EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 18 May 2004 
at the request of the Portuguese Ministry of Finance 
on a draft decree-law on the reorganisation and winding up of credit institutions 
(CON/2004/18)  
 1. On 16 April 2004 the European Central Bank (ECB) received a request from the Portuguese 
Ministry of Finance for an opinion on a draft decree-law on the reorganisation and winding up of credit institutions (the ‘draft decree-law’). 
2. The ECB’s competence to deliver an opinion is based on the fifth and sixth 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 provisions
1, as the legislative proposal contains 
provisions on payment and settlement systems and financial institutions that would materially 
influence the stability of financial institutions and markets. In accordance w ith the first sentence of 
Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has 
adopted this opinion. 
3. The draft decree-law will transpose into domest ic law Directive 2001/24/EC of the European 
Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit 
institutions2. In addition, Chapters I and II contain a fu ll review of the legal requirements applying 
to the process of winding up credit institutions with  their head offices in Portugal, as defined by a 
legal act from 1940. Chapter IV also provides for professional secrecy under winding-up proceedings. As draft national legal acts exclusivel y transposing directives fa ll outside the scope of 
Article 2(1) of Council Decision 98/415/EC, the cu rrent opinion is restricted to these latter 
provisions of the draft decree-law.  
4. Whereas Decree-Law No 298/92 of 31 December 1992,  approving the general legal framework for 
credit institutions and financial companies (the ‘Decree-Law No 298/92’), currently governs the 
reorganisation of credit institutions with their h ead offices in Portugal, Decree-Law No 30 689 of 
27 August 1940 continues to regulate winding up. Th e ECB notes that the Portuguese legislator’s 
initiative reviews the existing regime for winding up credit institutions with their head offices in 
                                                     
 
1  OJ L 189, 3.7.1998, p. 42. 
2  OJ L 125, 5.5.2001, p. 15. 
2 Portugal so that the legal framework can be br ought closer to Community legal principles and 
standards on this matter.  
5. Article 4 restricts the scope of application of Ch apter II of the draft decree-law to the following: 
- the winding up of credit institutions havi ng their head offices in Portugal, and  
- with the necessary adaptations, to financial comp anies having their head offices in Portugal, 
and 
- the winding up of branches located in Portugal of  credit institutions having their head offices 
in countries which are not Member States, and of branches located in Portugal of financial institutions.  
The ECB assumes that the term ‘financial institutions’ in the draft decree-law is the legal term used 
by Decree-Law No 298/92 and Directive 2000/12/E C of the European Parliament and of the 
Council of 20 March 2000 relating to the taki ng up and pursuit of the business of credit 
institutions
3, as amended by Directive 2000/28/EC4, which laid down the definition of those 
entities and specified which branches are subject  to supervision by the Banco de Portugal. 
Therefore, the ECB understands that the scope of Ch apter II, when read together with Article 1(1) 
of the draft decree-law, also includes those bran ches of ‘financial institutions’ when those branches 
are located in Portugal. The ECB notes from Article 4(2) that special legislation will continue to cover the winding up of the caixas de crédito agrícola mútuo  (mutual agricultural credit banks).  
6. According to Article 5(1) of the draft decree-la w, credit institutions with their head offices in 
Portugal may only be wound up by either: (i) wit hdrawing the authorisation to pursue the business 
of banking; or (ii) shareholders’ decision. 
Article 5(3) provides that decisions to withdraw au thorisation shall indicate the date and time of the 
act, it being considered, in the event of omission, that the act occurred at 12.00 this being deemed, 
for all legal purposes, the moment when the wi nding up proceedings are opened. The ECB notes 
that the date and time of adoption of the act wit hdrawing the authorisation will thus constitute, for 
legal purposes, the moment when the winding-up  proceedings are opened. Hence, the ECB 
understands that the date on which the Banco de Portugal applies to the competent court for a credit 
institution to be wound up is not deemed to be the moment when the winding-up proceedings are 
opened. The ECB also notes that the Banco de Portugal will give to the decision withdrawing 
authorisation the publicity it deems convenien t pursuant to Article 23(3) of Decree-Law 
No 298/92, to ensure third parties are adequately  informed. The ECB notes that this rule ensures 
legal certainty. The ECB considers however that this  rule could be improved by clarifying that the 
omission should only concern the time but not the date, as otherwise it would not be possible to 
identify to which day the time rule established in Article 5(3) refers. 
                                                     
 
3  OJ L 126, 26.5.2000, p. 1. 
4  OJ L 275, 27.10.2000, p. 37.  
3 7. Articles 6 and 7 of the draft decree-law provi de for winding up by shareholders’ decision. 
Article 6(1) provides that voluntary winding up is governed by Article 35-A of Decree-Law 
No 298/92. This ensures that any plan to volunta rily wind up a credit institution is notified to 
Banco de Portugal at least 90 days in advance of the date of its implementation. The ECB 
understands that voluntary winding up of a credit institution entails its extra-judicial winding up within the terms and conditions set by Article 7 of the draft decree-law. Notwithstanding this, the 
ECB welcomes the power granted by Article 6(2) of  the draft decree-law to the Banco de Portugal 
to request the judicial winding up of a credit ins titution, as foreseen in Article 8, even when wound-
up by shareholders’ decision. The ECB considers that such a discretionary power will allow the 
Banco de Portugal to strengthen creditor protec tion, where it deems necessary, in particular by 
allowing a request for the judicial application of interim measures. 
8. Articles 8 to 15 of the draft decree-law regulate judicial winding up where the authorisation of a 
credit institution is withdrawn, with the above mentioned exception in Article 6(2). The ECB 
understands that these judicial winding up proceedings  will be carried out within the framework of 
the Portuguese Insolvency and Company Reorganisa tion Code subject to the specific rules laid 
down in the draft decree-law. In respecting the Member States’ procedural autonomy, the ECB 
recommends granting national supervisory authoritie s and national central banks, if not granted 
supervisory powers over credit in stitutions, ample intervention righ ts in winding-up proceedings. 
This reinforces the financial stability framework by  allowing judicial authorities to consider the 
assessment and concerns of nationa l supervisory authorities and nati onal central banks, as the case 
may be
5. This is also in line with the spirit of Di rective 2001/24/EC, which highlights the important 
role played by the competent authorities of the home Member State before winding-up proceedings 
may continue during the process of winding-up so that these proceedings can be properly carried 
out6.  
In this regard, the ECB welcomes the extensive set of  rights granted to the Banco de Portugal in the 
context of the judicial winding-up proceedings by th e draft decree-law. In particular, the ECB notes 
that Article 8(3) grants the Banco de Portugal ex clusive standing to request the winding up of a 
credit institution before the appropriate court. Th e ECB notes further that, pursuant to Article 10(1) 
and (2) respectively, the judge appoints the liquidator or the liquidating commission, as the case may be, on proposal by the Banco de Portugal. Th e latter may propose the dismissal or substitution 
of the liquidator or of the members of the liquidating commission, as the case may be, or the substitution of a liquidator by a liquidating commission, or the latter by the former. The ECB notes also that the credit institution may only be c ontinued pending winding-up,  under the terms and 
conditions in Article 12(1), with the Banco de Portugal’s approval under Article 12(2). Finally, the 
ECB supports the ample intervention rights of the Banco de Portugal in the judicial winding-up proceedings established in Article 14. In partic ular, it supports the possibility of examining the 
                                                     
 
5  See, in the same vein, the cons iderations made in paragraph 5 of ECB Opinion CON/2004/9 of 16 March 2004. 
6  See recital 15 of Directive 2001/24/EC. 
4 credit institution’s accounts and requesting the liquida tor or liquidating authority, as the case may 
be, to provide all information and documents  deemed necessary by the Banco de Portugal.  
9. The ECB welcomes the wide scope of Article 40 in  Chapter IV of the draft decree-law, as all 
persons intervening in winding-up proceedings are subject to professional secrecy under Articles 78 to 84 of Decree-Law No 298/92. 
10. The ECB confirms that it has no objection to the competent national authorities making this 
opinion publicly available at their discretion. This opinion will be published on the ECB’s website 
six months after the date of its adoption. 
  Done at Frankfurt am Main, 18 May 2004. 
   
The President of the ECB 
Jean-Claude TRICHET