2000L0012 — EN — 11.02.2003 — 002.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B DIRECTIVE2000/12/ECOFTHEEUROPEANPARLIAMENTANDOFTHECOUNCIL
of20March2000
relatingtothetakingupandpursuitofthebusinessofcreditinstitutions
(OJ L 126, 26.5.2000, p. 1)
Amended by:
Official Journal
No page date
►M1 Directive 2000/28/EC of the European Parliament and of the Council of
18 September 2000L 275 37 27.10.2000
►M2 Directive 2002/87/EC of the European Parliament and of the Council of
16 December 2002L 35 1 11.2.2003
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DIRECTIVE 2000/12/EC OF THE EUROPEAN PARLIAMENT
ANDOFTHECOUNCIL
of20March2000
relatingtothetakingupandpursuitofthebusinessofcreditinsti-
tutions
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 credit institu-tions (
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 institu-
tions (9) have been frequently and substantially amended.For
reasons of clarity and rationality, the said Directives therefore,should be codified 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 on
nationality 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 obstruc-tive differences between the laws of the Member States as
regards the rules to which these institutions are subject.
(4) This Directive constitutes the essential instrument for the
achievement of the internal market, a course determined by the2000L0012 — EN — 11.02.2003 — 002.001 — 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) OJ L 322, 17.12.1977, p. 30. Directive as last amended by Directive 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 Acces-
sion.
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Single European Act and set out in timetable form in the
Commission's White Paper, from the point of view of both thefreedom 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 competitionbetween these institutions, apply to all of them.Due regardmust be had, where applicable, to the objective differences intheir statutes and their proper aims as laid down by nationallaws.
(6) The scope of those measures should therefore be as broad as
possible, covering all institutions whose business is to receive
repayable funds from the public, whether in the form of depositsor in other forms such as the continuing issue of bonds and othercomparable 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 provisions
of this Directive shall not prejudice the application of national
laws which provide for special supplementary authorisationspermitting credit institutions to carry on specific activities orundertake 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 supervision
systems, making possible the granting of a single licence recog-
nised throughout the Community and the application of theprinciple of home Member State prudential supervision.There-fore, the requirement that a programme of operations must beproduced should be seen merely as a factor enabling the compe-
tent authorities to decide on the basis of more precise
information using objective criteria.A measure of flexibilitymay none the less be possible as regards the requirements onthe legal form of credit institutions of the protection of bankingnames.
(8) Equivalent financial requirement for credit institutions are neces-
sary to ensure similar safeguards for savers and fair conditions of
competition between comparable groups of credit institutions.
Pending further coordination, appropriate structural ratios shouldbe formulated that will make it possible within the framework ofcooperation between national authorities to observe, in accor-dance with standard methods, the position of comparable typesof credit institutions.This procedure should help to bring about
the gradual approximation of the systems of coefficients estab-
lished and applied by the Member States.It is necessary,however to make a distinction between coefficients intended toensure the sound management of credit institutions and thoseestablished for the purposes of economic and monetary policy.
(9) The principles of mutual recognition and home Member State
supervision require that Member States' competent authorities
should not grant or should withdraw authorisation where factors
such as content of the activities programmes, the geographicaldistribution or the activities actually carried on indicate clearlythat a credit institution has opted for the legal system of oneMember State for the purpose of evading the stricter standards
in force in another Member State within whose territory it
carries on or intends to carry on the greater part of its activities.A credit institution which is a legal person must be authorised inthe Member State in which it has its registered office.A creditinstitution which is not a legal person must have its head officein the Member State in which it has been authorised.In addition,
Member States must require that a credit institution's head office
always 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 beprevented from effectively exercising their supervisory functionsby the close links between that institution and other natural or2000L0012 — EN — 11.02.2003 — 002.001 — 3
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legal persons.Credit institutions already authorised must also
satisfy the competent authorities in that respect.The definitionof ‘close links’ in this Directive lays down minimum criteria.
That does not prevent Member States from applying it to situa-
tions other than those envisaged by the definition.The sole factof having acquired a significant proportion of a company'scapital does not constitute participation, within the meaning of‘close links’, if that holding has been acquired solely as a
temporary investment which does not make it possible to exer-
cise influence over the structure or financial policy of theinstitution.
(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, theauthorities applied to for authorisation must be able to identify
the authorities competent to exercise supervision on a consoli-
dated basis 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), and
Articles 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 the aboli-tion 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 activitieslisted in Annex I by establishing branches or by providingservices.The carrying-on of activities not listed in the said
Annex enjoys the right of establishment and the freedom to
provide services 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 supervi-sion of their parent undertakings and meet certain strictconditions.
(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 regardto activities not listed in Annex I provided that, on the one hand,such provisions are compatible with Community law and areintended to protect the general good and that, on the other
hand, such institutions or such activities are not subject to
equivalent rules under this legislation or regulations of theirhome Member States.
(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 donot conflict with legal provisions protecting the general good inthe host Member State.
(18) There is a necessary link between the objective of this Directive
and the liberalisation of capital movements being brought aboutby other Community legislation.In any case the measures
regarding the liberalisation of banking services must be in
harmony 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 providethat such rules may not be more favourable than those forbranches of institutions from another Member State.It shouldbe specified that the Community may conclude agreements with2000L0012 — EN — 11.02.2003 — 002.001 — 4
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third countries providing for the application of rules which
accord such branches the same treatment throughout its territory,account being taken of the principle of reciprocity.The branches
of credit institutions authorised in third countries do not enjoy
the freedom to provide services under the second paragraph ofArticle 49 of the Treaty or the freedom of establishment inMember States other than those in which they are established.However, requests for 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 toensure that Community credit institutions receive reciprocaltreatment in the third 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.Existing
reciprocity clauses have therefore no effect.A flexible procedure
is therefore needed to make it possible to assess reciprocity on aCommunity 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 Directiveprovides for procedures for negotiating with third countries and,as a last resort, for the possibility of taking measures involvingthe suspension of new applications for authorisation or therestriction of new authorisations.
(21) It is desirable that agreement should be reached, on the basis of
reciprocity, between the Community and third countries with a
view to allowing the practical exercise of consolidated supervi-sion 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 compe-tent authorities of its home Member State.The host Member
State's competent authorities retain responsibility for the supervi-
sion of liquidity and monetary policy.The supervision of marketrisk must be the subject of close cooperation between thecompetent authorities 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 cooperationbetween the competent authorities of the Member States.For
the consideration of problems concerning individual credit insti-
tutions the ‘groupe de contact’ (contact group) set up betweenthe banking 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.The compe-
tent host Member State authorities can, without prejudice to theirpowers of proper control, continue either, in an emergency, ontheir own initiative or following the initiative of the competenthome Member State authorities, to verify that the activities of acredit institution established within their territories comply with
the relevant laws and with the principles of sound administrative
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, byvirtue of their function, help to strengthen the stability of thefinancial system.In order to preserve the confidential nature of
the information forwarded, the list of addressees must remain
within strict limits.
(26) Certain behaviour, such as fraud and insider offences, is liable to
affect the stability, including the integrity, of the financialsystem, even when involving institutions other than credit insti-tutions.
(27) It is necessary to specify the conditions under which such
exchanges of information are authorised.2000L0012 — EN — 11.02.2003 — 002.001 — 5
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(28) Where it is stipulated that information may be disclosed only
with the express agreement of the competent authorities, thesemay, where appropriate, make their agreement subject to compli-
ance with strict conditions.
(29) Exchanges of information between, on the one hand, the compe-
tent authorities and, on the other, central banks and other bodieswith a similar function in their capacity as monetary authoritiesand, where appropriate, other public authorities responsible forsupervising payment systems should also be authorised.
(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 report
promptly to the competent authorities, wherever, as provided forby this Directive, he becomes aware, while carrying out histasks, of certain facts which are liable to have a serious effecton the financial situation or the administrative and accountingorganisation of a credit institution.Having regard to the aim in
view, it is desirable for the Member State to provide that such a
duty should apply in all circumstances where such facts arediscovered by an auditor during the performance of his tasks inan undertaking which 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
credit institution which they discover during the performance oftheir tasks in a non-financial undertaking does not in itselfchange the nature of their tasks in that undertaking nor themanner in which they must perform those tasks in that under-taking.
(31) Common basic standards for the own funds of credit institutions
are a key factor in the creation of an internal banking market
since own funds serve to ensure the continuity of credit institu-
tions and to protect savings.Such harmonisation strengthens thesupervision of credit institutions and contributes to further coor-dination in 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
own funds also serve as an important yardstick for the competent
authorities, in particular for the assessment of the solvency ofcredit 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 stan-dards pertaining to own funds must therefore be equivalent.Tothat end, the criteria for determining the composition of ownfunds must not be left solely to Member States.The adoption
of common basic standards will be in the best interests of the
Community in that it will prevent distortions of competitionand will strengthen the 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 tothe discretion of each Member State to use all or some of suchitems or 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 more
stringent provisions.
(37) At the initial stage common basic standards are defined in broad
terms in order to encompass all the items making up own fundsin the 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 own2000L0012 — EN — 11.02.2003 — 002.001 — 6
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funds, the amount of the former included in own funds must not
exceed the original own funds.Moreover, the amount of certainitems of additional own funds included must not exceed one half
of the original own funds.
(40) In order to avoid distortions of competition, public credit institu-
tions must not include in their own funds guarantees grantedthem by the Member States or local authorities.
(41) Whenever in the course of supervision it is necessary to deter-
mine the amount of the consolidated own funds of a group ofcredit institutions, the calculation shall be effected in accordancewith this 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 provisionsof Council 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 June1983 based 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 majorcountries 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 fundsand thus achieving greater convergence on a common definitionof own funds.Such convergence will allow the alignment ofCommunity credit institutions' own funds.
(45) The provisions on solvency ratios are the outcome of work
carried out by the Banking Advisory Committee which isresponsible for making suggestions to the Commission with aview to coordinating the coefficients applicable in the MemberStates.
(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 useful
measure 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 supervisiontechniques 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 commonsolvency standards in the form of a minimum ratio preventdistortions of competition and strengthen the Communitybanking system.
(51) This Directive provides for different weightings to be given to
guarantees issued by different financial institutions.TheCommission accordingly undertakes to examine whether thisDirective taken as a whole significantly distorts competitionbetween credit institutions and insurance undertakings and, in2000L0012 — EN — 11.02.2003 — 002.001 — 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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the light of that examination, to consider whether any remedial
measures are justified.
(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 levelplaying field Member States are obliged to strive for uniformassessment of contractual netting agreements by their competent
authorities.Annex III takes account of the work of an interna-
tional forum of banking supervisors on the supervisoryrecognition of bilateral netting, in particular the possibility ofcalculating the own-funds requirements for certain transactionson the basis of a net rather than a gross amount provided that
there are legally binding agreements which ensure that the credit
risk is confined to the net amount.For internationally activecredit institutions and groups of credit institutions in a widerange of third countries, which compete with Community creditinstitutions, the rules adopted on the wider international levelwill result in a refined supervisory treatment of over-the-counter
(OTC) derivative instruments.This refinement results in a more
appropriate compulsory capital cover taking into account therisk-reducing effects of supervisorily recognised contractualnetting agreements on potential future credit risks.The clearingof OTC derivative instruments provided by clearing houses
acting as a central counterparty plays an important role in certain
Member States.It is appropriate to recognise the benefits fromsuch 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 collateralised
and for the risk of a build-up of the clearing house's exposures
beyond the market value of posted collateral to be eliminated inorder 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 level
of the initial margins and variation margins required and the
quality of and the level of protection provided by the postedcollateral.For credit institutions incorporated in the MemberStates, Annex III creates a similar possibility for the recognitionof bilateral netting by the competent authorities and therebyoffers them equal conditions of competition.The rules are both
well balanced and appropriate for the further reinforcement of
the application of prudential supervisory measures to credit insti-tutions.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 require-ments in force at the beginning of 1988.
(54) The essential rules for monitoring large exposures of credit insti-
tutions should be harmonised.Member States should still be able
to adopt provisions more stringent than those provided for bythis Directive.
(55) The monitoring and control of a credit institution's exposures is
an integral part of its supervision.Excessive concentration of
exposures to a single client or group of connected clients may
result in an unacceptable risk of loss.Such a situation may beconsidered 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 requirements
throughout the Community should therefore be equivalent.To
that end, the criteria applied to determining the concentration ofexposures 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 prevent differ-2000L0012 — EN — 11.02.2003 — 002.001 — 8
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ences 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 of expo-sures for the purposes of limits to large exposures.It is not,however, appropriate to refer on principle to the weightings ordegrees of risk laid down in the said provisions.Those weight-
ings and degrees of risk were devised for the purpose of
establishing a general solvency requirement to cover the creditrisk of credit institutions.In the context of the regulation of largeexposures, the aim is to limit the maximum loss that a creditinstitution may incur through any single client or group of
connected clients.It is therefore appropriate to adopt a prudent
approach in which, as a general rule, account is taken of thenominal value of exposures, but no weightings or degrees ofrisk 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 exposuresincurred 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 likelyto operate to the detriment of the sound and prudent manage-ment of that institution, the competent authorities shall takeappropriate measures to put an end to that situation.In the field
of large exposures, 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 thanfor other exposures.More stringent restrictions need not,however be applied where the parent undertaking is a financialholding company or a credit institution or where the other subsi-
diaries are either credit or financial institutions or undertakings
offering ancillary banking services, provided that all such under-takings are covered by the supervision of the credit institution ona consolidated basis.In such cases the consolidated monitoringof the group of undertakings allows for an adequate level of
supervision, and does not require the imposition of more strin-
gent limits on exposure.Under this approach banking groupswill also be encouraged to organise their structures in such away as to allow consolidated monitoring, which is desirablebecause a more comprehensive 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 ableto exercise such supervision.
(60) In the case of groups with diversified activities the parent under-
takings of which control at least one credit institution subsidiary,
the competent authorities must be able to assess the financialsituation of a credit institution in such a group.Pending subse-quent coordination, the Member States may lay downappropriate methods of consolidation for the achievement of the
objective of this Directive.The competent authorities must at
least have the means of obtaining from all undertakings withina group the information necessary for the performance of theirfunction.Cooperation between the authorities responsible forthe supervision of different financial sectors must be establishedin the case of groups of undertakings carrying on a range of
financial activities.
(61) The Member States can, furthermore, refuse or withdraw
banking authorisation in the case of certain group structuresconsidered inappropriate for carrying on banking activities, inparticular because such structures could not be supervised effec-2000L0012 — EN — 11.02.2003 — 002.001 — 9
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tively.In this respect the competent authorities have the powers
mentioned in 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 groups with structures not covered by this Direc-
tive.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 insuch activities must therefore be included in supervision on a
consolidated basis.As a result, the definition of financial institu-
tions 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
of the said institutions and ensuring the stability of the financial
system.
(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 competent
authorities and the Commission within a banking advisory
committee, particularly when conducted with a view to closercoordination.The Banking Advisory Committee of the compe-tent authorities of the Member States does not rule out otherforms of cooperation between authorities which supervise the
taking up and pursuit of the business of credit institutions and,
in particular, cooperation within the ‘groupe de contact’ (contactgroup) 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 Deci-
sion 1999/468/EC of 28 June 1999 laying down the proceduresfor the exercise of implementing powers conferred on theCommission (
1).
(68) Article 36(1) of this Directive permits joint and several commit-
ments of borrowers in the case of credit institutions organised as
cooperative societies or funds to be treated as own funds itemsunder Article 34(2)(7).The Danish Government has expressed astrong interest in having its few mortgage credit institutionsorganised as cooperative societies or funds converted into publiclimited liability companies.In order to facilitate the conversion
or to make it possible, a temporary derogation allowing them to
include part of their joint and several commitments as own fundsis required.This temporary derogation should not adverselyaffect competition between credit institutions.
(69) The application of a 20 % weighting to credit institutions' hold-
ings of mortgage bonds may unsettle a national financial marketon which such instruments play a preponderant role.In this case,provisional measures are taken to apply a 10 % risk weighting.The market for securitisation is undergoing rapid development.Itis therefore desirable that the Commission should examine with2000L0012 — EN — 11.02.2003 — 002.001 — 10
(1) OJ L 184, 17.7.1999, p. 23.
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the Member States the prudential treatment of asset-backed secu-
rities and put forward, before 22 June 1999, proposals aimed atadapting existing legislation in order to define an appropriate
prudential treatment for asset-backed securities.The competent
authorities may authorise a 50 % weighting to assets secured bymortgages on offices or on multipurpose commercial premisesuntil 31 December 2006.The property to which the mortgagerelates must be subject to rigorous assessment criteria and
regular revaluation to take account of the developments in the
commercial property market.The property must be either occu-pied or let by the owner.Loans for property development areexcluded from this 50 % weighting.
(70) In order to ensure harmonious application of the provisions on
large exposures, Member States should be allowed to providefor the two-stage application of the new limits.For smallercredit 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 — 11.02.2003 — 002.001 — 11
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CONTENTS
TITLEI DEFINITIONSANDSCOPE
Article 1 Definitions
Article 2 Scope
Article 3 Prohibition for undertakings other than credit institutions from carrying on
the business of taking deposits or other repayable funds from the public
TITLEII REQUIREMENTS FOR ACCESS TO THE TAKING UP AND
PURSUITOFTHEBUSINESSOFCREDITINSTITUTIONS
Article 4 Authorisation
Article 5 Initial capital
Article 6 Management body and place of the head office of credit institutions
Article 7 Shareholders and members
Article 8 Programme of operations and structural organisation
Article 9 Economic needs
Article 10 Authorisation refusal
Article 11 Notification of the authorisation to the Commission
Article 12 Prior consultation with the competent authorities of other Member States
Article 13 Branches of credit institutions authorised in another Member State
Article 14 Withdrawal of authorisation
Article 15 Name
Article 16 Qualifying holding in a credit institutionArticle 17 Procedures and internal control mechanisms
TITLEIII PROVISIONS CONCERNING THE FREEDOM OF ESTABLISH-
MENTANDTHEFREEDOMTOPROVIDESERVICES
Article 18 Credit institutions
Article 19 Financial institutions
Article 20 Exercise of the right of establishment
Article 21 Exercise of the freedom to provide services
Article 22 Power of the competent authorities of the host Member State
TITLEIV RELATIONSWITHTHIRDCOUNTRIES
Article 23 Notification of the subsidiaries of third countries' undertakings and condi-
tions of access to the markets of these countries
Article 24 Branches of credit institutions having their head offices outside the
Community
Article 25 Cooperation with third countries' competent authorities regarding supervi-
sion on a consolidated basis
TITLEV PRINCIPLES AND TECHNICAL INSTRUMENTS FOR PRUDEN-
TIALSUPERVISION
Chapter1 Principles ofprudentialsupervision
Article 26 Competence of control of the home Member State
Article 27 Competence of the host Member State
Article 28 Collaboration concerning supervisionArticle 29 On-the-spot verification of branches established in another Member State
Article 30 Exchange of information and professional secrecy2000L0012 — EN — 11.02.2003 — 002.001 — 12
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Article 31 Duty of persons responsible for the legal control of annual and consoli-
dated accounts
Article 32 Power of sanction of the competent authoritiesArticle 33 Right to apply to the courts
Chapter2 Technicalinstrumentsofprudentialsupervision
Section 1 Ownfunds
Article 34 General principles
Article 35 Other items
Article 36 Other provisions concerning own fundsArticle 37 Calculation of own funds on a consolidated basis
Article 38 Deductions and limits
Article 39 Provision of proof to the competent authorities
Section 2 Solvency ratio
Article 40 General principles
Article 41 The numerator: own funds
Article 42 The denominator: risk-adjusted assets and off-balance-sheet items
Article 43 Risk weightingsArticle 44 Weighting of claims for regional governments or local authorities of the
Member States
Article 45 Other weighting
Article 46 Administrative bodies and non-commercial undertakings
Article 47 Solvency ratio level
Section 3 Largeexposures
Article 48 Reporting of large exposures
Article 49 Limits on large exposures
Article 50 Supervision on a consolidated or unconsolidated basis of large exposures
Section 4 Qualifiying holdingsoutsidethefinancial sector
Article 51 Limits to non-financial qualifying holdings
Chapter3 Supervisiononaconsolidatedbasis
Article 52 Supervision on a consolidated basis of credit institutions
Article 53 Competent authorities responsible for exercising supervision on a consoli-
dated basis
Article 54 Form and extent of consolidationArticle 55 Information to be supplied by mixed-activity holding companies and their
subisidiaries
Article 56 Measures to facilitate supervision on a consolidated basis
TITLEVI BANKINGADVISORYCOMMITTEE
Article 57 Composition and tasks of the Banking Advisory Committee
Article 58 Examination of the requirements for authorisation
Article 59 Observation ratios
TITLEVII POWERSOFEXECUTION
Article 60 Technical adaptations2000L0012 — EN — 11.02.2003 — 002.001 — 13
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TITLEVIII TRANSITIONALANDFINALPROVISIONS
Chapter1 Transitionalprovisions
Article 61 Transitional provisions regarding Article 36
Article 62 Transitional provisions regarding Article 43
Article 63 Transitional provisions regarding Article 47Article 64 Transitional provisions regarding Article 49
Article 65 Transitional provisions regarding Article 51
Chapter2 Finalprovisions
Article 66 Commission informationArticle 67 Repealed Directives45
Article 68 Implementation45
Article 69 AddresseesANNEX I List of activities subject to mutual recognition
ANNEX II Classification of off-balance-sheet items
ANNEX III The treatment of off-balance-sheet itemsANNEX IV Types of off-balance-sheet items
ANNEX V Part A Repealed Directives, together with their successive amendments (referred
to in Article 67)
ANNEX V Part B Deadlines for implementation (referred to in Article 67)
ANNEX VI Correlation table2000L0012 — EN — 11.02.2003 — 002.001 — 14
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TITLE I
DEFINITIONSANDSCOPE
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 itsown account; or
(b) an electronic money institution within the meaning of Directive
2000/46/EC of the European Parliament and of the Council of18 September 2000 on the taking up, pursuit and prudential
supervision of the business of electronic money institutions (
1).
For the purposes of 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 public under-taking which corresponds to the definition in the first paragraphand 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 insti-tution according to the first paragraph, including branches of a
credit institution in third countries and any private or public under-
taking, including its branches, which corresponds to the definitionin the first paragraph and which has been authorised in a thirdcountry;
2.‘authorisation’ shall mean an instrument issued in any form by the
authorities by which the right to carry on the business of a creditinstitution 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 credit
institutions; any number of places of business set up in the same
Member 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 orto carry on one or more of the activities listed in points 2 to 12 ofAnnex I;
6.‘home Member State’ shall mean the Member State in which a
credit institution has been authorised in accordance with Articles4 to 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,or a similar relationship between any natural or legal person and an
undertaking;
9.‘participation for the purposes of supervision on a consolidated
basis and for the purposes of points 15 and 16 of Article34(2)’ shall mean participation within the meaning of the firstsentence of Article 17 of Directive 78/660/EEC, or the ownership,2000L0012 — EN — 11.02.2003 — 002.001 — 15
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direct or indirect, of 20 % or more of the voting rights or capital of
an undertaking;
10.‘qualifiying holding’ shall mean a direct or indirect holding in an
undertaking which represents 10 % or more of the capital or of the
voting rights or which makes it possible to exercise a significant
influence over the management of the undertaking in which aholding 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 under-
taking;
13.‘subsidiary’ shall mean a subsidiary undertaking as defined in Arti-
cles 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 withinthe meaning of Article 1(1) of Directive 83/349/EEC and any
undertaking over which, in the opinion of the competent authori-
ties, a parent undertaking effectively exercises a dominantinfluence.
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 coun-
tries which are full members of the Organisation for Economic
Cooperation and Development (OECD) and those countries which
have concluded special lending arrangements with the InternationalMonetary Fund (IMF) associated with the Fund's general arrange-ments to borrow (GAB).Any country which reschedules itsexternal sovereign debt is, however, precluded from Zone A for aperiod of five 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 andpublic undertakings covered by the definitions in point 1, firstsubparagraph and authorised in other Zone A countries, includingtheir branches;
17.‘Zone B credit institutions’ shall mean all private and public
undertakings authorised outside Zone A covered by the definitionin point 1, first subparagraph, including their branches within the
Community;
18.‘non-bank sector’ shall mean all borrowers other than credit insti-
tutions as defined in points 16 and 17, central governments andcentral banks, regional governments and local authorities, the
European 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 Councilof Europe 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 Article43(2) and listed in Annex II;2000L0012 — EN — 11.02.2003 — 002.001 — 16
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21.‘financial holding company’ shall mean a financial institution, the
subsidiary undertakings of which are either exclusively or mainlycredit institutions or financial institutions, at least one of such
subsidiaries being a credit institution, and which is not a mixed
financial holding company within the meaning of Directive 2002/87/EC of the European Parliament and of the Council of 16December 2002 on the supplementary supervision of credit institu-tions, insurance undertakings and investment firms in a financial
conglomerate (
1);
22.‘mixed-activity holding company’ shall mean a parent undertaking,
other than a financial holding company or a credit institution or amixed financial holding company within the meaning of Directive2002/87/EC, the subsidiaries of which include at least one creditinstitution;
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 inArticle 43 and in Annexes II and IV thereto, without application ofthe weightings or degrees of risk there provided for; the risks
referred to in Annex IV must be calculated in accordance with
one of the methods set out in Annex III, without application ofthe weightings for counterparty risk; all elements entirely coveredby own funds may, with the agreement of the competent authori-ties, be excluded from the definition of exposures provided thatsuch own funds are not included in the calculation of the solvency
ratio or of other monitoring ratios provided for in this Directive
and in other Community 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 duringthe five working days following payment or delivery of thesecurities, 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 sointerconnected that, if one of them were to experience financial
problems, the other or all of the others would be likely to
encounter 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 anundertaking, 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 rela-tionship 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.2000L0012 — EN — 11.02.2003 — 002.001 — 17
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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 link
between 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 condi-
tions for the operation of the exchange, the conditions ofaccess to the exchange as well as the conditions that must besatisfied by a contract before it can effectively be dealt on theexchange,
(iii) have a clearing mechanism that provides for contracts listed in
Annex IV to be subject to daily margin requirementsproviding an appropriate protection in the opinion of thecompetent 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 theirhead offices in the Community.
The institutions permanently excluded by paragraph 3, with the excep-
tion, however, of the Member States' central banks, shall be treated asfinancial 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 ‘Wohnungsgemeinnützigkeitsge-
setz’ as bodies of State housing policy and are not mainly engagedin banking transactions, and undertakings recognised under that lawas non-profit housing undertakings,
— in Greece, the ‘ Ελληνική Τράπεζα Βιοµηχανικής
Αναπτύξεως, ’, (Elliniki Trapeza Viomichanikis Anaptyxeos), the
‘Ταµείο Παρακαταθηκών 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 voorOntwikkeling 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 indus-
triellt samarbete AB’, and the ‘Kera Oy/Kera Ab’,2000L0012 — EN — 11.02.2003 — 002.001 — 18
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— 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 Securities
Corporation Ltd, the Crown Agents for overseas governments and
administrations, 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 perma-
nently affiliated, on 15 December 1977, to a central body which
supervises them and which is established in that same Member State,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 affiliatedinstitutions 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 ofconsolidated accounts,
— the management of the central body is empowered to issue instruc-
tions 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 ifthey constitute normal additions to the network belonging to thatcentral body.
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 or
mergers of existing institutions dependent or answerable to the central
body, the Council, acting on a proposal from the Commission, whichshall for this purpose, consult the Banking Advisory Committee, maylay down additional rules for the application of the second subpara-graph including the repeal of exemptions provided for in the first
subparagraph, where it is of the opinion that the affiliation of new insti-
tutions benefiting from the arrangements laid down in the secondsubparagraph might have an adverse effect on competition.TheCouncil shall decide by 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 State
may also be exempted from the provisions of Article 5, and also Arti-
cles 40 to 51, and 65 provided that, without prejudice to the applicationof 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 its
affiliated institutions.
Article 3
Prohibition for undertakings other than credit institutions from
carrying on the business of taking deposits or other repayable
fundsfromthepublic
The Member States shall prohibit persons or undertakings that are not
credit institutions from carrying on the business of taking deposits or
other repayable funds from the public.This prohibition shall not apply
to the taking of deposits or other funds repayable by a Member State orby a Member State's regional or local authorities or by public interna-tional bodies of which one or more Member States are members or tocases expressly covered by national or Community legislation,provided that those activities are subject to regulations and controls2000L0012 — EN — 11.02.2003 — 002.001 — 19
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intended to protect depositors and investors and applicable to those
cases.
TITLE II
REQUIREMENTS FOR ACCESS TO THE TAKING UP AND
PURSUITOFTHEBUSINESSOFCREDITINSTITUTIONS
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 notifythem to both the Commission and the Banking Advisory Committee.
Article 5
Initialcapital
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 require-ment contained 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 initialcapital of which is less than that prescribed in paragraph 1.In suchcases:
(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 capitalprescribed 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 its author-
isation.
4.The Member States may decide that credit institutions already in
existence on 1 January 1993, the own funds of which do not attain thelevels 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 forinitial capital in paragraphs 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 creditinstitutions falling within the category referred to in paragraph 4, theown funds of the institution resulting from the merger may not fall
below the total own funds of the merged institutions at the time of the
merger, as long as the appropriate levels pursuant to paragraphs 1 and2 have 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 circum-stances justify it, allow an institution a limited period in which torectify its situation or cease its activities.2000L0012 — EN — 11.02.2003 — 002.001 — 20
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Article 6
Managementbodyandplaceoftheheadofficeofcreditinstitutions1.The competent authorities shall grant an authorisation to the
credit institution only when there are at least two persons who effec-tively 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
experience to 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 thesame Member State as its registered office,
— 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
Shareholdersandmembers
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 hold-
ings, 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 Council Direc-
tive 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 acredit institution, they are not satisfied as to the suitability of theabovementioned shareholders or members.
3.Where close links exist between the credit institution and other
natural or legal persons, the competent authorities shall grant authorisa-
tion only if those links do not prevent the effective exercise of 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 ofoperationsandstructuralorganisation
Member States shall require applications for authorisation to be accom-
panied by a programme of operations setting out, inter alia , the types
of business envisaged and the structural organisation of the institution.
Article 9
Economicneeds
Member States may not require the application for authorisation to be
examined in terms of the economic needs of the market.2000L0012 — EN — 11.02.2003 — 002.001 — 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 10
Authorisationrefusal
Reasons shall be given whenever an authorisation is refused and the
applicant shall be notified thereof within six months of receipt of the
application or, should the latter be incomplete, within six months ofthe applicant's sending the information required for the decision.Adecision shall, in any case, be taken within 12 months of the receiptof the application.
Article 11
NotificationoftheauthorisationtotheCommission
Every authorisation shall be notified to the Commission.Each credit
institution shall be entered in a list which the Commission shall publish
in theOfficialJournaloftheEuropeanCommunities and shall keep up
to date.
Article 12
PriorconsultationwiththecompetentauthoritiesofotherMember
States
There must be prior consultation with the competent authorities of the
other Member State involved on the authorisation of a credit institutionwhich 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.
The competent authority of a Member State involved, responsible for
the supervision of insurance undertakings or investment firms, shall beconsulted prior to the granting of an authorisation to a credit institutionwhich is:
(a) a subsidiary of an insurance undertaking or investment firm
authorised in the Community; or
(b) a subsidiary of the parent undertaking of an insurance undertaking
or investment firm authorised in the Community; or
(c) controlled by the same person, whether natural or legal, who
controls an insurance undertaking or investment firm authorised inthe Community.
The relevant competent authorities referred to in the first and second
paragraphs shall in particular consult each other when assessing thesuitability of the shareholders and the reputation and experience ofdirectors involved in the management of another entity of the samegroup.They shall inform each other of any information regarding the
suitability of shareholders and the reputation and experience of direc-
tors which is of relevance to the other competent authorities involvedfor the granting of an authorisation as well as for the ongoing assess-ment of compliance with operating conditions.
Article 13
BranchesofcreditinstitutionsauthorisedinanotherMemberStateHost Member States may not require authorisation or endowment
capital for branches of credit institutions authorised in other MemberStates.The establishment and supervision of such branches shall beeffected as prescribed in Articles 17, 20(l) to (6) and Articles 22 and26.2000L0012 — EN — 11.02.2003 — 002.001 — 22
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Article 14
Withdrawalofauthorisation
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 for
more 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 nolonger 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 tothe 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 thehost Member State, use throughout the territory of the Community the
same name as they use in the Member State in which their head office
is situated.In the event of there being any danger of confusion, thehost Member State may, for the purposes of clarification, require thatthe name be accompanied by certain explanatory particulars.
Article 16
Qualifiyingholdinginacreditinstitution
1.The Member States shall require any natural or legal person who
proposes to hold, directly or indirectly a qualifying holding in a credit
institution first to inform the competent authorities, telling them of the
size 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 himwould reach or exceed 20 %, 33 % or 50 % or so that the credit insti-tution 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 sucha plan if, in view of the need to ensure sound and prudent managementof the credit institution, they are not satisfied as to the suitability of theperson referred 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, insurance undertaking or investment firm authorisedin another Member State or the parent undertaking of a credit institu-
tion, insurance undertaking or investment firm authorised in another
Member State or a natural or legal person controlling a credit institu-tion, insurance undertaking or investment firm authorised in anotherMember State, and if, as a result of that acquisition, the institution inwhich the acquirer proposes to hold a holding would become asubsidiary or subject to the control of the acquirer, the assessment of2000L0012 — EN — 11.02.2003 — 002.001 — 23
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the acquisition must be subject to the prior consultation referred to in
Article 12.
3.The Member States shall require any natural or legal person who
proposes to dispose, directly or indirectly, of a qualifying holding in a
credit institution first to inform the competent authorities, telling them
of the size of his intended holding.Such a person must likewise informthe competent authorities if he proposes to reduce his qualifyingholding so that the proportion of the voting rights or of the capitalheld by him would fall below 20 %, 33 % or 50 % or so that the creditinstitution 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 exer-
cised by the persons referred to in paragraph 1 is likely to operate tothe detriment of the prudent and sound management of the institution,
the competent authorities shall take appropriate measures to put an end
to that situation.Such measures may consist for example in injunctions,sanctions against directors and managers, or the suspension of the exer-cise of the voting rights attaching to the shares held by the shareholdersor members in question.
Similar measures shall apply to natural or legal persons failing to
comply with the obligation to provide prior information, as laid downin paragraph 1.If a holding is acquired despite the opposition of thecompetent authorities, the Member States shall, regardless of any othersanctions to be adopted, provide either for exercise of the corre-
sponding voting rights to be suspended, or for the nullity of votes cast
or for the possibility 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.
Article 17
Procedures andinternalcontrolmechanisms
Home Member State competent authorities shall require that every
credit institution have sound administrative and accounting procedures
and adequate internal control mechanisms.
TITLE III
PROVISIONSCONCERNINGTHEFREEDOMOFESTABLISH-
MENTANDTHEFREEDOMTOPROVIDESERVICES
Article 18
Creditinstitutions
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 abranch 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 the author-isation.2000L0012 — EN — 11.02.2003 — 002.001 — 24
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Article 19
Financialinstitutions
The Member States shall also 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 financial institu-tion from another Member State, whether a subsidiary of a creditinstitution or the jointly-owned subsidiary of two or more credit institu-tions, the memorandum and articles of association of which permit the
carrying on of those activities and which fulfils each of the following
conditions:
— 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
and must have declared, with the consent of the relevant homeMember State competent authorities, that they jointly and severallyguarantee 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 parentundertaking, or of each of the parent undertakings, in accordancewith Articles 52 to 56, in particular for the calculation of the
solvency ratio, for the control of large exposures and for purposes
of the 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 ofthe 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,the words ‘credit institution’ should be read as ‘financial institutionfulfilling the conditions laid down in Article 19’ and the word ‘author-
isation’ as ‘memorandum and articles of association’.
The second subparagraph of Article 20(3) shall read:
‘The home Member State competent authorities shall also commu-
nicate the amount of own funds of the subsidiary financialinstitution and the consolidated solvency ratio of the credit institu-tion 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 activitiescarried on by that institution in the host Member State become subjectto the legislation of the host Member State.
Article 20
Exercise oftherightofestablishment
1.A credit institution wishing to establish a branch within the terri-
tory of another Member State shall notify the competent authorities ofits Member State.2000L0012 — EN — 11.02.2003 — 002.001 — 25
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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, interalia , the types of busi-
ness 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 the
financial 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 informationto the 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 institu-tion.
Where the competent authorities of the home Member State refuse to
communicate the information referred to in paragraph 2 to the compe-tent authorities of the host Member State, they shall give reasons fortheir 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, prepare
for the supervision of the credit institution in accordance with Article22 and if necessary indicate the conditions under which, in the interestof the general good, those activities must be carried on in the hostMember 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 communicationfrom the latter, the branch may be established and commence its activ-ities.
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 givewritten notice of the change in question to the competent authoritiesof the home and host Member States at least one month before making
the change so as to enable the competent authorities of the home
Member State to take a decision pursuant to paragraph 3 and thecompetent authorities of the host Member State to take a decision onthe change pursuant to paragraph 4.
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 procedurelaid down in paragraphs 1 to 5.They shall be governed, from theabovementioned date, by paragraph 6, and by Articles 18, 19, 22 and
29.
Article 21
Exercise ofthefreedomtoprovideservices
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 authoritiesof the home Member State, of the activities on the list in Annex Iwhich it intends to carry on.2000L0012 — EN — 11.02.2003 — 002.001 — 26
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2.The competent authorities of the home Member State shall,
within one month of receipt of the notification mentioned in paragraph1, send that 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
PowerofthecompetentauthoritiesofthehostMember State
1.Host Member States may, for statistical purposes, require that all
credit institutions having branches within their territories shall reportperiodically on their activities in those host Member States to the
competent 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 fromother Member States provide the same information as they requirefrom national 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 itsterritory is not complying with the legal provisions adopted in thatState pursuant to the provisions of this Directive involving powers of
the host Member State's competent authorities, those authorities shall
require the institution concerned to put an end to that irregular situa-tion.
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.The
competent 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 thosemeasures shall be communicated to the competent authorities of thehost 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 legalrules referred to in paragraph 2 in force in the host Member State, the
latter State may, after informing the competent authorities of the home
Member State, take appropriate measures to prevent or to punishfurther irregularities and, in so far as is necessary, to prevent that insti-tution from initiating further transactions within its territory.TheMember States shall ensure that within their territories it is possible toserve the legal documents necessary for these measures on credit insti-
tutions.
5.The provisions of paragraph 1 to 4 shall not affect the power of
host Member States to take appropriate measures to prevent or topunish irregularities committed within their territories which arecontrary to the legal rules they have adopted in the interest of the
general good.This shall include the possibility of preventing offending
institutions from initiating any further transactions within their terri-tories.
6.Any measure adopted pursuant to paragraph 3, 4 and 5 involving
penalties or restrictions on the exercise of the freedom to provide
services must be properly justified and communicated to the institutionconcerned.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, in
emergencies, take any precautionary measures necessary to protect theinterests of depositors, investors and others to whom services areprovided.The Commission and the competent authorities of the otherMember States concerned must be informed of such measures at theearliest opportunity.2000L0012 — EN — 11.02.2003 — 002.001 — 27
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The Commission may, after consulting the competent authorities of the
Member States concerned, decide that the Member State in questionmust 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 topunish irregularities committed within their territories.This shall
include the possibility of preventing institutions from initiating further
transactions 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 initi-ating further transactions within its territory and to safeguard theinterests of depositors.Every two years the Commission shall submita report on such 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 with
paragraph 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 through
all available means of communication in the host Member State,subject to any rules governing the form and the content of such adver-tising adopted in the interest of the general good.
TITLE IV
RELATIONSWITHTHIRDCOUNTRIES
Article 23
Notificationofthesubsidiariesofthirdcountries'undertakingsand
conditionsofaccesstothemarketsofthesecountries
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 accordancewith Article 11.
2.The Member States shall inform the Commission of any general
difficulties encountered by their credit institutions in establishing them-selves or carrying on banking activities in a third country.
3.The Commission shall periodically draw up a report examining
the treatment accorded to Community credit institutions in third coun-tries, in the terms referred to in paragraphs 4 and 5, as regards
establishment and the carrying-on of banking activities, and the acqui-
sition of holdings in third-country credit institutions.The Commissionshall submit those reports to the Council, together with any appropriateproposals.
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 institutions effec-tive market access comparable to that granted by the Community tocredit institutions from that third country, the Commission may submit2000L0012 — EN — 11.02.2003 — 002.001 — 28
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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 qualified
majority.
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 information
that Community credit institutions in a third country do not receivenational treatment offering the same competitive opportunities as areavailable to domestic credit institutions and the conditions of effectivemarket 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, in accor-
dance with the procedure laid down in Article 60(2), that the competentauthorities of the Member States must limit or suspend their decisionsregarding requests pending at the moment of the decision or futurerequests for authorisations and the acquisition of holdings by direct orindirect parent undertakings governed by the laws of the third country
in question.The duration of the measures referred to may not exceed
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 proposalfrom the Commission, decide by a qualified majority whether themeasures shall be continued.
Such limitations or suspension may not apply to the setting up of subsi-
diaries by credit institutions or their subsidiaries duly authorised in theCommunity, or to the acquisition of holdings in Community creditinstitutions 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
inform it 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 laws
of 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 Communitycredit institution such that the latter would become its subsidiary.
This obligation to provide information shall lapse whenever an agree-
ment is reached with the third country referred to in paragraph 4 or 5or 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 Commu-
nity's obligations under any international agreements, bilateral or
multilateral, governing the taking-up and pursuit of the business ofcredit institutions.
Article 24
Branchesofcreditinstitutionshavingtheirheadofficesoutsidethe
Community
1.Member States shall not apply to branches of credit institutions
having their head office outside the Community, when commencing or
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 institution2000L0012 — EN — 11.02.2003 — 002.001 — 29
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having its head office outside the Community identical treatment
throughout the territory of the Community.
Article 25
Cooperation with third countries' competent authorities regarding
supervisiononaconsolidatedbasis
1.The Commission may submit proposals to the Council, either at
the request of a Member State or on its own initiative, for the negotia-
tion of agreements with one or more third countries regarding themeans 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
of their consolidated financial situations, of credit institutions orfinancial holding companies situated in the Community and whichhave as subsidiaries credit institutions or financial institutions situ-ated outside the Community, or holding participation in such
institutions,
— 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 andwhich have 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
and the resulting situation.
TITLE V
PRINCIPLES AND TECHNICAL INSTRUMENTS FOR
PRUDENTIALSUPERVISION
CHAPTER 1
PRINCIPLESOFPRUDENTIALSUPERVISION
Article 26
CompetenceofcontrolofthehomeMemberState
1.The prudential supervision of a credit institution, including that of
the activities it carries on accordance with Articles 18 and 19, shall be
the responsibility of the competent authorities of the home MemberState, without prejudice to those provisions of this Directive whichgive responsibility to the authorities of the host Member State.
2.Paragraph 1 shall not prevent supervision on a consolidated basis
pursuant to this Directive.
Article 27
CompetenceofthehostMember 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 coor-
dination.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 not2000L0012 — EN — 11.02.2003 — 002.001 — 30
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provide for discriminatory or restrictive treatment based on the fact that
a credit institution is authorised in another Member State.
Article 28
Collaborationconcerningsupervision
The competent authorities of the Member States concerned shall colla-
borate closely in order to supervise the activities of credit institutionsoperating, in particular by having established branches there, in one ormore Member States other than that in which their head offices are
situated.They shall supply one another with all information concerning
the management and ownership of such credit institutions that is likelyto facilitate their supervision and the examination of the conditions fortheir authorisation, and all information likely to facilitate the moni-toring 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-spot verification of branches established in another
Member 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 personsthey appoint 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 ofthe 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 their respon-sibilities under this Directive, on-the-spot verifications of branches
established within their territory.
Article 30
Exchangeofinformationandprofessionalsecrecy
1.The Member States shall provide that all persons working or who
have worked for the competent authorities, as well as auditors orexperts acting on behalf of the competent authorities, shall be bound
by the obligation of professional secrecy.This means that no confiden-
tial information which they may receive in the course of their dutiesmay be divulged to any person or authority whatsoever, except insummary or collective form, such that individual institutions cannot beidentified, 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 doesnot concern third parties involved in attempts to rescue that credit insti-tution may 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 accordancewith this Directive and with other Directives applicable to credit insti-
tutions.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 third
countries or with authorities or bodies of third countries as defined inparagraphs 5 and 6 only if the information disclosed is subject to guar-antees of professional secrecy at least equivalent to those referred to inthis Article.Such exchange of information must be for the purpose ofperforming the supervisory task of the authorities or bodies mentioned.2000L0012 — EN — 11.02.2003 — 002.001 — 31
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Where the information originates in another Member State, it may not
be disclosed without the express agreement of the competent authori-ties which have disclosed it and, where appropriate, solely for the
purposes for 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, largeexposures, and administrative and accounting procedures andinternal 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 thefield of credit institutions.
5.Paragraphs 1 and 4 shall not preclude the exchange of informa-
tion 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 finan-
cial organisations and insurance companies and the authoritiesresponsible for the supervision of financial markets,
— bodies involved in the liquidation and bankruptcy of credit institu-
tions 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 information
necessary to the exercise of their functions.The information received
shall 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 undertak-
ings, 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 aremet:
— the information shall be for the purpose of performing the supervi-
sory task referred to in the first subparagraph,
— information received in this context shall be subject to the condi-
tions 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, solelyfor 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 receive informa-tion 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 competent2000L0012 — EN — 11.02.2003 — 002.001 — 32
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authorities 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 subpar-
agraph 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 condi-
tions 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
for the 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 with
the aid, in view of their specific competence, of persons appointed for
that purpose and not employed in the public sector, the possibility ofexchanging information provided for in the first subparagraph may beextended 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 commu-nicate to the competent authorities which have disclosed theinformation, the names and precise responsibilities of the persons to
whom 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
receive information 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 trans-
mitting:
— to central banks and other bodies with a similar function in their
capacity as monetary authorities,
— where appropriate to other public authorities responsible for over-
seeing payment systems,
information intended for the performance of their task, nor shall it
prevent such authorities or bodies from communicating to the compe-
tent authorities such information as they may need for the purposes ofparagraph 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 para-
graphs 1 and 4, the Member States may, by virtue of provisions laiddown by law, authorise the disclosure of certain information to otherdepartments of their central government administrations responsiblefor legislation on the supervision of credit institutions financial institu-
tions, 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-spot verification referred to in Article 29(1) and (2) may never be
disclosed in the cases referred to in this paragraph except with the
express consent of the competent authorities which disclosed the infor-mation or of the competent authorities of the Member State in whichon-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 the2000L0012 — EN — 11.02.2003 — 002.001 — 33
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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
of professional secrecy imposed in paragraph 1.The Member States
shall, however, ensure that information received under paragraph 2may not be disclosed in the circumstances referred to in this paragraphwithout the express consent of the competent authorities whichdisclosed it.
Article 31
Duty of persons responsible for the legal control of annual and
consolidatedaccounts
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 adminis-
trative provisions which lay down the conditions governing
authorisation or which specifically govern pursuit of the activ-ities 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 deci-
sions of which he becomes aware in the course of carrying out atask as described in (a) in an undertaking having close links
resulting from a control relationship with the credit institution
within which he 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
any fact or decision referred to in paragraph 1 shall not constitute abreach of any restriction on disclosure of information imposed bycontract or by any legislative, regulatory or administrative provisionand shall not involve such persons in liability of any kind.
Article 32
Power ofsanctionofthecompetentauthorities
Without prejudice to the procedures for the withdrawal of authorisa-
tions and the provisions of criminal law, the Member States shall
provide that their respective competent authorities may, as against
credit institutions or those who effectively control the business of creditinstitutions which breach laws, regulations or administrative provisionsconcerning the supervision or pursuit of their activities, adopt orimpose in respect of them penalties or measures aimed specifically atending observed breaches or the causes of such breaches.2000L0012 — EN — 11.02.2003 — 002.001 — 34
(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 33
Righttoapplytothecourts
Member States shall ensure that decisions taken in respect of a credit
institution in pursuance of laws, regulations and administrative provi-sions adopted in accordance with this Directive may be subject to theright to apply to the courts.The same shall apply where no decision istaken within six months of its submission in respect of an applicationfor 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
TECHNICALINSTRUMENTSOFPRUDENTIALSUPERVISION
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 Communitylegislation concerning the prudential supervision of an operative credit
institution which uses the term or refers to the concept of own funds, it
shall 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 theauditing of the accounts and if it is proved to the satisfaction of
the competent authorities that the amount thereof has been evalu-
ated in accordance with the principles set out in Directive 86/635/EEC and is 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;
(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 theborrowers of certain institutions organised as funds, as referred toin 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;2000L0012 — EN — 11.02.2003 — 002.001 — 35
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(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;
(13) subordinated claims and instruments referred to in Article 35 and
Article 36(3) which a credit institution holds in respect of credit
and financial institutions in which it has holdings exceeding 10 %of the capital in each case;
(14) holdings in other credit and financial institutions of up to 10 % of
their capital, the subordinated claims and the instruments referredto in Article 35 and Article 36(3) which a credit institution holdsin respect of credit and financial institutions other than those
referred to in points 12 and 13 of this subparagraph in respect of
the amount of the total of such holdings, subordinated claims andinstruments which exceed 10 % of that credit institution's ownfunds calculated before the deduction of items in points 12 to 16of this subparagraph;
(15) participations within the meaning of Article 1(9) which a credit
institution holds in
— insurance undertakings within the meaning of Article 6 of
Directive 73/239/EEC, Article 6 of Directive 79/267/EEC orArticle 1(b) of Directive 98/78/EC of the European Parliamentand of the Council (
1),
— reinsurance undertakings within the meaning of Article 1(c) of
Directive 98/78/EC,
— insurance holding companies within the meaning of Article
1(i) of Directive 98/78/EC;
(16) each of the following items which the credit institution holds in
respect of the entities defined in point (15) in which it holds a
participation:
— instruments referred to in Article 16(3) of Directive 73/239/
EEC,
— instruments referred to in Article 18(3) of Directive 79/267/
EEC.
Where shares in another credit institution, financial institution, insur-
ance or reinsurance undertaking or insurance holding company areheld temporarily for the purposes of a financial assistance operation
designed to reorganise and save that entity, the competent authority
may waive the provisions on deduction referred to in points 12 to 16.
As an alternative to the deduction of the items referred to in points 15
and 16, Member States may allow their credit institutions to apply
mutatis mutandis methods 1, 2, or 3 of Annex I to Directive 2002/87/
EC.Method 1 (Accounting consolidation) shall only be applied if thecompetent authority is confident about the level of integrated manage-ment and internal control regarding the entities which would be
included in the scope of consolidation.The method chosen shall be
applied in a consistent manner over time.
Member States may provide that for the calculation of own funds on a
stand-alone basis, credit institutions subject to supervision on a conso-
lidated basis in accordance with Chapter 3 or to supplementary
supervision in accordance with Directive 2002/87/EC, need not deductthe items referred to in points 12 to 16 which are held in credit institu-tions, financial institutions, insurance or reinsurance undertakings orinsurance holding companies, which are included in the scope of
consolidated or supplementary supervision.
This provision shall apply to all the prudential rules harmonised by
Community acts.2000L0012 — EN — 11.02.2003 — 002.001 — 36
(1) OJ L 330, 5.12.1998, p. 1.▼M2
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3.The concept of own funds as defined in points (1) to (8) of para-
graph 2 embodies a maximum number of items and amounts.The useof those items and the fixing of lower ceilings, and the deduction of
items other than those listed in points (9) to (13) of paragraph 2 shall
be left to the discretion of the Member States.Member States shallnevertheless be obliged to consider increased convergence with a viewto 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 deem neces-sary.Not later than 1 January 1998, the European Parliament and theCouncil shall, acting in accordance with the procedure laid down inArticle 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 avail-
able to a credit institution for unrestricted and immediate use to coverrisks or losses as soon as these occur.The amount must be net of any
foreseeable tax charge at the moment of its calculation or be suitably
adjusted in so far as such tax charges reduce the amount up to whichthese items may be applied to cover risks or losses.
Article 35
Otheritems
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 institu-
tion, verified by independent auditors, made known to the
competent 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 subordi-
nated 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, whilstleaving 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
Otherprovisionsconcerningownfunds
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 legalcommitments of the members of those cooperative societies to makeadditional non-refundable payments should the credit institution incura loss, in which case it must be possible to demand those paymentswithout delay.2000L0012 — EN — 11.02.2003 — 002.001 — 37
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The joint and several commitments of borrowers in the case of credit
institutions organised as funds shall be treated in the same way as thepreceding 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 to
such 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
own funds, if binding agreements exist under which, in the event ofthe bankruptcy or liquidation of the credit institution, they rank afterthe claims of all other creditors and are not to be repaid until all otherdebts 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 debtis not fixed, they shall be repayable only subject to five years'notice unless the loans are no longer considered as own funds orunless the prior consent of the competent authorities is specifically
required for early repayment.The competent authorities may grant
permission for the early repayment of such loans provided therequest is made at the initiative of the issuer and the solvency ofthe credit institution in question 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 repaymentdate;
(d) the loan agreement must not include any clause providing that in
specified circumstances, other than the winding-up of the creditinstitution, the debt will become repayable before the agreed repay-ment date.
Article 37
Calculationofownfundsonaconsolidatedbasis
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 ownfunds:
— 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 ofDirective 83/349/EEC.
2.Where the above are debit (‘positive’) items, they must be
deducted in the calculation of consolidated own funds.2000L0012 — EN — 11.02.2003 — 002.001 — 38
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Article 38
Deductionsandlimits
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
Provisionofprooftothecompetentauthorities
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 compe-
tent authorities.
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 under-
takings shall be calculated on a consolidated basis in accordance with
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
require the calculation of a subconsolidated or unconsolidated ratio inrespect of that parent undertaking and of any of its subsidiaries whichare subject to authorisation and supervision by them.Where such moni-toring 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 notless than twice each year, either by credit institutions themselves,which shall communicate the results and any component data requiredto the competent authorities, or by the competent authorities, using data
supplied 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
Thenumerator:ownfunds
Own funds as defined in this Directive shall form the numerator of the
solvency ratio.2000L0012 — EN — 11.02.2003 — 002.001 — 39
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Article 42
Thedenominator:risk-adjustedassetsandoff-balance-sheetitems
1.Degrees of credit risk, expressed as percentage weightings, shall
be assigned to asset items in accordance with Articles 43 and 44, andexceptionally Articles 45, 62 and 63.The balance-sheet value of eachasset shall then be multiplied by the relevant weighting to produce a
risk-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 counter-
party default shall be calculated by means of one of the two methodsset out in Annex III.Those costs shall be multiplied by the relevantcounterparty weightings in Article 43(1), except the 100 % weightingsas provided for there shall be replaced by 50 % weightings to producerisk-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 denominatorof the solvency ratio.
Article 43
Riskweightings
1.The following weightings shall be applied to the various cate-
gories of asset items, although the competent authorities may fixhigher weightings 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 denominatedand funded in the national currency common to the guarantorand the borrower;
(7) asset items secured to the satisfaction of the competent authori-
ties, by collateral in the form of Zone A central government orcentral bank securities or securities issued by the EuropeanCommunities or by cash deposits placed with the lending insti-
tution or by certificates of deposit or similar instruments 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;2000L0012 — EN — 11.02.2003 — 002.001 — 40
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(6) asset items constituting claims carrying the explicit guarantees
of Zone A regional governments or local authorities, subjectto Article 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 issuedby 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 institu-
tions;
(11) asset items secured, to the satisfaction of the competent autho-
rities, by collateral in the form of securities issued by the EIBor 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 loansfully and completely secured, to the satisfaction of the compe-tent 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 orlet by 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 legal
framework in force in each Member State, that they are equiva-
lent in the light of the credit risk.Without prejudice to thetypes of securities which may be included in and are capableof fulfilling 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 definedin the 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 mort-
gage-asset items is held either directly by investors inmortgage-backed securities or on their behalf by a trusteeor mandated representative in the same proportion to the
securities which they hold;
(2) prepayments and accrued income: these assets shall be subject
to the weighting corresponding to the counterparty where acredit institution is able to determine it in accordance withDirective 86/635/EEC.Otherwise, where it is unable to deter-mine the counterparty, it shall apply a flat-rate weighting of50 %;2000L0012 — EN — 11.02.2003 — 002.001 — 41
(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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(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 Direc-
tive 86/635/EEC;
(6) holdings of shares, participation and other components of the
own funds of other credit institutions which are not deducted
from 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 grouped
according to the risk groupings set out in Annex II.The full value of
the full-risk items shall be taken into account, 50 % of the value of themedium-risk items and 20 % of the medium/low-risk items, while thevalue of low-risk items shall be set at zero.The second stage shall beto multiply the off-balance-sheet values, adjusted as described above,by the weightings attributable to the relevant counterparties in accor-
dance with the treatment of asset items prescribed in paragraph 1 and
Article 44.In the case of asset sale and repurchase agreements andoutright forward purchases, the weightings shall be those attaching tothe assets in question and not to the counterparties to the transactions.The portion of 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 III
over-the-counter (OTC) contracts cleared by a clearing house where the
latter acts as the legal counterparty and all participants fully collatera-lise on a daily basis the exposure they present to the clearing house,thereby providing a protection covering both the current exposure andthe potential future exposure.The competent authorities must be satis-fied that the posted collateral gives the same level of protection as
collateral which complies with paragraph 1(a)(7) and that the risk of a
build-up of the clearing house's exposures beyond the market value ofposted collateral is eliminated.Member States shall inform theCommission 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 guar-
antor rather than the counterparty.Where the potential exposure
arising from off-balance-sheet transactions is fully and completelysecured, to the satisfaction of the competent authorities, by any of theasset items recognised as collateral in paragraph 1(a)(7) and (b)(11),weightings of 0 % or 20 % shall apply depending on the collateral inquestion.
The Member States may apply a 50 % weighting to off-balance-sheet
items which are sureties or guarantees having the character of creditsubstitutes and which are fully guaranteed, to the satisfaction of thecompetent authorities, by mortgages meeting the conditions set out inparagraph 1(c)(1), subject to the guarantor having a direct right tosuch collateral.2000L0012 — EN — 11.02.2003 — 002.001 — 42
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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 apply
only to that part which is guaranteed or which is fully covered by the
collateral.
Article 44
Weighting of claims for regional governments or local authorities
oftheMember 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 authori-
ties and 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 claimson and off-balance-sheet items incurred on behalf of the regionalgovernments and local authorities in question and claims on others
and off-balance-sheet items incurred on behalf of others and guaranteed
by those regional governments and local authorities or secured, to thesatisfaction of the competent authorities concerned, by collateral in theform of securities issued by those regional governments or local autho-rities.
2.The Member States shall notify the Commission if they believe a
zero-weighting to be justified according to the criteria laid down in
paragraph 1.The Commission shall circulate that information.Other
Member States may offer the credit institutions under the supervisionof their competent authorities the possibility of applying a zero-weighting where they undertake business with the regional govern-ments or local authorities in question or where they hold claimsguaranteed by the latter, including collateral in the form of securities.
Article 45
Otherweighting
1.Without prejudice to Article 44(1) the Member States may apply
a weighting of 20 % to asset items which are secured, to the satisfac-tion of the competent authorities concerned, by collateral in the form of
securities issued by Zone A regional governments or local authorities,
by deposits placed with Zone A credit institutions other than thelending institution, or by certificates of deposit or similar instrumentsissued 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 intheir home Member States and subject to close supervision by the
competent authorities where those asset items are fully and completely
secured, 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 adequate collat-eral.
3.The Member States shall notify the Commission of any provi-
sions adopted pursuant to paragraphs 1 and 2 and of the grounds for
such provisions.The Commission shall forward that information tothe Member States.The Commission shall periodically examine theimplications of those provisions in order to ensure that they do notresult in any distortions of competition.
Article 46
Administrativebodiesandnon-commercial undertakings
For the purposes of Article 43 (1)(b), the competent authorities may
include within the concept of regional governments and local authori-ties non-commercial administrative bodies responsible to regionalgovernments or local authorities or authorities which, in the view of2000L0012 — EN — 11.02.2003 — 002.001 — 43
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the competent authorities, exercise the same responsibilities as regional
and local authorities.
The competent authorities may also include within the concept of
regional governments and local authorities, churches and religiouscommunities constituted in the form of a legal person under publiclaw, in so far as they raise taxes in accordance with legislation confer-ring on them the right to do so.However, in this case the option set out
in Article 44 shall not apply.
Article 47
Solvencyratio 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 to
restore the ratio to the agreed minimum as quickly as possible.
Section 3
Large exposures
Article 48
Reportingoflarge 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 toor exceeds 10 % of its own funds.
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, inaccordance 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 respectto 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 paragraph2 may be reduced to twice a year for the exposures referred to in
Article 49(7)(e) and (i), and also in paragraphs 8, 9 and 10.
4.The competent authorities shall require that every credit institu-
tion have sound administrative and accounting procedures andadequate internal control mechanisms for the purpose of identifyingand recording all large exposures and subsequent changes to them, as
defined and required by this Directive, and for that of monitoring those
exposures in the 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
Limitsonlarge 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 in2000L0012 — EN — 11.02.2003 — 002.001 — 44
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paragraph 1 shall be reduced to 20 %.Member States may, however,
exempt the exposures incurred to such clients from the 20 % limit ifthey provide for specific monitoring of such exposures by other
measures or procedures.They shall inform the Commission and the
Banking Advisory Committee of the content of such measures orprocedures.
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 an
exceptional 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 limitedperiod of 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 orto its own subsidiaries, in so far as those undertakings are covered bythe supervision on a consolidated basis to which the credit institutionitself is 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 expo-
sures 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;
(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 the
borrowers;
(f) asset items and other exposures 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 by theEuropean Communities or by Member State regional or localauthorities for which Article 44 lays down a zero weighting forsolvency purposes;
(g) asset items and other exposures secured, to the satisfaction of the
competent authorities, by collateral in the form of cash depositsplaced with the lending institution or with a credit institutionwhich is 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 consti-tuting such 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 oneyear or less, and secured in accordance with the same paragraph;2000L0012 — EN — 11.02.2003 — 002.001 — 45
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(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 compa-
nies referred to in Article 51(3) up to 40 % of the own funds ofthe credit institution acquiring such a holding;
(n) asset items constituting claims on regional or central credit institu-
tions with which the lending institution is associated in a networkin accordance with legal or statutory provisions and which areresponsible, 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 creditinstitution itself, its parent company or one of their subsidiaries,or by the client or group of connected clients in question.Thesecurities used as collateral must be valued at market price, havea value 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 competent autho-rities of the Member State of origin of the credit institution, for theestablishment of an objective price such that the excess value of
the securities may be verified at any time.The excess value
required shall be 100 % it shall, however, be 150 % in the caseof 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.Securities
used 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 residen-
tial housing companies, operating in accordance with the Finnish
Housing Company Act of 1991 or subsequent equivalent legisla-tion and leasing transactions under which the lessor retains fullownership of the residential property leased for as long as thelessee has not exercised his option to purchase, in all cases up to
50 % of the value of the residential property concerned.The value
of the property shall be calculated, to the satisfaction of thecompetent authorities, on the basis of strict valuation standardslaid down by law, regulation or administrative provisions.Valua-tion shall be carried out at least once a year.For the purposes ofthis point residential property shall mean a residence to be occu-
pied or let 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
are given for their members by mutual guarantee schemes posses-
sing the 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 distor-tions 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 onMember State regional and local authorities and to other exposures toor guaranteed by such authorities; subject to the conditions laid downin Article 44, however, Member States may reduce that rate to 0 %.2000L0012 — EN — 11.02.2003 — 002.001 — 46
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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 one
but not more than three years and a weighting of 50 % to asset items
constituting claims on credit institutions with a maturity of more thanthree 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
on a market made up of professional operators and are subject to daily
quotation on that market, or the issue of which was authorised by thecompetent authorities of the Member State of origin of the issuingcredit institutions.In no case may any of these items constitute ownfunds.
10.By way of derogation from paragraphs 7(i) and 9, Member
States may apply a weighting of 20 % to asset items constitutingclaims on and other exposures to credit institutions, regardless of theirmaturity.
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 the
conditions 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 competent
authorities,
— treat the exposure as having been incurred to the third party rather
than to the client, if the exposure defined in paragraph 7(o) is guar-anteed 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 interbank
exposures provided for in paragraphs 7(i), 9 and 10.The Council shalldecide on any changes to be made on a proposal from the Commission.
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 48and 49 or in any other Community provision applicable to this areashall 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 to
this area shall be monitored on a consolidated basis in accordance with
Articles 52 to 56.
3.Member States may waive monitoring on an individual or
subconsolidated basis of compliance with the obligations imposed inArticles 48 and 49 or in any other Community provision applicable to
this area by a credit institution which, as a parent undertaking, is
subject to monitoring on a consolidated basis and by any subsidiary ofsuch a credit institution which is subject to their authoritisation andsupervision and is covered by monitoring on a consolidated basis.
Member States also waive such monitoring where the parent under-
taking is a financial holding company established in the same Member
State as the credit institution, provided that company is subject to thesame monitoring 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.2000L0012 — EN — 11.02.2003 — 002.001 — 47
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Section 4
Qualifying holdings outside the financial sector
Article 51
Limitstonon-financialqualifyingholdings
1.No credit institution may have a qualifying holding the amount of
which exceeds 15 % of its own funds in an undertaking which isneither a credit institution, nor a financial institution, nor an under-taking carrying on an activity referred to in the second subparagraph
of Article 43(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 exceed60 % of its own funds.
3.The Member States need not apply the limits laid down in para-
graphs 1 and 2 to holdings in insurance companies as defined in
Directive 73/239/EEC and Directive 79/267/EEC, or in reinsurance
companies as defined in Directive 98/78/EC.
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 asqualifying holdings for the purpose of calculating the limits laid downin paragraphs 1 and 2.Shares which are not financial fixed assets as
defined in Article 35(2) of Directive 86/635/EEC shall not be included.
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 ownfunds 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 theyprovide that 100 % of the amounts by which a credit institution's quali-
fying holdings exceed those limits must be covered by own funds and
that the latter shall not be included in the calculation of the solvencyratio.If both the limits laid down in paragraphs 1 and 2 are exceeded,the amount to be covered by own funds shall be the greater of theexcess amounts.
CHAPTER 3
SUPERVISIONONACONSOLIDATEDBASIS
Article 52
Supervisiononaconsolidatedbasisofcredit institutions
1.Every credit institution which has a credit institution or a finan-
cial institution as a subsidiary or which holds a participation in suchinstitutions shall be subject, to the extent and in the manner prescribed
in Article 54, to supervision on the basis of its consolidated financial
situation.Such supervision shall be exercised at least in the areasreferred 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 themanner prescribed in Article 54, to supervision on the basis of theconsolidated financial situation of that financial holding company.
Such supervision shall be exercised at least in the areas referred to in
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lidation of the financial situation of the financial holding companyshall not in any way imply that the competent authorities are requiredto play a supervisory role in relation to the financial holding companyon a stand-alone basis. ◄2000L0012 — EN — 11.02.2003 — 002.001 — 48
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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 the
necessary 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 isless than the smaller of the following two amounts: EUR 10 millionor 1 % 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 exer-
cising supervision on a consolidated basis, the consolidation of thefinancial situation of the undertaking that should be included wouldbe inappropriate or misleading as far as the objectives of the super-vision 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 of
paragraph 3, the competent authorities of the Member State in whichthat credit institution subsidiary is situated may ask the parent under-taking for information which may facilitate their supervision of thatcredit institution.
5.Supervision of solvency, and of the adequacy of own funds to
cover market risks and control of large exposures shall be exercised
on a consolidated basis in accordance with this Article and Articles 53
to 56.Member States shall adopt any measures necessary, whereappropriate, to include financial holding companies in consolidatedsupervision, in accordance with paragraph 2.
Compliance with the limits set in Article 51(1) and (2) shall be super-
vised and controlled on the basis of the consolidated or subconsolidatedfinancial situation of the credit institution.
6.The competent authorities shall ensure that, in all the undertak-
ings included in the scope of the supervision on a consolidated basis
that is exercised over a credit institution in implementation of para-
graphs 1 and 2, there are adequate internal control mechanisms for theproduction of any data and information which would be relevant for thepurposes of supervision on a consolidated basis.
7.Without prejudice to specific provisions contained in other direc-
tives, 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 includedin the supervision on a consolidated basis of the credit institution whichis the parent company.The same exemption option shall be allowedwhere the parent undertaking is a financial holding company which
has its head office in the same Member State as the credit institution,
provided that it is subject to the same supervision as that exercisedover credit institutions, and in particular the standards laid down inparagraph 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,make use of the provision in the last subparagraph of Article 3(2).2000L0012 — EN — 11.02.2003 — 002.001 — 49
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8.Where a credit institution the parent of which is a credit institu-
tion has been authorised and is situated in another Member State, thecompetent authorities which granted that authorisation shall apply the
rules 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 under-taking which is a credit institution may, by bilateral agreement,
delegate their responsibility for supervision to the competent authorities
which authorised and supervise the parent undertaking so that theyassume responsibility for supervising the subsidiary in accordancewith this Directive.The Commission must be kept informed of theexistence and content of such agreements.It shall forward such infor-mation to the competent authorities of the other Member States and to
the Banking Advisory Committee.
10.Member States shall provide that their competent authorities
responsible for exercising supervision on a consolidated basis may askthe subsidiaries of a credit institution or a financial holding companywhich are not included within the scope of supervision on a consoli-
dated basis for the information referred to in Article 55.In such a
case, the procedures for transmitting and verifying the informationlaid down in that Article shall apply.
Article 53
Competent authorities responsible for exercising supervision on a
consolidatedbasis
1.Where a parent undertaking is a credit institution, supervision on
a consolidated basis shall be exercised by the competent authorities that
authorised it under Article 4.
2.Where the parent of a credit institution is a financial holding
company, supervision on a consolidated basis shall be exercised bythe competent 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, super-vision 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 compe-tent authorities of the Member States concerned (including those ofthe Member State in which the financial holding company was set up)shall seek to reach agreement as to who amongst them will exercise
supervision on a consolidated basis.In the absence of such agreement,
supervision on a consolidated basis shall be exercised by the competentauthorities that authorised the credit institution with the greatestbalance-sheet total; if that figure is the same, supervision on a consoli-dated basis shall be exercised by the competent authorities which firstgave the authorisation 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 para-graph 2.
4.The agreements referred to in the third subparagraph of paragraph
2 and in paragraph 3 shall provide for procedures for cooperation and
for the transmission of information such that the objectives of supervi-
sion on 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 institu-tions, Member States shall take the requisite measures to organisecoordination between such authorities.2000L0012 — EN — 11.02.2003 — 002.001 — 50
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Article 54
Formandextentofconsolidation
1.The competent authorities responsible for exercising supervision
on a consolidated basis must, for the purposes of supervision, require
full consolidation of all the credit institutions and financial institutions
which 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 under-taking holding a share of the capital is limited to that share of thecapital because of the liability of the other shareholders or members
whose solvency is satisfactory.The liability of the other shareholders
and members must be clearly established, if necessary by means offormal signed commitments.
In the case where undertakings are linked by a relationship within the
meaning of Article 12 (1) of Directive 83/349/EEC, the competent
authorities shall determine how consolidation is to be carried out.
2.The competent authorities responsible for carrying out supervision
on a consolidated basis must, in order to do so, require the proportionalconsolidation of participations in credit institutions and financial insti-tutions managed by an undertaking included in the consolidation
together with one or more undertakings not included in the consolida-
tion, where those undertakings' liability is limited to the share of thecapital 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 deter-mine whether and how consolidation is to be carried out.In particular,
they may permit or require use of the equity method.That method shall
not, however, constitute inclusion of the undertakings concerned insupervision on a consolidated basis.
4.Without prejudice to paragraphs 1, 2 and 3, the competent autho-
rities shall determine whether and how consolidation is to be carriedout in the following cases:
— where, in the opinion of the competent authorities, a credit institu-
tion exercises a significant influence over one or more creditinstitutions or financial institutions, but without holding a participa-tion or other capital 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.
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 included
in consolidations in the cases, and in accordance with the methods laid
down in paragraphs 1 to 4 of this Article.
Article 54a
Managementbodyoffinancialholdingcompanies
The Member States shall require that persons who effectively direct the
business of a financial holding company are of sufficiently good reputeand have sufficient experience to perform those duties.2000L0012 — EN — 11.02.2003 — 002.001 — 51
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Article 55
Information to be supplied by mixed-activity holding companies
andtheir subsidiaries
1.Pending further coordination of consolidation methods, Member
States shall provide that, where the parent undertaking of one or more
credit institutions is a mixed-activity holding company, the competent
authorities responsible for the authorisation and supervision of thosecredit institutions shall, by approaching the mixed-activity holdingcompany and its subsidiaries either directly or via credit institutionsubsidiaries, require them to supply any information which would berelevant for the purpose of supervising the credit institution subsidi-
aries.
2.Member States shall provide that their competent authorities may
carry out, or have carried out by external inspectors, on-the-spotinspections to verify information received from mixed-activity holding
companies and their subsidiaries.If the mixed-activity holding
company or one of its subsidiaries is an insurance undertaking, theprocedure laid down in Article 56(4) may also be used.If a mixed-activity holding company or one of its subsidiaries is situated in aMember 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 the procedure laid down in Article 56(7).
Article 55a
Intra-grouptransactionswithmixed-activity holdingcompanies
Without prejudice to the provisions of Title V, Chapter 2, Section 3, of
this Directive, Member States shall provide that, where the parentundertaking of one or more credit institutions is a mixed-activityholding company, the competent authorities responsible for the super-vision of these credit institutions shall exercise general supervisionover transactions between the credit institution and the mixed-activity
holding company and its subsidiaries.
Competent authorities shall require credit institutions to have in place
adequate risk management processes and internal control mechanisms,including sound reporting and accounting procedures, in order to iden-
tify, measure, monitor and control transactions with their parent mixed-
activity holding company and its subsidiaries appropriately.Competentauthorities shall require the reporting by the credit institution of anysignificant transaction with these entities other than the one referred toin Article 48.These procedures and significant transactions shall be
subject to overview by the competent authorities.
Where these intra-group transactions are a threat to a credit institution's
financial position, the competent authority responsible for the supervi-sion of the institution shall take appropriate measures.
Article 56
Measurestofacilitate supervisiononaconsolidatedbasis
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 kindcovered in Article 52(10), from exchanging amongst themselves anyinformation which would be relevant for the purposes of supervisionin accordance with 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 compe-tent authorities of each Member State shall communicate to eachother all relevant information which may allow or aid the exercise ofsupervision on a consolidated basis.2000L0012 — EN — 11.02.2003 — 002.001 — 52
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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 the
competent authorities responsible for exercising such supervision to
ask the parent undertaking for any information which would be rele-vant for the purposes of supervision on a consolidated basis and totransmit it to these authorities.
3.Member States shall authorise the exchange between their compe-
tent authorities of the information referred to in paragraph 2, on the
understanding that, in the case of financial holding companies, finan-cial institutions or ancillary banking services undertakings, thecollection or possession of information shall not in any way implythat the competent authorities are required to play a supervisory rolein 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 understandingthat the collection or possession of information does not in any wayimply that the competent authorities play a supervisory role in relationto the mixed-activity holding company and those of its subsidiarieswhich are 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 areinsurance companies or other undertakings providing investmentservices which are subject to authorisation, the competent authorities
and the authorities entrusted with the public task of supervising insur-
ance undertakings or those other undertakings providing investmentservices shall cooperate closely.Without prejudice to their respectiveresponsibilities, those authorities shall provide one another with anyinformation likely to simplify their task and to allow supervision ofthe activity and overall financial situation of the undertakings they
supervise.
5.Information received, in the framework of supervision on a
consolidated basis, and in particular any exchange of informationbetween 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 conso-
lidated 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 Commis-sion.
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 authoritieswhich receive such a request must, within the framework of theircompetence, act upon it either by carrying out the verification them-selves, by allowing the authorities who made the request to carry itout, or by allowing an auditor or expert to carry it out. ►
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competent authority which made the request may, if it so wishes, parti-
cipate in the verification when it does not carry out the verificationitself.◄
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 financial
holding 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.Incertain cases, such measures may require the intervention of the courts.The competent authorities shall cooperate closely to ensure that the2000L0012 — EN — 11.02.2003 — 002.001 — 53
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abovementioned 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 is
not located at its head office.
Article 56a
Third-countryparentundertakings
Where a credit institution, the parent undertaking of which is a credit
institution or a financial holding company, the head office of which is
outside the Community, is not subject to consolidated supervision
under Article 52, the competent authorities shall verify whether thecredit institution is subject to consolidated supervision by a third-country competent authority which is equivalent to that governed bythe principles laid down in Article 52.The verification shall be carried
out by the competent authority which would be responsible for conso-
lidated supervision if the fourth subparagraph were to apply, at therequest of the parent undertaking or of any of the regulated entitiesauthorised in the Community or on its own initiative.That competentauthority shall consult the other competent authorities involved.
The Banking Advisory Committee may give general guidance as to
whether the consolidated supervision arrangements of competent autho-rities in third countries are likely to achieve the objectives ofconsolidated supervision as defined in this Chapter, in relation to credit
institutions, the parent undertaking of which has its head office outside
the Community.The Committee shall keep any such guidance underreview and take into account any changes to the consolidated supervi-sion arrangements applied by such competent authorities.
The competent authority carrying out the verification specified in the
second subparagraph shall take into account any such guidance.Forthis purpose the competent authority shall consult the Committeebefore taking a decision.
In the absence of such equivalent supervision, Member States shall
apply the provisions of Article 52 to the credit institution by analogy.
As an alternative, Member States shall allow their competent authori-
ties to apply other appropriate supervisory techniques which achievethe objectives of the supervision on a consolidated basis of credit insti-tutions.Those methods must be agreed upon by the competent
authority which would be responsible for consolidated supervision,
after consultation with the other competent authorities involved.Competent authorities may in particular require the establishment of afinancial holding company which has its head office in the Community,and apply the provisions on consolidated supervision to the consoli-dated position of that financial holding company.The methods must
achieve the objectives of consolidated supervision as defined in this
Chapter and must be notified to the other competent authoritiesinvolved and the Commission.
TITLE VI
BANKINGADVISORYCOMMITTEE
Article 57
CompositionandtasksoftheBankingAdvisoryCommittee
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 Direc-tive.Further it shall carry out the other tasks prescribed by thisDirective and shall assist the Commission in the preparation of newproposals to the Council concerning further coordination in the sphereof credit institutions.2000L0012 — EN — 11.02.2003 — 002.001 — 54
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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 parti-cipate in its meetings.The secretariat shall be provided by the
Commission.
5.The Banking Advisory Committee shall adopt its rules of proce-
dure and elect a chairman from among the representatives of MemberStates.It shall meet at regular intervals and whenever the situationdemands.The Commission may ask the Committee to hold an emer-
gency 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 other-wise.
Article 58
Examinationoftherequirementsforauthorisation
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
Observationratios
1.Pending subsequent coordination, the competent authorities shall,
for the purposes of observation and, if necessary, in addition to such
coefficients as may be applied by them, establish ratios between the
various assets and/or liabilities of credit institutions with a view tomonitoring their solvency and liquidity and the other measures whichmay 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
the first subparagraph and lay down the method to be applied in calcu-lating them.
Where appropriate, the Banking Advisory Committee shall be guided
by technical consultations between the supervisory authorities of the
categories 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
third 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
POWERSOFEXECUTION
Article 60
Technicaladaptations
1.Without prejudice, regarding own funds, to the report referred to
in the second subparagraph of Article 34(3), the technical adaptations2000L0012 — EN — 11.02.2003 — 002.001 — 55
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in the following areas shall be adopted in accordance with the proce-
dure laid down in paragraph 2:
— clarification of the definitions in order to take account in the appli-
cation 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 related
matters,
— 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 thatlist to take account of developments on financial markets,
— the areas in which the competent authorities must exchange infor-
mation 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
described in 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 of
specific 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 Deci-
sion 1999/468/EC shall apply, having regard to the provisions of
Article 8 thereof.
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
TRANSITIONALANDFINALPROVISIONS
CHAPTER 1
TRANSITIONALPROVISIONS
Article 61
TransitionalprovisionsregardingArticle 36
Denmark may allow its mortgage credit institutions organised as coop-
erative societies or funds before 1 January 1990 and converted intopublic limited liability companies to continue to include joint andseveral commitments of members, or of borrowers as referred to inArticle 36(1) claims on whom are treated in the same way as such jointand several commitments, in their own funds, subject to the following
limits:
(a) the basis for calculation of the part of joint and several commit-
ments of borrowers shall be the total of the items referred to inArticle 34(2)(1) and (2), minus those referred to in Article34(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 basisfor calculation.The basis for calculation may never exceed themaximum basis for calculation;2000L0012 — EN — 11.02.2003 — 002.001 — 56
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(c) the maximum basis for calculation shall, from 1 January 1997, be
reduced by half of the proceeds from any issue of new capital, asdefined 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, and
0 % after 1 January 2001, of the basis for calculation.
Article 62
TransitionalprovisionsregardingArticle 43
1.Until 31 December 2006, the competent authorities of the
Member States may authorise their credit institutions to apply a 50 %
risk weighting to loans fully and completely secured to their satisfac-tion by mortgages on offices or on multi-purpose commercialpremises situated within the territory of those Member States that allowthe 50 % risk weighting, 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 thetime the loan is made.The loan must be based on the lowerof the two valuations.
The property shall be revalued at least once a year by one
valuer.For loans not exceeding EUR 1 million and 5 % ofthe own 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 mort-
gage lending value, whichever is lower, in those MemberStates that have laid down rigorous criteria for the assessmentof the mortgage lending value in statutory or regulatory provi-sions.
The mortgage lending value shall means the value of the prop-
erty as determined by a valuer making a prudent assessment ofthe future marketability of the property by taking into accountlong-term sustainable aspects of the property, the normal andlocal market conditions, the current use and alternative appro-priate uses of the property.Speculative elements shall not be
taken into account in the assessment of the mortgage lending
value.The mortgage lending value shall be documented n atransparent and clear manner.
At least every three years or if the market falls by more than
10 % the mortgage lending value and in particular the under-
lying 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 awilling seller and an arm's-length buyer on the date of valuation,it being assumed that the property is publicly exposed to themarket, that market conditions permit orderly disposal and that anormal period, having regard to the nature of the property, is
available for the negotiation of the sale;
(ii) the 100 % risk weighting applies to the part of the loan that
exceeds the limits set out in (i);2000L0012 — EN — 11.02.2003 — 002.001 — 57
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(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 % risk
weighting 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 % risk weighting to the loans outstanding on21 July 2000 provided that the conditions listed in this paragraph arefulfilled.In this case the property shall be valued according to theassessment 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 bound
to 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 in accor-dance 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 usethey make of this paragraph.
3.Article 43(3) shall not affect the competent authorities' recogni-
tion 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.
Article 63
TransitionalprovisionsregardingArticle 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 to
fall below the level reached before that objective has been attained.Any fluctuation should be temporary and the competent authoritiesshould be apprised 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 institutions2000L0012 — EN — 11.02.2003 — 002.001 — 58
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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 latter
must approach the level prescribed in Article 47(1) by successive
stages according to the method described in paragraph 1 of this Article.
Article 64
TransitionalprovisionsregardingArticle 49
1.If, on 5 February 1993, a credit institution had already incurred
an exposure or exposures exceeding either the large exposure limit orthe aggregate large exposure limit laid down in Article 49, the compe-
tent authorities shall require the credit institution concerned to take
steps to have that exposure or those exposures brought within the limitslaid down in Article 49.
2.The process of having such an exposure or exposures brought
within authorised limits shall be devised, adopted, implemented andcompleted within the period which the competent authorities considerconsistent with the principle of sound administration and fair competi-
tion.The competent authorities shall inform the Commission and the
Banking Advisory Committee of the schedule for the general processadopted.
3.A credit institution may not take any measure which would cause
the exposures referred to in paragraph 1 to exceed their level on 5February 1993
4.The period applicable under paragraph 2 shall expire no later than
31 December 2001.Exposures with a longer maturity, for which thelending institution is bound to observe the contractual terms, may becontinued 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 time
limit 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,Member States may extend the time limits laid down in paragraph 5by five years.Member States that avail themselves of the optionprovided for in this paragraph shall take steps to prevent distortions of
competition and shall inform the Commission and the Banking Advi-
sory 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 oflarge 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 institutionconsisting of mortgage loans as defined in Article 62(1) concluded
before 1 January 2002 as well as property leasing transactions as
defined in Article 62(2) concluded before 1 January 2002, in both casesup 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 housing compa-nies, operating in accordance with the Finnish Housing Company Actof 1991 or subsequent equivalent legislation which are similar to themortgage loans referred to in the first subparagraph.2000L0012 — EN — 11.02.2003 — 002.001 — 59
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Article 65
TransitionalprovisionsregardingArticle 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
FINALPROVISIONS
Article 66
Commissioninformation
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
RepealedDirectives
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 Direc-
tives set out in Annex V, Part A, are hereby repealed without
prejudice to the obligations of the Member States concerning the dead-lines for transposition of the said Directives listed in Annex V, Part B.
2.References to the repealed Directives shall be construed as refer-
ences 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 JournaloftheEuropeanCommunities .
Article 69
Addressees
This Directive is addressed to the Member States.
Done at Brussels, 20 March 2000.
Forthe EuropeanParliament
ThePresident
N.FONTAINEForthe Council
ThePresident
J.GAMA2000L0012 — EN — 11.02.2003 — 002.001 — 60
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ANNEX I
LISTOFACTIVITIESSUBJECTTOMUTUALRECOGNITION
1.Acceptance of deposits and other repayable funds
2.Lending (1)
3.Financial leasing4.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 advice
12.Safekeeping and administration of securities13.Credit reference services
14.Safe custody services2000L0012 — EN — 11.02.2003 — 002.001 — 61
(1) Including, interalia:
— consumer credit,— mortgage credit,— factoring, with or without recourse,
— financing of commercial transactions (including forfeiting).
▼B
ANNEX II
CLASSIFICATIONOFOFF-BALANCE-SHEETITEMS
Fullrisk
— 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 substi-
tutes,
— 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.
Mediumrisk— 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 substi-
tutes,
— 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/lowrisk
— Documentary credits in which underlying shipment acts as collateral and
other self-liquidating transactions,
— Other items also carrying medium/low risk.
Lowrisk
— 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 — 11.02.2003 — 002.001 — 62
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ANNEX III
THETREATMENTOFOFF-BALANCE-SHEETITEMS
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
Method1: 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 posi-
tive 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 maturitywould be equal to the time until the next reset date.In the case of interest-rate contracts that meet these criteriaand 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 — 11.02.2003 — 002.001 — 63
(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 Direc-tive 98/33/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.
▼B
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.
Method2: 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)Typesofnettingthatcompetentauthoritiesmayrecognise
For the purpose of this point 3 ‘counterparty’ means any entity (including
natural persons) that has the power to conclude a contractual netting agree-
ment.
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 coun-
terparty under which mutual claims and obligations are automatically
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)Conditionsforrecognition
The competent authorities may recognise contractual netting as risk-redu-
cing 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 authori-
ties 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'sclaims 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, and
— the law that governs any contract or agreement necessary to effect
the contractual netting;2000L0012 — EN — 11.02.2003 — 002.001 — 64
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(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 counter-
parties.
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)Effectsofrecognition
(i)Contractsfornovation
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 percen-
tages of Table 2 must apply.
(ii)Othernetting 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:
PCEred= 0,4 * PCEgross+ 0,6 * NGR * PCEgross
where:— PCE
red= the reduced figure for potential future credit expo-
sure 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 multi-
plying 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 a given counterparty (numerator) and the
gross replacement cost for all contracts2000L0012 — EN — 11.02.2003 — 002.001 — 65
▼B
included in a legally valid bilateral netting
agreement with that counterparty (denomi-
nator), 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 percen-
tages 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 — 11.02.2003 — 002.001 — 66
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ANNEX IV
TYPESOFOFF-BALANCE-SHEETITEMS
1.Interest-ratecontracts:
(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-exchangecontractsandcontractsconcerninggold:
(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.Contractsofanaturesimilartothoseinpoints1(a)to(e)and2(a)to(d)
concerningotherreference itemsorindicesconcerning:
(a) equities;
(b) precious metals except gold;
(c) commodities other than precious metals;
(d) other contracts of a similar nature.2000L0012 — EN — 11.02.2003 — 002.001 — 67
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ANNEX V
PART A
REPEALED DIRECTIVES TOGETHER WITH THEIR SUCCESSIVE
AMENDMENTS
(referred toinArticle67)
Council Directive 73/183/EEC
Council Directive 77/780/EEC
Council Directive 85/345/EECCouncil Directive 86/137/EECCouncil Directive 86/524/EEC
Council Directive 89/646/EEC
Directive 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/EC
Directive 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/EEC
Council Directive 92/30/EEC
Council Directive 89/646/EEC
Council Directive 92/30/EEC
Directive 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/EEC
Council Directive 92/30/EECCommission Directive 94/7/EC
Commission Directive 95/15/EC
Commission Directive 95/67/ECDirective 96/10/EC of the European Parliament and of the CouncilDirective 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 — 11.02.2003 — 002.001 — 68
▼B
PART B
DEADLINESFORIMPLEMENTATION
(referred toinArticle67)
DirectiveDeadlinefor
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) 15.7.198586/137/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) 1.1.199389/646/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) 1.1.199191/31/EEC (OJ L 17, 23.1.1991, p. 20) 31.3.1991
91/633/EEC (OJ L 339, 11.12.1991, p. 16) 31.12.1992
92/16/EEC (OJ L 75, 31.3.1992, p. 48) 31.12.199292/30/EEC (OJ L 110, 28.4.1992, p. 52) 31.12.1992
92/121/EEC (OJ L 29, 5.2.1993, p. 1) 31.12.1993
94/7/EC (OJ L 89, 6.4.1994, p. 17) 25.11.199495/15/EC (OJ L 125, 8.6.1995, p. 23) 30.9.1995
95/26/EC (OJ L 168, 18.7.1995, p. 7) 18.7.1996
95/67/EC (OJ L 314, 28.12.1995, p. 72) 1.7.199696/10/EC (OJ L 85, 3.4.1996, p. 17) 30.6.1996
96/13/EC (OJ L 66, 16.3.1996, p. 15) 15.4.1996
98/32/EC (OJ L 204, 21.7.1998, p. 26) 21.7.200098/33/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 — 11.02.2003 — 002.001 — 69
ANΝΕΧVI
CORRELATIONTABLE
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)▼B2000L0012 — EN — 11.02.2003 — 002.001 — 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 2(4) Article 2(3)
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)▼B2000L0012 — EN — 11.02.2003 — 002.001 — 71
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 15 Article 5
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 19Article 20(7) Article 23(1)
Article 21(1) and (2) Article 20
Article 21(3) Article 23(2)Article 22 Article 21
Article 23(1) Article 8
Article 23(2) to (7) Article 9Article 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 17Article 33 Article 13▼B2000L0012 — EN — 11.02.2003 — 002.001 — 72
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(1) Article 1(1)
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▼B2000L0012 — EN — 11.02.2003 — 002.001 — 73
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 56 Article 7
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 — 11.02.2003 — 002.001 — 74