EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 9 July 2013 
on branches of non-EEA credit institutions 
(CON/2013/49) 
 
Introduction and legal basis 
On 24 June 2013, the European Central Bank (ECB) received a request from the Irish Minister for 
Finance for an opinion on an amendment to the Central Bank (Supervision and Enforcement) Bill 2011 
(hereinafter the ‘draft law’). 
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third and si xth indents of Article 2(1) of Council Decision 
98/415/EC of 29 June 1998 on the consultation of  the European Central Bank by national authorities 
regarding draft legislative provisions1, as the draft law relates to the Central Bank of Ireland (CBI) and to 
the rules applicable to financial institutions insofar as they materially influence the stability of financial 
institutions and markets. In accordance with the first sen tence of Article 17.5 of the Rules of Procedure of 
the European Central Bank, the Governing Council has adopted this opinion. 
 1. Purpose of the draft law 
1.1 The draft law amends the Central Bank Act 1971,  which provides for the licensing and supervision 
of banks by the CBI, by introducing a new section 9A, pursuant to which the CBI may authorise a branch of a credit institution located outside th e European Economic Area (EEA) (hereinafter a 
‘section 9A branch’) to carry on banking business in  Ireland. Such authorisation is to be provided 
on condition that the CBI is satisfied  that the credit institution in ques tion is subject to authorisation 
and supervisory rules in the country in which its head office is located, which are broadly 
equivalent to those applicable in Ireland. In addition, the CBI is to be satisfied that depositors with 
a section 9A branch will be able to avail of pr otection broadly equivalent  to that provided under 
Irish law. 
1.2 A section 9A branch is not to be treated in any respect more favourably than branches of credit 
institutions whose head offices are located within the EEA. Furthermore, a section 9A branch will 
continue to be subject to prudential regulation in  the country in which its head office is located, 
while the CBI will be responsible for re gulating its conduct of business in Ireland. 
 
                                                 
1  OJ L 189, 3.7.1998, p. 42. 
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2 2. Non-compliance with the consultation obligation 
Scope of the consultation  
2.1 The ECB received the consultation request on 24 June 2013. The consultation request indicated 
that the draft law was to have reached committee stage and been discussed in Seanad Éireann, the 
upper house of the Irish Parliament, on 27 June. The ECB understands that the final stages in 
Seanad Éireann of the 2011 Bill took place on 2 Ju ly and that, on that occasion, the draft law was 
amended and further related am endments were made to the Central Bank (Supervision and 
Enforcement) Bill 2011. This opinion is limited to the version of the draft law which was sent for 
consultation.  
2.2 Article 2(1) of Decision 98/415/EC provides that  national authorities shall consult the ECB on any 
draft legislative provision within its field of co mpetence pursuant to the Treaty. Article 2(1) of 
Decision 98/415/EC contains a non-exhaustive list of matters which fall within the ECB’s field of 
competence, and on which the ECB must be consul ted by national authorities. In the event that a 
provision which has been submitted to the ECB for its opinion is substantively amended prior to 
the adoption by the ECB of its opinion, or where further draft legislative provisions are proposed, an updated version of all legisla tive provisions in question should be submitted to the ECB for its 
opinion. 
Appropriate time to consult the ECB  
2.3 Article 4 of Decision 98/415/EC provides that the ECB must be consulted ‘at an appropriate stage’ 
in the legislative process. It follows from this th at the consultation should take place at a point in 
the legislative process that a ffords the ECB sufficient time to examine the draft legislative 
provisions in question and adopt its opinion. Fo llowing from the wording of Article 3(4) of 
Decision 98/415/EC, Member States are obliged to suspend the process for adoption of the draft 
legislative provisions pending receipt of the ECB’s opinion in order to allow the relevant national 
authorities to meaningfully deliberate the ECB’s opinion prior to adoption of the provisions in question. In this respect, the ECB stresses that the fact that the enactment of a particular draft law is 
urgent does not relieve national authorities of th eir obligation to consult the ECB and to allow 
sufficient time for its views to be taken into  account in accordance with Decision 98/415/EC. The 
Irish Government should have pos tponed adoption of the draft law until such time as would have 
allowed for a proper consultation with the ECB, as well as due consideration of the ECB’s Opinion. 
The ECB would appreciate it if the consulting aut hority would honour its obligation to consult the 
ECB in a timely manner in the future. 
 3. General observations 
Union law 3.1 Regulation (EU) No 575/2013 of the European Pa rliament and of the Council of 26 June 2013  
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3 on prudential requirements for credit institutions and investment firms2 (hereinafter ‘CRR’) and 
Directive 2013/36/EU of the European Parliame nt and of the Council of 26 June 2013 on access to 
the activity of credit institutions and the prudentia l supervision of credit institutions and investment 
firms3 (hereinafter ‘CRDIV’) do not directly gove rn access to the market by branches of credit 
institutions having their head offices in third countri es; this is consistent with the legal basis of 
CRR and CRDIV, i.e. Article 53 of the Treaty, relating to the freedom of establishment4. CRR and 
CRDIV provide only for safeguards; Article 47 of  CRDIV provides that ‘Member States shall not 
apply to branches of credit institutions having th eir head office in a third country … provisions 
which result in more favourable treatment than that accorded to branches of credit institutions 
having their head office in the Union’. Recital 23 of CRDIV provides that rules governing branches 
of third-country credit institutions should be an alogous in all Member States. Subject to these 
safeguards, the power to authorise branches of thir d-country credit institutions to operate within the 
Union, and the specific conditions under which they are to operate, are left to the Member States. 
Under the draft law, Ireland uses this power and sets outs such conditions. 
Irish law 3.2 Section 7(1) of the Central Bank Act 1971, as am ended, provides that a licence is required for the 
purposes of carrying on banking business in Ireland. Under Irish law, such licences are currently 
only granted where the registered office and the h ead office of a credit institution are both located 
in Ireland. 
3.3 Under the draft law, section 9A branches will be  exempt from the requirement to hold a licence. 
 4. Specific observations 4.1 Under the draft law, the CBI is to be satisfied th at a section 9A branch is subject to authorisation 
and supervisory rules broadly equivalent to those in  force in Ireland. Furthermore, the CBI is to be 
satisfied that depositors with the branch are able to avail of protection broadly equivalent to that 
provided under Irish law. The ECB notes that the us e of the word ‘broadly ’ in each case leaves a 
margin of discretion to the CBI and introduces, ther efore, a possible lack of certainty under the law. 
In addition, the authorisation and supervisory ru les in respect of section 9A branches, and the 
protection of their depositors as referred to above, could be slightly more or less favourable than 
the rules applied to other, i.e. EEA, credit institu tions. This would seem to be incompatible with 
Article 47 of CRDIV, which provides that Member St ates are not to apply prov isions that result in 
more favourable treatment for branches of third-coun try credit institutions compared with branches 
of credit institutions having their head office in the Union. This provision is also reflected in the 
draft law. 
                                                 
2  OJ L 176, 27.6.2013, p. 1. 
3  OJ L 176, 27.6.2006, p. 338. 
4  Union legal acts in the financial services sector, including CRR and CRDIV, apply throughout the EEA on the basis of 
the Agreement on the European Econom ic Area (OJ L 1, 3.1.1994, p. 3). 
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4 4.2 It is not clear from the draft law how the CBI is to establish what protection is available to 
depositors of section 9A branches in the third count ry in which the institution concerned is located. 
Furthermore, the draft law does not indicate how or whether the existence of protection in a third-country jurisdiction is to be monitored. If, for example, the protection granted to depositors of a 
section 9A branch were to fall below the requis ite level, it is not clear how this would be 
ascertained, and whether the authorisation granted to  the branch of the institution concerned would 
be withdrawn by the CBI in that event. 
4.3 For the purposes of legal certainty and clarity, the ECB also recommends substituting references to 
the country in which the credit institution is ‘locat ed’ with references to the country in which the 
credit institution is ‘established’. 
4.4 The establishment of branches of third country credit institutions might create financial stability 
implications. The ECB understands that further am endments to the draft law and to the Central 
Bank (Supervision and Enforcement)  Bill 2011 have been made, wh ich are intended to underpin 
the power of the CBI to withdraw the authorisa tion of branches operating in Ireland of credit 
institutions established in non-EEA countries in certain circumstances.  
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 9 July 2013. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI