaction of the competent authorities,
by collateral in the form of securities other than those referred to in
(f) provided that those securities are not issued by the credit
institution itself, its parent company or one of their subsidiaries, orby the client or group of connected clients in question. Thesecurities used as collateral must be valued at market price, have avalue that exceeds the exposures guaranteed and be either traded on
a stock exchange or effectively negotiable and regularly quoted on a
market operated under the auspices of recognised professionaloperators and allowing, to the satisfaction of the competentauthorities of the Member State of origin of the credit institution,for the establishment of an objective price such that the excessvalue of the securities may be verified at any time. The excess value
required shall be 100 % it shall, however, be 150 % in the case of
shares and 50 % in the case of debt securities issued by creditinstitutions, Member State regional or local authorities other thanthose referred to in Article 44, and in the case of debt securitiesissued by the EIB and multilateral development banks. Securitiesused as collateral may not constitute credit institutions' own funds;
(p) loans secured, to the satisfaction of the competent authorities, by
mortgages on residential property or by shares in Finnish residentialhousing companies, operating in accordance with the Finnish2000L0012 — EN — 27.10.2000 — 001.001 — 44
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Housing Company Act of 1991 or subsequent equivalent legislation
and leasing transactions under which the lessor retains fullownership of the residential property leased for as long as the
lessee has not exercised his option to purchase, in all cases up to
50 % of the value of the residential property concerned. The valueof the property shall be calculated, to the satisfaction of thecompetent authorities, on the basis of strict valuation standards laiddown by law, regulation or administrative provisions. Valuation
shall be carried out at least once a year. For the purposes of this
point residential property shall mean a residence to be occupied orlet by the borrower;
(q) 50 % of the medium/low-risk off-balance-sheet items referred to in
Annex II;
(r) subject to the competent authorities' agreement, guarantees other
than loan guarantees which have a legal or regulatory basis and aregiven for their members by mutual guarantee schemes possessingthe status of credit institutions, subject to a weighting of 20 % of
their amount.
Member States shall inform the Commission of the use they make
of this option in order to ensure that it does not result in distortions
of competition;
(s) the low-risk off-balance-sheet items referred to in Annex II, to the
extent that an agreement has been concluded with the client orgroup of connected clients under which the exposure may beincurred only if it has been ascertained that it will not cause thelimits applicable under paragraphs 1, 2 and 3 to be exceeded.
8. For the purposes of paragraphs 1, 2 and 3, Member States may
apply a weighting of 20 % to asset items constituting claims on MemberState regional and local authorities and to other exposures to orguaranteed by such authorities; subject to the conditions laid down inArticle 44, however, Member States may reduce that rate to 0 %.
9. For the purposes of paragraphs 1, 2 and 3, Member States may
apply a weighting of 20 % to asset items constituting claims on andother exposures to credit institutions with a maturity of more than onebut not more than three years and a weighting of 50 % to asset items
constituting claims on credit institutions with a maturity of more than
three years, provided that the latter are represented by debt instrumentsthat were issued by a credit institution and that those debt instrumentsare, in the opinion of the competent authorities, effectively negotiable ona market made up of professional operators and are subject to daily
quotation on that market, or the issue of which was authorised by the
competent authorities of the Member State of origin of the issuing creditinstitutions. In no case may any of these items constitute own funds.
10. By way of derogation from paragraphs 7(i) and 9, Member States
may apply a weighting of 20 % to asset items constituting claims on and
other exposures to credit institutions, regardless of their maturity.
11. Where an exposure to a client is guaranteed by a third party, or by
collateral in the form of securities issued by a third party under theconditions laid down in paragraph 7(o), Member States may:
— treat the exposure as having been incurred to the third party rather
than to the client, if the exposure is directly and unconditionally
guaranteed by that third party, to the satisfaction of the competentauthorities,
— treat the exposure as having been incurred to the third party rather
than to the client, if the exposure defined in paragraph 7(o) isguaranteed by collateral under the conditions there laid down.
12. By 1 January 1999 at the latest, the Council shall, on the basis of
a report from the Commission, examine the treatment of interbankexposures provided for in paragraphs 7(i), 9 and 10. The Council shalldecide on any changes to be made on a proposal from the Commission.2000L0012 — EN — 27.10.2000 — 001.001 — 45
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Article 50
Supervision on a consolidated or unconsolidated basis of large
exposures
1. If the credit institution is neither a parent undertaking nor a
subsidiary, compliance with the obligations imposed in Articles 48 and
49 or in any other Community provision applicable to this area shall be
monitored on an unconsolidated basis.
2. In the other cases, compliance with the obligations imposed in
Articles 48 and 49 or in any other Community provision applicable tothis area shall be monitored on a consolidated basis in accordance withArticles 52 to 56.
3. Member States may waive monitoring on an individual or
subconsolidated basis of compliance with the obligations imposed in
Articles 48 and 49 or in any other Community provision applicable to
this area by a credit institution which, as a parent undertaking, is subjectto monitoring on a consolidated basis and by any subsidiary of such acredit institution which is subject to their authoritisation and supervisionand is covered by monitoring on a consolidated basis.
Member States also waive such monitoring where the parent undertaking
is a financial holding company established in the same Member State as
the credit institution, provided that company is subject to the samemonitoring as credit institutions.
In the cases referred to in the first and second subparagraphs measures
must be taken to ensure the satisfactory allocation of risks within thegroup.
Section 4
Qualifying holdings outside the financial sector
Article 51
Limits to non-financial qualifying holdings
1. No credit institution may have a qualifying holding the amount of
which exceeds 15 % of its own funds in an undertaking which is neither
a credit institution, nor a financial institution, nor an undertakingcarrying on an activity referred to in the second subparagraph of Article43(2)(f) of Directive 86/635/EEC.
2. The total amount of a credit institution's qualifying holdings in
undertakings other than credit institutions, financial institutions orundertakings carrying on activities referred to in the second subpara-
graph of Article 43(2)(f) of Directive 86/635/EEC may not exceed 60 %
of its own funds.
3. The Member States need not apply the limits laid down in
paragraphs 1 and 2 to holdings in insurance companies as defined inDirective 73/239/EEC(
1), and Directive 79/267/EEC(2).
4. Shares held temporarily during a financial reconstruction or rescue
operation or during the normal course of underwriting or in aninstitution's own name on behalf of others shall not be counted as
qualifying holdings for the purpose of calculating the limits laid down in
paragraphs 1 and 2. Shares which are not financial fixed assets asdefined in Article 35(2) of Directive 86/635/EEC shall not be included.2000L0012 — EN — 27.10.2000 — 001.001 — 46
(1) First Council Directive 73/239/EEC of 24 July 1973 on the coordination of
laws, regulations and administrative provisions relating to the taking-up and
pursuit of the business of direct insurance other than life assurance (OJ L 228,16.8.1973, p. 3). Directive as last amended by Directive 95/26/EC.
(
2) First Council Directive 79/267/EEC of 5 March 1979 on the coordination of
laws, regulations and administrative provisions relating to the taking-up and
pursuit of the business of direct life assurance (OJ L 63, 13.3.1979, p. 1).
Directive as last amended by Directive 95/26/EC.
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5. The limits laid down in paragraphs 1 and 2 may be exceeded only
in exceptional circumstances. In such cases, however, the competentauthorities shall require a credit institution either to increase its own
funds or to take other equivalent measures.
6. The Member States may provide that the competent authorities
shall not apply the limits laid down in paragraphs 1 and 2 if they providethat 100 % of the amounts by which a credit institution's qualifying
holdings exceed those limits must be covered by own funds and that the
latter shall not be included in the calculation of the solvency ratio. Ifboth the limits laid down in paragraphs 1 and 2 are exceeded, theamount to be covered by own funds shall be the greater of the excessamounts.
CHAPTER 3
SUPERVISION ON A CONSOLIDATED BASIS
Article 52
Supervision on a consolidated basis of credit institutions
1. Every credit institution which has a credit institution or a financial
institution as a subsidiary or which holds a participation in suchinstitutions shall be subject, to the extent and in the manner prescribed inArticle 54, to supervision on the basis of its consolidated financial
situation. Such supervision shall be exercised at least in the areas
referred to in paragraphs 5 and 6.
2. Every credit institution the parent undertaking of which is a
financial holding company shall be subject, to the extent and in the
manner prescribed in Article 54, to supervision on the basis of the
consolidated financial situation of that financial holding company. Suchsupervision shall be exercised at least in the areas referred to inparagraphs 5 and 6. The consolidation of the financial situation of thefinancial holding company shall not in any way imply that thecompetent authorities are required to play a supervisory role in relation
to the financial holding company standing alone.
3. The Member States or the competent authorities responsible for
exercising supervision on a consolidated basis pursuant to Article 53may decide in the cases listed below that a credit institution, financial
institution or auxiliary banking services undertaking which is a
subsidiary or in which a participation is held need not be included inthe consolidation:
— if the undertaking that should be included is situated in a third
country where there are legal impediments to the transfer of thenecessary information,
— if, in the opinion of the competent authorities, the undertaking that
should be included is of negligible interest only with respect to the
objectives of monitoring credit institutions and in all cases if thebalance-sheet total of the undertaking that should be included is lessthan the smaller of the following two amounts: EUR 10 million or1 % of the balance-sheet total of the parent undertaking or theundertaking that holds the participation. If several undertakings meet
the above criteria, they must nevertheless be included in the
consolidation where collectively they are of non-negligible interestwith respect to the aforementioned objectives, or
— if, in the opinion of the competent authorities responsible for
exercising supervision on a consolidated basis, the consolidation of
the financial situation of the undertaking that should be included
would be inappropriate or misleading as far as the objectives of thesupervision of credit institutions are concerned.
4. When the competent authorities of a Member State do not include
a credit institution subsidiary in supervision on a consolidated basis
under one of the cases provided for in the second and third indents ofparagraph 3, the competent authorities of the Member State in whichthat credit institution subsidiary is situated may ask the parentundertaking for information which may facilitate their supervision ofthat credit institution.2000L0012 — EN — 27.10.2000 — 001.001 — 47
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5. Supervision of solvency, and of the adequacy of own funds to
cover market risks and control of large exposures shall be exercised on aconsolidated basis in accordance with this Article and Articles 53 to 56.
Member States shall adopt any measures necessary, where appropriate,
to include financial holding companies in consolidated supervision, inaccordance with paragraph 2.
Compliance with the limits set in Article 51(1) and (2) shall be
supervised and controlled on the basis of the consolidated or
subconsolidated financial situation of the credit institution.
6. The competent authorities shall ensure that, in all the undertakings
included in the scope of the supervision on a consolidated basis that isexercised over a credit institution in implementation of paragraphs 1 and2, there are adequate internal control mechanisms for the production of
any data and information which would be relevant for the purposes of
supervision on a consolidated basis.
7. Without prejudice to specific provisions contained in other
directives, Member States may waive application, on an individual orsubconsolidated basis, of the rules laid down in paragraph 5 to a credit
institution that, as a parent undertaking, is subject to supervision on a
consolidated basis, and to any subsidiary of such a credit institutionwhich is subject to their authorisation and supervision and is included inthe supervision on a consolidated basis of the credit institution which isthe parent company. The same exemption option shall be allowed where
the parent undertaking isa financial holding company which has its head
office in the same Member State as the credit institution, provided that itis subject to the same supervision as that exercised over creditinstitutions, and in particular the standards laid down in paragraph 5.
In both cases set out in the first subparagraph, steps must be taken to
ensure that capital is distributed adequately within the banking group.
If the competent authorities apply those rules individually to such credit
institutions, they may, for the purpose of calculating own funds, makeuse of the provision in the last subparagraph of Article 3(2).
8. Where a credit institution the parent of which is a credit institution
has been authorised and is situated in another Member State, the
competent authorities which granted that authorisation shall apply therules laid down in paragraph 5 to that institution on an individual or,when appropriate, a subconsolidated basis.
9. Notwithstanding the requirements of paragraph 8, the competent
authorities responsible for authorising the subsidiary of a parent
undertaking which is a credit institution may, by bilateral agreement,delegate their responsibility for supervision to the competent authoritieswhich authorised and supervise the parent undertaking so that theyassume responsibility for supervising the subsidiary in accordance withthis Directive. The Commission must be kept informed of the existence
and content of such agreements. It shall forward such information to the
competent authorities of the other Member States and to the BankingAdvisory Committee.
10. Member States shall provide that their competent authorities
responsible for exercising supervision on a consolidated basis may ask
the subsidiaries of a credit institution or a financial holding company
which are not included within the scope of supervision on a consolidatedbasis for the information referred to in Article 55. In such a case, theprocedures for transmitting and verifying the information laid down inthat Article shall apply.
Article 53
Competent authorities responsible for exercising supervision on a
consolidated basis
1. Where a parent undertaking is a credit institution, supervision on a
consolidated basis shall be exercised by the competent authorities thatauthorised it under Article 4.2000L0012 — EN — 27.10.2000 — 001.001 — 48
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2. Where the parent of a credit institution is a financial holding
company, supervision on a consolidated basis shall be exercised by thecompetent authorities which authorised that credit institution under
Article 4.
However, where credit institutions authorised in two or more Member
States have as their parent the same financial holding company,supervision on a consolidated basis shall be exercised by the competentauthorities of the credit institution authorised in the Member State inwhich the financial holding company was set up.
If no credit institution subsidiary has been authorised in the Member
State in which the financial holding company was set up, the competent
authorities of the Member States concerned (including those of theMember State in which the financial holding company was set up) shallseek to reach agreement as to who amongst them will exercisesupervision on a consolidated basis. In the absence of such agreement,
supervision on a consolidated basis shall be exercised by the competent
authorities that authorised the credit institution with the greatest balance-sheet total; if that figure is the same, supervision on a consolidated basisshall be exercised by the competent authorities which first gave theauthorisation referred to in Article 4.
3. The competent authorities concerned may by common agreement
waive the rules laid down in the first and second subparagraph of
paragraph 2.
4. The agreements referred to in the third subparagraph of paragraph
2 and in paragraph 3 shall provide for procedures for cooperation and forthe transmission of information such that the objectives of supervisionon a consolidated basis can be attained.
5. Where Member States have more than one competent authority for
the prudential supervision of credit institutions and financial institutions,
Member States shall take the requisite measures to organise coordination
between such authorities.
Article 54
Form and extent of consolidation
1. The competent authorities responsible for exercising supervision
on a consolidated basis must, for the purposes of supervision, requirefull consolidation of all the credit institutions and financial institutionswhich are subsidiaries of a parent undertaking.
However, proportional consolidation may be prescribed where, in the
opinion of the competent authorities, the liability of a parent undertaking
holding a share of the capital is limited to that share of the capitalbecause of the liability of the other shareholders or members whosesolvency is satisfactory. The liability of the other shareholders andmembers must be clearly established, if necessary by means of formalsigned commitments.
2. The competent authorities responsible for carrying out supervision
on a consolidated basis must, in order to do so, require the proportional
consolidation of participations in credit institutions and financialinstitutions managed by an undertaking included in the consolidationtogether with one or more undertakings not included in the consolida-tion, where those undertakings' liability is limited to the share of the
capital they hold.
3. In the case of participations or capital ties other than those referred
to in paragraphs 1 and 2, the competent authorities shall determinewhether and how consolidation is to be carried out. In particular, theymay permit or require use of the equity method. That method shall not,however, constitute inclusion of the undertakings concerned in super-vision on a consolidated basis.2000L0012 — EN — 27.10.2000 — 001.001 — 49
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4. Without prejudice to paragraphs 1, 2 and 3, the competent
authorities shall determine whether and how consolidation is to becarried out in the following cases:
— where, in the opinion of the competent authorities, a credit institution
exercises a significant influence over one or more credit institutions
or financial institutions, but without holding a participation or othercapital ties in these institutions,
— where two or more credit institutions or financial institutions are
placed under single management other than pursuant to a contract or
clauses of their memoranda or articles of association,
— where two or more credit institutions or financial institutions have
administrative, management or supervisory bodies with the samepersons constituting a majority.
In particular, the competent authorities may permit, or require use of, the
method provided for in Article 12 of Directive 83/349/EEC. Thatmethod shall not, however, constitute inclusion of the undertakingsconcerned in consolidated supervision.
5. Where consolidated supervision is required pursuant to Article
52(1) and (2), ancillary banking services undertakings shall be includedin consolidations in the cases, and in accordance with the methods laiddown in paragraphs 1 to 4 of this Article.
Article 55
Informationtobesuppliedbymixed-activityholdingcompaniesand
their subsidiaries
1. Pending further coordination of consolidation methods, Member
States shall provide that, where the parent undertaking of one or morecredit institutions is a mixed-activity holding company, the competentauthorities responsible for the authorisation and supervision of thosecredit institutions shall, by approaching the mixed-activity holdingcompany and its subsidiaries either directly or via credit institution
subsidiaries, require them to supply any information which would be
relevant for the purpose of supervising the credit institution subsidiaries.
2. Member States shall provide that their competent authorities may
carry out, or have carried out by external inspectors, on-the-spot
inspections to verify information received from mixed-activity holding
companies and their subsidiaries. If the mixed-activity holding companyor one of its subsidiaries is an insurance undertaking, the procedure laiddown in Article 56(4) may also be used. If a mixed-activity holdingcompany or one of its subsidiaries is situated in a Member State other
than that in which the credit institution subsidiary is situated, on-the-spot
verification of information shall be carried out in accordance with theprocedure laid down in Article 56(7).
Article 56
Measures to facilitate supervision on a consolidated basis
1. Member States shall take the necessary steps to ensure that there
are no legal impediments preventing the undertakings included within
the scope of supervision on a consolidated basis, mixed-activity holding
companies and their subsidiaries, or subsidiaries of the kind covered inArticle 52(10), from exchanging amongst themselves any informationwhich would be relevant for the purposes of supervision in accordancewith Articles 52 to 55 and this Article.
2. Where a parent undertaking and any of its subsidiaries that are
credit institutions are situated in different Member States, the competentauthorities of each Member State shall communicate to each other allrelevant information which may allow or aid the exercise of supervisionon a consolidated basis.
Where the competent authorities of the Member State in which a parent
undertaking is situated do not themselves exercise supervision on aconsolidated basis pursuant to Article 53, they may be invited by thecompetent authorities responsible for exercising such supervision to ask2000L0012 — EN — 27.10.2000 — 001.001 — 50
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the parent undertaking for any information which would be relevant for
the purposes of supervision on a consolidated basis and to transmit it tothese authorities.
3. Member States shall authorise the exchange between their
competent authorities of the information referred to in paragraph 2, on
the understanding that, in the case of financial holding companies,financial institutions or ancillary banking services undertakings, thecollection or possession of information shall not in any way imply thatthe competent authorities are required to play a supervisory role in
relation to those institutions or undertakings standing alone.
Similarly, Member States shall authorise their competent authorities to
exchange the information referred to in Article 55 on the understanding
that the collection or possession of information does not in any wayimply that the competent authorities play a supervisory role in relation tothe mixed-activity holding company and those of its subsidiaries whichare not credit institutions, or to subsidiaries of the kind covered in
Article 52(10).
4. Where a credit institution, financial holding company or a mixed-
activity holding company controls one or more subsidiaries which are
insurance companies or other undertakings providing investmentservices which are subject to authorisation, the competent authoritiesand the authorities entrusted with the public task of supervisinginsurance undertakings or those other undertakings providing investment
services shall cooperate closely. Without prejudice to their respective
responsibilities, those authorities shall provide one another with anyinformation likely to simplify their task and to allow supervision of theactivity and overall financial situation of the undertakings theysupervise.
5. Information received, in the framework of supervision on a
consolidated basis, and in particular any exchange of information
between competent authorities which is provided for in this Directive,
shall be subject to the obligation of professional secrecy defined inArticle 30.
6. The competent authorities responsible for supervision on a
consolidated basis shall establish lists of the financial holding companiesreferred to in Article 52(2). Those lists shall be communicated to thecompetent authorities of the other Member States and to the
Commission.
7. Where, in applying this Directive, the competent authorities of one
Member State wish in specific cases to verify the informationconcerning a credit institution, a financial holding company, a financialinstitution, an ancillary banking services undertaking, a mixed-activityholding company, a subsidiary of the kind covered in Article 55 or asubsidiary of the kind covered in Article 52(10), situated in another
Member State, they must ask the competent authorities of that other
Member State to have that verification carried out. The authorities whichreceive such a request must, within the framework of their competence,act upon it either by carrying out the verification themselves, byallowing the authorities who made the request to carry it out, or by
allowing an auditor or expert to carry it out.
8. Without prejudice to their provisions of criminal law, Member
States shall ensure that penalties or measures aimed at ending observed
breaches or the causes of such breaches may be imposed on financialholding companies and mixed-activity holding companies, or theireffective managers, that infringe laws, regulation or administrativeprovisions enacted to implement Articles 52 to 55 and this Article. In
certain cases, such measures may require the intervention of the courts.
The competent authorities shall cooperate closely to ensure that theabovementioned penalties or measures produce the desired results,especially when the central administration or main establishment of afinancial holding company or of a mixed-activity holding company isnot located at its head office.2000L0012 — EN — 27.10.2000 — 001.001 — 51
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TITLE VI
BANKING ADVISORY COMMITTEE
Article 57
Composition and tasks of the Banking Advisory Committee
1. A Banking Advisory Committee of the competent authorities of
the Member States shall be set up alongside the Commission.
2. The tasks of the Banking Advisory Committee shall be to assist the
Commission in ensuring the proper implementation of this Directive.Further it shall carry out the other tasks prescribed by this Directive and
shall assist the Commission in the preparation of new proposals to the
Council concerning further coordination in the sphere of creditinstitutions.
3. The Banking Advisory Committee shall not concern itself with
concrete problems relating to individual credit institutions.
4. The Banking Advisory Committee shall be composed of not more
than three representatives from each Member State and from theCommission. These representatives may be accompanied by advisersfrom time to time and subject to the prior agreement of the Committee.
The Committee may also invite qualified persons and experts to
participate in its meetings. The secretariat shall be provided by theCommission.
5. The Banking Advisory Committee shall adopt its rules of
procedure and elect a chairman from among the representatives of
Member States. It shall meet at regular intervals and whenever thesituation demands. The Commission may ask the Committee to hold anemergency meeting if it considers that the situation so requires.
6. The Banking Advisory Committee's discussions and the outcome
thereof shall be confidential except when the Committee decides
otherwise.
Article 58
Examination of the requirements for authorisation
The Banking Advisory Committee shall examine the content given by
the competent authorities to requirements listed in Articles 5(1) and6(1), any other requirements which the Member States apply and theinformation which must be included in the programme of operations,
and shall, where appropriate, make suggestions to the Commission with
a view to a more detailed coordination.
Article 59
Observation ratios
1. Pending subsequent coordination, the competent authorities shall,
for the purposes of observation and, if necessary, in addition to suchcoefficients as may be applied by them, establish ratios between thevarious assets and/or liabilities of credit institutions with a view tomonitoring their solvency and liquidity and the other measures which
may serve to ensure that savings are protected.
To this end, the Banking Advisory Committee shall decide on the
content of the various factors of the observation ratios referred to in thefirst subparagraph and lay down the method to be applied in calculating
them.
Where appropriate, the Banking Advisory Committee shall be guided by
technical consultations between the supervisory authorities of thecategories of institutions concerned.
2. The observation ratios established in pursuance of paragraph 1
shall be calculated at least every six months.
3. The Banking Advisory Committee shall examine the results of
analyses carried out by the supervisory authorities referred to in the third2000L0012 — EN — 27.10.2000 — 001.001 — 52
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subparagraph of paragraph 1 on the basis of the calculations referred to
in paragraph 2.
4. The Banking Advisory Committee may make suggestions to the
Commission with a view to coordinating the coefficients applicable inthe Member States.
TITLE VII
POWERS OFEXECUTION
Article 60
Technical adaptations
1. Without prejudice, regarding own funds, to the report referred to in
the second subparagraph of Article 34(3), the technical adaptations inthe following areas shall be adopted in accordance with the procedurelaid down in paragraph 2:
— clarification of the definitions in order to take account in the
application of this Directive of developments on financial markets,
— clarification of the definitions to ensure uniform application of this
Directive in the Community,
— the alignment of terminology on and the framing of definitions in
accordance with subsequent acts on credit institutions and relatedmatters,
— the definition of ‘Zone A’ in Article 1(14),
— the definition of ‘multilateral development banks’ in Article 1(19),
— alteration of the amount of initial capital prescribed in Article 5 to
take account of developments in the economic and monetary field,
— expansion of the content of the list referred to in Articles 18 and 19
and set out in Annex I or adaptation of the terminology used in that
list to take account of developments on financial markets,
— the areas in which the competent authorities must exchange
information as listed in Article 28,
— amendment of the definitions of the assets listed in Article 43 in
order to take account of developments on financial markets,
— the list and classification of off-balance-sheet items in Annexes II
and IV and their treatment in the calculation of the ratio as describedin Articles 42, 43 and 44 and Annex III,
— a temporary reduction in the minimum ratio prescribed in Article 47
or the weighting prescribed in Article 43 in order to take account ofspecific circumstances,
— clarification of exemptions provided for in Article 49(5) to (10).
2. The Commission shall be assisted by a committee.Where reference is made to this paragraph, Articles 5 and 7 of Decision
1999/468/EC shall apply, having regard to the provisions of Article 8thereof.
The period laid down in Article 5(6) of Decision 1999/468/EC shall be
set at three months.
The Committee shall adopt its rules of procedure.
TITLE VIII
TRANSITIONAL AND FINAL PROVISIONS
CHAPTER 1
TRANSITIONAL PROVISIONS
Article 61
Transitional provisions regarding Article 36
Denmark may allow its mortgage credit institutions organised as
cooperative societies or funds before 1 January 1990 and converted into2000L0012 — EN — 27.10.2000 — 001.001 — 53
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public limited liability companies to continue to include joint and
several commitments of members, or of borrowers as referred to inArticle 36(1) claims on whom are treated in the same way as such joint
and several commitments, in their own funds, subject to the following
limits:
(a) the basis for calculation of the part of joint and several commitments
of borrowers shall be the total of the items referred to in Article
34(2)(1) and (2), minus those referred to in Article 34(2)(9), (10)and (11);
(b) the basis for calculation on 1 January 1991 or, if converted at a later
date, on the date on conversion, shall be the maximum basis forcalculation. The basis for calculation may never exceed themaximum basis for calculation;
(c) the maximum basis for calculation shall, from 1 January 1997, be
reduced by half of the proceeds from any issue of new capital, as
defined in Article 34(2)(1), made after that date; and
(d) the maximum amount of joint and several commitments of
borrowers to be included as own funds must never exceed:
50 % in 1991 and 1992,
45 % in 1993 and 1994,40 % in 1995 and 1996,35 % in 1997,30 % in 1998,20 % in 1999,10 % in 2000, and0 % after 1 January 2001, of the basis for calculation.
Article 62
Transitional provisions regarding Article 43
1. Until 31 December 2006, the competent authorities of the Member
States may authorise their credit institutions to apply a 50 % riskweighting to loans fully and completely secured to their satisfaction by
mortgages on offices or on multi-purpose commercial premises situated
within the territory of those Member States that allow the 50 % riskweighting, subject to the following conditions:
(i) the 50 % risk weighting applies to the part of the loan that does not
exceed a limit calculated according to either (a) or (b):
(a) 50 % of the market value of the property in question.
The market value of the property must be calculated by two
independent valuers making independent assessments at the
time the loan is made. The loan must be based on the lower ofthe two valuations.
The property shall be revalued at least once a year by one
valuer. For loans not exceeding EUR 1 million and 5 % of theown funds of the credit institution, the property shall berevalued at least every three years by one valuer;
(b) 50 % of the market value of the property or 60 % of the
mortgage lending value, whichever is lower, in those Member
States that have laid down rigorous criteria for the assessmentof the mortgage lending value in statutory or regulatoryprovisions.
The mortgage lending value shall means the value of the
property as determined by a valuer making a prudentassessment of the future marketability of the property by taking
into account long-term sustainable aspects of the property, the
normal and local market conditions, the current use andalternative appropriate uses of the property. Speculativeelements shall not be taken into account in the assessment ofthe mortgage lending value. The mortgage lending value shallbe documented n a transparent and clear manner.2000L0012 — EN — 27.10.2000 — 001.001 — 54
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At least every three years or if the market falls by more than
10 % the mortgage lending value and in particular theunderlying assumptions concerning the development of the
relevant market, shall be reassessed.
In both (a) and (b) ‘market value’ shall mean the price at which the
property could be sold under private contract between a willingseller and an arm's-length buyer on the date of valuation, it beingassumed that the property is publicly exposed to the market, that
market conditions permit orderly disposal and that a normal period,
having regard to the nature of the property, is available for thenegotiation of the sale;
(ii) the 100 % risk weighting applies to the part of the loan that exceeds
the limits set out in (i);
(iii) the property must be either used or let by the owner.
The first subparagraph shall not prevent the competent authorities of a
Member State, which applies a higher risk weighting in its territory,from allowing, under the conditions defined above, the 50 % riskweighting to apply for this type of lending in the territories of those
Member States that allow the 50 % risk weighting.
The competent authorities of the Member States may allow their credit
institutions to apply a 50% riskweighting to the loans outstanding on 21July 2000 provided that the conditions listed in this paragraph arefulfilled. In this case the property shall be valued according to the
assessment criteria laid down above not later than 21 July 2003.
For loans granted before 31 December 2006, the 50 % risk weighting
remains applicable until their maturity, if the credit institution is boundto observe the contractual terms.
Until 31 December 2006, the competent authorities of the Member State
may also authorise their credit institutions to apply a 50 % riskweighting to the part of the loans fully and completely secured to theirsatisfaction by shares in Finnish housing companies operating inaccordance with the Finnish Housing Company Act of 1991 or
subsequent equivalent legislation, provided that the conditions laid
down in this paragraph are fulfilled.
Member States shall inform the Commission of the use they make of this
paragraph.
2. Member States may apply a 50 % risk weighting to property
leasing transactions concluded before 31 December 2006 andconcerning assets for business use situated in the country of the headoffice and governed by statutory provisions whereby the lessor retains
full ownership of the rented asset until the tenant exercises his option to
purchase. Member States shall inform the Commission of the use theymake of this paragraph.
3. Article 43(3) shall not affect the competent authorities' recognition
of bilateral contracts for novation concluded concerning:
— Belgium, before 23 April 1996,
— Denmark, before 1 June 1996,
— Germany, before 30 October 1996,
— Greece, before 27 March 1997,— Spain, before 7 January 1997,— France, before 30 May 1996,— Ireland, before 27 June 1996,— Italy, before 30 July 1996,— Luxembourg, before 29 May 1996,
— the Netherlands, before 1 July 1996,
— Austria, before 30 December 1996,— Portugal, before 15 January 1997,— Finland, before 21 August 1996,— Sweden, before 1 June 1996, and— United Kingdom, before 30 April 1996.2000L0012 — EN — 27.10.2000 — 001.001 — 55
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Article 63
Transitional provisions regarding Article 47
1. A credit institution, the minimum ratio of which has not reached
the 8 % prescribed in Article 47(1), by 1 January 1991, must gradually
approach that level by successive stages. It may not allow the ratio tofall below the level reached before that objective has been attained. Anyfluctuation should be temporary and the competent authorities should beapprised of the reasons for it.
2. For not more than five years after 1 January 1993, the Member
States may fix a weighting of 10 % for the bonds defined in Article22(4) of Directive 85/611/EEC and maintain if for credit institutions
when and if they consider it necessary, to avoid grave disturbances in the
operation of their markets. Such exceptions shall be reported to theCommission.
3. For not more than seven years after 1 January 1993, Article 47(1)
shall not apply to the Agricultural Bank of Greece. However, the lattermust approach the level prescribed in Article 47(1) by successive stagesaccording to the method described in paragraph 1 of this Article.
Article 64
Transitional provisions regarding Article 49
1. If, on 5 February 1993, a credit institution had already incurred an
exposure or exposures exceeding either the large exposure limit or theaggregate large exposure limit laid down in Article 49, the competentauthorities shall require the credit institution concerned to take steps to
have that exposure or those exposures brought within the limits laid
down in Article 49.
2. The process of having such an exposure or exposures brought
within authorised limits shall be devised, adopted, implemented and
completed within the period which the competent authorities considerconsistent with the principle of sound administration and faircompetition. The competent authorities shall inform the Commissionand the Banking Advisory Committee of the schedule for the generalprocess adopted.
3. A credit institution may not take any measure which would cause
the exposures referred to in paragraph 1 to exceed their level on 5
February 1993
4. The period applicable under paragraph 2 shall expire no later than
31 December 2001. Exposures with a longer maturity, for which the
lending institution is bound to observe the contractual terms, may be
continued until their maturity.
5. Until 31 December 1998, Member States may increase the limit
laid down in Article 49(1) to 40 % and the limit laid down in Article
49(2) to 30 %. In such cases and subject to paragraphs 1 to 4, the timelimit for bringing the exposures existing at the end of this period withinthe limit laid down in Article 49 shall expire on 31 December 2001.
6. In the case of credit institutions the own funds of which do not
exceed EUR 7 million and only in the case of such institutions, MemberStates may extend the time limits laid down in paragraph 5 by five years.Member States that avail themselves of the option provided for in thisparagraph shall take steps to prevent distortions of competition and shall
inform the Commission and the Banking Advisory Committee thereof.
7. In the cases referred to in paragraphs 5 and 6, an exposure may be
considered a large exposure if its value is equal to or exceeds 15 % of
own funds.
8. Until 31 December 2001 Member States may substitute a
frequency of at least twice a year for the frequency of notification of
large exposures referred to in the second indent of Article 48(2).
9. Member States may fully or partially exempt from the application
of Article 49(1), (2) and (3) exposures incurred by a credit institution2000L0012 — EN — 27.10.2000 — 001.001 — 56
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consisting of mortgage loans as defined in Article 62(1) concluded
before 1 January 2002 as well as property leasing transactions as definedin Article 62(2) concluded before 1 January 2002, in both cases up to
50 % of the value of the property concerned.
The same treatment applies to loans secured, to the satisfaction of the
competent authorities, by shares in Finnish residential housingcompanies, operating in accordance with the Finnish Housing CompanyAct of 1991 or subsequent equivalent legislation which are similar to themortgage loans referred to in the first subparagraph.
Article 65
Transitional provisions regarding Article 51
Credit institutions which, on 1 January 1993, exceeded the limits laid
down in Articles 51(1) and (2) shall have until 1 January 2003 to comply
with them.
CHAPTER 2
FINAL PROVISIONS
Article 66
Commission information
Member States shall communicate to the Commission the texts of the
main laws, regulations and administrative provisions which they adoptin the field covered by this Directive.
Article 67
Repealed Directives
1. Directives 73/183/EEC, 77/780/EEC, 89/299/EEC, 89/646/EEC,
89/647/EEC, 92/30/EEC and 92/121/EEC, as amended by the Directives
set out in Annex V, Part A, are hereby repealed without prejudice to the
obligations of the Member States concerning the deadlines fortransposition of the said Directives listed in Annex V, Part B.
2. References to the repealed Directives shall be construed as
references to this Directive and should be read in accordance with thecorrelation table in Annex VI.
Article 68
Implementation
This Directive shall enter into force on the 20th day following its
publication in the Official Journal of the European Communities .
Article 69
Addressees
This Directive is addressed to the Member States.2000L0012 — EN — 27.10.2000 — 001.001 — 57
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ANNEX I
LIST OFACTIVITIES SUBJECT TO MUTUAL RECOGNITION
1. Acceptance of deposits and other repayable funds
2. Lending(1)
3. Financial leasing
4. Money transmission services
5. Issuing and administering means of payment (e.g. credit cards, travellers'
cheques and bankers' drafts)
6. Guarantees and commitments
7. Trading for own account or for account of customers in:
(a) money market instruments (cheques, bills, certificates of deposit, etc.)
(b) foreign exchange;
(c) financial futures and options;
(d) exchange and interest-rate instruments;
(e) transferable securities
8. Participation in securities issues and the provision of services related to such
issues
9. Advice to undertakings on capital structure, industrial strategy and related
questions and advice as well as services relating to mergers and the purchase
of undertakings
10. Money broking
11. Portfolio management and advice12. Safekeeping and administration of securities
13. Credit reference services
14. Safe custody services2000L0012 — EN — 27.10.2000 — 001.001 — 58
(1) Including, inter alia:
— consumer credit,— mortgage credit,— factoring, with or without recourse,
— financing of commercial transactions (including forfeiting).
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ANNEX II
CLASSIFICATION OF OFF-BALANCE-SHEET ITEMS
Full risk
— Guarantees having the character of credit substitutes,
— Acceptances,— Endorsements on bills not bearing the name of another credit institution,— Transactions with recourse,— Irrevocable standby letters of credit having the character of credit substitutes,— Assets purchased under outright forward purchase agreements,— Forward forward deposits,— The unpaid portion of partly-paid shares and securities,— Other items also carrying full risk.
Medium risk
— Documentary credits issued and confirmed (see also medium/low risk),
— Warranties and indemnities (including tender, performance, customs and tax
bonds) and guarantees not having the character of credit substitutes,
— Asset sale and repurchase agreements as defined in Article 12(3) and (5) of
Directive 86/635/EEC,
— Irrevocable standby letters of credit not having the character of credit
substitutes,
— Undrawn credit facilities (agreements to lend, purchase securities, provide
guarantees or acceptance facilities) with an original maturity of more than one
year,
— Note issuance facilities (NIFs) and revolving underwriting facilities (RUFs),— Other items also carrying medium risk.
Medium/low risk— Documentary credits in which underlying shipment acts as collateral and
other self-liquidating transactions,
— Other items also carrying medium/low risk.
Low risk— Undrawn credit facilities (agreements to lend, purchase securities, provide
guarantees or acceptance facilities) with an original maturity of up to and
including one year or which may be cancelled unconditionally at any time
without notice,
— Other items also carrying low risk.
The Member States undertake to inform the Commission as soon as they have
agreed to include a new off-balance-sheet item in any of the last indents under
each category of risk. Such items will be definitively classified at Community
level once the procedure laid down in Article 60 has been completed.2000L0012 — EN — 27.10.2000 — 001.001 — 59
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ANNEX III
THE TREATMENT OF OFF-BALANCE-SHEET ITEMS
1. CHOICE OF THE METHOD
To measure the credit risks associated with the contracts listed in points 1 and 2
of Annex IV, credit institutions may choose, subject to the consent of the
competent authorities, one of the methods set out below. Credit institutions which
have to comply with Article 6(1) of Directive 93/6/EEC(1) must use method 1 set
out below. To measure the credit risks associated with the contracts listed in point
3 of Annex IV all credit institutions must use method 1 set out below.
2. METHODS
Method 1: the ‘mark to market’ approach
Step (a): by attaching current market values to contracts (mark to market),
the current replacement cost of all contracts with positive values
is obtained.
Step (b): to obtain a figure for potential future credit exposure(2), the
notional principal amounts or underlying values are multiplied by
the following percentages:
TABLE 1 (a)(b)
Residual maturity(c)Interest-rate
contractsContracts
concerning
foreign-
exchange
rates and goldContracts
concerning
equitiesContracts
concerning
precious
metals except
goldContracts
concerning
commodities
other than
precious
metals
One year or less 0 % 1 % 6 % 7 % 10 %
Over one year, less than
five years0,5 % 5 % 8 % 7 % 12 %
Over five years 1,5 % 7,5 % 10 % 8 % 15 %
(a) Contracts which do not fall within one of the five categories indicated in this table shall be treated as contracts
concerning commodities other than precious metals.
(b) For contracts with multiple exchanges of principal, the percentages have to be multiplied by the number of
remaining payments still to be made according to the contract.
(c) For contracts that are structured to settle outstanding exposure following specified payment dates and where the
terms are reset such that the market value of the contract is zero on these specified dates, the residual maturity
would be equal to the time until the next reset date. In the case of interest-rate contracts that meet these criteria
and have a remaining maturity of over one year, the percentage shall be no lower than 0,5 %.
For the purpose of calculating the potential future exposure in accordance with
step (b) the competent authorities may allow credit institutions until 31 December
2006 to apply the following percentages instead of those prescribed in Table 1
provided that the institutions make use of the option set out in Article 11a of
Directive 93/6/EEC for contracts within the meaning of paragraph 3(b) and (c) of
Annex IV:
TABLE 1a
Residual maturityPrecious metals
(except gold)Base metalsAgricultural
products (softs)Other, including
energy products
One year or less 2 % 2,5 % 3 % 4 %
Over one year, less than five
years5% 4% 5% 6%
Over five years 7,5 % 8 % 9 % 10 %2000L0012 — EN — 27.10.2000 — 001.001 — 60
(1) Council Directive 93/6/EEC of 15 March 1993 on the capital adequacy of investment
firms and credit institutions (OJ L 141, 11.6.1993, p. 1). Directive amended by Directive98/33/EC (OJ L 204, 21.7.1998, p. 29).
(
2) Except in the case of single-currency ‘floating/floating’ interest rate swaps in which only
the current replacement cost will be calculated.
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Step (c): the sum of current replacement cost and potential future credit
exposure is multiplied by the risk weightings allocated to the
relevant counterparties in Article 43.
Method 2: the ‘original exposure’ approach
Step (a): the notional principal amount of each instrument is multiplied by
the percentages given below:
TABLE 2
Original maturity (1) Interest-rate contractsContracts concerning
foreign-exchange rates
and gold
One year or less 0,5 % 2 %
More than one year but not exceeding two years 1 % 5 %
Additional allowance for each additional year 1 % 3 %
(1) In the case of interest-rate contracts, credit institutions may, subject to the consent of their competent authorities,
choose either original or residual maturity.
Step (b): the original exposure thus obtained is multiplied by the risk
weightings allocated to the relevant counterparties in Article 43.
For methods 1 and 2 the competent authorities must ensure that the notional
amount to be taken into account is an appropriate yardstick for the risk inherent in
the contract. Where, for instance, the contract provides for a multiplication of
cash flows, the notional amount must be adjusted in order to take into account the
effects of the multiplication on the risk structure of that contract.
3. CONTRACTUAL NETTING (CONTRACTS FOR NOVATION AND
OTHER NETTING AGREEMENTS)
(a)Types of netting that competent authorities may recognise
For the purpose of this point 3 ‘counterparty’ means any entity (including
natural persons) that has the power to conclude a contractual netting
agreement.
The competent authorities may recognise as risk-reducing the following types
of contractual netting:
(i) bilateral contracts for novation between a credit institution and its
counterparty under which mutual claims and obligations are automati-
cally amalgamated in such a way that this novation fixes one single net
amount each time novation applies and thus creates a legally binding,
single new contract extinguishing former contracts;
(ii) other bilateral agreements between a credit institution and its counter-
party.
(b)Conditions for recognition
The competent authorities may recognise contractual netting as risk-reducing
only under the following conditions:
(i) a credit institution must have a contractual netting agreement with its
counterparty which creates a single legal obligation, covering all
included transactions, such that, in the event of a counterparty's failure
to perform owing to default, bankruptcy, liquidation or any other similar
circumstance, the credit institution would have a claim to receive or an
obligation to pay only the net sum of the positive and negative mark-to-
market values of included individual transactions;
(ii) a credit institution must have made available to the competent
authorities written and reasoned legal opinions to the effect that, in
the event of a legal challenge, the relevant courts and administrative
authorities would, in the cases described under (i), find that the credit
institution's claims and obligations would be limited to the net sum, as
described in (i), under:
— the law of the jurisdiction in which the counterparty is incorporated
and, if a foreign branch of an undertaking is involved, also under the
law of the jurisdiction in which the branch is located,
— the law that governs the individual transactions included, and2000L0012 — EN — 27.10.2000 — 001.001 — 61
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— the law that governs any contract or agreement necessary to effect
the contractual netting;
(iii) a credit institution must have procedures in place to ensure that the legal
validity of its contractual netting is kept under review in the light of
possible changes in the relevant laws.
The competent authorities must be satisfied, if necessary after consulting the
other competent authorities concerned, that the contractual netting is legally
valid under the law of each of the relevant jurisdictions. If any of the
competent authorities are not satisfied in that respect, the contractual netting
agreement will not be recognised as risk-reducing for either of the
counterparties.
The competent authorities may accept reasoned legal opinions drawn up by
types of contractual netting.
No contract containing a provision which permits a non-defaulting counter-
party to make limited payments only, or no payments at all, to the estate of
the defaulter, even if the defaulter is a net creditor (a ‘walkaway’ clause),
may be recognised as risk-reducing.
The competent authorities may recognise as risk-reducing contractual-netting
agreements covering foreign-exchange contracts with an original maturity of
14 calendar days or less written options or similar off-balance-sheet items to
which this Annex does not apply because they bear only a negligible or no
credit risk. If, depending on the positive or negative market value of these
contracts, their inclusion in another netting agreement can result in an
increase or decrease of the capital requirements, competent authorities must
oblige their credit institution to use a consistent treatment.
(c)Effects of recognition
(i)Contracts for novation
The single net amounts fixed by contracts for novation, rather than the
gross amounts involved, may be weighted. Thus, in the application of
method 1, in
— step (a): the current replacement cost, and in
— step (b): the notional principal amounts or underlying values
may be obtained taking account of the contract for novation. In the
application of method 2, in step (a) the notional principal amount may be
calculated taking account of the contract for novation; the percentages of
Table 2 must apply.
(ii)Other netting agreements
In application of method 1:
— in step (a) the current replacement cost for the contracts included in a
netting agreement may be obtained by taking account of the actual
hypothetical net replacement cost which results from the agreement;
in the case where netting leads to a net obligation for the credit
institution calculating the net replacement cost, the current replace-
ment cost is calculated as ‘0’,
— in step (b) the figure for potential future credit exposure for all
contracts included in a netting agreement may be reduced according
to the following equation:
PCEred¼0;4/C3PCEgrossþ0;6/C3NGR /C3PCEgross
where:
— PCEred= the reduced figure for potential future credit
exposure for all contracts with a given counterparty
included in a legally valid bilateral netting agree-
ment,
— PCEgross= the sum of the figures for potential future credit
exposure for all contracts with a given counterparty
which are included in a legally valid bilateral
netting agreement and are calculated by multiplying
their notional principal amounts by the percentages
set out in Table 1,
— NGR = ‘net-to-gross ratio’: at the discretion of the compe-
tent authorities either:
(i) separate calculation: the quotient of the net
replacement cost for all contracts included in a
legally valid bilateral netting agreement with a2000L0012 — EN — 27.10.2000 — 001.001 — 62
▼B
given counterparty (numerator) and the gross
replacement cost for all contracts included in a
legally valid bilateral netting agreement with
that counterparty (denominator), or
(ii) aggregate calculation: the quotient of the sum
of the net replacement cost calculated on a
bilateral basis for all counterparties taking into
account the contracts included in legally valid
netting agreements (numerator) and the gross
replacement cost for all contracts included in
legally valid netting agreements (denominator).
If Member States permit credit institutions a
choice of methods, the method chosen is to be
used consistently.
For the calculation of the potential future credit exposure according to
the above formula perfectly matching contracts included in the netting
agreement may be taken into account as a single contract with a notional
principal equivalent to the net receipts. Perfectly matching contracts are
forward foreign-exchange contracts or similar contracts in which a
notional principal is equivalent to cash flows if the cash flows fall due on
the same value date and fully or partly in the same currency.
In the application of method 2, in step (a)
— perfectly matching contracts included in the netting agreement may
be taken into account as a single contract with a notional principal
equivalent to the net receipts, the notional principal amounts are
multiplied by the percentages given in Table 2,
— for all other contracts included in a netting agreement, the
percentages applicable may be reduced as indicated in Table 3:
TABLE 3
Original maturity (1) Interest-rate contractsForeign-exchange
contracts
One year or less 0,35 % 1,50 %
More than one year but not more than two years 0,75 % 3,75 %
Additional allowance for each additional year 0,75 % 2,25 %
(1) In the case of interest-rate contracts, credit institutions may, subject to the consent of their competent authorities,
choose either original or residual maturity.2000L0012 — EN — 27.10.2000 — 001.001 — 63
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ANNEX IV
TYPES OF OFF-BALANCE-SHEET ITEMS
1.Interest-rate contracts:
(a) single-currency interest rate swaps;
(b) basis-swaps;
(c) forward rate agreements;
(d) interest-rate futures;(e) interest-rate options purchased;
(f) other contracts of similar nature.
2.Foreign-exchange contracts and contracts concerning gold:
(a) cross-currency interest-rate swaps;
(b) forward foreign-exchange contracts;(c) currency futures;
(d) currency options purchased;
(e) other contracts of a similar nature;(f) contracts concerning gold of a nature similar to (a) to (e).
3.Contracts of a nature similar to those in points 1(a) to (e) and 2(a) to (d)
concerning other reference items or indices concerning:
(a) equities;
(b) precious metals except gold;
(c) commodities other than precious metals;
(d) other contracts of a similar nature.2000L0012 — EN — 27.10.2000 — 001.001 — 64
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ANNEX V
PART A
REPEALED DIRECTIVES TOGETHER WITH THEIR SUCCESSIVE
AMENDMENTS
(referred to in Article 67)
Council Directive 73/183/EEC
Council Directive 77/780/EEC
Council Directive 85/345/EEC
Council Directive 86/137/EEC
Council Directive 86/524/EECCouncil Directive 89/646/EECDirective 95/26/EC of the European Parliament and of the Council,
only Article 1, first indent, Article 2(1), first indent and (2), first indent,
Article 3(2), Article 4(2), (3) and (4), as regards references to Directive
77/780/EEC, and (6), and Article 5, first indent
Council Directive 96/13/ECDirective 98/33/EC of the European Parliament and of the Council
Council Directive 89/299/EEC
Council Directive 91/633/EEC
Council Directive 92/16/EECCouncil Directive 92/30/EEC
Council Directive 89/646/EEC
Council Directive 92/30/EECDirective 95/26/EC of the European Parliament and of the Council
only Article 1, first indent
Council Directive 89/647/EEC
Commission Directive 91/31/EECCouncil Directive 92/30/EEC
Commission Directive 94/7/EC
Commission Directive 95/15/ECCommission Directive 95/67/ECDirective 96/10/EC of the European Parliament and of the Council
Directive 98/32/EC of the European Parliament and of the Council
Directive 98/33/EC of the European Parliament and of the Council (Article
2)
Council Directive 92/30/EEC
Council Directive 92/121/EEC2000L0012 — EN — 27.10.2000 — 001.001 — 65
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PART B
DEADLINES FOR IMPLEMENTATION
(referred to in Article 67)
DirectiveDeadline for
implementa-
tion
73/183/EEC (OJ L 194, 16.7.1973, p. 1) 2.1.1975(1)
77/780/EEC (OJ L 322, 17.12.1977, p. 30) 15.12.1979
85/345/EEC (OJ L 183, 16.7.1985, p. 19) 15.7.1985
86/137/EEC (OJ L 106, 23.4.1986, p. 35) —86/524/EEC (OJ L 309, 4.11.1986, p. 15) 31.12.1986
89/299/EEC (OJ L 124, 5.5.1989, p. 16) 1.1.1993
89/646/EEC (OJ L 386, 30.12.1989, p. 1) Article 6(2), 1.1.1990
other provisions 1.1.1993
89/647/EEC (OJ L 386, 30.12.1989, p. 14) 1.1.1991
91/31/EEC (OJ L 17, 23.1.1991, p. 20) 31.3.199191/633/EEC (OJ L 339, 11.12.1991, p. 16) 31.12.1992
92/16/EEC (OJ L 75, 31.3.1992, p. 48) 31.12.1992
92/30/EEC (OJ L 110, 28.4.1992, p. 52) 31.12.199292/121/EEC (OJ L 29, 5.2.1993, p. 1) 31.12.1993
94/7/EC (OJ L 89, 6.4.1994, p. 17) 25.11.1994
95/15/EC (OJ L 125, 8.6.1995, p. 23) 30.9.199595/26/EC (OJ L 168, 18.7.1995, p. 7) 18.7.1996
95/67/EC (OJ L 314, 28.12.1995, p. 72) 1.7.1996
96/10/EC (OJ L 85, 3.4.1996, p. 17) 30.6.199696/13/EC (OJ L 66, 16.3.1996, p. 15) 15.4.1996
98/32/EC (OJ L 204, 21.7.1998, p. 26) 21.7.2000
98/33/EC (OJ L 204, 21.7.1998, p. 29) 21.7.2000
(1) However, as regards the abolition of the restriction referred to in Article 3(2)(g), the Netherlands was allowed to
defer implementation until 2 July 1977. (See: Article 8, second subparagraph of Directive 73/183/EEC).2000L0012 — EN — 27.10.2000 — 001.001 — 66
ANΝΕΧVI
CORRELATION TABLE
This Directive Directive 77/780/EEC Directive 89/299/EEC Directive 89/646/EEC Directive 89/647/EEC Directive 92/30/EEC Directive 92/121/EEC D irective 96/10/EC
Article 1(1) Article 1, first indent Article 1, first indent Article 1(a)
Article 1(2) Article 1, second
indent
Article 1(3) Article 1(3)
Article 1(4) to (8) Article 1(5) to (9)
Article 1(9) Article 1, sixth indent
Article 1(10) and (11) Article 1(10) and (11)
Article 1(12) Article 1(12) Article 1, seventh
indentArticle 1(c)
Article 1(13) Article 1(13) Article 1, eighth
indentArticle 1(d)
Article 1(14) to (17) Article 2(1), second
to fifth indents
Article 1(18) to (20) Article 2(1), sixth to
eighth indents
Article 1(21) to (23) Article 1, third to
fifth indents
Article 1(24) Article 1(h)
Article 1(25) Article 1(m)
Article 1(26) Article 1, fifth indent
Article 1(27) Article 2(1), ninth
indent
Article 2(1) Article 2(1) Article 2(1) Article 1(1)
Article 2(2) Article 2
Article 2(3) Article 2(2)
Article 2(4) Article 2(3)▼B2000L0012 — EN — 27.10.2000 — 001.001 — 67
This Directive Directive 77/780/EEC Directive 89/299/EEC Directive 89/646/EEC Directive 89/647/EEC Directive 92/30/EEC Directive 92/121/EEC D irective 96/10/EC
Article 2(5), first,
second and third
subparagraphArticle 2(4)(a), (b)
and (c)
Article 2(6) Article 2(3) Article 1(3) Article 2(2)(b)
Article 3 Article 3
Article 4 Article 3(1)
Article 5(1), first
subparagraphArticle 3(2), first
subparagraphArticle 4(1)
Article 5(1), second
subparagraphArticle 10(1), third
subparagraph
Article 5(2) Article 4(2), intro-
ductory sentence, (a),
(b) and (c)
Article 5(3) to (7) Article 10(1) to (5)
Article 6(1) Article 3(2), first
subparagraph, third
indent and second
subparagraph
Article 6(2) Article 3(2)a
Article 7(1) and (2) Article 1(10), second
subparagraph and
Article 5(1) and (2)
Article 7(3) Article 3(2) third,
fourth and fifth
subparagraphs
Article 8 Article 3(4)
Article 9 Article 3(3)(a)
Article 10 Article 3(6)
Article 11 Article 3(7)
Article 12 Article 7
Article 13 Article 6(1)
Article 14(1) Article 8(1)
Article 14(2) Article 8(5)
Article 15 Article 5▼B2000L0012 — EN — 27.10.2000 — 001.001 — 68
This Directive Directive 77/780/EEC Directive 89/299/EEC Directive 89/646/EEC Directive 89/647/EEC Directive 92/30/EEC Directive 92/121/EEC D irective 96/10/EC
Article 16(1) to (5) Article 11(1) to (5)
Article 16(6) Article 1(10), second
subparagraph
Article 17 Article 13(2)Article 18 Article 18(1)Article 19 Article 18(2)
Article 20(1) to (6) Article 19
Article 20(7) Article 23(1)Article 21(1) and (2) Article 20
Article 21(3) Article 23(2)
Article 22 Article 21Article 23(1) Article 8
Article 23(2) to (7) Article 9
Article 24 Article 9Article 25 Article 8
Article 26 Article 13(1) and (3)
Article 27 Article 14(2)
Article 28 Article 7(1)Article 29 Article 15
Article 30(1) to (5) Article 12(1) to (5)
Article 30(6) Article 12(5a)Article 30(7) Article 12(5b)Article 30(8) Article 12(6)
Article 30(9) Article 12(7)
Article 30(10) Article 12(8)Article 31 Article 12a
Article 32 Article 17
Article 33 Article 13Article 34(1) Article 1(1)▼B2000L0012 — EN — 27.10.2000 — 001.001 — 69
This Directive Directive 77/780/EEC Directive 89/299/EEC Directive 89/646/EEC Directive 89/647/EEC Directive 92/30/EEC Directive 92/121/EEC D irective 96/10/EC
Article 34(2) to (4) Article 2(1) to (3)
Article 35 Article 3
Article 36 Article 4
Article 37 Article 5
Article 38 Article 6(1) and (4)
Article 39 Article 7
Article 40 Article 3(1) to (4), (7)
and (8)
Article 41 Article 4
Article 42 Article 5
Article 43 Article 6
Article 44 Article 7
Article 45 Article 8
Article 46 Article 2(2)
Article 47 Article 10
Article 48 Article 3
Article 49 Article 4(1) to (7)(r),
second subparagraph,
first sentence, and
(7)(s) to (12)
Article 50 Article 5(1) to (3)
Article 51(1) to (5) Article 12(1) to (5)Article 51(6) Article 12(8)
Article 52(1) to (7) Article 3(1) to (7)
Article 52(8) and (9) Article 3(5) and (6) Article 3(8) and (9) Article 5(4) and (5)
Article 52(10) Article 3(10)
Article 53 Article 4
Article 54 Article 5
Article 55 Article 6
Article 56 Article 7▼B2000L0012 — EN — 27.10.2000 — 001.001 — 70
This Directive Directive 77/780/EEC Directive 89/299/EEC Directive 89/646/EEC Directive 89/647/EEC Directive 92/30/EEC Directive 92/121/EEC D irective 96/10/EC
Article 57 Article 11
Article 58 Article 3(5)
Article 59 Article 6
Article 60 Article 8 Article 22 Article 9 Article 7
Article 61 Article 4a
Article 62(1) and (2) Article 11(4) and (5)
Article 62(3) Article 2
Article 63 Article 11(1) to (3)
Article 64 Article 6(1) to (9)
Article 65 Article 12(7)
Article 66 Article 14(2) Article 9(2) Article 24(3) Article 12(2)
Article 67 — — — — — — —
Article 68 — — — — — — —
Article 69 — — — — — — —
Annex I Annex
Annex II Annex I
Annex III Annex II
Annex IV Annex III
Annex V — — — — — — —
Annex VI — — — — — — —▼B2000L0012 — EN — 27.10.2000 — 001.001 — 71