EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 14.7.2004 
COM(2004) 486 final 
2004/0155 (COD) 
2004/0159 (COD)  Volume I 
  
Proposal for 
DIRECTIVES OF THE EUROPEAN PA RLIAMENT AND OF THE COUNCIL 
Re-casting Directive 2000/12/EC of the Euro pean Parliament and of the Council of 20 
March 2000 relating to the taking up and pursuit  of the business of credit institutions 
and Council Directive 93/6/EEC of 15 March 1993 on the capital adequacy of investment 
firms and credit institutions. 
(presented by the Commission) 
  
{SEC(2004) 921} 
 
EN 2   EN EXPLANATORY MEMORANDUM  
1. GENERAL  COMMENTS 
A single financial market in the EU will be a key factor in promoting the competitiveness of 
the European economy and the lowering the capital cost to companies. The Financial Services 
Action Plan announces a directive on new capital ad equacy rules for credit institutions and 
investment firms in 2004, in step with progr ess at G-10 level in the Basel Committee on 
Banking Supervision1. 
The agreement by the G-10 Basel Committee on Banking Supervision of the so-called Basel 
Accord in 1988 (Basel I) led to the adopti on of minimum capital requirements across over 100 
countries2. It was broadly contemporaneous to the adoption of key EU directives ( Directive 
89/299/EEC of 17.4.1989 on own funds , Directive 89/647/EEC of 18.12.1989 on a solvency 
ratio , consolidated in Directive 2000/12/EC of the Europe an Parliament and of the Council of 
20.3.2000 relating to the taking up and pursuit of the business of  credit institutions ). 
These directives addressed credit in stitutions’ risks arising from credit -granting activities. 
Directive 93/6/EEC of 15.3.1993 on the capita l adequacy of investment firms and credit 
institutions extended both the credit risk and market  risk rules to investment firms.  
1) The need for improved European requirements. 
The existing rules have made a significant contribution to the single market and high 
prudential standards. However, various impor tant shortcomings have been identified. 
1. Crude estimates of credit risks result in an extremely crude meas ure of risk and is in danger 
of falling into disrepute. 
2. Scope for capital arbitrage:  innovations in markets have enab led financial institutions to 
effectively arbitrage the mismatch between instit utions’ own allocation of capital to risks and 
minimum capital requirements.  
3. Lack of recognition of ef fective risk mitigation:  the present Directives do not provide 
appropriate levels of recognition for risk mitigation techniques.  
4. Incompleteness of the risks covered under the existing directives, including operational risk, 
which are not subject to any capital charges.  
5. Absence of requirement for supervisors  to evaluate the actual risk profile  of credit 
institutions to satisfy themselves that adequate  capital is held having  regard to that risk 
profile. 
                                                 
1 The Basel Committee on Banking Supervision was established by the central bank Governors of the 
Group of Ten (G-10) countries. It consists of representatives of the authority responsible for prudential supervision of banks from the following countries: Belgium, Canada, France, Germany, Italy, Japan, 
Luxembourg, the Netherlands, Spain, Sweden, Switzerland, the United Kingdom and the United States. 
The European Commission, along with the European Central Bank, participates as an observer. 
2 While formally agreed by the authorities of the G-10 group of industrialised countries for application to 
internationally active banks, the 1988 Accord has been applied throughout the world to banks of all 
sizes and levels of complexity. 
 
EN 3   EN 6. Absence of requirement for supervisory cooperation:  in an increasingly cross-border 
market authorities must cooperate effectively with each other in the supervision of cross-
border groups to reduce regulatory burdens. 
7. Absence of proper market disclosures:  the present Directives do not facilitate effective 
market discipline for reliable information fo r market participants  to make well-founded 
assessments. 
8. Lack of flexibility in the regulatory framework:  the current EU system the lacks the 
flexibility to keep pace with rapid developmen ts in financial markets and risk management 
practices, and with improvements in regulatory and supervisory tools. 
What would happen under a “no policy change” scenario? 
There is strong consensus that the present situation is unsustainable. Capital requirements and 
risks would continue to be misa ligned resulting in limited effectiveness of the prudential rules 
and increased risks to consumers and financial st ability. The full extent of the risks that some 
financial institutions are undertaking would still not be captured. In addition, the newest and 
most effective risk management techniques w ould not be actively encouraged or recognised 
and financial services groups operating in more than one Member State would continue to be 
subject to disproportio nate burdens resulting from mul tiple layers of regulation and 
supervision. Finally, the EU would be unable to benefit appropriately from future 
developments, given the difficulty in speedily updating the current EU regulatory framework. 
In view of the proposed global implementation of the new Basel Accord the EU financial 
services sector would be signifi cantly disadvantaged compared with its overseas competitors. 
2) The approach of the Directive 
The Commission’s 1998 Financial Services Action Plan stated that the EU needed accurate, 
internationally consistent, up to date prudentia l standards. They should also be proportionate 
recognising the reduction in risks arising from the context in which exposures are incurred, 
and in particular lending to consumers and to small- or medium-sized entities. Rules should 
apply to both credit institutions and investment firms (level playing field) but also need to be 
proportionate and take fully into account the ‘b iodiversity’ of EU fi nancial institutions.  
2. C ONSULTATION AND IMPACT ASSESSMENT  
a) Consultation of stakeholders and interested parties 
The Commission has been engaged in consultati on with stakeholders and interested parties 
since November 1999. Three full consultation  papers have been issued on 22.11.1999, 
5.2.2001 and 1.7.2003. A full and structur ed dialogue with stake holders was organised on 
18.11.2002. Consultation papers on sp ecific technical issues have been published (real estate 
and covered bonds on 7.4. 2003; ‘expected lo sses and unexpected  losses´ on 26.11.2003; 
collective investment undertakings on 3.2.2004). 
Commentators have generally be en very supportive of  the major objectives of the project. 
Enhanced risk-sensitivity leading to greater fina ncial stability is supported and there is now a 
pressing need for the rules to be updated, to re spond to the significant advances in techniques 
for risk measurement and management in fi nancial services, and to reflect increased 
regulatory and supervisory sophistication. Th ere is strong support for the Commission’s 
 
EN 4   EN approach that the EU capital framework s hould be revised consistent with the new 
international framework but differentiate d where necessary for EU specificities. 
Less complex institutions  
There is broad and significant s upport for the applica tion of the new rules in Europe – to all 
credit institutions and investment services providers whatever the legal nature and complexity of the institution, also to avoid ‘s econd class’ institutions that woul d be likely to result if some 
were excluded. This reflects the perception th at the proposed new framework has been well 
designed for the purposes of broad application.  
Flexibility of the new directive
 
There is continued wide and st rong support for the approach propos ed to ensure that the new 
framework is responsive to market and superv isory innovation to maintain an optimally 
efficient and competitive EU financial servic es sector. Stakeholders support the approach 
where enduring principles and objectives are set out in the articles and provide the mandate 
for the more detailed and technical provisions contained in the annexes. The procedure for 
amending the annexes must ensure full and eff ective consultation with interested parties. 
Investment firms  
Significant modifications have been introduced to address concerns expressed by some from 
the investment firm sector about being subject to  capital requirements which they perceive to 
be more appropriate for credit institutions. 
Complexity  
Some respondents asked for simplificati on and less prescrip tion. The Commission has 
increased the clarity and user-friendliness of the text. The design will be attractive to those 
institutions seeking simple rule s to apply or wishing to prog ress gradually to more complex 
capital rules. The proposed new framework cont ains a range of options  and approaches of 
different degrees of sophistication.  
Since 1999 there have also been several consul tations on detailed issues. The proposal has 
been taken account of very deta iled and useful comments from inte rested parties, in particular 
the banking and investment firm industry.  
b) Impact assessment 
An extended impact assessment has been carried out to identify whether there is a need for 
action at EU level and, if  so, the action required. 
The Basel Committee published a quantitativ e impact study (QIS3) involving credit 
institutions across 40 countries  to assess the impact of th e new Basel proposals on banks' 
minimum capital requirements. The Commission assisted in extending this study to EU 
countries not represented in Basel. The key conclusions were that the new rules will in 
general reduce capital requireme nts for EU credit institutions  by around 5% compared to 
present levels. Furthermore, the outcomes for the different approaches are in line with 
objectives – particularly combining capital ne utrality with appropriate incentives for 
institutions to move towards more sophisticat ed approaches. Finally, smaller domestic credit 
institutions adopting the simple approach will  face slightly reduced capital charges; larger 
internationally active credit institutions adopting the more advanced approach will face 
substantially unchanged capital ch arges; smaller but specialised and sophisticated EU credit 
institutions adopting the advanced approa ch might face substan tially lower capital 
 
EN 5   EN requirements than at present. Importantl y, the main source of reduction in capital 
requirements is the ‘retail’ portfolio, which is mostly composed of loans to Small and 
Medium Enterprises (SMEs) below EUR 1 milli on and residential mortgage loans. The new 
operational risk capital charge is the main s ource of offset of this decrease in capital 
requirements for credit institutions. 
In addition, at the re quest of the Barcelona European Council the Commission commissioned 
a study on the consequences of the draft pr oposed new capital requirements for credit 
institutions and investment firms in the EU3. The final report, prepared by 
PricewaterhouseCoopers, is posi tive about the impact (with onl y two areas of criticism – 
investment firms and ventur e capital - both of which ha ve been addressed in the 
Commission’s proposals).4 The key conclusions are that the new capital requirements 
framework should be positive for the EU, and fo r prudential regulation in the EU. EU credit 
institutions’ capital requirement s should decrease by ± 5% (€ 90 bi llion) and tran slate into an 
annual increase in profits of ± € 10-12 billi on. There is no disadvantage for smaller credit 
institutions and no indication that the new re gime will force mergers or consolidation. The 
decision to cover all credit institutions in the directive will not put EU firms at a competitive 
disadvantage, nor is the US decision to apply onl y advanced approaches to some 20 big credit 
institutions a significant competitive factor. Im plementation costs for EU credit institutions 
are not solely driven by Base l II and many of these investments (perhaps as high as 80%) 
would have happened anyway, although over a l onger period. Importantly, there will be no 
negative impact on the availabil ity and cost of finance for SMEs  in most EU Member States 
(‘procyclicality’ effects are less - and less dama ging - than the present rules). SME fears stem 
from insufficient information understanding of Basel II. The macro-econo mic effects of Basel 
II on the EU-economy are small - there could be a benign supply-side  shock to the economy 
reducing the cost of capital to firms and ge nerating an increase of 0.07% in EU GDP. In 
general the new capital framew ork will reduce the banking system’s vulnerability through 
greater awareness of risk, improved risk mana gement, and a more ef ficient allocation of 
capital should have beneficial long-ru n consequences for the EU economy.  
3. LEGAL BASIS  
The proposals are based on Article 47(2) of the Treaty, which is the legal basis to adopt 
Community measures aimed at achieving the In ternal Market in financial services. The 
chosen instrument is a Directive as the most  appropriate to achieve the objectives and it 
amends existing directives coveri ng the same technical  issues. Its provisio ns do not go beyond 
what it is necessary to achi eve the objectives pursued. 
4. C OMMENTS ON THE ARTICLES  
The proposals apply the ‘re-casting technique’  (Interinstitutional Agreement 2002/C 77/01) 
enabling substantive amendments  to existing legislation wit hout a self-standing amending 
directive. This reduces complexity and makes EU legislation more accessible and 
comprehensible. 
                                                 
3 OJ S167 of 29/08/2002, 
4 Available on Commission website - http://europa.eu.int/comm/internal_market/regcapital/index_en.htm  
 
EN 6   EN Amendments of a non-substan tive nature are made to ma ny provisions to improve the 
structure, drafting and read ability of the directives. 
A. D IRECTIVE 2000/12/EC 
Article 4: Definitions 
Article 4 contains certain new definitions concerning  essential concepts to clarify their 
meaning and contribute to a better understanding. 
Article 22: 
The existing wording has been amended to cl arify and develop the obligation for credit 
institutions to have in place effective internal  risk management systems. Given the diversity 
of credit institutions covered, these requirements will have to be met on a proportionate basis. 
Relevant technical provi sions are in Annex V. 
Articles 56-67: 
A small number of amendments have been made . Although it is not intended to review the 
definition of ‘own funds’, as a consequence of th e modified approach to expected loss in the 
Basel Committee (‘Madrid decision’), some limited amendments are necessary.  
Articles 68-75: 
Credit institutions must hold adequate own funds on an ongoi ng basis and state the minimum 
level of those own funds. The provisions specif y how the requirements should be met if the 
credit institution is part of a group (the ex isting option for Member States’ authorities to 
waive certain requirements has been retained but  with more precision). The calculation of the 
requirements has been clarified in the li ght of the introduction of Regulation (EC) 
no.1606/2002 on international accounting standards. 
Articles 76-101: 
These provisions replace the existing solvency ratio requirements for credit risk and introduce 
two methods to calculate risk weighted exposure amounts. 
The Standardised Approach (Art. 78-83) is based on the existing framework, with risk 
weights determined by the allocation of assets and off-balance sheet it ems to a limited number 
of risk buckets. Risk sensitivity has been increased by the number of exposure classes and risk buckets (Art. 79). There are lower risk weig hts for non-mortgage retail items (75%) and 
residential mortgages (35%). A 150% risk wei ght for assets which are 90 days past due 
(100% for residential mortgages) is introduced. The use of credit  rating agencies’ ratings to 
assign risk weights where these are availabl e (‘external ratings’) is permitted (Art 81-83). 
Relevant technical provi sions are in Annex VI. 
The Internal Ratings Based (IRB) approach (Art  84-89), permits credit institutions to use their 
own estimates of the risk parameters inherent in their different credit risk exposures. These 
parameters form the inputs into a prescribed calculation designed to provide soundness to a 
99.9% confidence level. The ‘Foundation’ Appro ach allows credit institutions to use their 
own estimates of probability of default, while us ing regulatory prescribed values for other risk 
 
EN 7   EN components. Under the ‘Advanced’ Approach, cred it institutions may use their own estimates 
for losses given default and their exposure at de fault. Credit institutions are allowed to use 
pooled data in the estimation of risk parameter values. This allo ws smaller credit institutions 
to apply a more risk sensitive approach to calculating capital requirements. 
The proposed ‘roll-out’ rules (A rt. 85) for the IRB approach provide flexibility for credit 
institutions to move differen t business lines and exposure classes to the Foundation or the 
Advanced IRB Approach during a reasonable timeframe. ‘Partial’ use is allowed for non-
material exposure classes and business lines (capital requirements can be calculated under the 
Standardised Approach even if a credit instit ution uses the IRB Approach for other exposure 
classes). The proposed EU framework recognises  that, for small credit institutions the 
requirement to develop a rating system for certain counterparties is potentially very 
burdensome. Permanent partial use for these expo sure classes is proposed even in cases where 
credit institutions’ exposures to such  counterparts are ma terial (Art. 89). 
Relevant technical provisions for th e IRB approach are in Annex VI. 
Articles 90-93: 
The rules identify common issues for mitigati on techniques and treat common underlying 
risks or economic effects consistently. These include the recognition of a wider range of 
collateral and guarantee/credit derivative prov iders than at present. The IRB Foundation 
Approach gives a prudentially appropriate level of recognition to financial receivables and physical collateral. Alternative methodologies are available for credit institutions to choose 
between methods of different le vels of complexity (a Simple  Method – based on an easy-to-
use ‘risk weight substitution’ approach; or a Comprehensive Method – involving the 
application of volatility adjustments to the va lue of the collateral received). To calculate 
volatility adjustments more and less complex approaches are made available (a simple 
‘Supervisory’ approach where th e amounts of the benchmark vola tility adjustments are set out 
in a table; or a more risk-sensitive ‘Own Esti mates’ approach). Relevant technical provisions 
are in Annex VIII. 
Articles 94-101: 
These articles introduce for the first time a harm onised set of rules for capital requirements for 
securitisation activities and investments. This provides a significantly improved capital 
requirements framework – allowing credit ins titutions to take advantage of the funding, 
balance-sheet management and other advantages that such transactions can deliver. It will also reduce the extent to which securitisation has been  seen as an instrument of capital arbitrage. 
Relevant technical provi sions are in Annex IX. 
Articles 102-105: 
These provisions introduce requirements to meet the operational risk faced by credit 
institutions. Three different me thodologies are available. A simp le approach (Art. 103) based 
on a single income indicator (B asic Indicator Approach - BI A). This approach provides a 
capital buffer against operational risk, without requiring credit institutions to develop sophisticated and costly information systems about their risk exposure. A more precise 
approach based on business lines (Standardised Approach - STA) (Art. 104) is more risk-
sensitive as the capital requirement for operationa l risk is differentiated to reflect the relative 
risks of different business lines. This approach is likely to be attractive to a large number of 
smaller / less complex credit institutions. More sophisticated methodologies (Advanced 
 
EN 8   EN Measurement Approaches - AMAs) (Art. 105) ge nerate their own measures of operational 
risk, subject to more demanding risk manageme nt standards. AMAs are expected to be 
gradually adopted mainly by large internatio nally active credit institutions and smaller 
specialised credit institutions which have de veloped advanced risk monitoring systems for 
their main activities. Relevant tec hnical provisions are in Annex X. 
Articles 106-119: 
A small number of amendments bring consistenc y between capital requirements and the large 
exposures rules, in particular to reflect th e expanded recognition of credit risk mitigation 
techniques. 
Article 123-124: 
These Articles reflect the sec ond ‘pillar’ of the Basel Committ ee’s capital accord. Art. 51A 
requires credit institutions to have in place in ternal processes to measure and manage their 
risk and the amount of ‘internal’  capital they themselves deem adequate to support those risks. 
Competent authorities are required  (Art. 124) to review complianc e by credit institutions with 
the various legal obligations for organisation and risk control, and to evaluate the risks taken 
by credit institutions. This assessment will be used by supervisors to determine whether weaknesses exist in controls and capital held. Relevant technical provisions are in Annex 
XIII. 
Articles 125-143: 
There is an increasing degree of EU cross-bord er business and a trend towards centralisation 
of risk management within cross-border groups. This requires improved coordination and 
cooperation amongst national supe rvisory authorities in the EU. The existing and well 
established role of the consolidating supervisor  has thus been develope d further. Under Art. 
136 supervisors will be provided with a mini mum harmonised range of  powers to require 
credit institutions to address any inadequaci es in the requirements of the Directive.  
Article 144: 
A minimum set of disclosure requirements exis ts for Member States’ authorities to enhance 
convergence of implementation and introduce transparency. 
Articles 145-149: 
These provisions reflect the ‘third’ pillar of  the Basel Committee’s new capital accord. The 
disclosure of information by credit institutions to market participants contributes to greater 
financial soundness and stability, maintains a leve l playing field and respects the sensitivity of 
certain information. Art. 147 requires disclosu re on a minimum annual basis for most credit 
institutions - more frequent di sclosure may be necessary in the light of specific criteria. 
Relevant technical provisi ons are in Annex XII. 
Article 150: 
The Directive needs to keep pace with ma rket developments. The necessary degree of 
flexibility is provided by making a distinction between core and technical rules (particularly 
in the annexes to the directive) that may need adaptations in the short to medium term. Art. 
150 adds new technical areas to  those in Directiv e 2000/12/EC (introduced in 1989) and 
 
EN 9   EN proposes that the new technical Annexes should be able to be modified following the same 
rapid procedure. 
B. D IRECTIVE 93/6/EEC  ON THE CAPITAL ADEQUACY OF INVESTMENTS FIRMS AND 
CREDIT INSTITUTIONS  
Article 2: Scope 
Article 2 specifies how the requi rements apply to individual investment firms, groups of 
investment firms, and mixed groups. 
Article 3: Definitions 
There are certain new and amended definitions on essential concepts to clarify their meaning 
and contribute to a better understanding. 
Article 11: Trading b ook capital treatment 
There is an enhanced definition of the ‘tradi ng book’ to increase certainty as to the capital 
requirements that apply and to restrict pos sible arbitrage between the ‘banking book’ / 
‘trading book’ boundary. Relevant  technical provisions ar e set out in Annex VII. 
Articles 18 and 20: 
Article 18 prescribes, for credit institutions  and investment firms, the minimum capital 
requirements for market risk. The treatment of positions in collective investment undertakings and credit derivatives and a number of other modi fications for increased risk-sensitivity are 
new. Relevant technical provisi ons are in Annexes I to VII. Article 20 extends the rules on 
capital requirements for credit risk and opera tional risk in Directive 2000/12 to investment 
firms, as at present. New credit risk elements  include the provision of a treatment for credit 
derivatives and an amended measure of exposure for repu rchase transactions and 
securities/commodities financing transactions . For operational risk there are significant 
modifications to take account of  the specific features of the i nvestment firm sector, with an 
option to continue the ‘Expenditu re Based Requirement’ for inve stment firms falling into the 
low-, medium- and medium/high-risk categories. 
Article 28: Large exposures 
The current situation is continued where credit institutions and investment firms are subject to 
the same rules, subject to modifications to large exposures for trading book transactions. A 
new element is an amended measure of exposure for repurchase transactions and 
securities/commodities financing transactions. Re levant technical provisions are in Annex VI. 
Article 33: Valuation of positions for reporting  
Enhanced requirements for the valuation of trading book positions are prescribed for 
prudential soundness in the context of rules designed for trading book positions to be priced on a daily basis. Relevant techni cal provisions are in Annex VII. 
Article 22: Consolidated requirements 
 
EN 10   EN The existing option for competent authorities to waive the application of consolidated 
requirements for groups consisting of invest ment firms is continued subject to more 
prudentially sound conditions. 
Article 34: Risk management and capital assessment 
Article 34 incorporates the obligation for credit  institutions (Article 17 of Directive 2000/12), 
for investment firms to have in place effectiv e internal risk management systems. Given the 
diversity of the institutions covered, these requi rements will have to be met on a proportionate 
basis. It also applies the requirement in Artic le 51A of Directive 2000/1 2 to investment firms 
to have internal processes to measure and mana ge the risk they are exposed to and the amount 
of capital (‘internal’ capital) they  deem adequate to support those risks. It adds to the existing 
risk management requirements for inve stment firms in Directive 2004/39/EC. 
Article 37: Supervision 
This Article applies the rules in Directive 2000/12 mutatis mutandis  to investment firms.  
Article 42 
As for Directive 2000/12, Directive 93/6 need to  keep pace with market developments. The 
necessary flexibility is brought by distinguishing betw een core and technical rules 
(particularly in the annexes) that will need adaptations in the short to medium run. The 
technical Annexes should be able to be modi fied following a rapid procedure. To reflect 
expected further important devel opments in regulatory practice in the coming years, a review 
clause is included for the tr eatment of counterparty risk. 
 
EN 11   EN  
Ð 2000/12/EC 
2004/0155 (COD) 
Proposal for a 
DIRECTIVE OF THE EUROPEAN PA RLIAMENT AND OF THE COUNCIL  
relating to the taking up and pursuit of th e business of credit institutions (recast) 
 
Ø new 
(Text with EEA relevance)  
 
Ð 2000/12/EC (adapted) 
THE EUROPEAN PARLIAMENT AND THE CO UNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty esta blishing 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
5, 
Acting in accordance with the procedure laid down in Article 251 of the Treaty6, 
Whereas: 
 
Ð 2000/12/EC Recital 1 (adapted) 
(1) Council Directive 73/183/EEC of 28 June 1973 on the abolition of restrictions on 
freedom of establishment and freedom to provide services in respect of self -employed 
activities of banks and other financial institutions7, first Council Directive 
(77/780/EEC) of 12 December 1977 on the c oordination of laws, regulations and 
administrative provisions relating to the taking up and pursuit of the business of credit 
institutions8, Council Directive 89/29 9/EEC of 17 April 1989 on the own funds of 
credit institutions9, second Council Directive 89/646/ EEC of 15 December 1989 on the 
coordination of laws, regulations an d administrative pr ovisions relatin g to the taking 
                                                 
5 OJ C 157, 25.5.1998, p. 13  ⌦ […] ⌫ . 
6 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)  
⌦ […] ⌫ . 
7 OJ L 126, 26.5.2000, p.1, as last amended by the Act of Accession 2003  
8 OJ L 126, 26.5.2000, p.1, as last amended by the Act of Accession 2003  
9 OJ L 126, 26.5.2000, p.1, as last amended by the Act of Accession 2003  
 
EN 12   EN up and pursuit of the business of credit institutions10, Council Directiv e 89/647/EEC of 
18 December 1989 on a solvency ratio for credit institutions11, Council Directive 
92/30/EEC of 6 April 1992 on the superv ision of credit institutions on a consolidated 
basis12, and Council Directive 92/121/EEC of  21 December 1992 on the monitoring 
and control of large exposur es of credit institutions13 have been frequently and 
substantially amended. For reasons of clar ity and rationality, the said Directives  
therefore, should be codified and combined in a single text.  ⌦ Directive 2000/12/EC 
of the European Parliament and of the C ouncil of 20 March 2000 re lating to the taking 
up and pursuit of the business  of credit institutions14 has been substantially amended 
several times. Since further amendments ar e to be made, it should be recast in the 
interest of clarity. ⌫  
 
Ð 2000/12/EC Recital 2 (adapted) 
Pursuant to the Treaty, any discrimina tory treatment with regard to esta blishment and to the 
provision of services, based either on nationalit y or on the fact that an undertaking is not 
established in the Member State where the services are provided, is prohibited.  
 
Ð 2000/12/EC Recital 3 
(2) In order to make it easier to take up and pursue the business of credit institutions, it is 
necessary to eliminate the most obstructive differences between the laws of the 
Member States as regards the rules to which these institutions are subject. 
 
Ð 2000/12/EC Recital 4 (adapted) 
(3) This Directive constitutes the essential instrument for the achievement of the internal 
market, a course determined by the Single European Act and set out in timetable form 
in the Commission's White Paper,  from the point of view  of both the freedom of 
establishment and the freedom to provide fi nancial services, in the field of credit 
institutions. 
 
Ð 2000/12/EC Recital 5 (adapted) 
(4) Measures to coordinate credit institutions mu st, both in order to protect savings and to 
create equal conditions of competition between these institutions, apply to all of them. 
Due regard must  ⌦ should however ⌫ be had, where applicable,  to the objective 
differences in their statutes and their proper aims as laid down by national laws. 
 
Ð 2000/12/EC Recital 6 (adapted) 
(5) The scope of those measures should therefor e be as broad as possible, covering all 
institutions whose business is to receive repayable funds from the public, whether in 
                                                 
10 OJ L 126, 26.5.20 00, p.1, as last amended by the Act of Accession 2003  
11 OJ L 126, 26.5.2000, p.1, as last amended by the Act of Accession 2003  
12 OJ L 126, 26.5.2000, p.1, as last amended by the Act of Accession 2003  
13 OJ L 126, 26.5.2000, p.1, as last amended by the Act o f Accession 2003  
14 OJ L 126, 26.5.2000, p.1 as last amended by Directive 2004/xx/EC (OJ L, […]) 
 
EN 13   EN the form of deposits or in other forms such as the continuing issu e of bonds and other 
comparable securities and to grant credits for thei r own account. Exceptions must  
⌦ should ⌫ be provided for in the case of cert ain credit institutions to which this 
Directive cannot apply. The provis ions of this Directive shall  ⌦ should ⌫ not 
prejudice the applicat ion of national laws which provi de for special supplementary 
authorisations permitting credit institutions to carry on specific activities or undertake specific kinds of operations. 
 
Ð 2000/12/EC Recital 7 (adapted) 
(6) The approach which has been adopted is  ⌦ It is appropriate ⌫ to achieve  
⌦ effect ⌫ only the essential harmonisation nece ssary and sufficient to secure the 
mutual recognition of authorisation and of  prudential supervis ion systems, making 
possible the granting of a single licence r ecognised throughout the Community and the 
application of the principle of home Member  State prudential s upervision. Therefore, 
the requirement that a programme of opera tions must be produced should be seen 
merely as a factor enabling the competent au thorities to decide on the basis of more 
precise information using objective cr iteria. A measure of flexibility may  
⌦ should ⌫ none-the-less be possible as regard s the requirements on the legal form 
of credit institutions of  ⌦ concerning ⌫ the protection of banking names. 
 
Ø new 
(7) Since the objective of the proposed acti on cannot be sufficiently achieved by the 
Member States and can therefore, by reason of the scale and the effects of the action, 
be better achieved at Community level, the Community may adopt measures, in 
accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. In 
accordance with the principle of proportional ity, as set out in that Article, this 
Directive confines itself to the minimum re quired in order to ach ieve those objectives 
and does not go beyond what is necessary for that purpose.  
 
Ð 2000/12/EC Recital 8 (adapted) 
(8) Equivalent financial requirements  for credit institutions are necessary to ensure similar 
safeguards for savers and fair conditions of  competition between comparable groups of 
credit institutions. Pending furt her coordination, appr opriate structural ratios should be 
formulated that will make  ⌦ making ⌫ it possible within the framework of 
cooperation between national au thorities to observe, in accordance with standard 
methods, the position of comparable types of credit institutions. This procedure should 
help to bring about the gradual approxi mation of the systems of coefficients 
established and applied by the Member States. It is necessary, however to make a distinction between coefficients intended to  ensure the sound management of credit 
institutions and those established for th e purposes of economic and monetary policy. 
 
Ð 2000/12/EC Recital 9 (adapted) 
Ö new 
(9) The principles of mutual recognition and hom e Member State supervision require that 
Member States' competent authorities should not grant or should withdraw ⌦ an ⌫ 
 
EN 14   EN authorisation where factors such as ⌦ the ⌫ content of the activities programmes, 
the geographical distribution ⌦ of activities ⌫ or the activities actually carried on 
indicate clearly that a credit institution ha s opted for the legal system of one Member 
State for the purpose of evading the stricter standards in force in another Member State 
within whose territory it carries on or in tends to carry on the greater part of its 
activities. A credit institution which is a legal person must  ⌦ should ⌫ be authorised 
in the Member State in which it has its regist ered office. A credit institution which is 
not a legal person must  ⌦ should ⌫ have its head office in the Member State in 
which it has been authorised. In addition, Member States must  ⌦ should ⌫ require 
that a credit institution's h ead office always be situated in its home Member State and 
that it actually operates there. 
 
Ð 2000/12/EC Recital 10 
(adapted) 
(10) The competent authorities should not authorise or continue the authorisation of a credit 
institution where they are li able to be prevented from effectively exercising their 
supervisory functions by the close links betw een that institution and other natural or 
legal persons. Credit institutions already authorised must  ⌦ should ⌫ also satisfy 
the competent authorities in that respect.  The definition of «close links» in this 
Directive lays down minimu m criteria. That does not  prevent Member States from  
applying it to situations other than those envisaged by the definition. The sole fact of 
having acquired a significant proportion of a company's capital doe s 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 exercise influence 
over the structure or financ ial policy of the institution.  
 
Ð 2000/12/EC Recital 11 
(adapted) 
(11) The reference to the supervisory authorities' effective exercise of their supervisory 
functions covers supervision on a consolidat ed basis which must be exercised over a 
credit institution where the provisions of Community law so provide. In such cases, 
the authorities applied to for authorisation must  ⌦ should ⌫ be able to identify the 
authorities competent to exercise supervision on a consolidated basis over that credit institution. 
 
Ð 2000/12/EC Recital 12 
(adapted) 
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 for institutions authorised by its 
competent authorities.  
 
Ð 2000/12/EC Recital 13 
(adapted) 
The abolition of the autho risation requirement with respect to the branches of Community 
credit institutions necessitates the abolition of endowment capital.  
 
EN 15   EN  
Ð 2000/12/EC Recital 14 
(adapted) 
(12) By virtue of mutual recogniti on, the approach chosen permits  cCredit institutions 
authorised in their home Member States ⌦ should be allowed ⌫ to carry on, 
throughout the Community, any or all of the activ ities listed in Annex I by establishing 
branches or by providing services. The carrying -on of acti vities not listed in the said 
Annex enjoys the right of establishment a nd the freedom to provide services under the 
general provisions of the Treaty.  
 
Ð 2000/12/EC Recital 15 
(adapted) 
(13) It is appropriate, however  to extend mutual recognition to the activities listed in Annex 
I when they are carried on by financial institutions which are subsidiaries of credit institutions, provided that such subsid iaries are covered by the consolidated 
supervision of their pare nt undertakings and meet certain strict conditions. 
 
Ð 2000/12/EC Recital 16 
(adapted) 
(14) The host Member State may  ⌦ should be able ⌫, in connection with the exercise of 
the right of establishment and th e freedom to provide services, ⌦ to ⌫ require 
compliance with specific provisions of its ow n national laws or re gulations on the part 
of institutions not authorised as credit institutions in their home Member States and with regard to activ ities not listed in Annex I pr ovided that, on the one hand, such 
provisions are compatible with Community la w and are intended to protect the general 
good and that, on the other hand, such institutio ns or such activities are not subject to 
equivalent rules under this legislation or regulations of their home Member States. 
 
Ð 2000/12/EC Recital 17 
(adapted) 
(15) The Member States must  ⌦ should ⌫ ensure that there are no obstacles to carrying 
on activities receiving mutual recognition in the same manner as in the home Member 
State, as long as the latter do not conflic t with legal provisions protecting the general 
good in the host Member State. 
 
Ð 2000/12/EC Recital 18 
(adapted) 
There is a necessary link between the objective of this Directive a nd the liberalisation of  
capital movements being brought  about by other Community le gislation. In any case the 
measures regarding the liberalisation of ba nking services must be  in harmony with the 
measures liberalising capital movements.  
 
EN 16   EN  
Ð 2000/12/EC Recital 19 
(adapted) 
(16) The rules governing branches of credit instit utions having their head office outside the 
Community should be analogous in  all Member States. It is  important at the present 
time to provide that such rules may not be mo re favourable than those for branches of 
institutions from another Member St ate. It should be specified that tThe Community 
may ⌦ should be able to ⌫ conclude agreements with 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  ⌦ should ⌫ not enjoy the freedom to 
provide services under the second paragraph of  Article 49 of the Tr eaty or the freedom 
of establishment in Member States other th an those in which they are established. 
However, requests for the authorisation of  subsidiaries or of the acquisition of 
holdings m ade by undertakings governed by th e laws of third countries are 
should  subject to a procedure intended to ensure that Community credit institutions 
receive reciprocal treatment in the third countries in question.  
 
Ð 2000/12/EC Recital 20 
(adapted) 
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 pr ocedure is therefore needed 
to make it possible to assess reciprocity on a Co mmunity basis. The aim of this procedure is 
not to close the Community's financial markets but rather, as the Community intends to keep 
its financial markets open to the rest of t he world, to improve the liberalisation of the global 
financial markets in other third countries. To th at end, this Directive pr ovides for procedures 
for negotiating with third countries  and, as a last resort, for the possibility of taking measures 
involvi ng the suspension of new a pplications for authorisation or the restriction of new 
authorisations.  
 
Ð 2000/12/EC Recital 21 
(adapted) 
(17) It is desirable that  aAgreement should be reached, on the basis of reciprocity, between 
the Community and third countries with a view  to allowing the practical exercise of 
consolidated supervision over the largest possible geographical area. 
 
Ð 2000/12/EC Recital 22 
(adapted) 
(18) Responsibility for supervising the financia l soundness of a credit institution, and in 
particular its solvency, rests  ⌦ should lay ⌫ with the competent authorities of  its 
home Member State. The host Member State's competent authorities retain  ⌦ should 
be ⌫ responsibility  ⌦ responsible ⌫ for the supervision of ⌦ the ⌫ liquidity 
⌦ of the branches ⌫ and monetary policy  ⌦ policies ⌫. The supervision of 
market risk must  ⌦ should ⌫ be the subject of close cooperation between the 
competent authorities of the home and host Member States. 
 
EN 17   EN  
Ð 2000/12/EC Recital 23 and 24 
(adapted) 
Ö new 
(19) The smooth operation of the internal banking market requires not only legal rules but 
also close and regular cooperation Ö and significantly enhanced convergence of 
regulatory and supe rvisory practices  between the competent authorities of the 
Member States. Fo r the  ⌦ To this end, in particular, ⌫ consideration of problems 
concerning individual credit institutions Ö and the mutual exchange of information 
should take place in  the «groupe de contact» (conta ct group)  Ö Committee of 
European Banking Supervisors  set up Ö by Commission Decision 2004/5/EC 15  
between the banking supervisory authorities remains  the most appropriate forum. That 
group is a su itable body for the mutual exchange of information provided for in Article 
28. That mutual information procedure does  ⌦ should ⌫ not in any case replace the 
bilateral collaboration  ⌦ co-operation ⌫ established by Article 28. The competent  
host Member State authorities can, . wWithout prejudice to their powers of proper 
control, ⌦ the competent authorities of the host Member States should be able ⌫ 
continue either , in an emergency, on their own initia tive or following the initiative of 
the competent ⌦ authorities of ⌫ home Member State authorities , to verify that the 
activities of a credit institution established within their territories comply with the 
relevant laws and with th e principles of sound administrative and accounting 
procedures and adequate internal control. 
 
Ð 2000/12/EC Recital 25 
(adapted) 
(20) It is appropriate to allow the exchange  of information between the competent 
authorities and authorities or bodies whic h, by virtue of their function, help to 
strengthen the stability of the financial sy stem. In order to preserve the confidential 
nature of the information forwarded, the list of addressees must  ⌦ should ⌫ remain 
within strict limits. 
 
Ð 2000/12/EC Recital 26 and 27 
(adapted) 
(21) Certain behaviour, such as fraud and insider o ffences, is liable to affect the stability, 
including the integrity, of the financial sy stem, even when involving institutions other 
than credit institutions. It  is necessary to specify the conditions under which such  
exchanges  of information ⌦ in such cases ⌫ are ⌦ is ⌫ authorised. 
 
Ð 2000/12/EC Recital 28 
(adapted) 
(22) Where it is stipulated that informatio n may be disclosed only with the express 
agreement of the competen t authorities, these may  ⌦ should be able ⌫, where 
                                                 
15 OJ L 3, 7.1.2004, p. 28  
 
EN 18   EN appropriate, ⌦ to ⌫ make their agreement subject  to compliance with strict 
conditions. 
 
Ð 2000/12/EC Recital 29 
(23) Exchanges of information between, on the on e hand, the competent au thorities and, on 
the other, central banks and other bodies w ith a similar function in their capacity as 
monetary authorities and, wh ere appropriate, other public authorities responsible for 
supervising payment systems should also be authorised. 
 
Ð 2000/12/EC Recital 30 
(adapted) 
(24) For the purpose of strengthening the prudential supervision of credit institutions and 
⌦ the ⌫ protection of clients of credit instit utions, it should be stipulated that an  
auditors  must  ⌦ should ⌫ have a duty to report promptly to the competent 
authorities, wherever, as provi ded for by this Directive, he  ⌦ during the performance 
of their tasks, ⌫ becomes  aware, while carrying out his tasks,  of certain facts which 
are liable to have a serious effect on the fi nancial situation or the administrative and 
accounting organisation of a credit institution. Having regard to the aim in view, it is 
desirable for  the ⌦ For the same reason ⌫ Member States  to ⌦ should also ⌫ 
provide that such a duty should  apply  ⌦ applies ⌫ in all circumstances where such 
facts are discovered by an auditor during the performance of his tasks in an undertaking which has close links with a cred it institution. The duty of auditors to 
communicate, where appropria te, to the competent authorities certain facts and 
decisions concerning a credit institution wh ich they discover during the performance 
of their tasks in a non-financial undertaking does
 ⌦ should ⌫ not in itself change 
the nature of their tasks in that undertaking nor the manner in which they must 
perform those tasks in that undertaking. 
 
Ð 2000/12/EC Recitals 31 to 35 
(adapted) 
Common basic standards for the own funds of credit i nstitutions are a key factor in the 
creation of an internal banking ma rket since own funds serve to en sure the conti nuity of credit 
institutions and to protect sa vings. Such harmonisation strengt hens the supervision of credit 
institutions and contributes t o further coordination in the banking sector.  
Such standards must apply to all credit institutions authorised in the Community.  
The own funds of a credit institutions can serve to absorb losses which are not matched by a 
sufficient volume of profits. The o wn funds also serve as an important yardstick for the 
competent authorities, in particular for the a ssessment of the solvency of credit institutions 
and for other prudential purposes.  
Credit institutions, in an internal banking market, engage in direct com petition with each 
other, and the definitions and st andards pertaining to own funds must therefore be equivalent. 
To that end, the criteria for determining the co mposition of own funds must not be left solely 
to Member States. The adoption of common basic standards will be in the best interests of the 
 
EN 19   EN Community in that it will pr event distortions of competi tion and will strengthen the 
Community banking system.  
The definition of own funds laid down in this Directive provid es for a maximum of items and  
qualif ying amounts, leaving it to the discretion of each Member State to use all or some of 
such items or to adopt lower ceilings for the qualifying amounts.  
 
Ð 2000/12/EC Recital 36 
(adapted) 
(25) This Directive specifies the  ⌦ that for certain own funds items ⌫ qualifying criteria 
for certain own funds items  ⌦ should be specified, without prejudice to the 
possibility of ⌫ and the  Member States remain free  to apply more stringent 
provisions. 
 
Ð 2000/12/EC Recital 37 
(adapted) 
At the initial stage common basi c standards are define d in broad terms in order to encompass 
all the items making up own funds in the different Member States.  
 
Ð 2000/12/EC Recital 38 
(26) According to the nature of the items maki ng up own funds, this Di rective distinguishes 
between on the one hand, items constituting original own funds and, on the other, those constituting additional own funds. 
 
Ð 2000/12/EC Recital 39 
(adapted) 
(27) To reflect the fact that items constituti ng additional own funds are not of the same 
nature as those constituting original own funds, the amount of the former included in 
own funds must  ⌦ should ⌫ not exceed the original own funds. Moreover, the 
amount of certain items of a dditional own funds included must  ⌦ should ⌫ not 
exceed one half of th e original own funds. 
 
Ð 2000/12/EC Recital 39 
(adapted) 
(28) In order to avoid distortions of comp etition, public credit institutions must  
⌦ should ⌫ not include in their own funds gua rantees granted them by the Member 
States or local authorities. 
 
Ð 2000/12/EC Recital 40 
(adapted) 
(29) Whenever in the course of s upervision it is n ecessary to determine the amount of the 
consolidated own funds of  a group of credit institutio ns, the calculation shall  
⌦ should ⌫ be effected in accordan ce with this Directive. 
 
EN 20   EN  
Ð 2000/12/EC Recital 41 
(adapted) 
Ö new 
(30) The precise accounting technique to be us ed for the calculation of own funds, the 
solvency ratio  Ö their adequacy for the risk to wh ich a credit inst itution is exposed , 
and for the assessment of the concentration of exposures must  ⌦ should ⌫ take 
account of the provisions of Council Directive 86/635/EEC of  8 December 1986 on 
the annual accounts and consolidated ac counts of banks and other financial 
institutions16, which incorporates certain adapta tions of the provisions of Council 
Directive 83/349/EEC of 13 June 1983 based on Article 44(2)(g) of  the Treaty on 
consolidated accounts ⌦ 17 ⌫ Ö or of Regulation (EC) No 1606/2002 of the 
European Parliament and Council of 19 July  2002 on the application of international 
accounting standards18 whichever governs the accounting of the credit institutions 
under national law . 
 
Ð 2000/12/EC Recital 42 to 47 
(adapted) 
The provisi ons on own funds, form part of the wide r international effort to bring about 
approximation of the rules in force in major co untries regarding the ad equacy of own funds.  
In an internal banking market, institutions are required to enter into direct competiti on with 
one another and the common solvency ration in the form of a minimum ratio  prevent 
distortions of competition and strengthen the Community banking system.  
The Commission will draw up a report and periodi cally examine, with the aim of tightening 
them , the provisions on own funds and thus achieving greater convergence on a common 
definition of own funds. Such convergence wi ll allow the alignment of Community credit 
institutions' own funds . 
The provisions on solvency ratios  are the outcome of work carri ed out by the Banking 
Advisory Committee which is responsible for making suggestions to the Commission with a 
view to coordinating the coefficients  applicable in the Member States.  
The establishment of an appropriate solvency ratio plays a central role in the supervision of 
credit institutions.  
A ratio which weights assets and off -balance -sheet items according to the degree of credit risk 
is a particularly useful measure of solvency.  
                                                 
16 OJ L 372, 31.12.1986, p. 1. 
17 OJ L 193, 18.7.1983, p. 1. Directive as last amended by Directive ⌦ 2003/51/EC (OJ L 178, 
17.7.2003, p. 16). ⌫ 
18 OJ L 243, 11.9.2002, p. 1. 
 
EN 21   EN  
Ø new 
(31) Minimum capital requirements play a centr al role in the supervision of credit 
institutions and in the mutual recognition of  supervisory techniques. In that respect, 
the provisions on minimum capital requireme nts should be considered in conjunction 
with other specific instruments also harm onising the fundamental techniques for the 
supervision of credit institutions. 
(32) In order to prevent distortions of competition and to strengthen the banking system in 
the internal market, it is appropri ate to lay down common minimum capital 
requirements. 
(33) For the purposes of ensuring adequate solvency it is im portant to lay down minimum 
capital requirements which weight assets and off-balance-sheet items according to the 
degree of risk. 
 
Ð 2000/12/EC Recitals 48 to 51 
(adapted) 
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 r ecognition of supervision techniques and thus 
the completion of th e internal banking market.  
In that respect, the provisions on a solvency ra tio must be considered in conjunction with 
other specific instruments also harmonising the fundamental techniques of the supervision of 
credit institutions.  
In an internal banking m arket, institutions are required to enter into direct competition with 
one another and the common solvency standards in the form of a minimum ratio prevent 
distortions of competition and strengthen the Community banking system.  
This Directive provides for different weightings to be given to guarantees issued by different 
financial institutions. The Commission accordingly undertakes to examine whether this 
Directive taken as a whole significantly distor ts competition between credit institutions and 
insurance  undertakings and, in the ligh t of that examination, to consider whether any remedial 
measures are justified.  
 
Ø new 
(34) It is essential to take account  of the diversity of credit institutions in the Community 
by providing alternative approaches to  the calculation of minimum capital 
requirements for credit risk incorporating different levels of risk-sensitivity and 
requiring different degrees of sophisticati on. Use of external ratings and credit 
institutions’ own estimates of individual cred it risk parameters represents a significant 
enhancement in the risk-sensi tivity and prudential soundness of the credit risk rules. 
There should be appropriate incentives for credit institutions to move towards the 
more risk-sensitive approaches. 
 
EN 22   EN (35) The minimum capital requirements should be pr oportionate to the ri sks addressed. In 
particular the reduction in risk  levels deriving from having a large number of relatively 
small exposures should be reflected in the requirements. 
(36) Increased recognition should be given to techni ques of credit risk mitigation within a 
framework of rules designed to ensure that solvency is not undermined by undue 
recognition. 
(37) In order to ensure that the risks and risk reductions arising from credit institutions’ 
securitisation activities and investments are appropriately reflected in the minimum 
capital requirements of credit institutions it is necessary to include rules providing for 
a risk-sensitive and prudentially  sound treatment of such activities and investments. 
 
Ð 2000/12/EC Recital 52 
(adapted) 
Annex III lays down the treatment of off -balance -sheet items in the context of the calculation 
of credit institutions' capital requirements. Wi th a view to the smooth functioning of the 
internal market and in particular with a view  to ensuring a level playing field Member States 
are obliged to strive for uniform assessment of contractual netting agreements by their 
competent authorities. Annex III takes account of  the work of an international forum of 
banking supervisors on the supe rvisory recognition of bilatera l netting, in particular the 
possibility of calculating the own -funds requirements for certain tr ansactions on 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 ne t amount. For internationally active credit 
institutions and groups of credit institutions in a wide range of third countries, which compete 
with Community credit in stitutions, the rules adopted  on the wider internatio nal level will 
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 the 
risk-reducing effects of supervisorily recognised cont ractual netting agr eements on potential 
future credit risks. The clea ring of OTC derivative instrume nts provided by clearing houses 
acting as a central counterparty plays an importa nt role in certain Member States. It is 
appropriate to recognise the benefi ts from such a clearing in term s of a reduction of credit risk 
and related systemic risk in the prudential treat ment of credit risk. It is necessary for the 
current and potential future exposures arising from cleared OTC derivativ es contracts to be 
fully c ollateralised and for the risk of a build -up of the clearing house' s exposures beyond the 
market value of posted collateral to be eliminat ed in order for cleared OTC derivatives to be 
granted for a transitional period the same prudential treatment as excha nge-traded derivatives. 
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 posted 
collateral. For credit institutions incorporated  in the Member States, Annex III creates a 
similar possibility for the recognition of bila teral netting by the competent authorities and 
thereby offers them equal conditions of competition. The rules are both well balanced and 
appropriate for the further r einforcement of the a pplication of prudential supervisory measures 
to credit institutions. The compet ent authorities in the Member States should ensure that the 
calculation of add -ons is based on effective rather  than apparent national amounts.  
 
EN 23   EN  
Ø new 
(38) Operational risk is a signif icant risk faced by credit ins titutions requiring coverage by 
own funds. It is essential to take account of the diversity of credit institutions in the 
Community by providing alternative approaches  to the calculation of operational risk 
requirements incorporating different levels of risk-sensitivity and requiring different 
degrees of sophistication. There should be appropriate incentives for credit institutions 
to move towards the more risk-sensitive approaches. In view of the emerging state of 
the art for the measurement and management  of operational risk the rules should be 
kept under review and updated as appropriate  including in relation to the charges for 
different business lines and the recognition of risk mitigation techniques. 
(39) In order to ensure adequate solvency of cr edit institutions within a group it is essential 
that the minimum capital requirements apply on the basis of the consolidated financial 
situation of the group. In order to ensure th at own funds are appropriately distributed 
within the group and availabl e to protect savings where needed, the minimum capital 
requirements should apply to individual credit  institutions within a group, unless this 
objective can be effectively otherwise achieved. 
 
Ð 2000/12/EC Recital 53 
(adapted) 
The minimum  ratio provided for in this Directive reinfor ces the capital of credit institutions in  
the Community. A level of 8% has been adopted following a statistical survey of capital 
requirements in force at the be ginning of 1988.  
 
Ð 2000/12/EC Recital 54 
(40) The essential rules for monitoring large exposures of credit institutions should be 
harmonised. Member States should still be able to adopt provisions more stringent 
than those provided for by this Directive. 
 
Ð 2000/12/EC Recital 55 
(adapted) 
(41) The monitoring and control of a credit institution's exposures is  ⌦ should be ⌫ an 
integral part of its supervision. ⌦ Therefore ⌫ Eexcessive concentration of 
exposures to a single clie nt or group of connected cl ients may result in an 
unacceptable risk of loss. Such a situation may  ⌦ can ⌫ be considered prejudicial to 
the solvency of a credit institution. 
 
Ð 2000/12/EC Recital 56 
(adapted) 
(42) In an internal banking market, ⌦ Since ⌫ credit institutions ⌦ in the internal 
market ⌫ are engaged in direct competition,  with one another and  monitoring 
requirements throughout the Community  should therefore  be equivalent 
⌦ throughout the Community ⌫. To that end, the criteria applied to determining the 
concentration of exposures must be the s ubject of legally bind ing rules at Community  
 
EN 24   EN level and cannot be left entirely to the di scretion of the Member States. The adoption 
of common rules will therefor e best serve the Community's interests, since it will 
prevent differences in the conditions of competition, while strengthening the 
Communi ty's banking system.  
 
Ð 2000/12/EC Recital 57 
(adapted) 
Ö new 
(43) The provisions on a solvency ratio for credit in stitutions include a list of credit risks 
which may be incurred by credit instituti ons. That list should therefore be used also for 
the definition of exposures for the purposes of limits to large exposures. It is not, 
however, Ö While it is appropriate to base the definition of exposures for the purposes 
of limits to large exposures on that provi ded for the purposes of minimum own funds 
requirements for credit risk, it is not  appropriate to refer on principle to the 
weightings or degrees of risk laid down in  the said provisions. Those weightings and 
degrees of risk were devised for the pur pose of establishing a general solvency 
requirement to cover the credit risk of cr edit institutions. In  the context of the 
regulation of large exposures, the aim is.  ⌦ In order ⌫ to limit the maximum loss 
that a credit institution ma y incur through any single client or group of connected 
clients.  It ⌦ it ⌫ is therefore  appropriate to adopt a prude nt approach in which, as a 
general rule, account is taken of the nominal value of exposures, but  no ⌦ rules for 
the determination of large exposures which take account of the nominal value of the exposure without applying ⌫ weightings or degrees  of risk are applied
. 
 
Ø new 
(44) While it is desirable, pending further review  of the large exposures provisions, to 
permit the recognition of the effects of cred it risk mitigation in a manner similar to 
that permitted for minimum capital requirement purposes in order to limit the 
calculation requirements, the rules on credit  risk mitigation were designed in the 
context of the general divers ified credit risk arising from exposures to a large number 
of counterparties. Accordingly, recognition of  the effects of such techniques for the 
purposes of limits to large exposures desi gned to limit the maximum loss that may be 
incurred through any single clie nt or group of connected clie nts should be subject to 
prudential safeguards. 
 
Ð 2000/12/EC Recital 58 
(adapted) 
(45) When a credit institution incurs an exposure to its own parent unde rtaking or to other 
subsidiaries of its pare nt undertaking, particular prudence is necessary. The 
management of exposures incurred by credit institutions must  ⌦ should ⌫ be carried 
out in a fully autonomous manner, in accordance with the principles of sound banking management, without regard to any ⌦ other ⌫ considerations other than those 
principles . The provision of this Directive require that wWhere the influence exercised 
by persons directly or indi rectly holding a qualifying pa rticipation in a credit 
institution is likely to oper ate to the detriment of the sound and prudent management 
of that institution, the competent authorities shall  ⌦ should ⌫ take appropriate 
measures to put an end to that situation. In the field of large exposures, specific 
 
EN 25   EN standards ⌦ , including more stringent restrictions, ⌫ should also  be laid down for 
exposures incurred by a credit inst itution to its own group, and in s uch cases more 
stringent restrictions are justified than fo r other exposures. More stringent restrictions  
⌦. Such standards ⌫ need not, however be applied where the parent undertaking is a 
financial holding company or a credit institu tion or where the other subsidiaries are 
either credit or financial institutions or undertakings offering ancillary banking  
services, provided that all such undertaki ngs are covered by the supervision of the 
credit institution on a consolidated basis. In  such cases the conso lidated monitoring of 
the group of undertakings allows for an ad equate level of supervision, and does not 
require the imposition of more stringent limits on exposure. Under this approach 
banking groups will also be encouraged to or ganise their structures in such a way as to 
allow consolidated monitoring, which is desirable because a more comprehensive 
level of monitoring is possible.  
 
Ø new 
(46) Credit institutions should ensu re that they have internal capital which, ha ving regard to 
the risks to which they are or might be exposed, is adequate in quantity, quality and 
distribution. Accordingly, credit institutions should have strategies and processes in 
place for assessing and maintaining the ad equacy of their internal capital. 
(47) Competent authorities have responsibility to be satisfied that credit institutions have 
good organisation and adequate own funds, ha ving regard to the risks to which the 
credit institutions are or might be exposed to. 
(48) In order for the internal market in banki ng to operate effectiv ely the Committee of 
European Banking Supervisors should contribute to the consistent application of this 
directive and to the conver gence of supervisory practi ces throughout the Community. 
(49) For the same reason and to ensure that Co mmunity credit institutions which are active 
in several Member States are not dispropor tionately burdened as a result of the 
continued responsibilities of  individual Member State competent authorities for 
authorisation and supervision, it is essential to  significantly enhanc e the co-operation 
between competent authorities. In this contex t the role of the consolidated supervisor 
should be strengthened. The Committee of European Banking Supervisors should 
support and enhance such co-operation. 
 
Ð 2000/12/EC Recital 65 
(adapted) 
(50) Supervision of credit institutions on a consolidated basis must be aimed  ⌦ aims ⌫ 
at, in particular, protecting the inte rests of the depositors of the said  ⌦ credit ⌫ 
institutions and ⌦ at ⌫ ensuring the stability of the financial system. 
 
Ð 2000/12/EC Recital 59 
(adapted) 
(51) In order to be effective, superv ision on a consolidated basis must  ⌦ should 
therefore ⌫ be applied to all banking groups, in cluding those the parent undertakings 
 
EN 26   EN of which are not credit institutions. The competent authorities must  ⌦ should ⌫ hold 
the necessary legal instruments to be able to exercise such supervision. 
 
Ð 2000/12/EC Recital 60 
(adapted) 
(52) In the case of groups w ith diversified activities ⌦ where ⌫ the parent undertakings 
of which control at least one credit institu tion subsidiary, the competent authorities 
must  ⌦ should ⌫ be able to assess the financial si tuation of a credit  institution in 
such a group. Pending subsequent coordina tion, the Member States may lay down 
appropriate methods of consolidation for the achieveme nt of the objective of this 
Directive.  The competent authorities must  ⌦ should ⌫ at least have the means of 
obtaining from all undertakings within a group the information necessary for the performance of their function. Cooperation be tween the authorities responsible for the 
supervision of different  financial sectors must
 ⌦ should ⌫ be established in the case 
of groups of undertakings carrying on a range of financial activities ⌦ . Pending 
subsequent coordination, the Member States  should be able to lay down appropriate 
methods of consolidation fo r the achievement of the obj ective of this Directive. ⌫ 
 
Ð 2000/12/EC Recital 61 
(adapted) 
(53) The Member States can, fur thermore,  ⌦ should be able to ⌫ refuse or withdraw 
banking authorisation in the cas e of certain group structures  considered inappropriate 
for carrying on banking activities, in particular  because such structures could not be 
supervised effectively. In this respect the competent authorities ⌦ should ⌫ have the 
⌦ necessary ⌫ powers mentioned in the first subpa ragraph of Article 7(1), Article 
7(2), point (c) of Article 14(l), a nd Article 16 of this Directive, in order  to ensure the 
sound and prudent management of credit institutions. 
 
Ð 2000/12/EC Recitals 62 to 64 
(adapted) 
The Member States can equally apply appropria te supervision techniqu es to groups with 
struc tures not covered by this Directive. If such  structures become common, this Directive 
should be extended to cover them.  
Supervision on a consolidated basis must take in all activities defined in Annex I. All 
undertakings principally engaged in such activit ies must therefore be included in supervision 
on a consolidated basis. As a resu lt, the definition of financial in stitutions must be widened in 
order to cover such activities.  
Directive 86/635/EEC, together with Dire ctive 83/349/EEC, established the rules of 
consolidation applicable to consolidated  accounts published by cred it institutions. It is  
therefore possible to define more  precisely the methods to be used in prudential supervision 
exercised on a consolidated basis.  
 
EN 27   EN  
Ø new 
(54) In order for the internal mark et in banking to operate with increasing effectiveness and 
for citizens of the Community to be afforded  adequate levels of transparency, it is 
necessary that competent authorities disclose publicly and in a way which allows for 
meaningful comparison the manner in wh ich this Directive is implemented. 
(55) In order to strengthen market discipline a nd stimulate credit institutions to improve 
their market strategy, risk control and internal manageme nt organization, appropriate 
public disclosure by credit institutions should be provided for. 
 
Ð 2000/12/EC Recital 66 
(adapted) 
(56) The examination of problems connected with matters covered by this Directive as well 
as by other Directive on the business of credit institutions re quires cooperation 
between the competent authorities and th e Commission within a banking advisory 
committee , particularly when conducted with a view to closer coordination. The 
Banking Advisory Committee of the competent authorities of the Member States does 
not rule out o ther forms of cooperation between aut horities which supervise the taking 
up and pursuit of the business of credit in stitutions and, in particular, cooperation 
within the «groupe de contact» (contact group) set up between the banking supervisory  
authorities . 
 
Ð 2000/12/EC Recital 67 
(adapted) 
(57) Technical modifications to the detailed rule s 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, after 
consulting the Banking Adviso ry Committee, within the limits of the implementing 
powers conferred on the Commission by the Treaty. The measures necessary for the 
implementation of this Directive should be adopted in accord ance with Council 
Decision 1999/468/EC of 28 June 1999 laying dow n the procedures for the exercise of 
implementing powers conferred on the Commission ⌦ 19 ⌫ . 
 
Ø new 
(58) In order to avoid disr uption to markets and to ensure c ontinuity in overall levels of 
own funds it is appropriate to provide for specific transitional arrangements. 
(59) In view of the risk-sensitivity of the rules relating to minimum capital requirements, it 
is desirable to keep under review whet her these have significant effects on the 
economic cycle. The Commission, taking into account the contribution of the 
European Central Bank should report on these aspects to the European Parliament and 
to the Council. 
                                                 
19 ⌦ OJ L 184, 17.7.1999, p. 23. ⌫ 
 
EN 28   EN  
Ð 2000/12/EC Recital 68 
(adapted) 
Article 36 (1) of this Directive permits joint and several commitments of borrowers in the 
case of credit institutions organi sed as cooperative societies or funds to be treated as own 
funds items under Article 34 (2)(7).  The Danish Government has expressed a strong interest 
in having its few mortgage cred it institutions organised as cooperative societies or funds 
converted into public limited liability companies. In order to facilitate the conversion or to 
make it possible, a te mporary derogation a llowing them to include part of their joint and 
several commitments as own funds is requi red. This temporary derogation should not 
adversely affect competition between credit institutions.  
 
Ð 2000/12/EC Recitals 69 to 71 
(69) The application of a 20% weighting to credit inst itutions' holdings of mortgage bonds 
may unsettle a national financial market on whic h 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. It  is therefore desirabl e that the Commission 
should examine with the Member States  the prudential treatment of asset -backed securities 
and put forward, before 22 June 1999, proposals aimed at adapting existing  legislation in 
order to define an appropriat e prudential treatment for asset -backed securities. The competent 
authorities may authorise a 50% weighting to assets secured by mortgages on offices or on 
multipurpose commercial premises until 31 December 2006 . The property to which the 
mortgage relates must be subject to rigorous assessment criteria and regular revaluation to 
take account of the developments in the comm ercial property market. The property must be 
either occupied or let by the owner. Loans for property development are excluded from this 
50% weighting.  
(70) In order to ensure harmonious application of the provisions on large exposures, Member 
States should be allowed to provide for the two -stage application of the new limits. For 
smaller credit i nstitutions, a longer transitional period may be warranted inasmuch as too 
rapid an application of the 25% rule coul d reduce their lending activity too abruptly.  
(71) Moreover, the harmonisation of the conditi ons relating to the reorganisation and 
winding -up of credit institutions is also proceeding.  
 
Ð 2000/12/EC Recital 72 
(adapted) 
(60) The arrangements necessary for the supervisi on of liquidity risks will also have to  be 
harmonised. 
 
Ð 2000/12/EC Recital 73 
(adapted) 
This Directiv e must not affect to obligations of th e Member States concerning the deadlines 
for transposition set out in Annex V, Part B  
 
EN 29   EN  
Ø new 
(61) This Directive respects the fundamental righ ts and observes the principles recognised 
in particular by the Charter of Fundamental Rights of the European Union as general 
principles of Community law. 
(62) The obligation to transpose this Directive in to national law should be  confined to those 
provisions which represent a substantive change as compared with the earlier 
Directives. The obligation to transpose the provisions which are unchanged arises 
under the earlier Directives. 
(63) This Directive should be without prejudice to the obligations of the Member States 
relating to the time-limits for transposition into national law of the Directives set out in 
Annex XIII, Part B. 
 
Ð 2000/12/EC 
HAVE ADOPTED THIS DIRECTIVE: 
 
Ø new 
CONTENTS 
TITLE I  SUBJECT MATTER, SCOPE AND DEFINITIONS  
TITLE II  REQUIREMENTS FOR ACCESS TO  THE TAKING UP AND 
PURSUIT OF THE BUSINESS OF CREDIT INSTITUTIONS  
TITLE III  PROVISIONS CONCERNI NG THE FREEDOM OF 
ESTABLISHMENT AND THE FREEDOM TO PROVIDE SERVICES  
Section 1  Credit institutions  
Section 2 Financial institutions 
Section 3 Exercise of the right of establishment 
Section 4 Exercise of the freedom to provide services 
Section 5  Powers of the competent authorit ies of the host Member State  
TITLE IV  RELATIONS WITH THIRD COUNTRIES  
Section 1  Notification in relation to third countries' undertakings and 
conditions of access to the markets of these countries 
Section 2  Cooperation with third countries' competent authorities regarding 
supervision on a consolidated basis 
TITLE V  PRINCIPLES AND TECHNICAL INSTRUMENTS FOR 
 
EN 30   EN PRUDENTIAL SUPERVISION AND DISCLOSURE  
Chapter 1  Principles of prudential supervision 
Section 1 Competence of home and host Member State 
Section 2  Exchange of information and professional secrecy 
Section 3  Duty of persons responsible fo r the legal cont rol of annual and 
consolidated accounts 
Section 4  Power of sanction and right to apply to the courts 
Chapter 2  Technical instruments of  prudential supervision 
Section 1 Own funds 
Section 2  Provision against risks 
Subsection 1  Level of application 
Subsection 2  Calculation of requirements 
Subsection 3  Minimum Level of Own Funds 
Section 3  Minimum own funds require ments for credit risk 
Subsection 1  Standardised Approach 
Subsection 2  Internal Ratings based Approach 
Subsection 3  Credit risk mitigation 
Subsection 4  Securitisation 
Section 4  Minimum own funds requirements for operational risk 
Section 5  Large exposures 
Section 6  Qualifying holdings outside the financial sector 
Chapter 3  Credit institutions' assessment process 
Chapter 4 Supervision and disclosure by  competent authorities  
Section 1  Supervision 
Section 2  Disclosure by competent authorities 
Chapter 5  Disclosure by credit institutions 
TITLE VI  POWERS OF EXECUTION 
 
EN 31   EN TITLE VII  TRANSITIONAL AND FINAL PROVISIONS 
Chapter 1  Transitional provisions 
Chapter 2 Final provisions 
ANNEX I List of activities subject to mutual recognition 
ANNEX II Classification of of f-balance-sheet items 
ANNEX III The treatment of derivative instruments 
ANNEX IV Types of derivatives 
ANNEX V Technical criteria on organisa tion and treatm ent of risks 
ANNEX VI  Standardised Approach 
ANNEX VI Part 1 Risk weights 
ANNEX VI Part 2 Recognition of ECAIs and mapping of  their credit assessments 
ANNEX VI Part 3 Use of ECAIs’ credit assessments for the determination of risk 
weights 
ANNEX VII  Internal Ratings based Approach 
ANNEX VII Part 1 Risk weighted exposure amounts and expected loss amounts 
ANNEX VII Part 2 PD, LGD, and Maturity 
ANNEX VII Part 3 Exposure value 
ANNEX VII Part 4 Minimum Requirements for IRB Approach 
ANNEX VIII  Credit risk mitigation 
ANNEX VIII Part 1 Eligibility 
ANNEX VIII Part 2 Minimum Requirements 
ANNEX VIII Part 3 Calculating the effects of  credit risk mitigation 
ANNEX VIII Part 4 Maturity mismatches 
ANNEX VIII Part 5 Combinations of credit risk miti gation in the Standardised Approach 
ANNEX VIII Part 6 Basket CRM techniques 
ANNEX IX Securitisation 
ANNEX IX Part 1 Definitions for purposes of Annex X 
 
EN 32   EN ANNEX IX Part 2 Minimum requirements for recogniti on of significant credit risk 
transfer and calculation of ri sk-weighted exposure amounts and 
expected loss amounts for securitised exposures 
ANNEX IX Part 3 External credit assessments 
ANNEX IX Part 4 Calculation 
ANNEX X  Operational Risk 
ANNEX X Part 1 Basic Indicator Approach 
ANNEX X Part 2 Standardised Approach 
ANNEX X Part 3 Advanced Measurement Approaches 
ANNEX X Part 4 Combined use of different methodologies 
ANNEX X Part 5 Loss event type classification 
ANNEX XI Technical criteria on the review and evaluation by the competent 
authorities 
ANNEX XII Technical criteria on disclosure 
ANNEX XII Part 1 General criteria 
ANNEX XII Part 2 General requirements 
ANNEX XII Part 3 Qualifying requirements for the use of particular instruments or 
methodologies 
ANNEX XIII Part A Repealed Directives, together wi th their successive amendments 
(referred to in Article 158) 
ANNEX XIII Part B Deadlines for implementation (r eferred to in Article 159) 
ANNEX XIV Correlation table 
 
EN 33   EN  
Ð 2000/12/EC (adapted) 
TITLE  I 
⌦ SUBJECT  MATTER,  SCOPE  AND ⌫ DEFINITIONS  AND  SCOPE  
 
Ð 2000/12/EC Article 2(1) and (2) 
(adapted) 
Article 1 
1. This Directive concerns  ⌦ lays down rules concerning ⌫ the taking up and pursuit 
of the business of credit institutions ⌦ , and their prudential supervision ⌫. This  
Directive shall apply to all credit institutions.  
2. Article  ⌦39⌫ and 52 to 56  ⌦ Title V, Chapter 4, Section 1 ⌫ shall also  apply to 
financial holding companies and mixed-ac tivity holding companies which have their 
head offices in the Community . 
3. The institutions permanently excluded by paragraph 3  ⌦ pursuant to Article 5 ⌫, 
with the exception, however, of the Member States’  central banks ⌦ of the Member 
States ⌫, shall be treated as financial institutions for the purposes of Articles  25 and  
52 to 56  ⌦ 39 and Title V, Chapter 4, Section 1 ⌫. 
 
Ð 2000/12/EC Article 2(3) 
(adapted) 
Article 2 
This Directive shall not apply to ⌦ the following ⌫ : 
– the central banks of Member States, 
– post office giro institutions, 
– in Belgium, the «Institut de Réescompte et de Garantie/Herdiscontering- en 
Waarborginstituut», 
– in Denmark, the «Dansk Eksportfinansieringsfond», the «Danmarks 
Skibskreditfond», and «Dansk Landbrugs Realkreditfond», 
– in Germany, the «Kreditanstalt für Wi ederaufbau», undertakings which are 
recognised under the «Wohnungsgemeinnützi gkeitsgesetz» as bodies of State 
housing policy and are not mainly engaged in  banking transactions , and undertakings 
recognised under that law as  non-profit housing undertakings, 
 
EN 34   EN – in Greece, the « Ελληνική  Τράπεζα  Βιομηχανικής  Αναπτύξεως ,», (Elliniki Trapeza 
Viomichanikis Anaptyxeos), the « Ταμείο  Παρακαταθηκών  και Δανείων » (Tamio 
Parakatathikon kai Danion), and the « Ταχυδρομικό  Ταμιευτήριο » (Tachidromiko 
Tamieftirio), 
– in Spain, the «Instituto de Crédito Oficial», 
– in France, the «Caisse de s dépôts et consignations», 
– in Ireland, credit unions and the friendly societies, 
– in Italy, the «Cassa depositi e prestiti», 
– in the Netherlands, the «Netherlandse I nvesteringsbank voor Ontwikkelingslanden 
NV», the «NV Noordelijke Ontwikkelings maatschappij», the «NV Industriebank 
Limburgs Instituut voor Ontwikkeling en Financiering» and the «Overijsselse Ontwikkelingsmaatschappij NV», 
– in Austria, undertakings r ecognised 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 lim ited companies and of the «Caixa Económica Montepio 
Geral», 
– in Finland, the «Teollisen yhteistyön rahasto Oy/Fonden för industriellt samarbete 
AB», and the «Kera Oy/Kera Ab», 
– in Sweden, the «Svenska Skeppshypotekskassan», 
– in the United Kingdom, the National Savings Bank, the Commonwealth 
Development Finance Company Ltd, the Agri cultural Mortgage Corporation Ltd, the 
Scottish Agricultural Securities Corporat ion Ltd, the Crown Agents for overseas 
governments and administrations, cr edit unions and municipal banks. 
 
Ð Act of accession 2003 
– in Latvia, the “kra¯jaizdevu sabiedr ı¯bas”, undertakings that are recognised under 
the “kra¯jaizdevu sabiedr ı¯bu likums” as cooperative  undertakings rendering 
financial services solely to their members, 
– in Lithuania, the “kredito unijos” other than the “Centrine ˙ kredito unija”, 
– in Hungary, the “Magyar Fejlesztési Bank Rt.” and the “Magyar Export-Import Bank 
Rt.”, 
– in Poland, the “Spó łdzielcze Kasy Oszcze ˛dnos´ciowo - Kreditowe” and the “Bank 
Gospodarstwa Krajowego”.’ 
 
EN 35   EN  
Ð Directive 2004/xx/EC Art. 3.1 
(adapted) 
4. The Commission, pursuant to the procedure se t out in Article 60(2) shall decide on 
any amendments to the list in paragraph 3.  
 
Ð 2000/12/EC Article 2(5) and (6) 
(adapted) 
Article 3 
1. ⌦ One or more ⌫ cCredit institutions situated in  the same Member State and 
⌦ which are ⌫ permanently affiliated, on 15 December 1977, to a central body which 
supervises them and which is established in that  ⌦ the ⌫ same Member State, may be 
exempted from the requirements of Articles ⌦ 7 and 11(1) ⌫ 6(1), 8 and 59  if, no later than 
15 December 1979, national law provides that: 
(a) the commitments of the central body and a ffiliated institutions are joint and several 
liabilities or the commitments of its affilia ted institutions are entirely guaranteed by 
the central body, 
(b) the solvency and liquidity of the central body and of all the affiliated institutions are 
monitored as a whole on the ba sis of consolidated accounts, 
(c) the management of the central body is empowered to issue instructions to the 
management of the affiliated institutions. 
Credit institutions operating locally which are ⌦ permanently ⌫ affiliated, subsequent to 15 
December 1977, to a central body within the mean ing of the first subparagraph, may benefit 
from the conditions laid down th erein if they constitute nor mal additions to the network 
belonging to that central body. 
 
Ð Directive 2004/xx/EC Art. 3.2 
(adapted) 
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 Commission, pur suant to the procedur e set out in Article 
60(2)  ⌦ 150 ⌫ may lay down additional rules for the application of the second 
subparagraph including the repeal of exemptions  provided for in the first subparagraph, where 
it is of the opinion that the affiliation of new institutions benefiting from the arrangements laid down in the second subparagraph might ha ve an adverse effect on competition. 
 
Ð 2000/12/EC Article 2(5) and (6) 
(adapted) 
2. A credit institution which, as defined  ⌦ referred to ⌫ in the first subparagraph of 
paragraph 5  ⌦ 1 ⌫, may also be exempted from the provisions of Articles ⌦ 9 and 10 ⌫ 
5, and also Articles 40 to 51, and 65  ⌦ Title V, Chapter 2, Sect ions 2, 3, 4, 5 and 6 and 
 
EN 36   EN Chapter 3 ⌫ provided that, without prej udice to the application of  those provisions to the 
central body, the whole as constituted by the central body together with its affiliated institutions is subject to the abovementioned
 ⌦ those ⌫ provisions on  a consolidated basis. 
In case of exemption, Articles ⌦ 16, 23, 24, 25, 26(1) to (3), 28 and 29 to 37 ⌫ 13, 18, 19, 
20(1) to (6), 21 and 22  shall apply to the whole as cons tituted by the cent ral body together 
with its affiliated institutions. 
 
Ð 2000/12/EC Art. 1 (adapted) 
Article 4 
Definitions  
For the purposes  of this Directive, ⌦ the following definitions shall apply: ⌫ 
 
Ð 2000/28/EC Art. 1(1) to (5) 
(adapted) 
(1) «credit institution» shall  mean  ⌦ means ⌫ : 
(a) an undertaking whose business is to r eceive deposits or other repayable funds 
from the public and to grant credits for its own account;or  
(b) an electronic money institution within  the meaning of Directive 2000/46/EC of 
the European Parliament and of the Council of 18 September 2000 on the 
taking up, pursuit and prudential supervis ion of the business of electronic 
money institutions20. 
 For the purposes of applying the superv ision on a consolidated basis, shall be 
consider ed as a credit institution, a credit institution according to the first paragraph and any 
private or public undertaking which corresponds to the definition in the first paragraph and 
which has been authoris ed in a third country . 
 For the purposes of applyi ng the supervision and control of large exposures, shall be 
considered as a credit institution, a credit instit ution according to the first paragraph, including 
branches of a credit institution in third c ountries and any private or public undertaking, 
including its branches, which corre sponds to the definition in th e first paragraph and which 
has been authorised in a third country;  
(2) «authorisation» shall  mean  ⌦ means ⌫ an instrument issued in any form by the 
authorities by which the right to carry on the business of a credit institution is granted; 
(3) «branch» shall  mean  ⌦ means ⌫a place of business which forms a legally 
dependent part of a credit inst itution and which carries out directly all or some of the 
transactions inherent in the business of credit institutions; any number of places of 
                                                 
20 OJ L 275, 27.10.2000, p. 39. 
 
EN 37   EN business set up in the same Member State by a credit institution with headquarters in 
another Member State shall be regarded as a single branch;  
(4) «competent authorities» shall  mean  ⌦ means ⌫ the national authorities which are 
empowered by law or regulation to  supervise credit institutions; 
(5) «financial institution» shall  mean  ⌦ means ⌫ an undertaking other than a credit 
institution, the principal activity of which is  to acquire holdings or  to carry on one or 
more of the activities listed in points 2 to 12 of Annex I; 
 
Ø new 
(6) «institutions», for the purposes of Sections  2 and 3 of Title V, Chapter 2, means 
institutions as defined in [Article  2(3) of Council Directive 96/3/EEC21]; 
 
Ð 2000/12/EC Art. 1 (6) to (8) 
adapted (adapted) 
(7) «home Member State» shall  mean  ⌦ means ⌫ the Member State in which a credit 
institution has been authorised in  accordance with Articles 4 to 11  ⌦ 6 to 9 and 11 to 
14 ⌫ ; 
(8) «host Member State» shall  mean  ⌦ means ⌫ the Member State in which a credit 
institution has a branch or in  which it provides services; 
(9) «control» shall  mean  ⌦ means ⌫ the relationship between a parent undertaking and 
a subsidiary, as defined in Article 1 of Di rective 83/349/EEC, or a similar relationship 
between any natural or lega l person and an undertaking; 
 
Ð 2002/87/EC Art. 29(1)(a) 
(adapted) 
Ö new 
(10) «participation» for the purposes  of supervision on a conso lidated basis and for the 
purposes of  points ⌦ (o) and (p) ⌫ 15 and 16  of Articles  34 ⌦ 57 ⌫ (2), ⌦ 71 to 
73 ⌫ Article 42  and Title V, Chapter 4 shall mean  ⌦ means ⌫ participation within 
the meaning of the first sentence of Article 17 of ⌦ Council ⌫ Directive 
78/660/EEC ⌦ 22 ⌫, or the ownership, direct or in direct, of 20 % or more of the 
voting rights or capital of an undertaking; 
 
Ð 2000/12/EC Art. 1 (10) to (13) 
(adapted) 
(11) «qualifying holding» shall  mean  ⌦ means ⌫ a direct or indirect holding in an 
undertaking which represents 10 % or more of  the capital or of the voting rights or 
                                                 
21 OJ L 141, 11.6.1993, p. 1. 
22 OJ L 222, 14.8.1978, p.11. 
 
EN 38   EN which makes it possible to exercise a signi ficant influence over the management of t he 
⌦ that ⌫ undertaking in which a holding subsists . ⌦ ; ⌫ 
(12) «initial capital» shall mean capital as  defined in Article 34 (2)(1) and (2);  
(12) «parent undertaking» shall mean  ⌦ means ⌫ 
(a) a parent undertaking as defined in Ar ticles 1 and 2 of Directive 83/349/EEC. 
(b) It shall,  for the purposes of supervision on a consolidated basis and control of 
large exposures, mean  ⌦ Articles 71 to 73, Title V, Chapter 2, Section 5 and 
Chapter 4 ⌫, a parent undertaking within th e meaning of Article 1(1) of 
Directive 83/349/EEC and any undertaking which, in the opinion of the competent authorities, effectively exer cises a dominant influence over another 
undertaking; 
(13) «subsidiary» shall
 mean  ⌦ means ⌫ 
(a) a subsidiary undertaking as defined in Articles 1 and 2 of Directive 
83/349/EEC; 
(b) It shall,  for the purposes of supervision on a consolidated basis and control of 
large exposures, me an ⌦ Articles 71 to 73, Title V,  Chapter 2, Section 5, and 
Chapter 4 ⌫ a subsidiary undertaking within the meaning of Article 1(1) of 
Directive 83/349/EEC and any undertaking over which, in the opinion of the 
competent authorities, a parent underta king effectively exercises a dominant 
influence. 
All subsidiaries of subsidiary undertakings shall also be considered subsidiaries of 
the undertaking that is their original parent; 
 
Ø new 
(14) “parent credit institution in a Member State”  means a credit institution which has a 
credit institution or a financial institution as a subsidiary or which holds a participation 
in such an institution, and which is not itself a subsidiary of another credit institution 
authorised in the same Member State, or of a financial holding company set up in the 
same Member State, and in which no other credit institution authorised in the same 
Member State holds a participation; 
(15) “parent financial holding company in a Me mber State” means a financial holding 
company which is not itself a subsidiary of a credit institution authorised in the same 
Member State, or of a financial holding co mpany set up in the same Member State; 
(16) “EU parent credit institution” means a pare nt credit institution in a Member State 
which is not a subsidiary of another credit institution authorised in any Member State, 
or of a financial holding company set up in any Member State, and in which no other 
credit institution authorised in any Member State holds a participation; 
 
EN 39   EN (17) “EU parent financial holding company” mean  a parent financial holding company in a 
Member State which is not a subsidiary of a credit institution authorised in any 
Member State; 
 
Ð 2000/12/EC Art. 1 (14) to (18) 
(adapted) 
(14) “Zone A»  shall comprise all the Member States and all other countries which are full 
members of the Organisation for Economic C ooperation and Development (OECD) and those 
countries which have concluded special lending arrangements with the International Monetary 
Fund (IMF) associ ated with the Fund's general arrangem ents to borrow (GAB). Any country 
which reschedules its external  sovereign debt is, however, precluded from Zone A for a 
period of five years;  
(15) «Zone B»  shall comprise all countries not in Zone A;  
(16) «Zone A credi t institutions»  shall mean all credit institutions authorised in the 
Member States, in accordance w ith Article 4, including their bran ches in third countries, and 
all private and public undertakings covered by the definitions in point 1, first subparagraph  
and authorised in other Zone A c ountries, including their branches;  
(17) Zone B credit institutions»  shall mean all private and public undertakings 
authorised outside Zone A covered by the de finition in point 1, firs t subparagraph, including 
their branche s within the Community;  
(18) «non -bank sector» shall mean all borrowers other than credit institu tions as defined in  
points 16 and 17, central governments and cent ral banks, regional governments and local 
authorities, the European Communities, the European  Investment Bank (EIB) and multilateral 
development banks as defined in point 19 ; 
 
Ð 2004/69/EC Art. 1 (adapted) 
«multilateral development banks» shall mean the International Bank for Reconstruction and 
Development, the International Finance Corporation, the Inter -American Development Bank, 
the Asian Development Bank, the African Development Bank, the Council of Europe 
Resettlement Fund, the Nordic Investment Bank, the Caribbean Development Bank, the 
European Bank for Reconstruction and Develo pment, the European Investment Fund, the 
Inter -American Investment Corporation and the Multilateral Investment Guarantee Agency;  
 
Ð 2000/12/EC Art. 1 (20) 
(20) «full -risk», «medium -risk», «medium/low -risk» and «low -risk» off -balance -sheet ite ms» 
shall mean the items described in Article 43(2) and listed in Annex II;  
 
Ø new 
(18) “public sector entities” means non-commercia l administrative bodies responsible to 
central governments, regional governments or lo cal authorities, or authorities that in 
the view of the competent authorities exerci se the same responsibilities as regional and 
local authorities; 
 
EN 40   EN  
Ð 2002/87/EC Art. 29.1(b) 
adapted (adapted) 
(19) «financial holding company» shall  mean  ⌦ means ⌫ a financial institution, the 
subsidiary undertakings of which are either exclusively or mainly credit institutions or financial institutions, at least one of such subsidiaries being a credit institution, and which is not a mixed financial holding co mpany within the meaning of Directive 
2002/87/EC of the European Parliament and of the Council of 16 December 2002 on 
the supplementary supervision of credit institutions, insurance undertakings and 
investment firms in a financial conglomerate23; 
(20) «mixed-activity holding company» shall mean  ⌦ means ⌫ a parent undertaking, 
other than a financial holding company or a credit institution or a mixed financial holding company within the meaning of Di rective 2002/87/EC, th e subsidiaries of 
which include at least one credit institution; 
 
Ð 2000/12/EC Art. 1 (23) 
(adapted) 
(21) «ancillary banking  services undertaking» shall  mean  ⌦ means ⌫ an undertaking the 
principal activity of which consists in owning or managing property, managing data-
processing services, or any other similar act ivity which is ancillary to the principal 
activity of one or more credit institutions;  
 
Ø new 
(22) “operational risk” means the risk of loss resulting from inadequate or failed internal 
processes, people and systems or from ex ternal events, and includes legal risk;  
 
Ð 2000/12/EC Art. 1 (24) 
(adapted) 
«exposures» for the purpose of applying Articles 47, 48 and 49 shall mean the assets and off -
balance -sheet items referred to in Article 43 and in Annexe s II and IV thereto Title V, Chapter 
2, Section 2, and 3, without application of the risk  weightings or degrees of risk there 
provided for; the risks referred to in Annex IV must be calculated in accordance with one o f 
the methods set out in Annex III, without applic ation of the weightings  for counterparty risk; 
all elements entirely covere d by own funds may, with the agreement of the competent 
authorities, be excluded from the defini tion of exposures provided that suc h own funds are not 
included in the credit institution’s own funds  calculation of the solvency ratio for the purposes 
of Article 44 or  in the calculation  of other monitoring ratios provided for in this Directive and 
in other Community acts; exposures shall  not include:  
– in the case of foreign exchange transactio ns, exposures incurred in the ordinary 
course of settlement during th e 48 hours following payment, or  
                                                 
23 OJ L 35, 11.2.2003, p. 1. 
 
EN 41   EN – in the case of transactions for the purch ase or sale of securities, exposures 
incurred in the ordi nary course of settlement during the five working days 
following payment or delivery of the securities, whiche ver is the earlier;  
 
Ø new 
(23) “central banks” include the European Central Bank unless otherwise indicated;  
(24) “dilution risk” means the risk that an amount receivable is reduced through cash or 
non-cash credits to the obligor;  
(25) “probability of default” means the probabi lity of default of a counterparty over a one 
year period;  
(26) “loss” means economic loss, including material  discount effects, a nd material direct 
and indirect costs associated w ith collecting on the instrument;  
(27) “loss given default” means the ratio of the loss on an exposure due to the default of a 
counterparty to the amount outstanding at default;  
(28) “conversion factor” means the ratio, to  the currently undrawn amount of the 
commitment, of the currently undrawn amount of a commitment subject to an advised 
limit that will be drawn and outstanding at default;  
(29) “expected loss (EL)” shall mean the ratio of  the amount expected to be lost on an 
exposure from a potential default of a count erparty or dilution over a one year period 
to the amount outstanding at default;  
(30) “credit risk mitigation” means a technique used by a credit institution to reduce the 
credit risk associated with an exposure or exposures which the credit institution 
continues to hold;  
(31) “funded credit protection” means a technique  of credit risk mitigation where the 
reduction of the credit risk on the exposure of a credit institution derives from the right 
of the credit institution - in the event of  the default of the counterparty or on the 
occurrence of other specified cr edit events relating to the counterparty - to liquidate, or 
to obtain transfer or appropria tion of, or to retain certain  assets or amounts, or to 
reduce the amount of the exposure to, or to replace it wit h, the amount of the 
difference between the amount of the exposur e and the amount of a claim on the credit 
institution;  
(32) “unfunded credit protection” means a techni que of credit risk mitigation where the 
reduction of the credit risk on the exposure of a credit institution derives from the 
undertaking of a third party to pay an amou nt in the event of the default of the 
borrower or on the occurrence of  other specified events;  
(33) “repurchase transaction” means any tran saction governed by an agreement falling 
within the definition of ‘repurchase agreemen t’ or ‘reverse repurchase agreement’ as 
defined in [Article 3 point (m) of Directive 93/6/EEC];  
 
EN 42   EN (34) “securities or commodities lending or borrowing transaction” means any transaction 
falling within the definition of ‘securities or commodities lending’ or ‘securities or 
commodities borrowing’ as defined in [Article 3 point (n) of Directive 93/6/EEC]; 
(35) “cash assimilated instrument” means a cer tificate of deposit or other similar 
instrument issued by the lending credit institution; 
(36) “securitisation” means a transaction or scheme , whereby the credit risk associated with 
an exposure or pool of exposures is tran ched, having the following characteristics: 
(a) payments in the transaction or sche me are dependent upon the performance of 
the exposure or pool of exposures; 
(b) the subordination of tranches determin es the distribution of losses during the 
ongoing life of the transaction or scheme; 
(37) “traditional securitisation” means a securiti sation involving the economic transfer of 
the exposures being securitised to a securitis ation special purpose entity which issues 
securities. This shall be accomplished by the transfer of ownership of the securitised 
exposures from the originator credit inst itution or through s ub-participation. The 
securities issued do not represent paymen t obligations of the originator credit 
institution; 
(38) “synthetic securitisation” means a securitisa tion where the tranching is achieved by the 
use of credit derivatives or guarantees, and the pool of e xposures is not removed from 
the balance sheet of the or iginator credit institution; 
(39) “tranche” means a contractually established segment of the cr edit risk associated with 
an exposure or number of exposures, where a position in the segment entails a risk of 
credit loss greater than or less than a pos ition of the same amount in each other such 
segment, without taking account of credit protection provided by third parties directly 
to the holders of positions in the segment or in other segments; 
(40) “securitisation position” shall mean an exposure to a securitisation; 
(41) “originator” means either of the following: 
(a) an entity which, either itself or through related entiti es, directly or indirectly, 
was involved in the origin al agreement which crea ted the obligations or 
potential obligations of the debtor or pot ential debtor giving  rise to exposure 
being securitised; 
(b) an entity which purchases a third pa rty’s exposures onto its balance sheet and 
then securitises them; 
(42) “sponsor” means a credit institution other than  an originator credit institution that 
establishes and manages an asset-backed  commercial paper programme or other 
securitisation scheme that purchases exposures from third party entities; 
(43) “credit enhancement” means a contractual arrangement whereby the credit quality of a 
position in a securitisation is improved in re lation to what it would have been if the 
 
EN 43   EN enhancement had not been provided, incl uding the enhancement provided by more 
junior tranches in the securitisation and other types of credit protection; 
(44) “securitisation special purpose entity (SSPE )” means a corporation trust or other 
entity, other than a credit institution, or ganised for carrying on a securitisation or 
securitisations, the activities of whic h are limited to those appropriate to 
accomplishing that objective, the structure of which is intended to isolate the 
obligations of the SSPE from those of the originator credit institution, and the holders 
of the beneficial interests in which have the right to pledge or ex change those interests 
without restriction; 
 
Ð 2000/12/EC Article 1(25) to 
(27) (adapted) 
(45) «group of connected clients» shall  mean  ⌦ means ⌫ :  
(a) two or more natural or legal persons  who, unless it is shown otherwise, 
constitute a single risk because one of th em, directly or indirectly, has control 
over the other or others;  or 
(b) two or more natural or legal persons between whom there is no relationship of 
control as defined  ⌦ set out ⌫ in the first indent but who are to be regarded 
as constituting a single risk because they  are so interconnected that, if one of 
them were to experience financial problems,  the other or all of  the others would 
be likely to encounter repayment difficulties; 
(46) «close links» shall  mean  ⌦ means ⌫ a situation in which tw o or more natural or 
legal persons are linked by  ⌦ in any of the following ways ⌫ :  
(a) participation , which shall mean the  ⌦ in the form of ⌫ ownership, direct or 
by way of control, of 20% or more of  the voting rights or capital of an 
undertaking, or ; 
(b) control, which shall mean the relati onship between a pare nt undertaking and a 
subsidiary, in all the c ases referred to in Article 1(1) and (2) of Directive  
83/349/EEC, or a similar relationship between any natural or legal person and 
an undertaking; any subsidiary undertak ing of a subsidiary undertaking shall 
also be considered a subsidiary of the parent u ndertaking which is at the head 
of those undertakings. ; 
(c) A situation in which two or more na tural or legal persons are permanently 
linked  ⌦ the fact that both or all are permanently linked ⌫ to one and the 
same ⌦ third ⌫ person by a control relationshi p shall also be regarded as 
constituting a close link between such persons ; 
(47) «recognised exchanges» shall  mean  ⌦ means ⌫ exchanges ⌦ which are ⌫ 
recognised ⌦ as such ⌫ by the competent authorities ⌦ and ⌫ which ⌦ meet the 
following conditions: ⌫ 
(a) ⌦they ⌫ function regularly; 
 
EN 44   EN (b) ⌦they ⌫have rules, issued or approved by the appropriate authorities of the 
home country of the exchange, which define  ⌦ defining ⌫the conditions for 
the operation of the exchange, the conditi ons of access to the exchange as well 
as the conditions that must be satisfied by a contract before it can effectively be 
dealt on the exchange; 
(c) ⌦they ⌫have a clearing mechanism that provides for  ⌦ whereby ⌫ 
contracts listed in  Annex IV to be  ⌦ are ⌫ subject to daily margin 
requirements providing an appropriate protection  ⌦ which, ⌫ in the opinion 
of the competent authorities ⌦, provide appropriate protection ⌫ in the 
opinion of the competent authorities .  
 
Ð 2000/12/EC Art. 3 (adapted) 
Article 5 
Prohibition for undertakings other than cred it institutions from carrying on the 
business of taking deposits or other repayab le funds from the public  
The Member States shall prohibit persons or und ertakings that are not credit institutions from 
carrying on the business of taking deposits or  other repayable funds from the public.  
⌦ The first paragraph ⌫ This prohibition  shall not apply to the ta king of deposits or other 
funds repayable by a Member Stat e or by a Member State's regiona l or local authorities or by 
public international bodies of which one or more Member Stat es are members or to cases 
expressly covered by national or Community le gislation, provided that  those activities are 
subject to regulations and contro ls intended to protect depositors  and investors and applicable 
to those cases. 
 
Ð 2000/12/EC  
TITLE  II 
REQUIREMENTS  FOR  ACCESS  TO THE  TAKING  UP AND  PURSUIT  
OF THE  BUSINESS  OF CREDIT  INSTITUTIONS 
 
Ð 2000/12/EC Art. 4 (adapted) 
Î1 Directive 2004/xx/EC Art. 3 
Article 6 
Authorisation  
Member States shall require credit institutio ns to obtain authorisation before commencing 
their activities. ⌦ Without prejudice to Articles 7 to 9, 11 and 12 ⌫ Tthey shall lay down the 
 
EN 45   EN requirements for such authorisat ion subject to Articles 5 to 9,  and notify them to Î1 the 
Commission  . 
 
Ð 2000/12/EC Art. 8 (adapted) 
Article 7 
Programme of operations and structural organisation  
Member States shall require applications for authorisation to be acco mpanied by a programme 
of operations setting out, inter alia , the types of business envisaged and the structural 
organisation of the institution. 
 
Ð 2000/12/EC Article 9 (adapted) 
Article 8 
Economic needs  
Member States may not require the application fo r authorisation to be examined in terms of 
the economic needs of the market. 
 
Ð 2000/12/EC Art. 5(1) (adapted) 
Article 9 
Initial capital  
1. Without prejudice to other general c onditions laid down by national law, the 
competent authorities shall not grant author isation when the credit institution does 
not possess separate own funds or in cases where initial capital is less than EUR 5 
million. 
 
Ð 2000/12/EC Art. 1 (11) 
(adapted) 
«Initial capital» shall mean  ⌦ comprise ⌫ capital ⌦ and reserves as referred to 
⌫ as defined  in Article 34  ⌦ 57(a) and (b) ⌫ (2)(1) and (2) . 
 
Ð 2000/12/EC Article 5(1) and (2) 
(adapted) 
Member States may decide that credit inst itutions which do not fulfil the requirement 
of separate own funds and which were  in existence on 15 December 1979 may 
continue to carry on th eir business. They may exempt su ch credit institutions from 
complying with the requirement containe d in the first subparagraph of Article 
⌦ 11 ⌫ 6(1). 
 
EN 46   EN 2. The Member States ⌦ may, subject to the following conditions, grant ⌫ shall, 
however, have the option of granting authorisation to particul ar categories of credit 
institutions the initial capital of which is less than that ⌦ specified ⌫ prescribed  in 
paragraph 1. In such cases : 
(a) the initial capital ⌦ must ⌫ shall  not be less than  EUR 1 million; 
(b) the Member States concerned must no tify the Commission of their reasons for 
⌦ exercising ⌫ using  ⌦ this option ⌫making use of the option provided 
for in this paragraph,  
(c) when the list referred to  in Article 11 is published,  the name of each credit 
institution that does not have the minimum capital ⌦ specified ⌫ prescribed  
in paragraph 1 ⌦ must ⌫ shall  be annotated to that effect ⌦ in the list 
referred to in Article 14. ⌫ 
 
Ð 2000/12/EC Art. 5(3) to (7) 
(adapted) 
Article 10 
1. A credit institution's own funds may not fall below the amount of initial capital 
required by  ⌦ under Article 9 ⌫ paragraphs  1 and 2  at the time of its  authorisation. 
2. The Member States may decide that credit institutions already in existence on 1 
January 1993, the own funds of which do not attain  the levels specified for initial capital in 
⌦ Article 9 ⌫ paragraphs  1 and 2 , may continue to carry on thei r activities. In that event, 
their own funds may not fall below the highest level reached with effect from 22 December 
1989. 
3. If control of a credit institution falling within the category referred to in paragraph 
⌦ 2 ⌫ 4 is taken by a natural or legal person other than the person  who controlled the 
institution previously, the own funds of that ⌦ credit ⌫ institution must attain at least the 
level ⌦ specified ⌫ prescribed  for initial capital in ⌦ Article 9 ⌫ paragraphs  1 and 2.  
4. In certain specific circumstances and with  the consent of the competent authorities, 
where there is a merger of two or more credit  institutions falling with in the category referred 
to in paragraph 4  ⌦ 2 ⌫ , the own funds of the ⌦ credit ⌫ institution resulting from the 
merger may not fall below the to tal own funds of the merged ⌦ credit ⌫ institutions at the 
time of the merger, as long as the appropriate levels ⌦ specified in ⌫ pursuant to  
⌦ Article 9 ⌫ paragraphs 1 and 2  have not been attained. 
5. If, in the cases referred to in paragraphs ⌦ 1, 2 and 4 ⌫ 3, 4 and 6,  the own funds 
should be reduced, the competent authorities ma y, where the circumstances justify it, allow an  
⌦ credit ⌫ institution a limited period in which to rec tify its situation or cease its activities. 
 
EN 47   EN  
Ð 2000/12/EC Article 6 (adapted) 
Article 11 
Management body and place of the head office of credit institutions  
1. The competent authorities shall grant an au thorisation to the credit institution only 
when there are at least two persons who e ffectively direct the business of the credit 
institution. 
⌦ They ⌫ Moreover, the aut horities concerned  shall not grant authorisation if 
these persons are not of sufficiently good re pute or lack suffi cient experience to 
perform such duties. 
2. Each Member State shall require that: 
(a) any credit institution which is a lega l person and which, under its national law, 
has a registered office ⌦ shall ⌫ have its head office in the same Member 
State as its registered office; 
(b) any other credit institution ⌦ shall ⌫ have its head office in the Member 
State which issued its authorisation and in which it actually carries on its 
business. 
 
Ð 2000/12/EC Art. 7 (adapted) 
Article 12 
Shareholders and members  
1. The competent authorities shall not grant authorisation for the taking-up of the 
business of credit institutions ⌦ unless ⌫ before  they have been informed of the 
identities of the shareholders or members, whether direct or indirect, natural or legal 
persons, that have qualifying holdings, and of the amounts of those holdings. 
⌦ In determining a ⌫ For the purpose of the definition of  qualifying holding in the 
context of this Article, the votin g rights referred to in Article 7  ⌦ 92 ⌫ of 
Council Directive 88/627/EEC24 ⌦ 2001/34/EC of the European Parliament and of 
the Council25 ⌫ shall be taken in to consideration. 
2. The competent authorities shall refuse authorisation if, taking into account the need 
to ensure the sound and prudent management  of a credit institu tion, they are not 
satisfied as to the suitability of the abovementioned  shareholders or members. 
                                                 
24 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).  
25 OJ L 184 , 6.7.2001, p. 1. 
 
EN 48   EN 3. Where close links exist between the credit institution and other natural or legal 
persons, the competent authorities shall grant authorisation 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 ⌦ third ⌫ non -member  country governing one or 
more natural or legal persons with which the credit institution has close links, or 
difficulties involved in their  enforcement ⌦ of those laws, regulations or 
administrative provisions ⌫ , prevent the effective exer cise of their supervisory 
functions. 
The competent authorities shall require cred it institutions to provide them with the 
information they require to monitor complian ce with the conditions referred to in this 
paragraph on a continuous basis. 
 
Ð 2000/12/EC Articles 8 & 9 
(adapted) 
Article 8  
Programme of operations and structural organisation  
Member States shall require applications for authorisation to be acco mpanied by a programme 
of operations setting out,  inter alia , the types of business envisaged and the structural 
organisation of the institution.  
Article 9  
Economic needs  
Member States may not require the application fo r authorisation to be examined in terms of 
the economic needs of the market.  
 
Ð 2000/12/EC Article 10 
(adapted) 
Article 13 
Authorisation refusal  
Reasons shall be given whenever an authoris ation 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  of the applicant's sending the information required for the 
decision. A decision shall, in any case, be ta ken within 12 months of  the receipt of the 
application. 
 
EN 49   EN  
Ð 2000/12/EC Article 11 
(adapted) 
Article 14 
Notification of the authorisation to the Commission  
Every authorisation shall be notified to the Commission.  
⌦ The name of e ⌫ Each credit institution ⌦ to ⌫ shall be entered in a list ⌦ which 
authorisation has been granted shall be entered in a list ⌫. which t  ⌦ The ⌫ the 
Commission shall publish ⌦ that list ⌫ in the Official Journal of the European 
⌦ Union  ⌫ Communities  and shall keep ⌦ it ⌫ up to date. 
 
Ð 2000/12/EC Art. 12 (adapted) 
Article 15 
Prior consultation with the competen t authorities of other Member States  
1. ⌦ The competent authority shall, before  granting authorisat ion to a credit 
institution, ⌫ There must be prior consultation with  ⌦ consult ⌫ the competent authorities 
of the other Member State involved on the authorisation of a credit institution  ⌦ in the 
following cases ⌫ which is: 
⌦ (a) the credit institution concerned is ⌫ a subsidiary of a credit institution 
authorised in another Member State, or  
⌦ (b) the credit institution concerned is ⌫ a subsidiary of the parent undertaking of 
a credit institution authorised in another Member State, or ; 
⌦ (c) the credit institution concerned is ⌫ controlled by the same persons, whether 
natural or legal, as control a credit in stitution authorised in another Member 
State. 
 
Ð 2002/87/EC Art. 29.2 (adapted) 
2. The competent authority ⌦ shall, before granting author isation to a credit institution, 
consult the competent authority ⌫ of a Member State involved, responsible for the 
supervision of insurance undertak ings or investment firms, sh all be consulted prior to the 
granting of an authorisation to  a credit institution which is: ⌦ in the following cases: ⌫ 
(a) ⌦ the credit institution concerned is ⌫ a subsidiary of an insurance 
undertaking or investment firm authorised in the Community, or ; 
(b) ⌦ the credit instit ution concerned is ⌫ a subsidiary of the parent undertaking 
of an insurance undertaking or investment  firm authorised in the Community;or  
 
EN 50   EN (c) ⌦ the credit institution concerned is ⌫ controlled by the same person, 
whether natural or legal, ⌦ as ⌫ who  controls an insurance undertaking or 
investment firm authorised in the Community. 
3. The relevant competent authorities referred to in the first and second  paragraphs ⌦ 1 
and 2 ⌫ shall in particular consult each other when assessing the suitability of the 
shareholders and the reputation and experience of directors involved in  the management of 
another entity of the same group. They shall ⌦ exchange ⌫ inform each other of  any 
information regarding the suitability of shareh olders and the reputati on and experience of 
directors which is of relevance to th e other competent authorities involved  for the granting of 
an authorisation as well as for the ongoing  assessment of compliance with operating 
conditions. 
 
Ð 2000/12/EC Article 13 
(adapted) 
Article 16 
Branches of credit institutions au thorised in another Member State  
Host Member States may not require authoris ation or endowment capital for branches of 
credit institutions authorised in other Member States. The establishment and supervision of such branches shall be effected ⌦ in accordance with Articles 22, 25, 26(1) to (3), 29 to 37 
and 40⌫ as prescribed in
 Articles 17, 20(l) to (6 ) and Articles 22 and 26 . 
 
Ð 2000/12/EC Art. 14 (adapted) 
Article 17 
Withdrawal of authorisation  
1. The competent authorities may withdraw  the authorisation issued to a credit 
institution only where such an institution: 
(a) does not make use of the authorisati on 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  no provision for the authorisation to 
lapse in such cases; 
(b) has obtained the authoris ation through false statements  or any other irregular 
means; 
(c) no longer fulfils the conditions under which authorisation was granted; (d) no longer possesses sufficient own funds or can no longer be relied on to fulfil 
its obligations towards its creditors, and in particular no longer provides 
security for the assets entrusted to it; 
 
EN 51   EN (e) falls within one of the other cases where national law provides for withdrawal 
of authorisation. 
2. Reasons ⌦ shall ⌫ must  be given for any withdrawal  of authorisation and those 
concerned informed thereof; . Ssuch withdrawal shall be notified to the Commission. 
 
Ð 2000/12/EC Article 15 
(adapted) 
Article 18 
Name  
For the purposes  of exercising their activities, credit  institutions may, notwithstanding any 
provisions ⌦ in the host Member State ⌫ concerning the use of the words «bank», «savings 
bank» or other banking names which ma y exist in the host 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 ther e being any danger of confusion, the host Member 
State may, for the purposes of clarification, re quire that the name be accompanied by certain 
explanatory particulars. 
 
Ð 2000/12/EC Art. 16 (1) 
(adapted) 
Article 19 
Qualifiying holding in  a credit institution  
1. The  Member States shall require any natural or legal person who proposes to hold, 
directly or indirectly,  a qualifying holding in a credit institution first to inform the 
competent authorities, telling them of the size of the intended holding.  
Such a person must likewise inform the co mpetent authorities if he proposes to 
increase his qualifying holding so  that the proportion of th e voting rights or of the 
capital held by him would re ach or exceed 20%, 33% or 50% or so that the credit 
institution would become his subsidiary. 
Without prejudice to the provisions of paragraph 2, the competent authorities shall 
have a maximum of three months from the da te of the notification provided for in the 
first ⌦ and second subparagraphs ⌫ subparagraph  to oppose such a plan if, in view 
of the need to ensure sound and prudent ma nagement of the credit institution, they 
are not satisfied as to the suitability of the person ⌦ concerned ⌫ 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. 
 
Ð 2002/87/EC Art. 29.3 (adapted) 
2. If the ⌦ person proposing to acquire ⌫ acquirer of  the holdings referred to in 
paragraph 1 is a credit institution, insurance undertaking or investment firm 
 
EN 52   EN authorised in another Member State or th e parent undertaking of a credit institution, 
insurance undertaking or inve stment firm authorised in another Member State or a 
natural or legal person controlling a credit institution, insurance undertaking or investment firm authorised in another Me mber State, and if, as a result of that 
acquisition, the ⌦ credit ⌫ institution in which the acquirer proposes to hold a 
holding would become a subsidiary or subj ect to the control of the acquirer, the 
assessment of the acquisition ⌦ shall ⌫ must
 be subject to the prior consultation 
⌦ provided for ⌫ referred to  in Article ⌦ 15 ⌫ 12. 
 
Ð 2000/12/EC Article 16(3)  
Article 20 
3. The Member States shall require any natura l 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 si ze of his intended holding. Such a person must 
likewise inform the competent authorities if he proposes to  reduce his qualifying holding so 
that the proportion of the voting rights or of  the capital held by him would fall below 20%, 
33% or 50% or so that the credit instit ution would cease to be his subsidiary. 
 
Ð 2000/12/EC Art. 16 (4) to (6) 
(adapted) 
Article 21 
14. On becoming aware of them, c  ⌦ Credit ⌫ credit  institutions shall ⌦ , on 
becoming aware ⌫ inform the competent authorities of any acquisitions or disposals 
of holdings in their capital that cause hol dings to exceed or fall below one of the 
thresholds referred to in ⌦ Article 19(1) and Article 20 ⌫ paragraphs 1 and 3  ⌦ , 
inform the competent authorities of  those acquisitions or disposals. ⌫ 
They shall also, at le ast once a year, inform ⌦ the competent authorities ⌫ them  of 
the names of shareholders and members possessing qualifying holdings and the sizes 
of such holdings as shown, for example, by the information received at the annual 
general meetings of sharehol ders and members or as a result of compliance with the 
regulations relating to companie s listed on stock exchanges. 
25. The Member States shall require that, wh ere the influence exercised by the persons 
referred to in ⌦ Article 19(1) ⌫ paragraph 1  is likely to operate to the detriment of 
the prudent and sound management of the in stitution, the competen t 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 exercise of the voting ri ghts attaching to the shares held by the 
shareholders or members in question. 
Similar measures shall apply to natural or legal persons ⌦ who fail ⌫ failing  to 
comply with the obligation to provide  prior information, as laid down in 
⌦ Article 19 (1). ⌫ paragraph 1.  If a holding is acquired despite the opposition of 
the competent authorities, the Member States  shall, regardless of any other sanctions 
 
EN 53   EN to be adopted, provide either for exercise  of the corresponding voting rights to be 
suspended, or for the nullity of votes cast or for the possi bility of their annulment. 
36. ⌦ In determining a ⌫ For the purposes of the definition of  qualifying holding and 
other levels of holding ⌦ referred to ⌫ set out  in this Article, the voting rights 
referred to in Article 7  ⌦ 92 ⌫ of Council  Directive  88/627/EEC ⌦ Directive 
2001/34/EC ⌫ shall be taken in to consideration. 
 
Ð 2000/12/EC Article 17 
(adapted) 
Ö new 
Article 22 
Procedures and internal control mechanisms  
1. Home Member State competent authorities shall require that every credit institution 
have sound administrative and accounting proc edures and adequate internal control 
mechanisms.  Ö have robust governance arrangeme nts, which include a clear 
organisational structure with  well defined, transparent and consistent lines of 
responsibility, effective proce sses to identify, manage, mon itor and report  the risks it 
is or might be exposed to, and adequate  internal control mechanisms, including 
sound administrative and accounting procedures.  
2. The arrangements, processes and mechanis ms referred to in paragraph 1 shall be 
comprehensive and proportionate to the nature, scale and complexity of the credit 
institution’s activities. The technical crite ria laid down in Annex V shall be taken 
into account.  
 
Ð 2000/12/EC 
TITLE  III 
PROVISIONS  CONCERNING  THE  FREEDOM  OF ESTABLISHMENT  
AND  THE  FREEDOM  TO PROVIDE  SERVICES 
 
Ð 2000/12/EC (adapted) 
⌦ SECTION 1 CREDIT INSTITUTIONS  ⌫ 
 
Ð 2000/12/EC Art. 18 (adapted) 
Article 23 
Credit institutions  
 
EN 54   EN The Member States shall provide that the activit ies listed in Annex I ma y be carried on within 
their territories, in accordance with Articles ⌦ 25, 26(1) to (3), 28(1) and (2) and 29 to 37 ⌫ 
20(1) to (6), 21(1) and (2), and 22,  either by the establishment of  a branch or by way of the 
provision of services, by any credit institution authorised a nd supervised by the competent 
authorities of another Member  State, provided that such activities are covered by the 
authorisation. 
 
Ð 2000/12/EC (adapted) 
⌦ SECTION 2 FINANCIAL INSTITUTIONS  ⌫ 
 
Ð 2000/12/EC Article 19 1st & 
3rd paragraphs (adapted) 
Article 24 
Financial institutions  
1. The Member States shall also  provide that the activities listed in Annex I may be 
carried on within their territori es, in accordance with Articles ⌦ 25, 26(1) to (3), 
28(1) and (2) and 29 to 37 ⌫ 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 
institution from another Member State, whet her a subsidiary of a credit institution or 
the jointly-owned subsidiary of two or more credit inst itutions, the memorandum and 
aArticles of association of which permit th e carrying on of those activities and which 
fulfils each of the following conditions: 
(a) the parent undertaking or undertakings must  be authorised as credit institutions 
in the Member State by the law of which the ⌦ financial institution ⌫ 
subsidiary  is governed. ; 
(b) the activities in question must actually be  carried on within the territory of the 
same Member State. ; 
(c) the parent undertaking or  undertakings must hold 90%  or more of the voting 
rights attaching to shares in the capital of the ⌦ financial institution; ⌫ 
subsidia ry. 
(d) the parent undertaking or  undertakings must satisfy the competent authorities 
regarding the prudent management of the ⌦ financial institution ⌫ 
subsidiary  and must have declared, with the consent of the relevant home 
Member State competent authorities, th at they jointly and severally guarantee 
the commitments entered into by the ⌦ financial institution; ⌫ subsidiary,  
(e) the ⌦ financial institution ⌫ subsidiary  must be effectively included, for the 
activities in question in particular, in th e consolidated supervision of the parent 
undertaking, or of each of the parent undertakings, in accordance with Articles  
52 to 56  ⌦ Title V, Chapter 4, Section 1 ⌫ , in particular for the calculation 
 
EN 55   EN of the solvency ratio, for the control of  large exposures and for purposes of the 
limitation of holdings provided for in Article ⌦ 120 ⌫ 50. 
Compliance with these conditions ⌦ shall ⌫ must  be verified by the competent 
authorities of the home Me mber State and the latter ⌦ shall ⌫ must  supply the 
⌦ financial institution ⌫ subsidiary  with a certificate of compliance which must 
form part of the notification referred to in Articles ⌦ 25 and 28 ⌫ 20(1) to (6), and 
21(1) and (2 ). 
The competent authorities of the home Member  State shall ensure the supervision of 
the ⌦ financial institution ⌫ subsidiary  in accordance with Articles ⌦10 (1), 19 
to 22, 40, 42 to 52 and 54 ⌫ 5(3), 16, 17, 26, 28, 29, 30, and 32 . 
 
Ð 2000/12/EC Art. 19 
(sixth paragraph) (adapted) 
2. If a financial institution ⌦ as referred to in the firs t subparagraph of paragraph 1 ⌫ 
eligible under this Article should  ceases  to fulfil any of the conditions imposed, the 
home Member State shall notify the compet ent authorities of the host Member State 
and the activities carried on by that ⌦ financial ⌫ institution in the host Member 
State shall become subject to the legislation of the host Member State. 
 
Ð 2000/12/EC Art. 19 
fourth paragraph (adapted) 
3. The provisions mentioned in ⌦ paragraphs 1 and 2 ⌫ this Article  shall apply 
mutatis mutandis  to subsidiaries ⌦of a financial institution as referred to in the first 
subparagraph of paragraph 1 ⌫subject to the necessary m odifications. In particular, 
the words «credit institution» should be r ead as «financial in stitution fulfilling the 
conditions laid down in Article 19» and the word «authorisation» as «memorandum 
and Articles of associa tion».  
 
Ð 2000/12/EC Art. (19) 5th & 6th 
paragraphs (adapted) 
The second subparagraph of Article 20(3) shall read:  
«The home Member State competent authorit ies shall also communicate the amount of own 
funds of the subsidia ry financial instit ution and the consolidated solvency ratio of the credit 
institution which is its parent undertaking».  
If a financial institution eligible under this Ar ticle should cease to fulfil any of the conditions 
imposed, the home Member State shall notify the compet ent authorities of the host Member  
State and the activities carried on by that institution in the host Member State become subject 
to the legislation of the host Member State.  
 
EN 56   EN  
Ð 2000/12/EC (adapted) 
⌦ SECTION 3 EXERCISE OF THE RIGHT OF ESTABLISHMENT ⌫ 
 
Ð 2000/12/EC Art. 20 (1) (2) & 
(3) 1st & 2nd subparagraphs 
(adapted) 
Article 25 
Exercise of the right of establishment  
1. A credit institution wishing to establish a branch within the territory of another 
Member State shall notify the competent authorities of its ⌦ home ⌫ Member 
State. 
2. The Member States State shall require every credit inst itution wishing to establish a 
branch in another Member State to provide the following information when effecting the notification referred to in paragraph 1: 
(a) the Member State within the territory of which it plans to establish a branch; 
(b) a programme of operations setting out, inter alia , the types of business 
envisaged and the structural organisation of the branch; 
(c) the address in the host Member State from which documents may be obtained; 
(d) the names of those ⌦ to be ⌫ responsible for the management of the branch. 
3. Unless the competent author ities 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 the activitie s envisaged, they shall within three 
months of receipt of the information re ferred to in paragraph 2 communicate that 
information to the competent authorities of the host Member State and shall inform the ⌦ credit ⌫ institution accordingly. 
The home Member State competent authoriti es shall also communicate the amount of 
own funds and the solvency ra tio of the credit institution. 
 
Ð 2000/12/EC Art. 19 5th 
subparagraph (adapted) 
⌦ By way of derogation from the second s ubparagraph, in the ca se referred to in 
Article 24, ⌫ “The  the home Member State comp etent authorities shall also  
communicate the amount of ow n funds of the subsidiary  the financial institution and 
the consolidated solvency ratio of the credit institution which is its parent undertaking.”
 
 
EN 57   EN  
Ð 2000/12/EC Art. 20 (3) 3rd 
subparagraph (adapted) 
4. Where the competent authorities of the home Member State refuse to communicate 
the information referred to in paragraph 2 to the competent authorities of the host Member State, they shall give reasons for their refusal to the ⌦ credit ⌫ institution 
concerned within three months of  receipt of all the information. 
That refusal,
 or a  failure to reply,  shall be subject to a right to apply to the courts in 
the home Member State. 
 
Ð 2000/12/EC Art. 20(4) to (7) 
(adapted) 
Article 26 
14. Before the branch of a credit institu tion commences its activities the competent 
authorities of the host Member State sha ll, within two months of receiving the 
information ⌦ referred to ⌫ mentioned  in ⌦ Article 25 ⌫ (paragraph 3), prepare 
for the supervision of the credit  institution in accordance with ⌦ Section 5 ⌫ 
Article 22  and if necessary indicate the conditi ons under which, in the interest of the 
general good, those activities must be carried on in the host Member State. 
25. On receipt of a communicat ion from the competent authorities of the host Member 
State, or in the event of the expiry of the period provided for in paragraph 14  without 
receipt of any communication from the latter, the branch  may be established and 
⌦ may ⌫ commence its activities. 
36. In the event of a change in any of the particulars comm unicated pursuant to 
⌦ points (b), (c) or (d) of Article 25 ⌫ (paragraph 2) (b), (c) or (d) , a credit 
institution shall give written notice of the change in question to the competent 
authorities of the home and host Member Stat es at least one month before making the 
change so as to enable the competent auth orities of the home Member State to take a 
decision pursuant to ⌦ Article 25 ⌫(paragraph 3) and the competent authorities of 
the host Member State to take a decision on the change pursuant to paragraph 14  
⌦ of this Article. ⌫ 4. 
47. Branches which have commenced their activ ities, in accordance with the provisions 
in force in their host Member  States, before 1 January 1993, shall be presumed to 
have been subject to the procedure laid down in ⌦ Article 25 and in ⌫ paragraphs 
1 ⌦ and 2 ⌫ to 5 ⌦ of this Article. ⌫ They shall be governed, from ⌦ that ⌫ 
the abovementioned  date, by paragraph 6 ⌦ 3 of this Article ⌫ , and by ⌦ Article 
23, Sections 2 and 5 and Article 43 ⌫ Articles 18, 19, 22 and 29 . 
 
EN 58   EN  
Ð 2000/12/EC Art. 1 (3) final 
clause 
Article 27 
Any any  number of places of business set up in th e same Member State by a credit institution 
with headquarters in another Member Stat e shall be regarded as a single branch; . 
 
Ð 2000/12/EC (adapted) 
⌦ SECTION 4 EXERCISE OF THE FREEDOM TO PROVIDE SERVICES  ⌫ 
 
Ð 2000/12/EC Art. 21 (adapted) 
Article 28 
Exercise of the freedom to provide services  
1. Any credit institution wishing to exercise the freedom to provide services by carrying 
on its activities within the territory of another Member State for the first time shall notify the competent authorities of the hom e Member State, of the activities on the 
list in Annex I which it intends to carry on. 
2. The competent authorities of the home Member State shall, within one month of 
receipt of the notification ⌦ provided for ⌫ mentioned
 in paragraph 1, send that 
notification to the competent authorities of the host Member State. 
3. This Article shall not affect rights acqui red by credit instituti ons providing services 
before 1 January 1993. 
 
Ð 2000/12/EC (adapted) 
⌦ SECTION 5 POWERS OF THE COMPETENT AUTHORITIES OF THE HOST 
MEMBER STATE  ⌫ 
 
Ð 2000/12/EC Art. 22(1) 
(adapted) 
Article 29 
Power of the competent authorit ies of the host Member State  
1.Host Member States may, for statistical purposes , require that all credit institutions having 
branches within their territories shall report periodically on their activities in those host 
Member States to the competent authorities of those host Member States. 
 
EN 59   EN In discharging the re sponsibilities imposed on them in Article ⌦ 41 ⌫ 27, host Member 
States may require that branches of credit in stitutions from other Member States provide the 
same information as they require from national credit institutions for that purpose. 
 
Ð 2000/12/EC Art. 22(2) to (4) 
(adapted) 
Article 30 
12. Where the competent authorities of a host Member State ascertain ⌦ that ⌫ than  
an ⌦ credit ⌫ institution having a branch or provi ding services within its territory 
is not complying with the legal provisions  adopted in that State pursuant to the 
provisions of this Directive involving pow ers of the host Member State's competent 
authorities, those author ities shall require the ⌦ credit ⌫ institution concerned to 
put an end to that irregular situation. 
23. If the ⌦ credit ⌫ institution concerned fails to take the necessary steps, the 
competent authorities of the host Memb er State shall inform the competent 
authorities of the home Member State accordingly.  
The competent authorities of the home Me mber State shall, at the earliest 
opportunity, take all appropriate measures to ensure that the ⌦ credit ⌫ institution 
concerned puts an end to that irregular situ ation. The nature of those measures shall 
be communicated to the competent aut horities of the host Member State. 
34. If, despite the measures taken by the home Member State or because such measures 
prove inadequate or are not available in the Member State in question, the 
⌦ credit ⌫ institution persists in violating the legal rules referred to in paragraph 2  
⌦ 1 ⌫ in force in the host Member State, the latter State may, after informing the 
competent authorities of th e home Member State, take appropriate measures to 
prevent or to punish further irregularities and, in so far as is necessary, to prevent that 
⌦ credit ⌫ institution from initiating further tran sactions within its territory. The 
Member States shall ensure that within their territories it is possible to serve the legal 
documents necessary for these measures on credit institutions. 
 
Ð 2000/12/EC Art. 22(5) 
(adapted) 
Article 31 
5.The provisions of ⌦ Articles 29 and 30 ⌫ paragraph 1 to 4  shall not affect the power of 
host Member States to take appropriate measur es to prevent or to punish irregularities 
committed within their territories which are contra ry to the legal rules they have adopted in 
the interests  of the general good. This shall include the possibility of preventing offending 
⌦ credit ⌫ institutions from initiating any further transactions within their territories. 
 
EN 60   EN  
Ð 2000/12/EC Art. 22(6) 
(adapted) 
Article 32 
6. Any measure adopted pursuant to paragraph (2 ) ⌦ Article 30(2) and (3), or Article 31 ⌫ 
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 ⌦ credit ⌫ institution 
concerned. Every such measure shall be subject to a right of appeal to the courts in the 
Member State the authorities of which adopted it. 
 
Ð 2000/12/EC Art. 22(7) 
(adapted) 
Article 33 
7. Before following the procedure provided for in ⌦ Article 30 ⌫ paragraph 2, 3 and 4 , the 
competent authorities of the host Member State may, in emergencies, take any precautionary 
measures necessary to protect the interests of depositors, investors and others to whom 
services are provided. The Commission and the competent authorities of the other Member 
States concerned must be informed of su ch measures at the earliest opportunity. 
The Commission may, after consulting the comp etent authorities of the Member States 
concerned, decide that the Member State in que stion must amend or abolish those measures. 
 
Ð 2000/12/EC Art. 22 (8) 
(adapted) 
Article 34 
8.Host Member States may exercise the power s conferred on them under this Directive by 
taking appropriate measures to prevent or to  punish irregularities committed within their 
territories. This shall include the possibility of preventing ⌦ credit ⌫ institutions from 
initiating further transactions  within their territories. 
 
Ð 2000/12/EC Art. 22(9) 
(adapted) 
Article 35 
9.In the event of the withdraw al of authorisation, the comp etent authorities of the host 
Member State shall be informed and shall take appropriate measures to prevent the 
⌦ credit ⌫ institution concerned from initiating furthe r transactions within its territory and 
to safeguard the interests of depositors. 
 
EN 61   EN  
Ð 2000/12/EC Art. 22 (10) 
(adapted) 
Article 36 
10.The Member States shall inform the Commission of the number and type of cases in which 
there has been a refusal pursuant to Article ⌦ 25 and 26 ⌫ 20(1) to (6)  or in which 
measures have been taken in accordance with paragraph 4 of this Article  ⌦ Article 30(3) ⌫ 
paragraph 4 of this Article . 
 
Ð 2000/12/EC Art. 22(11) 
(adapted) 
Article 37 
11.⌦ This Section shall not ⌫ Nothing in this Article shall  prevent credit institutions with 
head offices in other Member States from ad vertising 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 advertising adopt ed in the interest s of the general good. 
 
Ð 2000/12/EC 
TITLE  IV 
RELATIONS  WITH  THIRD  COUNTRIES 
 
Ð 2000/12/EC (adapted) 
⌦ SECTION 1 NOTIFICATION IN RELATION TO THIRD COUNTRIES ' 
UNDERTAKINGS AND CONDITIONS OF ACCESS TO THE MARKETS OF THESE 
COUNTRIES  ⌫ 
 
Ð 2000/12/EC Art. 23 (adapted) 
Notification of the subsidiaries of third countries' undertakings and conditions of access to the 
markets of these countries  
1. The competent authorities of the Member States shall inform the Commission 1  and 
the competent authoriti es of the other Member States  : 
(a) of any authorisat ion of a direct or indirect subsidiary one or more parent 
undertakings of which are governed by the laws of a third country;  
(b) whenever such a parent undertaking acquires a holding in a Community credi t 
institution such that the latter  would become its subsidiary.  
 
EN 62   EN When authorisation is granted to the direct  or indirect subsidia ry of one or more 
parent undertakings governed by the law of th ird countries, the stru cture of the group 
shall be specified in t he notification which the competent authorities shall address to 
the Commission in accordance with Article 11.  
2. The Member States shall inform the Commission of any ge neral difficulties 
encountered by their credit institu tions in establishing themselves or carrying on 
banking activities in  a third country.  
3. The Commission shall periodic ally draw up a report examining the treatment 
accorded to Community credit institutions in third countries , in the terms referred to 
in paragraphs 4 and 5, as regards est ablishment and the carrying -on of banking 
activities, and the acquisition of holdings in third -country credit institutions. The 
Commission shall submit those reports to th e Council, together w ith any appropriate 
proposals.  
4. Whenever it appears to the Com mission, 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 eff ective market access comparable to that 
granted by the Community to credit in stitutions from that third country, the 
Commission may submit proposals to the C ouncil for the appropriate mandate for 
negotiation with a view to  obtaining comparable co mpetitive opportunities for 
Community 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 1 or on the basis of other info rmation that Community credit institutions 
in a third country do not re ceive national treatment offer ing the same competitive 
opportunities as are available to domestic cr edit institutions and the conditions of 
effective market access are not fulfilled, the Commission may initiate negotiations in 
order to remedy the situation.  
6. In the circumstances desc ribed in the first subparagraph, it may also be decided at 
any time, and in addition to initiating ne gotiations, in accordance with the procedure 
laid down in Article 60 (2), that the compet ent authorities of the Member States must 
limit or suspend their d ecisions regarding requests pe nding at the moment of the 
decision or future requests for authorisations  and the acquisition of holdings by direct 
or indirect parent undertakings governed by th e laws of the third country in question. 
The duration of the mea sures 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 pr oposal from the Commission, decide by 
a qualified majority whether the measures sh all be continued.  
6. Whenever it appears to the Commission that  one of the situations described in 
paragraphs 4 and 5 of Article 39 obtains, the Member States shall inform it at its 
request:  
(a) of any request for the authorisat ion of a direct or indirect subsidiary one or 
more parent undertakings of which are govern ed by the laws of the third country in 
question;  
 
EN 63   EN (b) whenever they are informed in accord ance with Article 16 that such an 
undertaking proposes to acquire a hold ing in a Community credit institu tion such that 
the latter would become its subsidiary.  
This obligation to provide information sha ll lapse whenever an agreement is reached 
with the third country referred to in paragraph 4 or 5or when  the measures referred to 
in the second and third subpar agraphs of paragraph 5 cease to apply.  
7. Measures taken pursuant to this Article comply with the Community's obligations 
under any international agreements, bilate ral or multilateral, governing the taking -up 
and pursuit of the busine ss of credit instituti ons. 
 
ê 2000/12/EC Art. 24 (adapted)  
Î1 Directive 2004/xx/EC Art. 3.7 
Article 38 
Branches of credit institutions having their head offices outside the Community  
1. Member States shall not apply to branches of credit institutions  having their head 
office outside the Community, when commenci ng or carrying on their business, provisions 
which result in more favourable treatment than that accorded to branches of credit institutions 
having their head office in the Community. 
2. The competent authorities sha ll notify the Commission and the Î1 European Banking 
Committee  of all authorisations for branches granted to credit institutions having their 
head office outside the Community. 
3. Without prejudice to paragraph 1, the Co mmunity may, through agreements concluded 
in accordance with the Treaty  with one or more third countr ies, agree to apply provisions 
which, on the basis of the principle of reciprocity,  accord to branches of a credit institution 
having its head office outside the Community id entical treatment thr oughout the territory of 
the Community. 
 
Ø new 
SECTION 2  
COOPERATION WITH THIRD COUNTRIES ' COMPETENT AUTHORITIES 
REGARDING SUPERVISION ON A CONSOLIDATED BASIS   
 
Ð 2000/12/EC Art. 25 (adapted) 
Article 39 
1. The Commission may submit proposals to th e Council, either at the request of a 
Member State or on its own in itiative, for the negotiation of agreements with one or 
 
EN 64   EN more third countries regarding the means of  exercising supervision on a consolidated 
basis over ⌦ the following ⌫: 
(a) credit institutions the parent undertaki ngs of which have their head offices 
situated in a third country; and  
(b) credit institutions situated in third co untries 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 ⌦ the 
following ⌫ both : 
(a) that the competent authorities of the Member States are able to obtain the 
information necessary for the supervisi on, on the basis of their consolidated 
financial situations, of credit institu tions or financial holding companies 
situated in the Community and which have  as subsidiaries credit institutions or 
financial institutions situated outside the Community, or holding participation in such institutions; 
(b)
 that the competent author ities of third countries are able to obtain the 
information necessary for the supervis ion of parent undertakings the head 
offices of which are situated within their territories an d which have as 
subsidiaries credit institutions or financ ial institutions situated in one or more 
Member States or holding participation in such institutions. 
 
Ð Directive 2004/xx/EC Art. 3.8 
3. Without prejudice to Article  300(1) and (2) of the Treaty  establishing the European 
Community, the Commission shall, with the assistance of the European Banking 
Committee, examine the outcome of the negotiations referred to in paragraph 1 and 
the resulting situation. 
 
EN 65   EN  
Ð 2000/12/EC  
TITLE  V 
 
Ð 2000/12/EC 
Ö new 
PRINCIPLES AND TECHNI CAL INSTRUMENTS FOR 
PRUDENTIAL SUPERVISION Ö AND DISCLOSURE  
 
Ð 2000/12/EC 
CHAPTER 1 
PRINCIPLES OF PRUDENTIAL SUPERVISION 
 
Ø new 
SECTION 1  
COMPETENCE OF HOME AND HOST MEMBER STATE  
 
Ð 2000/12/EC Art. 26 (adapted) 
Article 40 
Competence of control of  the home Member State  
1. The prudential supervision of a credit instit ution, including that of the activities it 
carries on accordance with Articles 18 and 19  ⌦ 23 and 24 ⌫ , shall be the 
responsibility of the compet ent authorities of the home  Member State, without 
prejudice to those provisions of this Di rective which give responsibility to the 
authorities of the host Member State. 
2. Paragraph 1 shall not prevent supervision on a consolidated basis pursuant to this 
Directive. 
 
Ð 2000/12/EC Art 27 (adapted) 
Article 41 
Competence of the host Member State  
 
EN 66   EN Host Member States shall ⌦ , pending further coordination, ⌫ retain responsibility in 
cooperation with the competent au thorities of the home Member State for the supervision of 
the liquidity of the branches of credit institutions pending further coordination.   
Without prejudice to the measures necessary for the reinforcement of the European Monetary 
System, host Member States shall retain comple te responsibility for the measures resulting 
from the implementation of their monetary policies.  
Such measures may not provide for discriminatory  or restrictive treatment based on the fact 
that a credit institution is author ised in another Member State. 
 
Ð 2000/12/EC Art 28 (adapted) 
Article 42 
Collaboration concerning supervision  
The competent authorities of the Member States concerned shall collaborate closely in order 
to supervise the activities of credit instituti ons operating, in particul ar by having established 
branches there, in one or more 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 likely to facilitate th eir supervision and the 
examination of the conditions for their authoris ation, and all information likely to facilitate 
the monitoring of such instituti ons, in particular with regard  to liquidity, solvency, deposit 
guarantees, the limiting of large exposures, ad ministrative and accounting procedures and 
internal control mechanisms. 
 
Ð 2000/12/EC Art. 29 (adapted) 
Article 43 
On-the-spot verification of branches es tablished in another Member State  
1. Host Member States shall provide that, where a credit institution authorised in 
another Member State carries on its ac tivities through a branch, the competent 
authorities of the home Member State may, after having first informed the competent 
authorities of the host Me mber State, carry out th emselves or through the 
intermediary of persons they appoint for th at purpose on-the-spot  verification of the 
information referred to in Article ⌦ 42 ⌫ 28. 
2. The competent authorities of the home Me mber State may also, for purposes of the 
verification of branches, have recourse to one of the other procedures laid down in 
Article ⌦ 141 ⌫ 55(7) . 
3. This Article  ⌦ Paragraphs 1 and 2 ⌫ shall not affect the right of the competent 
authorities of the host Member State to  carry out, in the discharge of their 
responsibilities under this Dir ective, on-the-spot verificati ons of branches established 
within their territory. 
 
EN 67   EN  
Ð 2000/12/EC (adapted) 
⌦ SECTION 2 EXCHANGE OF INFORMATION AND PROFESSIONAL SECRECY  ⌫ 
 
Ð 2000/12/EC Art. 30 (1) to (3) 
(adapted) 
Article 44 
Exchange of information and professional secrecy  
1. The Member States shall provide  that all persons working ⌦ for ⌫ or who have 
worked for the competent authorities, as we ll as auditors or experts acting on behalf 
of the competent authorit ies, shall be bound by the obligation of professional 
secrecy.  
⌦ No ⌫ This means that no  confidential information which they may receive in 
the course of their duties may be divulge d to any person or authority whatsoever, 
except in summary or collective form, such that individual ⌦ credit ⌫ institutions 
cannot be identified, without prejudice to cases covered by criminal law. 
Nevertheless, where a credit institution has been declared bankrupt or is being 
compulsorily wound up, confidential in formation which does not concern third 
parties involved in attempts to rescue that  credit institution may be divulged in civil 
or commercial proceedings. 
2. Paragraph 1 shall not prevent the competent authorities of the va rious Member States 
from exchanging information in accordance  with this Directive and with other 
Directives applicable to credit institutions . That information shall be subject to the 
conditions of professional secr ecy indicated in paragraph 1. 
 
Ð 2000/12/EC Art. 30 (4) 
(adapted) 
Article 45 
4.Competent authorities receiving confidential information under ⌦ Article 44 ⌫ 
paragraph s 1 or 2  may use it only in the course of their duties ⌦ and only for the following 
purposes ⌫: 
(a) to check that the conditi ons governing the taking-up of  the business of credit 
institutions are met and to faci litate monitoring, on a non-consolidated or consolidated basis, 
of the conduct of such business, especially with regard to the mo nitoring of liquidity, 
solvency, large exposures, and administrative a nd accounting procedures and internal control 
mechanisms;, or  
(b) to impose sanctions;, or  
 
EN 68   EN (c) in an administrative appeal against a decision of the competent authority;, or  
(d) in court proceedings initiat ed pursuant to Article 33  ⌦ 55 ⌫ or to special provisions 
provided for in this in other Directives a dopted in the field of credit institutions. 
 
Ð 2000/12/EC Art. 30 (3) 
(adapted) 
Article 46 
3. Member States may conclude cooperati on agreements, providing for exchanges of 
information, with the competent au thorities of third countries or with authorities or bodies of 
third countries as de fined in paragraphs  5 and 6  ⌦ Articles 47 and 48(1) ⌫ only if the 
information disclosed is subject to guarantees of  professional secrecy at least equivalent to 
those referred to in this Article. Such exch ange of information must be for the purpose of 
performing the supervisory task of the authorities or bodies mentioned. 
Where the information originates in another Me mber State, it may not be disclosed without 
the express agreement of the competent aut horities which have disclosed it and, where 
appropriate, solely for the purposes for whic h those authorities gave their agreement. 
 
Ð 2000/12/EC Art 30 (5) 
(adapted) 
Article 47 
5. Paragraphs  1 and 4  ⌦ Articles 44(1) and 45 ⌫ shall not preclude the exchange of 
information within a Member State, where there are two or more competent authorities in the 
same Member State, or between Member States, between competent authorities and ⌦ the 
following ⌫:  
(a) authorities entrusted with the public duty of  supervising other financial organisations 
and insurance companies and th e authorities responsible for the supervision of financial 
markets. ; 
(b) bodies involved in the liquidation and bankr uptcy of credit institutions and in other 
similar procedures. ; 
(c) persons responsible for carrying out stat utory audits of the accounts of credit 
institutions and other financial institutions. , 
in the discharge of their supervisory functions., and  
⌦ Nor shall they preclude ⌫ the disclosure to bodies whic h administer deposit-guarantee 
schemes of information necessary to the exercise of their functions.  
⌦ In both cases, the ⌫ The  information received shall be subject to the conditions of 
professional secrecy ⌦ specified ⌫ indicated  in paragraph 1 ⌦ Article 44(1) ⌫. 
 
EN 69   EN  
Ð 2000/12/EC Art. 30 (6) & (7) 
(adapted) 
Article 48 
16. Notwithstanding ⌦ Articles 44 to 46 ⌫ paragraphs 1 to 4 , Member States may 
authorise the  exchanges  of information between th e competent authorities and ⌦ the 
following ⌫:  
(a) the authorities responsible for ov erseeing the bodies, involved in the 
liquidation and bankruptcy of credit institutions and other similar procedures;  , 
or 
(b) the authorities responsible for overs eeing persons charged with carrying out 
statutory audits of the a ccounts of insurance undertak ings, credit institutions, 
investment firms and other financial institutions. 
⌦ In such cases, ⌫ Member States which have recourse to th e provisions of the 
first subparagraph  shall require ⌦ fulfilment of ⌫ at least that  the following 
conditions are met : 
(a) the information ⌦ must ⌫ shall  be for the purpose of performing the 
supervisory task referred to  in the first subparagraph. ; 
(b) information received in this context ⌦ must ⌫ shall  be subject to the 
conditions of professional secrecy imposed in ⌦ Article 44(1) ⌫ 
paragraph1 ).; 
(c) where the information originates in a nother Member State, it may not be 
disclosed without the express agreemen t of the competent authorities which 
have disclosed it and, where appropriate , solely for the purposes for which 
those authorities gave their agreement. 
Member States shall communicate to the Commission and to the other Member 
States the names  of the authorities which may receive information pursuant to this 
paragraph. 
27. Notwithstanding ⌦ Articles 44 to 46 ⌫ paragra phs 1 to 4 , Member States may, 
with the aim of strengthening the stabil ity, including integrity, of the financial 
system, authorise the exchange of informa tion between the competent authorities and 
the authorities or bodies responsible under la w for the detection and investigation of 
breaches of company law. 
⌦ In such cases ⌫ Member States which have recourse to the provision in the first 
subparagraph  shall require ⌦ fulfilment of ⌫ at least that the following conditions 
are met : 
(a) the information is for the purpose of performing the task referred to in the first 
subparagraph. ; 
 
EN 70   EN (b) information received in this context ⌦ is ⌫ shall be  subject to the conditions 
of professional secrecy imposed in ⌦ Article 44(1) ⌫ (paragraph1). ; 
(c) where the information originates in a nother Member State, it may not be 
disclosed without the express agreemen t of the competent authorities which 
have disclosed it and, where appropriate , solely for the purposes for which 
those authorities gave their agreement. 
Where, in a Member State, the authoriti es 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 appoint ed for that purpose and not employed in 
the public sector, the possibili ty of exchanging informati on provided for in the first 
subparagraph may be extended to such persons under the conditions ⌦ specified ⌫ 
stipulated  in the second subparagraph. 
In order to implement the third indent of the second  subparagraph, the authorities or 
bodies referred to in the first subparag raph shall communicate to the competent 
authorities which have disclosed th e information, 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 bodi es which may receive information pursuant 
to this ⌦ Article ⌫ paragraph . 
Before 31 December 2000, t The Commission shall draw up a report on the application of the 
provisions of this ⌦ Article ⌫ paragraph . 
 
Ð 2000/12/EC Art 30 (8) 
(adapted) 
Article 49 
8.This ⌦ Section ⌫ Article  shall not prevent a competen t authority from transmitting 
⌦ information to the following for the purposes of their tasks ⌫: 
(a) central banks and other bodies  with a similar function in their capacity as monetary 
authorities. ; 
(b) where appropriate, to othe r public authorities respons ible for overseeing payment 
systems. 
information intended for the performance of their task, nor  ⌦ Nor ⌫ shall it prevent such 
authorities or bodies from communicating to th e competent authorities such information as 
they may need for the purposes of ⌦ Article 45 ⌫ paragraph  4.  
Information received in this context shall be subject to the conditions of professional secrecy 
⌦ set out ⌫ imposed  in this  Article ⌦ 44(1) ⌫. 
 
EN 71   EN  
Ð 2000/12/EC Art. 30 (9) 1st and 
2nd paragraphs (adapted) 
Article 50 
9. In a ddition, n Notwithstanding the provisions referred to in ⌦ Articles 44(1) and 45 ⌫ 
paragraph  1 and 4 , the Member States may, by virtue  of provisions laid down by law, 
authorise the disclosure of certain informa tion to other departments of their central 
government administrations responsible for legislation on the supervision of credit 
institutions,  financial institutions, investment services and insurance companies and to 
inspectors acting on behalf of those departments. 
However, such disclosures may be made onl y where necessary for reasons of prudential 
control. 
 
Ð 2000/12/EC Art 30 (9) 3rd 
paragraph (adapted) 
Article 51 
However, t The Member States shall provide that information received under ⌦ Articles 
44(2) and 47 ⌫ paragraph  2 and 5  and ⌦ information ⌫ that obtained by means of the on-
the-spot verification referred to in Article ⌦ 43 ⌫ 29(1) and (2) may neve r be disclosed in 
the cases referred to in this ⌦ Article ⌫ paragraph  except with the express consent of the 
competent authorities which disclosed the information or of the competent authorities of the Member State in which on-the-s pot verification was carried out. 
 
Ð 2000/12/EC Art. 30 (10) 
(adapted) 
Article 52 
10.⌦ This Section ⌫ Article  shall not prevent the competent authorities ⌦ of a Member 
State ⌫ from communicating the information referred to in ⌦ Articles 44 to 46 ⌫ 
paragraph  1 to 4  to a clearing house or other similar body recognised under national law for 
the provision of clearing or settlement services for one of their Member States' markets if they consider that it is necessary  to communicate the information in order to ensure the proper 
functioning of those bodies in rela tion to defaults or potential de faults by market participants. 
The information received in this context shall be subject to the conditions of professional 
secrecy ⌦ laid down ⌫ imposed
 in ⌦ Article 44(1) ⌫ paragraph 1 .  
The Member States shall, however, ensure that information rece ived under paragraph 2  
⌦ Article 44(2) ⌫ may not be disclosed in the circumstances referred to in this 
⌦ Article ⌫ paragraph  without the express consent of the competent authorities which 
disclosed it. 
 
EN 72   EN  
Ø new 
SECTION 3  
DUTY OF PERSONS RESPONSIBLE FOR THE LEGAL CONTROL OF ANNUAL AND 
CONSOLIDATED ACCOUNTS  
 
Ð 2000/12/EC Art. 31 (adapted) 
Article 53 
Duty of persons responsible for the legal control of annual and consolidated accounts  
1. Member States shall pr ovide at least that: (a)  any person authorised within the 
meaning of ⌦ eight ⌫ Council Directive 84/253/EEC26, performing in a credit 
institution the task described in Article 51 of ⌦ fourth ⌫ Council Directive 
78/660/EEC27, or Article 37 of Council Direct ive 83/349/EEC, or Article 31 of 
⌦ Council ⌫ Directive 85/611/EEC28, or any other statutory task, shall have a duty 
to report promptly to the competent author ities any fact or deci sion concerning that 
⌦ credit ⌫ institution of which he has become  aware while carrying out that task 
which is liable to: 
(a) constitute a material breach of the laws, regulations or administrative 
provisions which lay down the conditions  governing authorisation or which 
specifically govern pursuit of the acti vities of credit institutions, or ; 
(b) affect the continuous functioning of the credit institution, or ; 
(c) lead to refusal to certify the accounts  or to the expression of reservations. 
⌦ Member States shall provide at least that ⌫ (b) that person shall likewise have a 
duty to report any fact ⌦ or ⌫ and decision of which he  becomes aware in the 
course of carrying out a task as described in ⌦ the first sub-paragraph ⌫ (a) in an 
undertaking having close links resulting from a control re lationship with  the credit 
institution within whic h he is carrying out ⌦ that ⌫ the abovement ioned  task. 
2. The disclosure in good faith to the comp etent authorities, by persons authorised 
within the meaning of Direct ive 84/253/EEC, of any fact or decision referred to in 
paragraph 1 shall not constitute a breach  of any restriction on disclosure of 
information imposed by contract or by any legislative, regulator y or administrative 
provision and shall not involve such persons in liability of any kind. 
                                                 
26 OJ L 126, 12.5.1984, p. 20. 
27 OJ L 222, 14.8.1978, p. 11, as last amended by Directive 1999/60/EC (OJ L 62, 26.6.1999, p. 65). 
28 OJ L 375, 31.12.1985, p. 3, as last amended by Directive 95/26/EC (OJ L 168, 18.7.1995, p. 7). 
 
EN 73   EN  
Ð 2000/12/EC (adapted) 
⌦SECTION 4 POWER OF SANCTION AND RIGHT TO APPLY TO THE COURTS  ⌫ 
 
Ð 2000/12/EC Art. 32 (adapted) 
Article 54 
Power of sanction of th e competent authorities  
Without prejudice to the procedures  for the withdrawal of author isations 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 c ontrol the business of credit 
institutions,  which breach laws, regulations or ad ministrative provis ions concerning the 
supervision or pursuit of their activities , adopt or impose in respect of them  penalties or 
measures aimed specifically at ending ⌦ the ⌫ observed breaches or the causes of such 
breaches. 
 
Ð 2000/12/EC Art. 33 (adapted) 
Article 55 
Right to apply to the courts  
Member States shall ensure that decisions taken in respect of a credit institution in pursuance 
of laws, regulations and administrative provision s adopted in accordance  with this Directive 
may be subject to the right to apply to the c ourts. The same shall a pply where no decision is 
taken,  within six months of its submission, in resp ect of an application for authorisation which 
contains all the information requi red under the provisions in force. 
 
Ð 2000/28/EC 1.2 (adapted) 
Article 33a  
Article 3 of Directive 2000/46/EC sh all apply to credit institutions  
 
EN 74   EN  
Ð 2000/12/EC 
CHAPTER  2 
TECHNICAL  INSTRUMENTS  OF PRUDENTIAL  SUPERVISION 
SECTION 1 
OWN FUNDS  
 
Ð 2000/12/EC Art. 34 (1) 
(adapted) 
Article 56 
General principles  
1.Wherever a Member State lays down by law, regulation or administra tive action a provision 
in implementation of Community legislation c oncerning the prudentia l 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 in ⌦ Articles 57 to 61 and 
Articles 63 to 66 ⌫paragraph 2, 3 and 4 and Articles 35 to 38 . 
 
Ð 2000/12/EC Art. 34 (2) 1st 
paragraph (adapted) 
Ö new 
Article 57 
Subject to the limits imposed in Article 38  ⌦ 66 ⌫ , the unconsolidated own funds of credit 
institutions shall consist of the following items: 
(1a) capital within the meaning of Article 22 of Directive 86/635/ EEC, in so far as 
it has been paid up, plus share prem ium accounts but excluding cumulative 
preferential shares; 
(2b) reserves within the meaning of Articl e 23 of Directive 86/ 635/EEC and profits 
and losses brought forward as a result of the application of the final profit or 
loss;.. The Member States may permit in clusion of interim profits before a 
formal decision has been taken only if  these profits have been verified by 
persons responsible for the auditing of the accounts and if it is proved to the 
satisfaction of the competent authorit ies that the amount thereof has been 
evaluated in accordance with the principles set out in Directive  86/635/EEC 
and is net of any forese eable charge or dividend;   
 
EN 75   EN (3c) funds for general banking risks within the meaning of Article 38 of Directive 
86/635/EEC; 
(4d) revaluation reserves within the meani ng of Article 33 of Directive 78/660/EEC; 
(5e) value adjustments within the meaning of Article 37(2) of Directive 
86/635/EEC; 
(6f) other items within the meaning of Article 35  ⌦ 63 ⌫ ; 
(7g) the commitments of the members of credit institutions set up as cooperative 
societies and the joint and several commitments of the borrowers of certain institutions organised as funds , as referred to in Article 36
 ⌦ 64 ⌫ (1); 
(8h) fixed-term cumulative preferential sh ares and subordinate d loan capital as 
referred to in Article 36  ⌦ 64 ⌫ (3). 
The following items shall be deducted in accordance with Article 38  ⌦ 66 ⌫ : 
(9i) own shares at book value held by a credit institution; 
(10j) intangible assets within the meaning of  Article 4(9) («Asse ts») of Directive 
86/635/EEC; 
(k11) material losses of the current financial year; 
 
Ð 2002/87/EC Art. 29.4(a) 
(adapted) 
(l12) holdings in other credit and financial institutions amounting to more than 10 % 
of their capital; 
(m13 ) subordinated claims and instruments referred to in Article 35  ⌦ 63 ⌫ and 
Article 36  ⌦ 64 ⌫ (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; 
(n14
) holdings in other credit and financial institutions of up to 10 % of their capital, 
the subordinated claims and the inst ruments referred to in Article 35  ⌦ 63 ⌫ 
and Article 36  ⌦ 64 ⌫ (3) which a credit institution holds in 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 and instruments which exceed 10 % of that credit institution's own funds calculated befo re the deduction of items in points ⌦ (l) 
to (p) ⌫ 12 to 16
 of this subparagraph; 
(o15) participations within the meaning of Article ⌦ 4(10) ⌫ 1(9)  which a credit 
institution holds in:  
 
EN 76   EN (i) insurance undertakings within the meaning of Article 6 of ⌦ First 
Council ⌫ Directive 73/239/EEC ⌦ 29 ⌫ , Article 6 of ⌦ First 
Council ⌫ Directive 79/267/EEC ⌦ 30 ⌫ or Article 1(b) of Directive 
98/78/EC of the European Parliament and of the Council31; 
(ii) reinsurance undertakings within the meaning of Ar ticle 1(c) of Directive 
98/78/EC; 
(iii) insurance holding companies within the meaning of Article 1(i) of 
Directive 98/78/EC; 
(p16) each of the following items which the cred it institution holds in respect of the 
entities defined in point (15 o) in which it holds a participation: 
(i) instruments referred to in Artic le 16(3) of Directive 73/239/EEC, 
(ii) instruments referred to in Artic le 18(3) of Directive 79/267/EEC. 
 
Ø new 
(q) For credit institutions calculati ng risk-weighted exposure amounts under 
Section 3, Subsection 2, negative amount s resulting from the calculation in 
Annex VII, Part 1, paragraph 34 and e xpected loss amounts calculated in 
accordance with Annex VII, Part 1 paragraphs 30 and 31;  
(r) The exposure amount of securitisation pos itions which receive a risk weight of 
1250% under Annex IX, Part 4, calculat ed in the manner there specified. 
 
Ð 2000/12/EC Art. 34 (2) point 2, 
final sentence (adapted) 
Ö new 
⌦ For the purposes of point (b), the ⌫ The Member States may permit inclusion of 
interim profits before a formal decision has b een taken only if thes e profits have been 
verified by persons responsible for the auditi ng of the accounts and if it is proved to 
the satisfaction of the competent author ities that the amount thereof has been 
evaluated in accordance with the principles  set out in Directive 86/635/EEC and is 
net of any foreseeable charge or dividend; . 
Ö In the case of a credit institution which is the originator of  a securitisation, net 
gains arising from the capitalisation of future  income from the securitised assets and 
providing credit enhancement to positions in the securitisation shall be excluded 
from the item specified in point (b) . 
                                                 
29 ⌦ OJ L 228, 16.8.1973, p. 3 ⌫ 
30 ⌦ OJ L 63, 13.3.1979, p. 1 ⌫ 
31 OJ L 330, 5.12.1998, p. 1. 
 
EN 77   EN  
Ð 2002/87/EC Art. 29.4(b) 
(adapted) 
Article 58 
Where shares in another credit institution, fi nancial institution, insurance or reinsurance 
undertaking or insurance holding company are held temporarily for the purposes of a financial 
assistance operation designed to reorganise and save that entity, the competent authority may waive the provisions on deduc tion referred to in points ⌦ (l) to (p) ⌫12 to 16
. 
Article 59 
As an alternative to the deduction of the items referred to in points ⌦ (o) to (p) ⌫ 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/E C. Method 1 (Accounting consolidation) ⌦ may ⌫ 
shall only  be applied ⌦ only ⌫ if the competent authority is confident about the level of 
integrated management and internal control re garding the entities which would be included in 
the scope of consolidation. The method chosen shall be applied in a consistent manner over 
time. 
Article 60 
Member States may provide that for the calc ulation of own funds on a stand-alone basis, 
credit institutions subject to supervision on a c onsolidated basis in accordance with Chapter 
⌦ 4, Section 1 ⌫ 3, or to supplementary supervision in accordance with Directive 
2002/87/EC, need not deduct the items referred to in points ⌦ (l) to (p) ⌫12 to 16 which are 
held in credit institutions, financial institutions, insurance or reinsurance undertakings or insurance holding companies, which are in cluded in the scope of  consolidated or 
supplementary supervision. 
This provision shall apply to all the prude ntial rules harmonised by Community acts. 
 
Ð 2000/12/EC Art 34 (3) 
(adapted) 
Article 61 
3.The concept of own funds as defined in points ⌦ (a) to (h) ⌫ (1) to (8)  of paragraph 2  
⌦ Article 57 ⌫ embodies a maximum number of items and amounts. The use of those items 
and the fixing of lower ceilings, and the deduction of items other than those listed in points (9) to
 (13)  ⌦ (i) to (r) ⌫ of ⌦ Article 57 ⌫ paragraph 2  shall be left to the discretion of 
the Member States. Member States shall neverth eless be obliged to consider increased 
convergence with a view to a common definition of own funds.  
To that end, the Commission shall, by 1 Janua ry 1996 at the latest, su bmit a report to the 
European Parliament and to the Council on the appl ication of this  Article and Articles 35 to 
39, accompanied, where appropriate, by such proposals for amendment as it shall deem 
 
EN 78   EN necessary. Not later than 1 January 1998, the Eu ropean Parliament a nd the Council shall, 
acting in accordance with the procedure laid down in A rticle 251 of the Treaty and after 
consultation of the Economic and Social Co mmittee, examine the definition of own funds 
with a view to the uniform app lication of the common definition.  
 
Ð 2000/12/EC Art 34 (4) 
(adapted) 
4The items listed in points ⌦ (a) to (e) ⌫ (1) to (5)  of ⌦ Article 57 ⌫ paragraph 2  must 
be available to a credit institution for unrestric ted and immediate use to cover risks 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 which these items may be applied to cover risks or losses. 
 
Ø new 
Article 62 
Member States will report to the Commission on the progress achieved in convergence with a 
view to a common definition of  own funds. On the basis of these reports the Commission 
shall, if appropriate, by 1 January 2009 at the latest, subm it a proposal to the European 
Parliament and to the Council for amendmen t of this Article a nd Articles 35 to 39.  
 
Ð 2000/12/EC Art 35 (adapted) 
Article 63 
Other items  
1. The concept of own funds used by a Memb er State may include other items provided 
that, whatever their legal or accounti ng designations 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 ha ve not yet been identified; 
(b) their existence is disclosed in internal accounting records; (c) their amount is determined by the management of the credit institution, verified 
by independent auditors, made known to the competent authorities and placed 
under the supervisi on of the latter. 
2.
 Securities of indeterminate duration and other instrument s that fulfil the following 
conditions may also be accepted as other items: 
(a) they may not be reimbursed on the b earer's initiative or without the prior 
agreement of the competent authority; 
 
EN 79   EN (b) the debt agreement must provide for the credit institution to have the option of 
deferring the payment of interest on the debt; 
(c) the lender's claims on the credit institution must be wholly subordinated to 
those of all non-subordinated creditors; 
(d) the documents governing the issue of th e securities must provide for debt and 
unpaid interest to be such  as to absorb losses, whilst leaving the credit 
institution in a position to continue trading; 
(e) only fully paid-up amounts shall be taken into account. To these may be added cumulative preferential  shares other than those referred to in 
point ⌦ (h) ⌫ 8
 of Article 34  ⌦ 57 ⌫ (2). 
 
Ø new 
3. For credit institutions calculating risk -weighted exposure amounts under Section 3, 
Subsection 2, positive amounts resulting from the calculation in A nnex VII, Part 1, 
paragraph 34, may, up to 0.6% of risk we ighted exposure amounts calculated under 
Subsection 2, be accepted as other items.  For these credit institutions value 
adjustments and provisions included in th e calculation referred to in Annex VII, 
Section 3, Part 1, paragraph 34 and value adjustments and provisions for exposures 
referred to in point (e) of Article 57 shall not be included in own funds other than in 
accordance with this provision. For these purposes, risk-weighted exposure amounts 
shall not include those calculated in respec t of securitisation pos itions which have a 
risk weight of 1250%. 
 
Ð2000/12/EC Art 36 (adapted) 
Article 64 
Othe r provisions concerning own funds  
1. The commitments of the members of cr edit institutions set up as cooperative 
societies referred to in point ⌦ (g) ⌫ 7 of Article 34(2) ⌦57⌫, shall comprise 
those societies' uncalled capital; together with the legal commitm ents of the members 
of those cooperative societies to make additional non-refundable payments should 
the credit institution incur a loss, in which case it must be possible to demand those payments without delay. 
The joint and several commitments of borrowers in the case of credit institutions 
organised as funds shall be  treated in the same way as the preceding items. 
All such items may be included in own funds in so far as they are counted as the own 
funds of institutions of this category under national law. 
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. 
 
EN 80   EN 3. Member States or the competent author ities may include fixed-term cumulative 
preferential shares referred to in point ⌦ (h) ⌫ (8) of Article 34(2) ⌦57⌫ and 
subordinated loan capital referred to in that provision in ow n funds, if binding 
agreements exist under which, in the event of the bankrup tcy or liquidation of the 
credit institution, they rank after the claims of all other creditors and are not to be 
repaid until all other debts outstandi ng at the time have been settled. 
Subordinated loan capital must also  fulfil the following additional  criteria: 
(a) only fully paid-up funds may be taken into account; (b) the loans involved must have  an original maturity of at least five years, after 
which they may be repaid; if the maturity of the debt
 is not fixed, they shall be 
repayable only subject to five years'  notice unless the loans are no longer 
considered as own funds or unless the prior consent of the competent 
authorities is specifically required for early repayment. The competent 
authoritie s may grant permission for the ear ly repayment of such loans 
provided the request is made at the initia tive of the issuer and the solvency of 
the 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 y ears before the repayment date; 
(d) the loan agreement must not include any clause providing that in specified 
circumstances, other than the winding-up of  the credit institution, the debt will 
become repayable before the agreed repayment date. 
 
Ð 2000/12/EC Art. 36(3)(b), 
excluding first 19 words  
Ö new 
Ö For the purposes of point (b) of the second subparagraph,  if the maturity of the 
debt is not fixed, they shall be repayable only subject to five years' notice unless the 
loans are no longer considered  as own funds or unless the prior consent of the 
competent authorities is specifically requi red for early repayment. The competent 
authorities may grant permission for the ea rly repayment of such loans provided the 
request is made at the initiative of the issu er and the solvency of the credit institution 
in question is not affected; 
 
Ø new 
4. Credit institutions shall not include in own funds either th e fair value reserves related 
to gains or losses on cash flow hedges of financial instruments measured at amortised 
cost, or any gains or losses on their liabilitie s valued at fair value that are due to 
changes in the credit institutions’ own credit standing. 
 
EN 81   EN  
Ð2000/12/EC Art 37 (adapted) 
Article 65 
Calculation of own funds on a consolidated basis  
1. Where the calculation is to be made on a consolidated basis,  the consolidated 
amounts relating to the items listed under Article 34  ⌦57⌫(2) shall be used in 
accordance with the rules laid down in Articles  52 to 56⌦Chapter 4, Section 1 ⌫. 
Moreover, the following may, when they are credit («negative») it ems, be regarded 
as consolidated reserves fo r the calculation of own funds: 
(a) any minority interests within the meaning of Article 21 of Directive 
83/349/EEC, where the global integration method is used; 
(b) the first consolidation difference with in the meaning of Articles 19, 30 and 31 
of Directive 83/349/EEC; 
(c) the translation differences included in c onsolidated reserves in accordance with 
Article 39(6) of Directive 86/635/EEC; 
(d) any difference resulting from the inclusi on of certain particip ating interests in 
accordance with the method prescribed in  Article 33 of Directive 83/349/EEC. 
2. Where the above debit (“positiv e”) items, they must be de ducted in the calculation of 
consolidated own funds  ⌦ Where the items referred to in points (a) to (d) of 
paragraph 1 are debit («positive») items, they shall be deducted in the calculation of consolidated own funds. ⌫ 
 
Ð 2000/12/EC Art 38 (1) 
(adapted) 
Ö new 
Article 66 
Deductions and limits  
1. The items referred to in points ⌦ (d) to (h) ⌫ (4) to (8)  of Article 34(2) ⌦57⌫, shall be 
subject to the following limits: 
(a) the total of the items in points ⌦ (d) to (h) ⌫ (4) to (8)  may not exceed a 
maximum of 100% of the items in points ⌦ (a) plus (b) and (c) ⌫ (1) plus 
(2) and (3)  minus ⌦ (i) to (k) ⌫ (9), (10) (11)  Ö and 50% of the amounts in 
item (q) ; 
(b) the total of the items in points ⌦ (g) to (h) ⌫ (7) and (8)  may not exceed a 
maximum of 50% of the items in points ⌦ (a) plus (b) and (c) ⌫ (1) plus (2) 
and (3)  minus (i) to (k) (9), (10) and (11)  Ö and 50% of the amounts in item 
(q)  ; 
 
EN 82   EN (c) the total of the items in points (l) (12)  and (13)  Ö to (q) shall be deducted 
from the total of the items. 
 
Ø new 
2. The items referred to in point (r) of Article 57 shall be deducted from the total of the 
items specified in points (a) to (h) of th at Article, unless the credit institution 
includes the former items in its calcula tion of risk-weighted exposure amounts for 
the purposes of Article 75 as specified in Annex IX, Part 4. 
 
Ð 2000/12/EC Art 38 (2) 
23. The competent authorities may authorise cr edit institutions to exceed the limit laid 
down in paragraph 1 in temporary and exceptional circumstances. 
 
Ð 2000/12/EC Art 39 (adapted) 
Article 67 
Provision of proof to the competent authorities  
Compliance with the conditions laid down in ⌦ this Section ⌫ Article 34 (2), (3) and (4) 
and Articles 35 to 38  must be proved to the satisfaction of the competent authorities. 
 
Ø new 
SECTION 2 
PROVISION AGAINST RISKS  
SUBSECTION 1 - LEVEL OF APPLICATION  
Article 68 
1. Credit institutions shall comp ly with the obligations laid down in Articles 22 and 75 
and Section 5 on an individual basis. 
2. Every credit institution which is neither a subsidiary in th e Member State where it is 
authorised and supervised, nor a parent undertaking, and every credit institution not 
included in the consolida tion pursuant to Article 73, shall comply with the 
obligations laid down in Articles 120 and 123 on an individual basis. 
3. Every credit institution which is neither a parent undertaking, nor a subsidiary, and 
every the credit institution not included in the consolidation pursuant to Article73, 
shall comply with the obligations laid dow n in Chapter 5 on an individual basis. 
 
EN 83   EN Article 69 
1. The Member States may choose not to appl y Article 68(1) to a ny subsidiary of a 
credit institution, where both the subsidiary and the credit institution are subject to 
authorisation and supervision by the Member  State concerned, and the subsidiary is 
included in the supervision on a consolidated basis of the credit institution which is 
the parent undertaking, and a ll of the following conditions are satisfied, in order to 
ensure that own funds are distributed ad equately among the parent undertaking and 
the subsidiaries: 
(a) there is no current or foreseen materi al or legal impediment to the prompt 
transfer of own funds or repayment of liabilities by its parent undertaking; 
(b) its parent undertaking is committe d to an unconditiona l, explicit and 
irrevocable obligation to transfer own funds to the subsidiary and meet its 
liabilities, or the risks in the subsid iaries are of negligible interest; 
(c) the risk evaluation, measurement a nd control procedures of the parent 
undertaking cover the subsidiary; 
(d) the parent undertaking has the right to appoint or remove a majority the 
members of the management body of the subsidiary. 
2. The Member States may exercise the option provided for in paragraph 1 where the 
parent undertaking is a financial holding company set up in the same Member State 
as the credit institution, pr ovided that it is subject to the same supervision as that 
exercised over credit institutions, and in pa rticular to the standards laid down in 
Article 71(1). 
Article 70 
The competent authorities may allow on a case by case basis parent credit institutions in a 
Member State to incorporate in the calculation of  their requirement under Article 68(1) 
subsidiaries in the Community which meet the conditions laid down in the points (a), (c) and 
(d) of Article 69(1), and whose ma terial exposures or material li abilities are to  that parent 
credit institution in a Member State. 
Article 71 
1. Without prejudice to Articles 68 to 70, parent credit inst itutions in a Member State 
shall comply, to the extent and in the manner prescribed in Article 133, with the 
obligations laid down in Articles 75, 120, 123 and Sectio n 5 on the basis of their 
consolidated financial situation. 
2. Without prejudice to Articles 68 to 70, credit institutions controlled by a parent 
financial holding company in a Member State shall comply, to the extent and in the 
manner prescribed in Article 133, with the obl igations laid down in Articles 75, 120, 
123 and Section 5 on the basis of the consolidat ed financial situation of that financial 
holding company.  
 
EN 84   EN Where more than one credit institution is  controlled by a parent financial holding 
company in a Member State, the first subparagraph shall apply only to the credit 
institution to which supervision on a cons olidated basis applies in accordance with 
Articles 125 and 126. 
Article 72 
1. EU parent credit institutions shall comply  with the obligations laid down in Chapter 
5 on the basis of their conso lidated financial situation. 
However, in respect of their significant subsidiaries, they shall disclose the 
information specified in Annex XII, Part 1, paragraph 5, on an individual or sub-
consolidated basis. 
2. Credit institutions cont rolled by an EU parent financial holding company shall 
comply with the obligations laid down in Chapter 5 on the basis of the consolidated 
financial situation of that  financial holding company. 
However, in respect of their significant subsidiaries, they shall disclose the 
information specified in Annex XII, Part 1, paragraph 5, on an individual or sub-
consolidated basis. 
3. The competent authorities responsible fo r exercising supervision on a consolidated 
basis pursuant to Articles 125 to 131 may de cide not to apply in full or in part 
paragraphs 1 and 2 to the credit institutio ns which are included within comparable 
disclosures provided on a consolidated basi s by a parent undertaking established in a 
third country. 
 
Ð 2000/12/EC Art. 52 (3) 
(adapted) 
Article 73 
61. The Member States or the competent authorities responsib le for exercising 
supervision on a consolidated basis pursuant to Article 53  ⌦ 125 to 131 ⌫ may 
decide in the ⌦ following ⌫ cases listed below  that a credit institution, financial 
institution or ancillary banking  services undertaking which is a subsidiary or in 
which a participation is held need no t be included in the consolidation: 
(a) where  if the undertaking ⌦ concerned ⌫ that should be included  is situated 
in a third country where there are lega l impediments to the transfer of the 
necessary information. ; 
(b) where  if, in the opinion of the competent authorities, the undertaking 
⌦ concerned ⌫ that should be included  is of negligible interest only with 
respect to the objectives of monitoring credit institutions and in ⌦ any 
event where ⌫ all cases  the balance-sheet total of the undertaking 
⌦ concerned ⌫ that should be included  is less than the smaller of the 
following two amounts: 
 
EN 85   EN (i) EUR 10 million; 
(ii) or 1% of the balance-sheet total of the parent undertaking or the 
undertaking that hold s the participation. 
If several undertakings meet the above crit eria, they must nevertheless be included  in 
the consolidation where collectively they are of non -negligible interest with respect 
to the aforementioned objectives, or  
(c) where  if, in the opinion of the competent au thorities responsible for exercising 
supervision on a consolidated  basis, the conso lidation of the financial situation 
of the undertaking ⌦ concerned ⌫ that should be included  would be 
inappropriate or misleading as  far as the objectives of the supervision of credit 
institutions are concerned. 
 
Ð 2000/12/EC Art. 52 (3) 2nd 
indent, final sentence (adapted) 
If ⌦ , in the cases referred to in poi nt (b) of the first subparagraph ⌫ , several 
undertakings meet the above criteria ⌦ set out therein ⌫ , they must nevertheless 
be included in the consolida tion where collectively they ar e of non-negligible interest 
with respect to the specified aforementioned  objectives, or . 
 
Ø new 
2. Competent authorities shall require subs idiary credit institutions to apply the 
requirements laid down in Articles 75, 120, 123 and Section 5 on a sub-consolidated 
basis if those credit institutions, or the parent undertaking wher e it is a financial 
holding company, have a credit institution or  a financial institution or an asset 
management company as defined in Arti cle 2(5) of Directive 2002/87/EC as a 
subsidiary in a third country, or hold a participation in such an undertaking. 
3. The competent authorities shall require the parent undertakings and subsidiaries 
subject to this Directive to meet the obligations laid down in Article 22 on a 
consolidated or sub-consolidated basis, to  ensure that their arrangements, processes 
and mechanisms are consistent and well-integrated and that any data and information 
relevant to the purpose of supervision can be produced. 
SUBSECTION 2 - CALCULATION OF REQUIREMENTS  
Article 74 
1. Save where otherwise provided, the valuati on of assets and off-balance-sheet items 
shall be effected in accor dance with the accounting framework to which the credit 
institution is subject under Regulat ion (EC) No 1606/2002 and Directive 
86/635/EEC. 
2. Notwithstanding the requirements laid down in Articles 68 to 72, the competent 
authorities shall ensure that the calcula tions to verify the compliance of credit 
 
EN 86   EN institutions with the obligat ions laid down in Article 75 are carried out not less than 
twice each year. 
The calculations shall be carried out either  by the credit institutions themselves, in 
which case they shall communicate the results and any component data required to 
the competent authorities, or by the compet ent authorities, using data supplied by the 
credit institutions. 
SUBSECTION 3 - MINIMUM LEVEL OF OWN FUNDS  
Article 75 
Without prejudice to Article 136, Member States shall require credit institutions to provide 
own funds which are at all times more than or equal to the sum of the following capital 
requirements: 
(a) for credit risk and dilution risk in respect  of all of their busi ness activities with the 
exception of their trading book business and illi quid assets if deducte d from own funds under 
[Directive 93/6/EEC, Article 13(2)(d ) ], 8 per cent of the total of their risk-w eighted exposure 
amounts calculated in accordance with Section 3;  
(b) in respect of their trading-book business, for position risk, settlement and counter-
party risk and, in so far as th e limits laid down in Articles 111 to 117 are authorised to be 
exceeded, for large exposures exceeding such li mits, the capital requirements determined in 
accordance with [Directive 93/6/ EEC, Chapter V, Section 4]; 
(c) in respect of all of th eir business activities, for fore ign-exchange risk and for 
commodities risk, the capital requirements determ ined according to [Article 18 of Directive 
93/6/EEC]; 
(d) in respect of all of their business act ivities, for operational risk, the capital 
requirements determined in accordance with Section 4. 
 
Ð 2000/12/EC 
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 -adjusted in accordance with Article 42.  
 
EN 87   EN 2. The solvency ratios of credit institutions wh ich are neither parent undertakings as defined 
in Article 1 of Directive 83/ 349/EEC, nor subsidiaries of such undertakings shall be 
calculated on an individual basis.  
3. The solvency ratios of credit institutions which are parent undertakin gs shall be calculated 
on a consolidated basis in accordance with the methods laid down in this Directive and in 
Directiv e 86/635/EEC.  
4. The competent authorities responsible for auth orising and supervising a parent undertaking 
which is a credit institution may also require  the calculation of a subconsolidated or 
unconsolidated ratio in respect of that parent  undertaking an d of any of its subsidiaries which 
are subject to authorisation and supervisio n by them. Where such monitoring of the 
satisfactory allocation of capita l 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 comp etent authorities shall ensure that ratios are 
calculated not less than twice each year , either by credit institutions themse lves, which shall 
communicate the results and any component data required to 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 effecte d in accordance with 
Directive 86/635/EEC.  
Article 41  
The numerator: own funds  
Own funds as defined in this Directive shal l form the numerator of the solvency ratio.  
Article 42  
The denominator: risk -adjusted assets and off -balance -sheet items  
1. Degrees of  credit risk, expressed as percentage wei ghtings, shall be assigned to asset items 
in accordance with Articles 43 and 44, and exceptionally Articles 45, 62 and 63. The balance -
sheet value of each asset 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 th e event of counterparty de fault shall be calculated by means of one of 
the two methods set out in Annex III. Those costs shall be multiplied by the relevant 
counterparty weightings in Artic le 43(1), except the 100% weight ings as provided for there 
shall be replaced by 50% weightings to produce risk -adjusted values.  
4. The total of the risk -adjusted values of the assets and off -balance -sheet items mentioned in 
paragraphs 2 and 3 shall be the denominator of the solvency rati o. 
 
EN 88   EN Article 43  
Risk weightings  
1. The following weightings shall be applied to the various categories of asset items, although 
the competent authorities may fix hi gher weightings as they see fit:  
(a) Zero weighting  
(1) cash in hand and equivalent items;  
(2) asset items constituting claims on Z one A central governments and central 
banks;  
(3) asset items constituting claims on the European Communities;  
(4) asset items constituting claims carry ing the explicit guarantees of Zone A 
central governments and centra l banks or of the European Communities;  
(5) asset items constituting claims on Z one B central governments and central 
banks denominated and funded in the national currencies of the borrowers;  
(6) asset items constituting claims carrying the explicit guaran tees of Zone B 
central governments and central banks denominated and funded in the national 
currency common to the guarantor and the borrower;  
(7) asset items secured to the satisfaction of the competent authorities, by collateral 
in the form of Zone A cen tral government or cen tral bank securities or 
securities issued by the European Communities or by cash deposits placed with 
the lending institution 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 explici t guarantees of multilateral 
development banks;  
(5) asset items constituting claims on Zone A regional governments or local 
authorities, subject to Article 44;  
(6) asset items constituting claims carry ing the explicit guarantees of Zone A 
regional governme nts or local authorities,  subject to Article 44;  
(7) asset items constituting claims on Zone A credit institutions but not 
constituting such institutions' own funds;  
 
EN 89   EN (8) asset items constituting claims with a ma turity of one year or less, on Zone B 
credit institutions, other than securities issued by such institutions which are 
recognised as components of their own funds;  
(9) asset items carrying the explicit guarantees of Zone A credit institutions;  
(10) asset items constituting claims with a maturity of o ne year or less carrying the 
explicit guarantees of Zone B credit institutions;  
(11) asset items secured, to the satisfac tion of the competent authorities, by 
collateral in the form of securities issued by the EIB or by multilateral 
development banks;  
(12) cash items in the process of collection;  
(c) 50% weighting  
(1) loans fully and completely secured, to the satisfaction of the competent 
authorities, by mortgages on re sidential property which is or will be occupied 
or let by the borrowe r, and loans fully and completely secured, to the 
satisfaction of the competent authoritie s, by shares in Finnish residential 
housing companies, operating in accordance with the Finnish Housing 
Company Act of 1991 or subsequent equi valent legislation, in respect of 
residenti al property which is or will be occupied or let by the borrower;  
 «mortgage -backed securities» which may be tr eated as loans referred to in the 
first subparagraph or in Article 62(1), if the competent au thorities consider, 
having regard to the legal framew ork in force in each Member State, that they 
are equivalent in the light of the cred it risk. Without prejudi ce to the types of 
securities which may be included in and are capable of fulf illing the conditions 
in this point 1, «mortgage -backed securities» ma y include instruments within 
the meaning of Section B(1)(a) and (b ) of the Annex to Council Directive 
93/22/EEC32. The competent authorities must in particular be satisfied that:  
(i) such securities are fully and dire ctly backed by a pool of mortgages 
which  are of the same nature as those defined in the first subparagraph or 
in Article 62(1) and are fully performing when the mortgage -backed 
securities are created;  
(ii) an acceptable high -priority charge on the underlying mortgage -asset 
items is held either d irectly by investors in mortgage -backed securities or 
on their behalf by a trustee or manda ted representative in the same 
proportion to the securities which they hold;  
(2) prepayments and accrued income: these assets shall be subject to the weighting 
corre sponding to the count erparty where a cred it institution is able to determine 
it in accordance with Direc tive 86/635/EEC. Otherwise, where it is unable to 
determine the counterparty, it shall apply a flat -rate weighting of 50%;  
                                                 
32 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).  
 
EN 90   EN (d) 100% weighting  
(1) asset items constituting claims on Zone  B central governments and central 
banks except where denominated and funde d in the national currency of the 
borrower;  
(2) asset items constituting claims on Zone B regional governments or local 
authorities;  
(3) asset items  constituting claims with a maturity  of more than one year on Zone 
B credit institutions;  
(4) asset items constituting claims on the Zone A and Zone B non -bank sectors;  
(5) tangible «Assets» within the meaning of Article 4(10) of Directive 
86/635/EEC;  
(6) holdings of shares, participation and other components of the own funds of 
other credit institutions which are not  deducted from the own funds of the 
lending institutions;  
(7) all other assets except where deducted from own funds.  
2. The following treatmen t shall apply to off -balance -sheet items other than those covered in 
paragraph 3. They shall first be grouped accord ing 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 the 
medium -risk items and 20% of the medium/low -risk items, while the value of low -risk items 
shall be set at zero. The second stage shall be to multiply the off -balance -sheet values, 
adjusted as described above, by the weigh tings attributable to the relevant co unterparties in 
accordance with the treatment of asset items pres cribed in paragraph 1 and Article 44. In the 
case of asset sale and repurchase agreements and outright forward purchases, the weightings 
shall be those attaching to the assets in question and  not to the count erparties to the 
transactions. The portion of unpaid capital subscr ibed 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 f or: 
– 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 
applic ation of the methods set out in Annex III over -the-counter (OTC) contra cts cleared by a 
clearing house where the latter acts as the legal counterpart y and all participants fully 
collateralise on a daily basis the exposure they present to the clearing house , thereby 
providing a protection covering bo th the current exposure and th e potential futu re exposure. 
The competent authorities must be satisfied that  the posted collateral gives the same level of 
protection as collateral whic h complies with paragraph 1(a )(7) and that th e risk of a build -up 
of the clearing house's exposures beyond the market  value of posted collateral is eliminated. 
Member States shall inform the Commissi on of the use they make of this option.  
 
EN 91   EN 4. Where off -balance -sheet items carry explici t guarantees, they shall be weighted as if they 
had been incurred on behalf of the guarantor ra ther than the counterparty. Where the potential 
exposure arising from off -balance -sheet transactions is fully and completely secured, to the 
satisfaction of the competent authorities, by any of the asset items recognised as collateral in 
paragraph 1(a)(7) and (b)(11), weightings of  0% or 20% shall apply depending on the 
collateral in question.  
The Member States may apply a 50% weighting to off -balance -sheet items which are sureties 
or guarantees having the character of credit s ubstitutes and which are fully guaranteed, to the 
satisfaction of the competent authorities, by  mortgages meeting the conditions set out in 
paragraph 1(c)(1), subject to the guarantor having a direct right to such collateral.  
5. Where asset and off -balance -sheet items are given a lowe r weighting because of the 
existence of explicit guarantees or collateral a cceptable to the competent authorities, the lower 
weighting shall apply only to that pa rt which is guaranteed or wh ich is fully covered by the 
collateral.  
Article 44  
Weighting of claims for regional governments or local authorities of the Member States  
1. Notwithstanding the requirements of Article  43(1)(b), the Member States may fix a 
weigh ting of 0% for their own regional government s and local authorities if there is no 
difference in risk between claims on the latt er and claims on their central governments 
because of the revenue -raising powers of the regional governments and local authoriti es and 
the existence of specific institutional arrange ments the effect of which is to reduce the 
chances of default by the latter. A zero -weighting fixed in accordance with these criteria shall 
apply to claims on and off -balance -sheet items incurred on beh alf of the regional governments 
and local authorities in questi on 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 the satisfaction of the compet ent authorities concerned, by collateral in the form of 
securities issued by those regional governments or local authorities.  
2. The Member States shall notify the Commission if they believe a zero -weighting to be 
justified according to the criteria laid d own in paragraph 1. The Commission shall circulate 
that information. Other Member States may offer the credit institutions under the supervision 
of their competent authorities th e possibility of applying a zero -weighting where they 
undertake business with the regional governments or local authorities in question or where 
they hold claims guaranteed by the latter, incl uding collateral in the form of securities.  
Article 45  
Other weighting  
1. Without prejudice to Article 44(1) the Member States may apply a wei ghting of 20% to 
asset items which are secured, to the satisfacti on of the competent aut horities concerned, by 
collateral in the form of  securities issued by Zone A regiona l governments or local authorities, 
by deposits placed with Zone A credit institutio ns other than the le nding institution, or by 
certificates of deposit or similar instruments issued by such credit institutions.  
 
EN 92   EN 2. The Member States may apply a weighting of 10% to claims on institutions specialising in 
the inter -bank and public -debt marke ts in their 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 home Member States, by a 
combination of asset ite ms mentioned in Article 43(1)(a) a nd (b) recognised by the latter as 
constituting adequate collateral.  
3. The Member States shall notify the Commissi on of any provisions a dopted pursuant to 
paragraphs 1 and 2 and of the gr ounds for such provisions. The Com mission shall forward 
that information to the Member States. The Commission shall periodically examine the 
implications of those provisions in order to ensure that they do  not result in any distortions of 
competition.  
Article 46  
Administrative bodies and n on-commercial undertakings  
For the purposes of Article 43 (1)(b), the co mpetent authorities may include within the 
concept of regional governmen ts and local authorities non -commercial admi nistrative bodies 
responsible to regional governments or local autho rities or authorities which, in the view of 
the competent authorities, exercise the same re sponsibilities as regional  and local authorities.  
The competent authorities may also include wi thin the concept of regional governments and 
local authorities, church es and religious communities constituted in the form of a legal person 
under public law, in so far as they raise taxe s in accordance with legislation conferring on 
them the right to do so. However, in this ca se the option set out in  Article 44 shall not ap ply. 
Article 47  
Solvency ratio level  
1. Credit institutions shall be required permanently to maintain the ratio defined in Article 40 
at a level of at least 8%.  
2. Notwithstanding paragraph 1, the competent authorities may prescribe higher minimum 
ratios a s 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 restor e the ratio to the agreed minimum as quickly 
as possible.  
 
EN 93   EN  
Ø new 
SECTION  3 
MINIMUM OWN FUNDS REQUIREMENTS FOR CREDIT RISK  
Article 76  
Credit institutions shall apply ei ther the Standardised Approach  provided for in Articles 78 to 
83 or, if permitted by the competent authoritie s in accordance with Article 84, the Internal 
Ratings Based Approach provided for in Articles 84 to 89 to calculate their risk-weighted 
exposure amounts for the purposes of Article 75(a). 
Article 77 
“Exposure” for the purposes of this Section m eans an asset or off-balance sheet item. 
SUBSECTION 1 – STANDARDISED APPROACH  
Article 78 
1. Subject to paragraph 2, the exposure value of an asset item shall be its balance-sheet 
value and the exposure value of an off-bala nce sheet item listed in Annex II shall be 
the following percentage of its value: 100% if it is a full-risk item, 50% if it is a 
medium-risk item, 20% if it is a medium/low-risk item, 0% if its is a low-risk item. 
The off-balance sheet items referred to in the first sentence of this paragraph shall be 
assigned to risk categories as indicated in Annex II. 
2. The exposure value of a deriva tive instrument listed in Anne x IV shall be determined 
in accordance with one of the two methods se t out in Annex III with the effects of 
contracts of novation and other netting agreements taken into account for the 
purposes of those methods in accordance with Annex III. 
3. Where an exposure is subj ect to funded cred it protection, th e exposure value 
applicable to that item may be modi fied in accordance with Subsection 3. 
4. In the case of a credit institution using the Financial Collateral Comprehensive 
Method under Annex VIII, Part 3, where an ex posure takes the form of securities or 
commodities sold, posted or le nt under a repurchase trans action or under a securities 
or commodities lending or borrowing transa ction, the exposure value shall be the 
value of the securities or commodities de termined in accordance with Article 74(1) 
and shall be increased by the volatility adjustment appropriate to such securities or 
commodities as prescribed in Annex VIII, Part 3, paragraphs 35 to 60. 
 
EN 94   EN Article 79 
1. Each exposure shall be assigned to on e of the following exposure classes: 
(a) claims or contingent claims on central governments or central banks; 
(b) claims or contingent claims on re gional governments or local authorities; 
(c) claims or contingent claims on administrative bodies and non-commercial 
undertakings; 
(d) claims or contingent claims on multilateral development banks; 
(e) claims or contingent claims  on international organisations; 
(f) claims or contingent claims on institutions; 
(g) claims or contingent claims on corporates; 
(h) retail claims or cont ingent retail claims; 
(i) claims or contingent claims secured on real estate property; 
(j) past due items; 
(k) items belonging to regulat ory high-risk categories; 
(l) claims in the form of covered bonds; 
(m) securitisation positions; 
(n) short-term claims on institutions and corporate; 
(o) claims in the form of collective investment undertakings (CIU); 
(p) other items. 
2. To be eligible for the retail exposure class referred to in point (h) of paragraph 1, an 
exposure shall meet the following conditions: 
(a) the exposure must be either to an indi vidual person or persons, or to a small or 
medium sized entity; 
(b) the exposure must be one of a signif icant number of exposures with similar 
characteristics such that the risks associ ated with such lending are substantially 
reduced; 
(c) the total amount owed to the credit institution and any pa rent undertaking and 
its subsidiaries, including any past due exposure, by the oblig or client or group 
of connected clients must not, to the know ledge of the credit institution, exceed 
EUR 1 million. The credit institution must ta ke reasonable steps to acquire this 
knowledge. 
 
EN 95   EN Securities shall not be eligible for the retail exposure class. 
Article 80 
1. To calculate risk-weighted exposure amounts,  risk weights shall be applied to all 
exposures, unless deducted from own funds , in accordance with the provisions of 
Annex VI, Part 1. The application of risk  weights shall be based on the exposure 
class to which the exposure is assigned and, to the extent specified in Annex VI, Part 
1, its credit quality. Credit qu ality may be determined by reference to the credit 
assessments of External Credit Assessment Institutions (‘ECAIs’) in accordance with 
the provisions of Articles 81 to 83 or  the credit assessments of Export Credit 
Agencies as described in Annex VI, Part 1. 
2. For the purposes of applying a risk wei ght, as referred to in paragraph 1, the 
exposure value shall be multiplied by the risk  weight specified or determined in 
accordance with this Subsection. 
3. For the purposes of calculating risk-w eighted exposure amount s for exposures to 
institutions, competent author ities shall decide whether to adopt the method based on 
the credit quality of the central governmen t of the jurisdiction in which the credit 
institution is incorporated or the me thod based on the credit quality of the 
counterparty institution in accordance with Annex VI. 
4. Notwithstanding paragraph 1, where an expos ure is subject to credit protection the 
risk weight applicable to that item may be  modified in accord ance with Subsection 3. 
5. Risk-weighted exposure amounts for securiti sed exposures shall be calculated in 
accordance with Subsection 4. 
6. Exposures the calculation of risk-wei ghted exposure amounts for which is not 
otherwise provided for under this Subsectio n shall be assigned a risk-weight of 
100%. 
7. With the exception of exposures giving rise to liabilities in th e form of the items 
referred to in points (1) to (8) of Articl e 57(1), competent authorities may exempt 
from the requirements of paragraph 1 of this Article the exposures of a credit 
institution to a counterparty which is its  parent undertaking, its  subsidiary or a 
subsidiary of its parent undertaking, provided that th e following conditions are met: 
(a) the counterparty is an institution or a financial holding company, financial 
institution, asset management compa ny or ancillary se rvices undertaking 
subject to appropriate prudential requirements; 
(b) the counterparty is included in the sa me consolidation as the credit institution 
on a full basis; 
(c) the counterparty is subject to the same risk evaluation, measurement and 
control procedures as the credit institution; 
(d) the counterparty is established in the same Member State as the credit 
institution; 
 
EN 96   EN (e) there is no current or foreseen materi al or legal impediment to the prompt 
transfer of own funds or repayment of liabilities from  the counterparty to the 
credit institution. 
In such a case, a risk weight of 0% shall be applied. 
Article 81 
1. An external credit assessment may be us ed to determine the risk weight of an 
exposure in accordance with Ar ticle 80 only if the ECAI which provides it has been 
recognised as eligible for t hose purposes by the competent authorities, hereinafter 
“an eligible ECAI’. 
2. Competent authorities shall recognise an ECAI  as eligible for the purposes of Article 
80 only if they are satisfied that it s assessment methodology complies with the 
requirements of objectivity, independence,  ongoing review and transparency, and 
that the resulting credit assessments meet  the requirements of credibility and 
transparency. For those purposes; the compet ent authorities shall take into account 
the technical criteria set out in Annex VI, Part 2. 
3. If an ECAI has been recognised as eligib le by the competent authorities of a Member 
State, the competent authorit ies of other Member States may recognise that ECAI as 
eligible without car rying out their own evaluation process. 
4. Competent authorities shall make public ly available an explanation of the 
recognition process, and a list of eligible ECAIs. 
Article 82 
1. The competent authorities shall determine,  taking into account the technical criteria 
set out in Annex VI, Part 2, with which of th e credit quality steps set out in Part 1 of 
that Annex the relevant credit  assessments of an eligible ECAI are to be associated. 
Those determinations shall be objective and consistent. 
2. When the competent authorit ies of a Member State have  made a determination under 
paragraph 1, the competent authorities of other Member States may recognise that 
determination without carrying out their own determination process. 
Article 83 
1. The use of ECAI credit assessments for th e calculation of a credit institution’s risk-
weighted exposure amounts shall be consis tent and in accordance with Annex VI, 
Part 3. Credit assessments shall not be used selectively. 
2. Credit institutions shall use solicited credit assessments. However, with the 
permission of the relevant competen t authority, they may use unsolicited 
assessments. 
 
EN 97   EN SUBSECTION 2 - INTERNAL RATINGS BASED APPROACH  
Article 84  
1. In accordance with this Subsection, th e competent authorities may permit credit 
institutions to calculate their risk-weighted exposure amounts using the Internal 
Ratings Based Approach (IRB Approach). Ex plicit permission shall be required in 
the case of each credit institution. 
2. Permission shall be given only if the compet ent authority is satisfied that the credit 
institution's systems for the management and rating of credit risk exposures are 
sound and implemented with inte grity and, in particular, th at they meet the following 
standards in accordance with Annex VII, Part 4: 
(a) the credit institution’s rating systems provide for a meaningful assessment of 
obligor and transaction characteristics, a meaningful differentiation of risk and 
accurate and consistent quantitative estimates of risk; 
(b) internal ratings and default and loss es timates used in the calculation of capital 
requirements and associated systems and pr ocesses play an essential role in the 
risk management and decision-making pr ocess, and in the credit approval, 
internal capital allocation and corporate governance functions of the credit 
institution; 
(c) the credit institution has a credit risk control unit responsible for its rating 
systems that is appropriately indepe ndent and free from undue influence; 
(d) the credit institution collects and stores all relevant data to provide effective 
support to its credit risk measur ement and management process; 
(e) the credit institution documents its rating systems, the rationale for their design 
and validates its rating systems. 
Where an EU parent credit institution and it s subsidiaries or an EU parent financial 
institution and its subsidiari es use the IRB Approach on a unified basis for the parent 
and its subsidiaries, the competent author ities may allow minimum requirements of 
Annex VII, Part 4 to be met by the parent and its subsidiaries considered together. 
3. A credit institution applying for the use of the IRB Approach shall demonstrate that 
it has been using for the IRB exposure cla sses in question rating systems that were 
broadly in line with the minimum requirement s set out in this Annex for internal risk 
measurement and management purposes fo r at least three years prior to its 
qualification to use the IRB Approach. This requirement shall apply from the 31 
December 2010 onwards. 
4. A credit institution applying for the use of  own estimates of LGDs and/or conversion 
factors shall demonstrate that it has been estimating and employing own estimates of 
LGDs and/or conversion factors in a manne r that was broadly consistent with the 
minimum requirements for use of own estimates of those parameters set out in this 
Annex for at least three years prior to qua lification to use own estimates of LGDs 
 
EN 98   EN and/or conversion factors. This requirem ent shall apply from the 31 December 2010 
onwards. 
5. If a credit institution ceases to comply  with the requirements set out in this 
Subsection, it shall either presen t to the competent authority a plan for a timely return 
to compliance or demonstrate that the effect of non-compliance is immaterial. 
6. When the IRB Approach is intended to be  used by the EU parent credit institution 
and its subsidiaries, or by the EU parent financial holding company and its 
subsidiaries, the competent authorities of th e different legal entities shall co-operate 
closely as provided for in Articles 129 to 132. 
Article 85 
1. Without prejudice to Article 89, credit inst itutions and any parent undertaking and its 
subsidiaries shall implement the IRB Approach for all exposures. 
Subject to the approval of th e competent authorities, im plementation may be carried 
out sequentially across the different exposure classes, referred to in Article 86, within 
the same business unit, across different busin ess units in the same group or for the 
use of own estimates of LGDs or convers ion factors for the calculation of risk 
weights for exposures to corporates, instit utions, and central governments and central 
banks.  
In the case of the retail exposure class referred to in Article 86, implementation may 
be carried out sequentially ac ross the categories of exposures to which the different 
correlations in Annex VII, Part 1, paragraphs 9, 10 and 11 correspond. 
2. Implementation as referred to in paragra ph 1 shall be carried out within a reasonable 
period of time to be agreed with the co mpetent authorities. The implementation shall 
be carried out subject to strict conditions  determined by the competent authorities. 
Those conditions shall be designed to ensure  that the flexibility  under paragraph 1 is 
not used selectively with the purpose of achieving reduced minimum capital 
requirements in respect of those exposure cla sses or business units that are yet to be 
included in the IRB Approach or in th e use of own estimates of LGDs and 
conversion factors. 
3. Credit institutions using the  IRB Approach for any exposur e class shall at the same 
time use the IRB Approach for the equity exposure class. 
4. Subject to paragraphs 1 to 3 and Articl e 89, credit institutions which have obtained 
permission under Article 84 to use the IRB Approach shall not revert to the use of 
Subsection 1 for the calculation of ri sk-weighted exposure amounts except for 
demonstrated good cause and subject to the approval of the comp etent authorities. 
5. Subject to paragraphs 1 and 2 and Articl e 89, credit institutions  which have obtained 
permission under Article 87(9) to use own es timates of LGDs and conversion factors, 
shall not revert to the use of LGD values a nd conversion factors referred to in Article 
87(8) except for demonstrated good cause  and subject to the approval of the 
competent authorities. 
 
EN 99   EN Article 86 
1. Each exposure shall be assigned to on e of the following exposure classes: 
(a) claims or contingent claims on central governments and central banks; 
(b) claims or contingent claims on institutions; 
(c) claims or contingent claims on corporates; 
(d) retail claims or cont ingent retail claims; 
(e) equity claims; 
(f) securitisation positions; 
(g) other non credit-obligation assets. 
2. The following exposures shall be treated as exposures to centr al governments and 
central banks: 
(a) exposures to regional governments and local authorities which are treated as 
exposures to central gover nments under Subsection 1; 
(b) exposures to Multilateral Developmen t Banks and International Organisations 
which attract a risk weight of 0% under Subsection 1. 
3. The following exposures shall be trea ted as exposures to institutions: 
(a) exposures to regional governments and local authorities wh ich are not treated 
as exposures to central governments under Subsection 1; 
(b) exposures to Public Sector Entitie s which are treated as exposures to 
institutions under the Subsection 1; 
(c) exposures to Multilateral Developmen t Banks which do not attract a 0% risk 
weight under Subsection 1.  
4. To be eligible for the retail exposure cla ss referred to in point (d) of paragraph 1, 
exposures shall meet the following criteria: 
(a) they shall be either to an individual person or persons, or to a small or medium 
sized entity, provided in the latter case that the total amount owed to the credit 
institution and to any parent undertaki ng and its subsidiaries by the obligor 
client or group of connected clients doe s not, to the knowledge of the credit 
institution, which must have taken reas onable steps to confirm the situation, 
exceed EUR 1 million; 
(b) they are treated by the credit institu tion in its risk management consistently 
over time and in a similar manner; 
(c) they are not managed individually in a way comparable to exposures in the 
corporate exposure class; 
 
EN 100   EN (d) they each represent one of a si gnificant number of similarly managed 
exposures. 
5. The following exposures shall be classed as equity exposures: 
(a) non-debt exposures conveying a subordi nated, residual claim on the assets or 
income of the issuer; 
(b) debt exposures the economic substance of which is similar to the exposures 
specified in point (a). 
6. Within the corporate exposure class, credit  institutions shall separately identify as 
specialised lending exposures, exposures wh ich possess the following characteristics:  
(a) the exposure is to an entity which wa s created specifically to finance and/or 
operate physical assets; 
(b) the contractual arrangements give th e lender a substantial degree of control 
over the assets and the inco me that they generate;  
(c) the primary source of repayment of th e obligation is the in come generated by 
the assets being financed, rather than the independent  capacity of a broader 
commercial enterprise.  
7. Any credit obligation not assigned to the expos ure classes referred to in points (a), (b) 
and (d) to (f) of paragraph 1 shall be assigned to  the exposure class referred to in point (c) of 
that paragraph. 
8. The exposure class referred to in point (g) of paragraph 1 shall include the residual 
value of leased properties, if not co vered elsewhere in this Directive. 
9. The methodology used by the credit instituti on for assigning exposures to different 
exposure classes shall be appropr iate and consistent over time. 
Article 87 
1. The risk-weighted exposure amounts for cred it risk for exposures belonging to one of 
the exposure classes referred to in points (a) to (e) or (g) of Article 86(1) shall, unless 
deducted from own funds, be calculated in acco rdance with Annex VII, Part 1, paragraphs 1 
to 25. 
2. The risk-weighted exposure amounts for dilution risk for purchased receivables shall 
be calculated according to Annex VII, Part 1, paragraph 26.  
3. The calculation of risk-weighted exposure amounts for credit risk and dilution risk 
shall be based on the relevant parameters a ssociated with the expos ure in question. These 
shall include probability of default (PD), lo ss given default (LGD), maturity (M) and the 
exposure value of the exposure. PD and LGD ma y be considered separa tely or jointly, in 
accordance with Annex VII, Part 2. 
 
EN 101   EN 4. Notwithstanding paragraph 3, the calcula tion of risk-weighted exposure amounts for 
credit risk for all exposures belonging to the ex posure class referred to in point (e) of Article 
86(1) shall be calculated in accordance with Anne x VII, Part 1, paragraphs 15 to 24 subject to 
approval of competent authorities. Competent au thorities shall only allow a credit institution 
to use the approach set out in Annex VII, Part 1, paragraphs 24 to 25, if the credit institution 
meets the minimum requirements Annex VII, Part 4, paragraphs 114 to 122. 
5. Notwithstanding paragraph 3, the calculati on of risk weighted exposure amounts for 
credit risk for specialised lending exposures ma y be calculated in accord ance with Annex VII, 
Part 1, paragraph 5. Competent au thorities shall publis h guidance on how institutions should 
assign risk weights to specialised lending expos ures under Annex VII, Part 1, paragraph 5 and 
shall approve institutions  assignment methodologies. 
6. For exposures belonging to the exposure cl asses referred to in points (a) to (d) of 
Article 86(1), credit institutions shall provide their own estimates of PDs in accordance with 
Article 84 and Annex VII, Part 4. 
7. For exposures belonging to the exposure clas s referred to in point (d) of Article 86(1), 
credit institutions shall provide  own estimates of LGDs and c onversion factors in accordance 
with Article 84 and Annex VII, Part 4. 
8. For exposures belonging to the exposure cl asses referred to in points (a) to (c) of 
Article 86(1), credit institutions shall apply the LGD values set out in Annex VII, Part 2, 
paragraph 8, and the conversion factors set out in Annex VII, Part 3, paragraph 11 points (a) 
to (c). 
9. Notwithstanding paragraph 8, for all exposur es belonging to the exposure classes 
referred to in points (a) to (c) of Article 86 (1), competent authorities may permit credit 
institutions to use own estimates of LGDs and conversion factors in accordance with Article 
84 and Annex VII, Part 4. 
10. The risk-weighted exposure amounts for securitised exposures and for exposures 
belonging to the exposure class refe rred to in point (f) of Article  86(1) shall be calculated in 
accordance with Subsection 4. 
11. Where exposures to a collec tive investment undertaking (CIU ) meet the criteria set out 
in Annex VI, Part 1, paragraphs 74 to 75 and the credit institution is aware of all of the 
underlying exposures of the CIU, the credit institution shall look through to those underlying 
exposures in order to calculat e risk-weighted exposure amount s and expected loss amounts in 
accordance with the methods se t out in this Subsection.  
Where the credit institution does not meet the c onditions for using the methods set out in this 
Subsection, risk weighted e xposure amounts and expected loss amounts shall be calculated in 
accordance with the following approaches: 
(a) for exposures belonging to the exposure class referred to in point (e) of Article 
86(1), the approach set out in Annex V II, Part 1, paragraphs 17 to 19. If, for 
those purposes; the credit institution is unable to differentiate between private 
equity, exchange-traded and other equity  exposures, it shall treat the exposures 
concerned as other equity exposures. 
 
EN 102   EN (b) for all other underlying exposures, the approach set out in Subsection 1, subject 
to the following modifications: 
(i) the exposures are assigned to the appropriate exposure class and 
attributed the risk weight of the credit quality step immediately 
above the credit quality step that would normally be assigned to the 
exposure; 
(ii) exposures assigned to the higher cr edit quality steps, to which a risk 
weight of 150% would normally be attributed, are assigned a risk 
weight of 200%. 
12. Where exposures to a CIU do not meet th e criteria set out in Annex VI, Part 1, 
paragraphs 74 to 75, or the credit institution is not aware of all of the underlying exposures of 
the CIU, the credit institution shall look thro ugh to the underlying exposures and calculate 
risk-weighted exposure amounts and expected loss amounts in accordance with the approach 
set out in Annex VII, Part 1, paragraphs 17 to  19. If, for those purposes, the credit institution 
is unable to differentiate between private equi ty, exchange-traded and other equity exposures, 
it shall treat the exposures concerned as ot her equity exposures. For these purposes, non-
equity exposures are assigned to one of the classe s (private equity, excha nge traded equity or 
other equity) set out in Annex VII, Part 1, paragraph 17 and unknown exposures are assigned 
to other equity class.  
Alternatively to the method described above, cr edit institutions may rely  on a third party to 
calculate and repor t the average risk weighted exposur e amounts based on the CIUs underling 
exposures and calculated in accordance with the following approaches, provided that the 
correctness of the calculation and th e report is adequately ensured: 
(a) for exposures belonging to the exposure class referred to in point (e) of Article 
86(1), the approach set out in Annex V II, Part 1, paragraphs 17 to 19. If, for 
those purposes, the credit institution is unable to differentiate between private 
equity, exchange-traded and other equity  exposures, it shall treat the exposures 
concerned as other equity exposures. 
(b) for all other underlying exposures, the a pproach set out in Subsection 1, subject 
to the following modifications: 
(i) the exposures are assigned to the appropriate exposure class and 
attributed the risk weight of the cr edit quality step immediately above the 
credit quality step that would norma lly be assigned to the exposure; 
(ii) exposures assigned to the higher cr edit quality steps, to which a risk 
weight of 150% would normally be attr ibuted, are assigned a risk weight 
of 200%. 
Article 88 
1. The expected loss amounts for exposures belonging to one of the exposure classes 
referred to in points (a) to (e) of Article 86(1) shall be calcul ated in accordance with the 
methods set out in Annex VII, Part 1, paragraphs 27 to 33. 
 
EN 103   EN 2. The calculation of expected loss amounts in accordance with Annex VII, Part 1, 
paragraphs 27 to 33 shall be based on the same  input figures of PD, LGD and the exposure 
value for each exposure as being used for th e calculation of risk-weighted exposure amounts 
in accordance with Article 87. 
3. The expected loss amounts for securitised exposures shall be calculated in accordance 
with Subsection 4.  
4. The expected loss amount for exposures bel onging to the exposure class referred to in 
point (g) of Article 86(1) shall be zero. 
5. The expected loss amounts for dilution ri sk of purchased receivables shall be 
calculated in accordance with the methods se t out in Annex VII, Part 1, paragraph 33. 
6. The expected loss amounts for exposures re ferred to in Article 87(11) and (12) shall 
be calculated in accordance with the methods set out in Annex VII, Part 1, paragraphs 27 to 
33. 
Article 89 
1. Subject to the approval of the competent au thorities, credit institutions permitted to 
use the IRB Approach in the ca lculation of risk-weighted expos ure amounts and expected loss 
amounts for one or more exposure classes may apply Subsection 1 for the following: 
(a) the exposure class referred to in point (a) of Article 86(1), where the number of 
material counterparties is limited and it would be unduly burdensome for the 
credit institution to implement a rating system for these counterparties; 
(b) the exposure class referred to in point  (b) of Article 86(1),  where the number of 
material counterparties is limited and it would be unduly burdensome for the 
credit institution to implement a rating system for these counterparties; 
(c) exposures in non-signifi cant business units as well as  exposure classes that are 
immaterial in terms of size and perceived risk profile;  
(d) exposures to central governments of the home Member State and to their 
regional governments, local authoriti es and administrative bodies, provided 
that: 
(i) there is no difference in risk be tween the exposures to that central 
government and those other exposures because of specific public 
arrangements; 
(ii) exposures to the central government  are associated with credit quality 
assessment step 1 under Subsection 1. 
(e) exposures of a credit institution to a counterparty which is its parent 
undertaking, its subsidiary or a subsidia ry of its parent undertaking provided 
that the counterparty is an institution or a financial holding company, financial 
institution, asset management compa ny or ancillary se rvices undertaking 
subject to appropriate prudential requirements. 
 
EN 104   EN f) equity exposures to entities whose cr edit obligations qualify for a zero risk 
weight under Subsection 1 (including thos e publicly sponsored entities where a 
zero weight can be applied). 
g) equity exposures incurr ed under legislated programm es to promote specified 
sectors of the economy that provide significant subsidie s for the investment to 
the credit institution and involve some form of government oversight and 
restrictions on the equity investments. Th is exclusion is limited to an aggregate 
of 10% of original own funds plus additional own funds. 
This paragraph shall not prevent the compet ent authorities of other Member State to 
allow the application of the rules of Subsection 1 for e quity exposures which have 
been allowed for this treatment in other Member States. 
2. For the purposes of point (c), the equity e xposure class of a credit  institution shall be 
considered material if thei r aggregate value, excluding eq uity exposures incurred under 
legislative programmes as referred to in poi nt (g), exceeds, on average over the preceding 
year, 10% of the credit institution’ s own funds. If the number of t hose equity exposures is less 
than 10 individual holdings, that threshold sha ll be 5% of the credit  institution’s own funds. 
SUBSECTION 3 - CREDIT RISK MITIGATION  
Article 90 
For the purposes of this Subsection, ‘lending  credit institution’ shall mean the credit 
institution which has the exposure in ques tion, whether or not de riving from a loan. 
Article 91 
Credit institutions using the Standardised Appr oach under Articles 78 to  83 or using the IRB 
Approach under Articles 84 to 89, but not using their own estimates of LGD and conversion 
factors under Articles 87 and 88, may recognise cred it risk mitigation in accordance with this 
Subsection in the calculation of  risk-weighted exposure amounts for the purposes of Article 
75 point (a) or as relevant e xpected loss amounts for the purpos es of the calculation referred 
to in point (q) of Article 57, and Article 63(3). 
Article 92 
1. The technique used to provide the credit  protection together with the actions and 
steps taken and procedures and policies implemented by the lending credit institution 
shall be such as to result in credit protection arrangements which are legally effective 
and enforceable in all relevant jurisdictions. 
2. The lending credit institution shall take all appropriate steps to ensure the 
effectiveness of the credit protection arra ngement and to address related risks. 
3. In the case of funded credit protection, to be  eligible for recognition the assets relied 
upon must be sufficiently liquid and their value over time sufficiently stable to 
provide appropriate certainty as to the credit protection achieved having regard to the 
approach used to calculate risk-weighted  exposure amounts and to the degree of 
 
EN 105   EN recognition allowed. Eligibility shall be limite d to the assets set out in Annex VIII, 
Part 1.  
4. In the case of funded credit protection, th e lending credit institution shall have the 
right to liquidate or retain, in a timely manner, the assets from which the protection 
derives in the event of the default, insolv ency or bankruptcy - or  other credit event 
set out in the transaction documentation - and, where applicable, of the custodian 
holding the collateral. The degree of corre lation between the value of the assets 
relied upon for protection and the credit qua lity of the borrower must not be undue.   
5. In the case of unfunded credit  protection, to be eligible  for recognition the party 
giving the undertaking must be sufficient ly reliable, and the protection agreement 
legally effective in the relevant jurisdicti ons, to provide appropriate certainty as to 
the credit protection achieved having regard to the approach used to calculate risk-
weighted exposure amounts and to the degr ee of recognition allowed. Eligibility 
shall be limited to the protection providers and types of protection agreement set out 
in Annex VIII, Part 1. 
6. The minimum requirements set out in Anne x VIII, Part 2 shall be complied with. 
Article 93 
1. Where the requirements of Article 92 ar e met the calculation of risk-weighted 
exposure amounts, and, as relevant, expect ed loss amounts, may be modified in 
accordance with Annex VIII, Parts 3 to 6. 
2. No exposure in respect of which credit risk mitigation is obtained shall produce a 
higher risk-weighted exposure amount or e xpected loss amount than an otherwise 
identical exposure in respect of which there is no credit risk mitigation.  
3. Where the risk-weighted exposure amount al ready takes account of credit protection 
under Articles 78 to 83 or Arti cles 84 to 93, as relevant, the calculation of  the credit 
protection shall not be further recognised under this Subsection. 
SUBSECTION 4 - SECURITISATION  
Article 94 
Where a credit institution uses the Standardised  Approach set out in  Subsection 1 for the 
calculation of risk-weighted exposure amounts for the exposure class to which the securitised 
exposures would be assigned under Article 79, it shall calculate the ri sk-weighted exposure 
amount for a securitisation position in accordance with Annex IX, Part 4, paragraphs 6 to 35.  
In all other cases, it shall ca lculate the risk-weighted expos ure amount in accordance with 
Annex IX, Part 4, paragraphs 36 to 74. 
 
EN 106   EN Article 95 
1. Where significant credit risk associated  with securitised exposures has been 
transferred from the originator credit instituti on in accordance with the terms of Annex IX, 
Part 2, that credit institution may: 
(a) in the case of a traditional securitisation, exclude from its calculation of risk-
weighted exposure amounts, and, as re levant, expected lo ss amounts, the 
exposures which it has securitised;  
(b) in the case of a synthetic securitis ation, calculate risk -weighted exposure 
amounts, and, as relevant, expected loss amounts, in respect of the securitised 
exposures in accordance with Annex IX, part 2. 
2. Where paragraph 1 applies, the originator credit institution shall calculate the risk-
weighted exposure amounts prescrib ed in Annex IX for the positi ons that it may hold in the 
securitisation.  
Where the originator credit institution fails to transfer significant credit risk in accordance 
with paragraph 1, it need not calculate ri sk-weighted exposure amounts for any positions it 
may have in the secu ritisation in question. 
Article 96 
1. To calculate the risk-weighted exposure amount of a securitis ation position, risk 
weights shall be applied to the exposure va lue of the position in accordance with Annex IX, 
based on the credit quality of the position, which may be determined by reference to an ECAI 
credit assessment or otherwis e, as set out in Annex IX.  
2. Where there is an exposure to different tr anches in a securitisation, the exposure to 
each tranche shall be considered a separate securitisation position. The providers of credit 
protection to securitisati on positions shall be considered to hold positions in the securitisation. 
Securitisation positions shall include exposures to a securitisation arising from interest rate or 
currency derivative contracts. 
3. Where a securitisation position is subject to funded or unfunded credit protection the 
risk-weight to be applied to that position may be modified in accordance with Articles 90 to 
93, read in conjunction with Annex IX. 
4. Subject to point (r) of Article 57 and Artic le 66(2), the risk-weighted exposure amount 
shall be included in the credit institution’s total of risk-weighted exposure amounts for the 
purposes of Article 75(a). 
Article 97 
1. An ECAI credit assessment may be us ed to determine the risk weight of a 
securitisation position in accordan ce with Article 96 only if the EC AI has been recognised as 
eligible by the competent authorities for this  purpose, hereinafter “an eligible ECAI”.  
 
EN 107   EN 2. The competent authorities sh all recognise an ECAI as el igible for the purposes of 
paragraph 1 only if they are satisfied as to its  compliance with the requirements laid down in 
Article 81, taking into account th e technical criteria in Annex VI, Part 2, and that it has a 
demonstrated ability in the area of securitisa tion, which may be evidenced by a strong market 
acceptance. 
3. If an ECAI has been recognised as eligib le by the competent authorities of a Member 
State for the purposes of paragraph 1, the comp etent authorities of other Member States may 
recognise that ECAI as eligib le for those purposes without ca rrying out their own evaluation 
process. 
4. The competent authorities shall make pub licly available an explanation of the 
recognition process and a lis t of eligible ECAIs.  
5. To be used for this purpose a credit assessment of an eligible ECAI shall comply with 
the principles of credibility and transparen cy as elaborated in Annex IX, Part 3.  
Article 98 
1. For the purposes of applyi ng risk weights to securitisa tion positions, the competent 
authorities shall determine with which of the credit quality steps set out in Annex IX the 
relevant credit assessments of an eligible ECAI are to be associated. Those determinations 
shall be objective and consistent. 
2. When the competent authori ties of a Member State have  made a determination under 
paragraph 1, the competent authorities of other Member States may recognise that 
determination without carrying out their own determination process. 
Article 99 
The use of ECAI credit assessments for the calcu lation of a credit institution’s risk-weighted 
exposure amounts under Article 96 shall be consis tent and in accordance with Annex IX, Part 
3. Credit assessments shall not be used selectively. 
Article 100 
1. Where there is a securitisation of re volving exposures subject to an early 
amortisation provision, the originator credit in stitution or sponsor credit institution 
shall calculate, in a ccordance with Annex IX, an a dditional risk-weighted exposure 
amount in respect of the risk th at the levels of credit risk  to which it is exposed may 
increase following the operation of the early amortisation provision. 
2. For those purposes, a revolving exposure sh all be an exposure whereby a customer 
may vary the amount drawn within an ag reed limit, and an early amortisation 
provision shall be a contractual clause wh ich requires, on the occurrence of defined 
events, investors’ positions to be redeemed before the originally stated maturity of 
the securities issued. 
 
EN 108   EN 3. In the case of securitisations subjects to  an early amortisation provision of retail 
exposures which are uncommitted and unco nditionally cancellable without prior 
notice, where the early amortis ation is triggered by a quantit ative value in respect of 
something other than the three months  average excess spread, the competent 
authorities may apply a treatment which appr oximates closely to that prescribed in 
Annex IX, Part 4, paragraphs 27 to 30 for determining the conversion figure 
indicated. 
4. Where a competent authority intends to apply a treatment in accordance with 
paragraph 3 in respect of a particular secu ritisation, it shall first of all inform the 
relevant competent authorities of all the ot her Member States. Before the application 
of such a treatment becomes part of the general policy approach of the competent 
authority to securitisations  containing early amortisati on clauses of the type in 
question, the competent authority shall cons ult the relevant competent authorities of 
all the other member States and take in to consideration the views expressed. The 
views expressed in such consultation and the treatment adopted shall be publicly 
disclosed by the competent authority in question. 
Article 101 
1. An originator credit institution or sponsor cr edit institution shall not, with a view to 
reducing potential or actual losse s to investors, provide suppor t to the securitisation beyond its 
contractual obligations. 
2. If an originator credit institution or a spons or credit institution fails to comply with 
paragraph 1 in respect of a securitisation, th e competent authority shall require it at a 
minimum, to hold capital against all of the se curitised exposures as if they had not been 
securitised. The credit institution shall disclose publicly that it  has provided non-contractual 
support and the regulatory capit al impact of having done so. 
SECTION 4 
MINIMUM OWN FUNDS REQUIREMENTS FOR OPERATIONAL RISK  
Article 102 
1. Competent authorities shall require credit institutions to hold own funds against 
operational risk in accordan ce with the approaches set out in Articles 103, 104 and 105. 
2. Without prejudice to paragr aph 4, credit institutions  that use  the approach set out in 
Article 104 shall not revert to the use of th e approach set out in Article 103, except for 
demonstrated good cause and subject to approval by the competent authorities. 
3. Without prejudice to paragraph 4, credit institutions that use the approach set out in 
Article 105 shall not revert to th e use of the approaches set out  in Articles 103 or 104 except 
for demonstrated good cause and subject to approval by the competent authorities. 
 
EN 109   EN 4. Competent authorities may allow credit  institutions to use a combination of 
approaches in accordance with Annex X, Part 4. 
Article 103 
The capital requirement for opera tional risk under th e Basic Indicator Approach shall be a 
certain percentage of a relevant indicator, in accordance with the parameters set out in Annex 
X, Part 1. 
Article 104 
1. Under the Standardised Appro ach, credit institutions shall divide their activities into 
a number of business lines as set out in Annex X, Part 2. 
2. For each business line, credit institutions  shall calculate a capital requirement for 
operational risk as a certain percentage of a relevant indicator, in accordance with the 
parameters set out in Annex X, Part 2. 
3. For certain business lines, the competent authorities may under certain conditions 
authorise a credit institution to use an alternative indicator for determining its capital 
requirement for operational risk. 
4. The capital requirement for operational risk  under the Standardis ed Approach shall 
be the sum of the capital requirements fo r operational risk across all individual 
business lines. 
5. The parameters for the Standardised  Approach are in Annex X, Part 2. 
6. To qualify for use of the Standardised Approach, credit institutions shall meet the 
criteria set out in Annex X, Part 2. 
Article 105 
1. Credit institutions may use Advanced M easurement Approaches based on their own 
internal risk measurement systems, provided th at the competent authority expressly approves 
the use of the models concerned for calculating the own funds requirement. 
2. Credit institutions must satisfy their competent authorities that they meet the 
qualifying criteria set out in Annex X, Part 3.  
3. When an Advanced Measurement Approach is  intended to be used  by an EU parent 
credit institution and its subsidiaries or by the su bsidiaries of an EU parent financial holding 
company, the competent authorities of the differe nt legal entities shall cooperate closely as 
provided for in Articles 128 to 132. The application shall include the elements listed in Annex 
X, Part 3. 
4. Where an EU parent credit institution and its  subsidiaries or an EU parent financial 
institution and its subs idiaries use an Advanced Measurement Approach on a unified basis for 
 
EN 110   EN the parent and its subsidiaries, the competent authorities may allow the qualifying criteria set 
out in Annex X, Part 3 to be met by the pare nt and its subsidiaries  considered together. 
 
Ð 2000/12/EC 
SECTION 35 
LARGE EXPOSURES  
 
Ð 2000/12/EC Art 1(24) (adapted) 
Ö new 
Article 106 
1. «e Exposures», for the purposes of applying Articles 48, 49 and 50  ⌦ this 
Section ⌫ , shall mean the  assets  ⌦ any asset ⌫ or off-balance-sheet items  
referred to in Article 43 and in Annexes II and IV thereto  ⌦ Section 3, Subsection 
1 ⌫ , without application of the ⌦ risk ⌫ weighting s or degrees of risk there 
provided for; . 
the risks  ⌦ Exposures arising from the items ⌫ referred to in Annex IV must  
⌦ shall ⌫ be calculated in acco rdance with one of the methods set out in Annex 
III;. 
without application of the weightings for c ounterparty risk; all  ⌦ All ⌫ elements 
entirely covered by own funds  may, with the agreement of the competent authorities, 
be excluded from the determination of e xposures, provided that such own funds are 
not included in the Ö credit institution’s own funds  calculation of the solvency 
ratio Ö for the purposes of Article 75  or Ö in the calculation  of other 
monitoring ratios provided for in this Di rective and in othe r Community acts.;  
2. e Exposures shall not include either of the following: 
(a) in the case of foreign exchange transac tions, exposures incurred in the ordinary 
course of settlement during th e 48 hours following payment, or  ⌦ ; ⌫ 
(b) in the case of transactions for the pur chase or sale of securities, exposures 
incurred in the ordinary course of settlement during the five working days 
following payment or delivery of the securities, whiche ver is the earlier; . 
 
EN 111   EN  
Ð 2000/12/EC Art. 1(1) 3rd 
subparagraph (adapted) 
Article 107 
For the purposes of applying the supe rvision and control of large exposures  ⌦ this 
Section ⌫ , shall be considered as a credit institution,  ⌦ the term “credit institution” shall 
cover the following: ⌫ 
(a) a credit institution according to the first paragraph , including ⌦ its ⌫ branches of a 
credit institution  in third countries; and 
(b) any private or public undertaking, in cluding its branches, which corresponds to  
⌦ meets ⌫ the definition in the first paragraph  of “credit institution” and which  
has been authorised in a third country; . 
 
Ð 2000/12/EC Art. 48(1) 
(adapted) 
Ö new 
Article 108 
Reporting of large exposures  
1. A credit institution's exposure to a client  or group of connected clients shall be 
considered a large exposure wher e its value is equal to or exceeds 10% of its own funds. 
Ö For those purposes, Section 1 may be read wit hout the inclusion of po int (q) of Article 57 
and Article 63(3) and sha ll be read without the in clusion of Article 66(2).  
 
Ð 2000/12/EC Art 48 (4) 1st 
paragraph (adapted) 
Article 109 
The competent authorities shall require that ever y credit institution have sound administrative 
and accounting procedures and adequate intern al control mechanisms for the purposes of 
identifying and recording all large expos ures and subsequent changes to them, ⌦ in 
accordance with ⌫ as defined and required by  this Directive, and for that of monitoring those 
exposures in the light of each cred it institution's own exposure policies. 
 
EN 112   EN  
Ð 2000/12/EC Art. 48(2) 
(adapted) 
Article 110 
Reporting of large exposures  
21. A credit institution shall report every larg e exposure within the meaning of paragraph 
1to the competent authorities. 
Member States shall provide that reporting is  to be carried out, at their discretion, in 
accordance with one of the following two methods: 
(a) reporting of all large exposures at least once a year, combined with reporting during 
the year of all new large exposures and any increases in existing large exposures of at 
least 20% with respect to the previous communication; 
(b) reporting of all large exposure s at least four times a year. 
 
Ð 2000/12/EC Art. 48.3 (adapted) 
Ö new 
3.2 Ö Except in the case of cred it institutions relying on Artic le 114 for the recognition of 
collateral in calculating the value of exposures for the purp oses of paragraphs 1, 2 and 3 of 
Article 111,  eExposures exempted under Article 49  ⌦ 111 ⌫ (7)Ö (3) (a), (b), (c), (d), 
(f), (g) and (h) need not, however,  be reported as laid  down in paragraph Ö 1  2 and the 
reporting frequency laid down in Ö point (b) of  the second indent to  paragraph Ö 1  2 
may be reduced to twice a year for th e exposures referred to in Article 49  ⌦ 111 ⌫ 
(7)Ö (3) (e) and (i), and also  in paragraphs  8, 9 and 10  ÖArticles 115 and 116 . 
 
Ð 2000/12/EC Art. 48(4) 2nd 
subparagraph (adapted) 
Where a credit institution invokes paragraph ⌦ 2 ⌫ 3, it shall keep a record of the grounds 
advanced for at least one year after the even t giving rise to the dispensation, so that the 
competent authorities may establish whether it is justified. 
 
Ø new 
3. Member States may require the reporting of concentrated exposures  to the issuers of 
collateral taken by the credit institution. 
 
EN 113   EN  
Ð 2000/12/EC Art 49(1) to (5) 
(adapted) 
Î1 2004/xx/EC Art. 3.7 
Ö new 
Article 111 
Limits on large exposures  
1. A credit institution may not incur an expos ure to a client or  group of connected 
clients the value of which exceed 25% of its own funds Ö . For these purposes and 
the purposes of the other provisions of this  Article, Section 1 may be read without 
taking into account point (q) of Article 57 and Article 63(3 ) and shall be read without 
the inclusion of Article 66(2).  
2. Where that client or group of connected  clients is the parent undertaking or 
subsidiary of the credit institution and/or one or more subsidiari es of that parent 
undertaking, the percentage laid down in paragraph 1 shall be reduced to 20%. 
Member States may, however, exempt the ex posures incurred to such clients from 
the 20% limit if they provide for specifi c monitoring of such exposures by other 
measures or procedures. They shall inform the Commission and the Î1 European 
Banking Committee  of the content of such measures or procedures. 
3. A credit institution may not incur large e xposures which in total exceed 800% of its 
own funds. 
 
Ð 2000/12/EC Art. 49.4 (adapted) 
4. Member Sta tes may impose limits more stringent than those laid down in paragraphs 1, 2 
and 3.  
 
Ð 2000/12/EC Art 49(1) to (5) 
54. 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 be reported without delay to the competent authorities 
which may, where the circumstances warrant it, allow the credit institution a limited 
period of time in which to comply with the limits. 
 
Ø new 
Article 112 
1. For the purposes of Articles 113 to 117, ‘gua rantee’ shall include credit derivatives 
recognised under Articles 90 to 93 other than credit linked notes. 
2. Subject to paragraph 3, where, under Ar ticles 113 to 117, the recognition of funded 
or unfunded credit protection may be permitted, this shall be subject to compliance 
 
EN 114   EN with the eligibility requirements and other minimum requirements, set out under 
Articles 90 to 93 for the pur poses of calculating risk -weighted exposure amounts 
under Articles 78 to 83. 
3. Where a credit institution relies upon Ar ticle 114(2), the recognition of credit 
protection shall be subject to the rele vant requirements under Articles 84 to 89. 
 
Ð 2000/12/EC Art 49(4) & (6) 
adapted (adapted) 
Article 113 
1. Member States may impose limits more st ringent than those laid down in Article 
⌦ 111 ⌫ 75 paragraphs 1, 2 and 3 . 
62. Member States may fully or partially exempt from the appl ication of Article 
⌦ 111 ⌫ 75 paragraphs  1, 2 and 3 exposures incurred by a credit institution to its parent 
undertaking, to other subsidiaries  of that parent undertaking or to its own subsidiaries, in so 
far as those undertakings are covered by the supe rvision on a consolidated  basis to which the 
credit institution itself is subject, in accord ance with this Directive or with equivalent 
standards in force in a third country. 
 
Ð 2000/12/EC Art 49(7) (adapted) 
Ö new 
73. Member States may fully or partially exempt  the following exposures from the application 
of paragraphs (1), (2) and (3)  ⌦ Article 111 ⌫: 
(a) asset items constituting claims on Z one A central governments or central 
banks;  Ö central governments or central ba nks which would unsecured receive 
a 0% risk weighting under Articles 78 to 83;  
(b) asset items constituting clai ms on the European Communities Ö international 
organisations or multilateral development banks which would unsecured 
receive a 0% risk weight under Articles 78 to 83;  
(c) asset items constituting claims carry ing the explicit guarantees of Zone A 
central governments or central banks or of the European Communities  
Ö central governments, central banks , international organisations or 
multilateral development banks, where unsecured claims on the entity 
providing the guarantee would achieve a 0%  risk weight unde r Articles 78 to 
83;  
(d) other exposures attributable  to, or guaranteed by, Zone A central governments 
or central banks or the European Communities  Ö central governments, central 
banks, international organisations, or multilateral development banks where 
unsecured claims on the entity to which the exposure is attributable or by 
which it is guaranteed woul d receive a 0% risk wei ght under Articles 78 to 
83; 
 
EN 115   EN (e) asset items constituting claims on and other exposures to Zone B  central 
governments or central banks Ö not mentioned in paragraph a) above  which 
are denominated and, where applicable, f unded 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 Ö debt securities issued by Zone A  
central governments or central  banks, securities, or s ecurities issued by the 
European Communities or by Member State regional or local authorities for 
which Article 44 lays down a ze ro weighting for solvency purposes  
Ö international organisations, multilateral development banks or Member 
States’ regional governments or local au thorities, which securities constitute 
claims on their issuer which would rece ive a 0% risk weighting under Articles 
78 to 83; 
(g) asset items and other exposures secured, to the satisfaction of the competent 
authorities, by collateral in the form  of cash deposits placed with the 
lending ⌦ credit ⌫ institution or with a credit institution which 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 ⌦ credit ⌫ institution or by a credit institution which is the parent 
undertaking or a subsid iary of the lending ⌦ credit ⌫ institution 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 constituting such institutions' own funds; 
(j) asset items constituting claims on and other exposures to those institutions 
which are not credit institutions but which fulfil the conditions referred to in 
Article 45(2) Ö Annex VI, Part 1, paragraph 82 , with a maturity of one year 
or less, and secured in accordan ce with the same paragraph; 
(k) bills of trade and other similar bills, with a maturity of one year or less, bearing 
the signatures of other credit institutions; 
(l) debt securities as defined in Ar ticle 22(4) of Di rective 85/611/EEC; Ö covered 
bonds as defined in Articles 78 to 83;  
 
Ð 2000/12/EC (adapted) 
(m) pending subsequent coordination, holdings in the insurance companies referred 
to in Article 51(3)  ⌦ 122(1) ⌫ up to 40% of the own funds of the credit 
institution acquiring such a holding; 
(n) asset items constituting claims on regi onal or central credit institutions with 
which the lending ⌦ credit ⌫ institution is associated in a network in 
accordance with legal or statutory provi sions and which are responsible, under 
those provisions, for cash-clearing operations within the network; 
 
EN 116   EN  
Ð 2000/12/EC 
(o) exposures secured, to the sa tisfaction of the competent authorities, by collateral 
in the form of securities other than thos e referred to in (f); provided that those 
securities are  not issued by the credit institution itself, its parent company or 
one of their subsidiaries, or by the c lient or group of connected clients in 
question. The securities used as collateral must be valu ed at market price, have 
a value that exceeds the expos ures guaranteed and be either traded on a stock 
exchange or effectively negotiable a nd regularly quoted on a market operated 
under the auspices of recognised profe ssional operators and allowing, to the 
satisfaction of the competent authorities of the Membe r State of origin of the 
credit institution, for the establishment of an objective pri ce such that the 
excess value of the securities may be verified at any time. The excess value 
required shall be 100% it sha ll, however, be 150% in  the case of shares and 
50% in the case of debt securities issu ed by credit institutions, Member State 
regional or local aut horities other than those referred  to in Article 44, and in the 
case of debt securities issued by th e EIB and multilateral development banks 
Securities used  as collateral may not constitu te credit institutions' own funds;  
 
Ð 2000/12/EC 
(p) loans secured, to the satisfaction of th e competent authorities, by mortgages on 
residential property or by shares in Finnish residential housing companies, 
operating in accordance with the Finnish  Housing Company Act of 1991 or 
subsequent equivalent legislation a nd leasing transactions under which the 
lessor retains full ownership of the residen tial property leased for as long as the 
lessee has not exercised his option to pur chase, in all cases up to 50% of the 
value of the residential property concerne d; The value of the property shall be 
calculated, to the satisfaction of the competent authorities, on the basis of strict 
valuation standards la id down by law, regu lation or administrative provisions. 
Valuation shall be carried out at leas t once a year. For the purposes of this 
point residential property shall mean a re sidence to be occupied or let by the 
borrower;  
 
Ø new 
(q) the following, where they would receive a 50% risk weight under Articles 78 to 
83, and only up to 50% of the value of the property concerned: 
(i) exposures secured by mortgages on offi ces or other commercial premises, or 
by shares in Finnish housing companie s, operating in accordance with the 
Finnish Housing Company Act of 1991 or subsequent equivalent legislation, in 
respect of offices or other commercial premises;  
(ii) exposures related to property leasing transactions concerni ng offices or other 
commercial premises; 
For the purposes of point (ii), until 31 December 2011, the competent authorities of 
each Member State may allow credit institutio ns to recognise 100% of the value of 
 
EN 117   EN the property concerned. At the end of this period, this treatment shall be reviewed. 
Member states shall inform the Commission of  the use they make of this preferential 
treatment. 
 
Ð 2000/12/EC (adapted) 
(qr) 50% of the medium/low-risk off-balan ce-sheet items referred to in Annex II; 
(rs) 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 possessing the status of credit institutions, subject to a weighting of 20% of their amount. 
Member States shall inform the Comm
ission of the use they make of this option in 
order to ensure that it does not result in distortions of competition;  
(st) the low-risk off-balance-sheet items refe rred to in Annex II, to the extent that 
an agreement has been concluded with the client or group of connected clients under 
which the exposure may be incurred only if it  has been ascertained  that it will not 
cause the limits applicable under ⌦ Article 111(1) to (3) ⌫ paragraphs 1, 2 and 3  
to be exceeded. 
 
Ø new 
Cash received under a credit linked note issued by the credit institution and loans and 
deposits of a counterparty to or with the credit institution which are subject to an on-
balance sheet netting agreement recognised und er Articles 90 to 93 shall be deemed 
to fall under point (g). 
 
Ð 2000/12/EC Art 49(o) 2nd & 3rd 
sentences (adapted) 
Ö new 
⌦ For the purposes of point (o), the ⌫ The  securities used as collateral must be 
valued at market price, have a value th at exceeds the exposures guaranteed and be 
either traded on a stock exchange or eff ectively negotiable and regularly quoted on a 
market operated under the auspices of  recognised professional operators and 
allowing, to the satisfaction of the compet ent authorities of the Member State of 
origin of the credit institution, for the esta blishment 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%. i It shall, however, be 150% in the case of shares and 50% in 
the case of debt securities issued by credit  institutions, Member State regional 
⌦ governments ⌫ or local authorities other than those referred to in Article 44  
⌦ sub-point (f) ⌫, and in the case of debt s ecurities issued by the EIB and  
multilateral development banks Ö other than those receivi ng a 0% risk weighting 
under the Standardised Approach.  Where there is a mismatch between the maturity 
of the exposure and the maturity of the cr edit protection, the colla teral shall not be 
recognised.  ⌦ Securities used as collateral ma y not constitute credit institutions' 
own funds. ⌫ 
 
EN 118   EN ⌦ For the purposes of point (p) , the ⌫ The  value of the property shall be 
calculated, to the satisfaction of the compet ent authorities, on the basis of strict 
valuation standards laid down by law, regulation or administrative provisions. 
Valuation shall be carried out at leas t once a year. For the purposes of this  point 
⌦ (p), ⌫ residential property shall mean a resi dence to be occupied or let by the 
borrower; . 
Member States shall inform the Commission of any exemption granted ⌦ under 
point (s) ⌫ the use they make of this option in order to ensure that it does not result 
in distortion of competition; . 
 
Ø new 
Article 114 
1. Subject to paragraph 3, for the purposes of calculating the value of exposures for the 
purposes of Article 111(1) to (3 ) Member States may, in respect  of credit institutions using 
the Financial Collateral (Comprehensive Method ) under Articles 90 to 93, in the alternative to 
availing of the full or partial exemptions permitted under points (f), (g), (h ), and (o) of Article 
113(3), permit such credit institutions to use a value lower than the value of the exposure, but 
no lower than the total of the fully-adjusted exposu re values of their exposures to the client or 
group of connected clients. 
For these purposes ‘fu lly adjusted exposure value’ means that calculated under Articles 90 to 
93 taking into account the credit risk mitigati on, volatility adjustments, and any maturity 
mismatch (E*). 
Where this paragraph is applied to a credit inst itution, points (f), (g), (h), and (o) of Article 
113(3) shall not apply to the credit institution in question. 
2. Subject to paragraph 3, a credit instituti on permitted to use own estimates of LGDs 
and conversion factors for an exposure class under Articles 84 to 89 may be permitted, where 
it is able to the satisfaction of the competent au thorities to estimate the effects of financial 
collateral on their exposures sepa rately from other LGD-relevant  aspects, to recognise such 
effects in calculating the value of exposu res for the purposes of Article 113(3). 
Competent authorities shall be satisfied as to the suitability of the estimates produced by the 
credit institution for use for the reduction of the exposure value for the purposes of 
compliance with the provisions of Article 111.  
Where a credit institution is permitted to use its own estimates of the effects of financial 
collateral, it must do so on a consistent basis to  the satisfaction of the competent authorities. 
In particular, this approach must be adopted for all large exposures. 
Credit institutions permitted to  use own estimates of LGDs and conversion factors for an 
exposure class under Articles 84 to 89 which doe s not calculate the valu e of their exposures 
using the method referred to in the first subpa ragraph, may be permitted to use the approach 
set out in paragraph 9(1) above or the approach set out in point  (o) of Article 113(3) above for 
calculating the value of exposures. A credit institution shall use only one of these two 
methods. 
 
EN 119   EN 3. A credit institution which is permitted to use the methods described in paragraphs 1 
and 2 in calculating the value of exposures fo r the purposes of Article 111(1) to (3) shall 
conduct periodic stress tests of their credit risk  concentrations including in relation to the 
realisable value of any collateral taken. 
These shall address risks arising from potenti al changes in market conditions that could 
adversely impact the credit institutions’ adequacy of own funds and risks arising from the 
realisation of collateral in stressed situations. 
The credit institution shall satisfy the competent authorities that the stress tests carried out are 
adequate and appropriate for the assessment of such risks. 
In the event that such a stress test indicates a lower realisable value of collateral taken than 
would be permitted to be taken into account under paragraphs 2 and 3 as appropriate, the 
value of collateral permitted to be recognised in calculating the value of exposures for the 
purposes of Article 111(1) to (3 ) shall be reduced accordingly. 
Such credit institutions shall include the followi ng in their strategies to  address concentration 
risk: 
(a) policies and procedures to address risks arising from maturity mismatches between 
exposures and any credit pr otection on those exposures; 
(b) policies and procedures relating to concentr ation risk arising from the application of 
credit risk mitigation techniques, and in particular large indi rect credit exposures 
(e.g. to a single issuer of secu rities taken as collateral). 
4. Where the effects of collateral are recogni sed under the terms of  paragraphs 1 or 2 
above, Member States may treat any covered part  of the exposure as having been incurred to 
the collateral issuer rather than to the client. 
 
Ð 2000/12/EC Art 49 (8) & (9) 
(adapted) 
Ö new 
Article 115 
81. For the purposes of ⌦ Article 111(1) to (3) ⌫paragraphs 1, 2 and 3 , Member States 
may apply a weighting of 20% to asset item s constituting claims on Member State regional 
⌦ governments ⌫ and local authorities Ö where those claims would receive a 20% risk 
weight under Article 78 to 83 and to other exposures to or guaranteed by such  governments 
and authorities claims on which receive a 20% risk weight under Article 78 to 83. and to 
other exposures to or guaranteed by such author ities; subject to the conditions laid down in 
Article 44, however, Member States ma y reduce that rate to 0%.  
Ö However, Member States may reduce that rate to 0% in respect of to asset items 
constituting claims on Member States’ regional governments and local authorities where those 
claims would receive a 0% risk weight under Ar ticle 78 to 83 and to other exposures to or 
guaranteed by such governments and authorities claims on which receive a 0% risk weight 
under Article 78 to 83.  
 
EN 120   EN 9.2. For the purposes of ⌦ Article 111(1) to (3) ⌫ paragraphs 1, 2 and 3 , Member States 
may apply a weighting of 20% to asset items constituting claims on and other 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 than three years, provided that the latter are represented by debt instruments that were 
issued by a credit  institution and that those debt inst ruments are, 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 the 
competent authorities of the Member St ate of origin of the issuing credit  institutions. In no 
case may any of these items constitute own funds. 
 
Ð 2000/12/EC Art 49 (10) 
(adapted) 
Article 116 
10.By way of derogation from  paragraphs 7 (i) and  9 ⌦ Article 113(3)(i) and Article 
115(2) ⌫, Member States may apply a weighting of 20% to asse t items constituting claims 
on and other exposures to credit institutions, regardless of their maturity. 
 
Ð 2000/12/EC Art. 49 (11) 
(adapted) 
Article 117 
111. Where an exposure to a client is guaranteed  by a third party, or by collateral in the 
form of securities issued by a third part y under the conditions laid down in paragraph 
7 ⌦ Article 113(3) ⌫ (o), Member States may: 
(a) treat the exposure as having been incurred to the ⌦ guarantor ⌫ third party  
rather than to the client, if the exposure is directly and unconditionally 
guaranteed by that third party, to the sa tisfaction of the competent authorities ,; 
(b) treat the exposure as having been incurre d to the third party rather than to the 
client, if the exposure defined in sub -paragraph 7  ⌦ Article 113(3) ⌫ (o) is 
guaranteed by collateral under th e conditions there laid down. 
 
Ø new 
2. Where Member States apply the treatment provided for in point (a) of paragraph 1: 
(a) where the guarantee is denominated in a currency different fr om that in which 
the exposure is denominated the amount of the exposure deemed to be covered 
will be calculated in accordance with the provisions on the treatment of 
currency mismatch for unfunded protection in Annex VIII; 
(b) a mismatch between the maturity of the exposure and the maturity of the 
protection will be treated in accordance w ith the provisions on the treatment of 
maturity mismatch in Annex VIII; 
 
EN 121   EN (c) partial coverage may be recognised in accordance with the treatment set out in 
Annex VIII. 
 
Ð 2000/12/EC Art 49 (2) 
(adapted) 
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 shall decide on any cha nges to be made on a proposal from the 
Commission.  
 
Ð 2000/12/EC Art 50 (adapted) 
Ö new 
Article 118 
Supervision on a consolidated or unconsolidated basis of l arge exposures  
1. If the credit institution is neither a parent undertaking nor a subsidiary, compliance with the 
obligations imposed in Articles 48 and 49 or in any other Comm unity provision applicable to 
this area shall be monito red on an unconsolidated basis.  
2. In the other cases, compliance with the obliga tions imposed in Articles 48 and 49 or in any 
other Community provision applicable to this ar ea shall be monitored on a consolidated basis 
in accordance with Articles 52 to 56.  
3. Member States may wa ive monitoring on an individual or subconsolidated basis of 
compliance with the obligations imposed in Ar ticles 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 moni toring on a consolidated basis and by any subsidiary of such a credit institution 
which is subject to their authorisation and supervision and is covered by monitoring on a 
consolidated basis.  
Member States also waive such monitoring where the parent undert aking is a financial 
holding company established in the same Member State as the cr edit institution, provided that 
company is subject to the same monitoring as credit institutions.  
In the cases referred to in th e first and second subparagraphs . 
Ö Where compliance by a credit institution on an individual or sub-consolidated basis with 
the obligations imposed in this  Section is disapplied under Article 69(1), or the provisions of 
Article 70 are applied in the case of parent  credit institutions in a Member State,  measures 
must be taken to ensure the satisfactor y allocation of risks within the group. 
 
EN 122   EN  
Ø new 
Article 119 
By 31 December 2007, the Commission shall submit to the European Parliament and to the 
Council a report on the functioning of this Section, together w ith any appropriate proposals. 
 
Ð 2000/12/EC 
SECTION 6 
QUALIFYING HOLDINGS OUTSIDE THE FINANCIAL SECTOR  
 
Ð 2000/12/EC Art. 51 (1) & (2) 
(adapted) 
Article 120 
Limits to non -financi al qualifying holdings  
1. No credit institution may have a qualifying holding the amount of which exceeds 15% 
of its own funds in an undertaking which is neither a credit institution, nor a financial 
institution, nor an undertaking 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 in stitutions or undertakings carryi ng on activities referred to in the 
second subparagraph of Article 43(2)(f) of Directive 86/635/EEC  may not exceed 60% of its 
own funds. 
 
Ð 2002/87/EC Art. 29(5) 
(adapted) 
5. The Member States need not apply the lim its laid down in paragraphs 1 and 2 to h oldings in 
insurance companies as defined in Directiv e 73/239/EEC and Directive 79/267/EEC, or in 
reinsurance companies as defined in Directive 98/78/EC.  
 
Ð 2000/12/EC Art. 51(4) 
(adapted) 
4. Shares held temporarily during a financial reconst ruction or rescue op eration or during the 
normal course of underwriting or in an institutio n's own name on behalf of others shall not be 
counted as qualifying holdings for the purpo se of calculating the limits laid down in 
paragraphs 1 and 2. Shares which are not financial fixed assets as  defined in Article 35(2) of 
Directive 86/635/EEC sh all not be included.  
 
EN 123   EN  
Ð 2000/12/EC Art. 51 (5) 
53. The limits laid down in paragraphs 1 and 2 may be exceeded only in exceptional 
circumstances. In such cases, however, the competent authorities shall require a credit institution either to increase its own funds  or to take other equivalent measures. 
 
Ð 2000/12/EC Art. 51 (6) 
(adapted) 
6. The Member States may provide  that the competent authoritie s shall not apply the limits 
laid down in paragraphs 1 and 2 if they prov ide that 100% of the amounts by which a credit 
institution's qualifying holdings exceed those li mits must be covered by own funds and that 
the latter shall not be included in the calc ulation of the solvency ratio. If both the limits laid 
down in paragraphs 1 and 2 are exceeded, the am ount to be covered by own funds shall be the 
greater of the excess amounts.  
 
Ð 2000/12/EC Art. 51 (4) 
Article 121 
4.Shares held temporarily during a financial rec onstruction or rescue op eration or during the 
normal course of underwriting or in an institutio n's own name on behalf of others shall not be 
counted as qualifying holdings for the purpo se of calculating the limits laid down in 
paragraphs 1 and 2. Shares whic h are not financial fixed assets as defined in Article 35(2) of 
Directive 86/635/EEC sh all not be included. 
 
Ð 2002/87/EC Art. 29(5) 
Article 122 
31. The Member States need not apply the lim its laid down in paragraphs 1 and 2 to 
holdings in insurance companies as define d in Directive 73/ 239/EEC and Directive 
79/267/EEC, or in reinsurance companies as defined in Directive 98/78/EC. 
 
Ð 2000/12/EC Art. 51(6) 
(adapted) 
62. The Member States may provide that the competent authorities are not to apply the 
limits laid down in ⌦ Article 120(1) and (2) ⌫ paragraphs 1 and 2  if they provide 
that 100% of the amounts by which a credit  institution's qualifying holdings exceed 
those limits must be covered by own funds a nd that the latter sha ll not be included in 
the calculation of the solvency ratio. If both the limits laid down in ⌦ Article 120(1) 
and (2) ⌫ paragraphs 1 and 2  are exceeded, the amount to be covered by own funds 
shall be the greater of the excess amounts. 
 
EN 124   EN  
Ø new 
CHAPTER  3 
CREDIT  INSTITUTIONS'  ASSESSMENT  PROCESS   
Article 123 
Credit institutions shall have in place sound, effective and comp lete strategies and processes 
to assess and maintain on an ongoing basis the amounts, types and distribution of internal 
capital that they consider adequate to cover the nature and level of the risks to which they are 
or might be exposed. 
These strategies and processes sha ll be subject to regular internal review to ensure that they 
remain comprehensive and proportionate to the na ture, scale and complex ity of the activities 
of the credit institution concerned. 
 
Ð 2000/12/EC (adapted) 
CHAPTER  34 
SUPERVISION ⌦ AND  DISCLOSURE  BY COMPETENT  
AUTHORITIES ⌫ ON  A CONSOLIDATED  BASIS  
 
Ð 2000/12/EC (new) 
Î1 2002/87/EC Art. 29.6 
Article 52  
Supervision on a consolidated basis of credit institutions  
1. Every credit institution wh ich has a credit institution  or a financial institution as a 
subsidiary or which holds a participation in such institutions shall be subject, to the extent and 
in the manner prescribed in Article 54, to superv ision on the basis of its consolidated financial 
situation. Such supervisio n shall be exercised at least in the areas referred to in paragraphs 5 
and 6.  
2. Every credit institution the parent undertak ing of which is a financial holding company 
shall be subject, to the extent  and in the manner prescribed  in Article 54, to supervis ion on the 
basis of the consolidated financial situa tion of that financia l holding company. Such 
supervision shall be exercised at least in the areas referred to in  paragraphs 5 and 6.  
Î1 Without prejudice to Article 54a, the consolidation of  the financial situation of the 
financial holding company shall not in any way imply that the competent authorities are 
 
EN 125   EN required to play a supervisory role in relation to the financ ial holding company on a stand -
alone basis.   
 
Ð 2000/12/EC Art. 52.3 
3. The Member States or the competent authori ties responsible for exercising supervision on a 
consolidated basis pursuant to Article 53 may decide in the ca ses listed below that a credit  
institution, financial institution or auxiliar y banking services undertaking which is a 
subsidiary or in which a participation is held  need not be included  in the 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 w ith respect to the objectives of monitoring 
credit institutions and in all cases if the balance -sheet tot al of the undertaking that 
should be included is less than the sm aller of the following two amounts: EUR 
10 million or 1% of the balance -sheet total of the pare nt undertaking or the 
undertaking that holds the participati on. If several undert akings meet the  above 
criteria, they must nevertheless be include d in the consolidation where collectively 
they are of non -negligible interest with respect to the aforementioned objectives, or  
– if, in the opinion of the competent aut horities responsible for exercising sup ervision 
on a consolidated basis, the consolidation of  the financial situation of the undertaking 
that should be included would be inappropria te or misleading as far as the objectives 
of the supervision of credit institutions are concerned.  
 
Ð 2000/12/EC Art. 52 (5) to (8 
5. Supervision of solvency, and of the adequa cy 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, where 
appropriate, to include fina ncial holding companies in consolidated supervision, in 
accordance with paragraph 2.  
Compliance with the limits set in Article 51(1) and (2) shall be supervis ed and controlled on 
the ba sis of the consolidated or subconsolidated financial 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 ba sis that is exercised over a cred it institution in 
implementation of paragraphs 1 and 2, there are adequate internal control mechanisms for the 
production of any data and information whic h would be relevant for the purposes of 
supervision on a consolidated basis.  
7. Without prejudice to s pecific provisions contained in ot her directives, Member States may 
waive application, on an individu al or subconsolidated basis,  of the rules laid down in 
paragraph 5 to a credit institution that, as a pa rent undertaking, is subject to supervision on a 
consolidated basis, and to any subsidiary of such a credit institution which is subject to their 
authorisation and supervision and is included in the supervision on a consolidated basis of the 
credit institution which is the parent company. The same exemptio n option shall be allowed 
where the parent undertaking is a financial hol ding company which has its head office in the 
 
EN 126   EN same Member State as the credit institution, provid ed that it is subject to the same supervision 
as that exercised over credit institutio ns, and in particular th e standards laid down in 
paragraph 5.  
In both cases set out in the first subparagraph, st eps must be taken to en sure that capital is 
distributed adequately within the banking group.  
If the competent authoriti es apply those rules ind ividually 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).  
8. Where a credit institution the parent of which is a credit institution has been authorised and  
is situated in another Member State, the competent authorities which granted that 
authorisation shall apply the rules laid down in paragraph 5 to that institution on an individual 
or, when appropriate, a subconsolidated basis.  
 
Ð 2000/12/EC Art. 52.9 (adapted) 
Î1 2004/xx/EC Art. 3.9 
9. Notwithstanding the requirements of paragraph 8, the competent authorities responsible for 
authorising the subsidiary of  a parent undertaking which is a credit institution may, by 
bilateral agreem ent, delegate their responsibility for s upervision to the competent authorities 
which authorised and supervise the parent undertaking so that they assume responsibility for 
supervising the subsidiary in accordance with  this Directive. The Commission must b e kept 
informed of the existence and content of such agreements.  Î1 The competent authority 
concerned shall forward such information to th e competent authorities of the other Member 
States.   
 
Ø new 
SECTION 1 - SUPERVISION  
Article 124 
1. Taking into account the technical criter ia set out in Annex XI, the competent 
authorities shall review the arrangements , strategies, processes and mechanisms 
implemented by the credit institutions to comp ly with this Directive and evaluate the 
risks to which the credit institu tions are or might be exposed. 
2. The scope of the review and evaluation referr ed to in paragraph 1 shall be that of the 
requirements of this Directive. 
3. On the basis of the review and evaluation referred to in paragraph 1, the competent 
authorities shall determine whether the arrangements, strategies, processes and 
mechanisms implemented by the credit institutions and the own funds held by these 
ensure a sound management a nd coverage of their risks. 
4. Competent authorities shall establish the frequency and intensity of the review and 
evaluation referred to in paragraph 1 havi ng regard to the systemic importance, 
 
EN 127   EN nature, scale and complexity of the activities of the credit institution concerned. The 
review and evaluation shall be updat ed at least on an annual basis. 
5. The review and evaluation performed by competent authorities shall include the 
exposure of credit institutions to the in terest rate risk arising from non-trading 
activities. Measures shall be required in the case of institutions whose economic 
value declines by more than 20% of thei r own funds as a re sult of a sudden and 
unexpected change in interest rates the size of which shall be prescribed by the 
competent authorities and shall not differ between credit institutions. 
 
Ð 2000/12/EC Art 53(1) and (2) 
first sub-paragraph (adapted) 
Ö new 
Article 125 
Competent authorities responsible for exercising  
1. Where a parent undertaking is a Ö parent  credit institution Ö in a Member 
State or an EU parent  credit institution , supervision on a consolidated basis shall 
be exercised by the competent authoritie s that authorised it under Article 4 ⌦ 6 ⌫. 
2. Where the parent of a credit institution is a Ö parent  financial holding company 
Ö in a Member State or an EU parent financial holding company , supervision on 
a consolidated basis shall be exercised by the competent authorities which authorised 
that credit institution under Article 4 ⌦ 6 ⌫. 
 
Ð 2000/12/EC Art. 53 (2) second 
and third sub-paragraph and (3) 
Ö new 
Article 126 
3.1. However  wWhere credit institutions authorised in two or more Member States have 
as their parent the same Ö parent  financial holding company Ö in a Member State 
or the same EU parent financial holding company  , supervision on a consolidated 
basis shall be exercised by the competen t authorities of the credit institution 
authorised in the Member State in whic h the financial holding company was set up. 
If no credit institution subsidia ry has been authorised in the Member State in which 
the financial holding company was set up, th e competent authorities of the Member 
States concerned (including those of the Me mber 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 competent authorities 
that authorised the credit instit ution with the greatest balance -sheet total; if that 
figure is the same, supervision on a conso lidated basis shall be exercised by the 
competent authorities which first gave the authorisation referred to in Article 4. 
 
EN 128   EN 3. The competent authorities concerned may by common agreement waive the rules 
laid do wn in the first and second subparagraph of paragraph 2. 
 
Ø new 
Where credit institutions authorised in two or more Member States have as their 
parents more than one financial holding company with head offices in different 
Member States and there is a credit instituti on in each of these States, supervision on 
a consolidated basis shall be exercised by the competent authority of the credit 
institution with the largest balance sheet total. 
2. Where more than one credit institution author ised in the Community has as its parent 
the same financial holding company and none  of these credit institutions has been 
authorised in the Member State in whic h the financial holding company was set up, 
supervision on a consolidated basis shall be  exercised by the comp etent authority that 
authorised the credit institution with the largest balance sheet total, which shall be 
considered, for the purposes of this Directive,  as the credit institution controlled by 
an EU parent financial holding company. 
 
Ð 2000/12/EC Art 53(4) 
4. The agreements referred to in the third s ubparagraph of paragraph 2 and in paragraph 3 
shall provide for procedures for cooperation and for the transmission of information such that 
the objectives of supervision on a consolidated basis can be attained.  
 
Ø new 
3. In particular cases, the competent aut horities may by common agreement waive the 
criteria referred to in paragraphs 1 and 2 if their application w ould be inappropriate, 
taking into account the credit institutions  and the relative importance of their 
activities in different  countries, and appoint a diffe rent competent authority to 
exercise supervision on a consolidated ba sis. In these cases,  before taking their 
decision, the competent authorities shall give the EU parent credit  institution, or EU 
parent financial holding company, or credit institution with the largest balance sheet, 
as appropriate, an opportunity to state its opinion on that decision. 
4. The competent authorities shall notify  the Commission of any agreement falling 
within paragraph 3 
 
Ð 2000/12/EC Art. 52(2) last 
sentence (adapted) 
Ö new 
Article 127 
1. Ö Member States shall adopt any measures  necessary, where appropriate, to include 
financial holding companies in consolid ated supervision. W ithout prejudice to 
Article 135,  the consolidation of the financial situation of the financial holding 
company shall not in any way imply that the competent authorities are required to 
 
EN 129   EN play a supervisory role in relati on to the financial holding company ⌦ on a stand-
alone basis ⌫ standing alone . 
 
Ð 2000/12/EC Art. 52 (4) 
(adapted) 
42. When the competent authorities of a Memb er 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 ⌦ points (b) and (c) of Article 
73(1) ⌫, the competent authorities of the Me mber State in which that credit 
institution subsidiary is situated may ask the parent  undertaking for information 
which may facilitate their supervision of that credit institution. 
 
Ð 2000/12/EC Art. 52 (10) 
(adapted) 
103. Member States shall provide that thei r competent authori ties responsible for 
exercising supervision on a consolidated ba sis may ask the subsidiaries of a credit 
institution or a fina ncial holding company,  which are not included within the scope 
of supervision on a consolidated basis for the information referred to in Article 55  
⌦ 137 ⌫. In such a case, the procedures for transmitting and verifying the 
information laid down in that Article shall apply. 
 
Ð 2000/12/EC Art 53(5) 
Article 128 
5Where Member States have more than one competent authority for the prudential 
supervision of credit institutions and financial institutions, Member States shall take the 
requisite measures to organise coor dination between su ch authorities. 
 
Ø new 
Article 129 
1. The competent authority responsible for the exercise of supervision on a consolidated 
basis of EU parent credit inst itutions and credit instituti ons controlled by EU parent 
financial holding companies shall carry out the following tasks: 
(a) supervisory overview and assessment of  compliance with the requirements laid 
down in Articles 71, 72(1), 72(2) and 73(3); 
(b) coordination of the gathering and di ssemination of relevant or essential 
information in going concern and emergency situations; 
(c) planning and coordination of supervisor y activities in going concern as well as 
in emergency situations, including in rela tion to the activities in Article 124, in 
 
EN 130   EN cooperation with the competent authorities involve d, and in relatio n to Articles 
43 and 141. 
2. In the case of applications for the permissions referred to in Articles 84(1), 87(9) and 
105, respectively, submitted by an EU parent credit institution and its subsidiaries, or 
jointly by the subsidiaries of an EU pare nt financial holding company, the competent 
authorities shall work together, in full c onsultation, to determin e whether or not to 
grant the permission sought and to determ ine the terms and conditions, if any, to 
which such permission should be subject. 
An application as referred to in the firs t subparagraph shall be submitted only to the 
competent authority referred to in paragraph 1.  
The competent authorities shall in a singl e document agree together, within no more 
than six months, their determination on the application. This  document shall be 
provided to the applicant. In the absence of a determination within six months, the 
competent authority referred to in paragrap h 1 shall make its own determination on 
the application. 
Article 130 
1. Where an emergency situation arises, wh ich potentially jeopardises the stability, 
including the integrit y, of the financial system, the co mpetent authorities responsible 
for the exercise of supervis ion on a consolidated basis shall alert as soon as is 
practicable, subject to Title V, Chapter 1, Section 2, the authorities referred to in 
Article 49(a) and Article 50. This obligation shall apply to all co mpetent authorities 
identified under Articles 125 and 126 in rela tion to a particular group, and to the 
competent authority identified under paragraph 1 of Article 129. 
2. The competent authority responsible for s upervision on a consolidated basis shall, 
when it needs information which has alr eady been given to another competent 
authority, contact this author ity whenever possible in orde r to prevent duplication of 
reporting to the various author ities involved in  supervision. 
Article 131 
In order to facilitate and esta blish effective superv ision, the competent authority responsible 
for supervision on a consolidated basis and the other competent authorities shall have written 
coordination and cooperation arrangements in place. 
Under these arrangements additional tasks may be entrusted to the competent authority 
responsible for supervision on a consolidated basis and procedures for the decision-making 
process and for cooperation with other co mpetent authorities, may be specified. 
 
Ð 2000/12/EC Art. 52 (9) 
(adapted) 
Notwithstanding the requireme nts of paragraph 8, the  ⌦ The ⌫ competent authorities 
responsible for authorising the subsidiary of a parent undertaking which is a credit institution 
 
EN 131   EN may, by bilateral agreement, delegate their re sponsibility for supervis ion to the competent 
authorities which authorised a nd supervise the parent undert aking so that they assume 
responsibility for supervising the subsidiary  in accordance with this Directive. The 
Commission must be kept informed  of the existence and content of such agreements. It shall 
forward such information to the competent author ities of the other Member States and to the 
Banking Advisory Committee.  
 
Ø new 
Article 132 
1. The competent authorities shall cooperate cl osely with each other. They shall provide 
one another with any information which is esse ntial or relevant for the exercise of the 
other authorities’ supervisory tasks under this Directive. In  this regard, the competent 
authorities shall communicate on request  all relevant information and shall 
communicate on their own initiativ e all essential information. 
In particular, competent authorities respons ible for consolidated supervision of EU 
companies shall ensure that relevant inform ation is provided to competent authorities 
in other Member States who supervise subsidiaries of th ese parents. In determining 
the extent of relevant information, the importance of these subsidiaries within the 
financial system in those Member St ates shall be taken into account. 
The essential information referred to in the first subparagraph shall include, in 
particular, the following items: 
(a) identification of the group structure of all major credit ins titutions in a group, 
as well as of the competent authorities of the credit institutions in the group; 
(b) procedures for the collection of inform ation from the credit institutions in a 
group, and the verification of that information; 
(c) adverse developments in credit institu tions or in other entities of a group, 
which could seriously affect the credit institutions; 
(d) major sanctions and exceptional meas ures taken by competent authorities in 
accordance with this Directive, incl uding the imposition of an additional 
capital charge under Article 136 and th e imposition of any limitation on the use 
of the Advanced Measurement Approach for the calculation of the own funds 
requirements under Article 105. 
2. The competent authorities responsible fo r the supervision of credit institutions 
controlled by an EU parent credit institu tion shall contact the competent authority 
referred to in Article 129(1) when th ey need information regarding the 
implementation of approaches and methodologi es set out in this Directive that may 
already be available to that competent authority. 
3. The competent authorities concerned shall, prior to their decision, consult each other 
with regard to the following items, where these decisions are of importance for other 
competent authorities’ supervisory tasks: 
 
EN 132   EN (a) changes in the shareholder, organisati onal or management structure of credit 
institutions in a group, which require  the approval or authorisation of 
competent authorities; 
(b) major sanctions or exceptional me asures taken by competent authorities, 
including the imposition of an additiona l capital charge under Article 136 and 
the imposition of any limitation on th e use of the Advances Measurement 
Approaches for the calculation of the own funds requiremen ts under Article 
105. 
For the purposes of point (b ), the competent authority re sponsible for supervision on 
a consolidated basis shall always be consulted. 
However, a competent authority may decide not to consult in cases of urgency or 
where such consultation may jeopardise the effectiveness of the decisions. In this 
case, the competent authority shall, w ithout delay, inform the other competent 
authorities. 
 
Ð 2000/12/EC Art 54 (1) 
(adapted) 
Article 133 
Form and extent of consolidation  
1. The competent authorities responsible for exercising  supervision on a consolidated 
basis ⌦ shall ⌫ must , for the purposes of supervisi on, require full consolidation of 
all the credit institutions and financial inst itutions which are subs idiaries of a parent 
undertaking. 
However, ⌦ the competent authorities may require only ⌫proportional 
consolidation may be prescribed  where, in ⌦ their ⌫ the opinion of the competent 
authorities , the liability of a parent undertakin g holding a share of the capital is 
limited to that share of the capital ⌦ in view ⌫ because  of the liability of the other 
shareholders or members whose solvency is  satisfactory. The liab ility of the other 
shareholders and members must be clearly  established, if necessary by means of 
formal signed commitments. 
 
Ð 2002/87/EC Art. 29(7)(a) 
In the case where undertakings are linked by a relationship with in the meaning of 
Article 12 (1) of Directiv e 83/349/EEC, the competent au thorities shall determine 
how consolidation is to be carried out. 
 
Ð 2000/12/EC Art 54(2) & (3) 
(adapted) 
2. The competent authorities responsible for carrying out  supervision on a consolidated 
basis ⌦ shall ⌫ must, in order to do so,  require the proportional consolidation of 
 
EN 133   EN participations in credit institutions and financial institutions managed by an 
undertaking included in the consolidation toge ther with one or more undertakings not 
included in the consolidati on, where those undertakings' lia bility is limited to the 
share of the capital they hold. 
3. In the case of participations or capital ties  other than those referre d to in paragraphs 1 
and 2, the competent authorities shall determ ine 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 
in supervision on a consolidated basis. 
 
Ð 2000/12/EC Art. 54(4) 1st 
paragraph (adapted) 
Article 134 
41. Without prejudice to ⌦ Article 133 ⌫ paragraphs 1, 2 and 3 , the competent 
authorities shall determine whether and how conso lidation is to be carried out in the following 
cases: 
(a) where, in the opinion of the competent au thorities, a credit institution exercises 
a significant influence over one or mo re credit institutions or financial 
institutions, but without hol ding a participation or other capital ties in these 
institutions, ; 
(b) where two or more credit institutions or  financial instituti ons are placed under 
single management other than pursuant to a contract or clauses of their 
memoranda or articles of association. 
 
Ð 2002/87/EC Art. 29(7)(b) 
--------- 
 
Ð 2000/12/EC Art 54(4) 2nd 
paragraph 
In particular, the competent authorities may pe rmit, or require use of, the method provided for 
in Article 12 of Directive 83/349/EEC. That method shall not, however, constitute inclusion 
of the undertakings concerned in consolidated supervision. 
 
Ð 2000/12/EC Art 54(5) (adapted) 
Ö new 
52 Where consolidated supervision is required pursuant to Article  52 (1) and (2)  
⌦Articles 125 and 126 ⌫, ancillary banking  services undertakings Ö and asset 
management companies as defined in Directive 2002/87/EC  shall be included in 
consolidations in the cases , and in accordance with the methods, laid down in ⌦ Article 133 
and paragraphs  1 ⌫ to 4 of this Article. 
 
EN 134   EN  
Ð 2002/87/EC Art. 29(8) 
(adapted) 
Article 135 
Management body of financial holding companies  
The Member States shall require that persons who effectively dire ct the business of a financial 
holding company ⌦ be ⌫ of sufficiently good repute and have sufficient experience to 
perform those duties. 
 
Ø new 
Article 136 
1. Competent authorities shall require any cr edit institution that does not meet the 
requirements of this Directive to  take the necessary actions or steps at an early stage to 
address the situation. 
For those purposes, the measures available to  the competent authori ties shall include the 
following: 
(a) obliging credit institutions to hold own funds in excess of the minimum level laid 
down in Article 75; 
(b) reinforcing the arrangements and strategies implemented to comply with Articles 22 
and 123; 
(c) requiring credit institutions to apply a sp ecific provisioning policy or treatment of 
assets in terms of own funds requirements; 
(d) restricting or limiting the business, operations or network of credit institutions; 
(e) reducing the risk inherent in activities,  products and systems by credit institutions. 
The adoption of these measures shall be subject to Title V, Chapter 1, Section 2. 
2. A specific own funds requirement in excess of  the minimum level laid down in Article 
75 shall be imposed by the competent authorities at least on the credit institutions which have 
in place inadequate arrangements, processes, m echanisms and strategies for the management 
and coverage of their risks, if the sole appli cation of other measures is unlikely to reinforce 
those arrangements within an appropriate timeframe. 
 
Ð 2000/12/EC Art 55(1) (adapted) 
Article 137 
Information to be supplied by mixed -activity holding companies and their subsidiaries  
 
EN 135   EN 1. Pending further coordination of consolida tion 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 respons ible for the authorisation 
and supervision of those credit instituti ons shall, by approaching the mixed-activity 
holding company and its subsidiaries eith er directly or via credit institution 
subsidiaries, require them to supply any in formation which would be relevant for the 
purpose of supervising the credit institution subsidiaries. 
 
Ð 2000/12/EC Art. 55(2) 
(adapted) 
2. Member States shall provide that their co mpetent authorities may carry out, or have 
carried out by external inspectors, on-the- spot inspections to verify information 
received from mixed-activity holding compan ies and their subsidiaries. If the mixed-
activity holding company or one  of its subsidiaries is an insurance undertaking, the 
procedure laid dow n in Article 56 (4) ⌦ 140(1) ⌫ may also be used. If a mixed-
activity holding company or one of its subsidiaries is situated in a Member State other than that in which the credit instit ution subsidiary is situated, on-the-spot 
verification of information shall be carried out in accordance with the procedure laid 
down in Article 56
(7) ⌦ 140(1) ⌫. 
 
Ð 2002/87/EC Art. 29(9) 
(adapted) 
Article 138 
Intra -group transactions with mixed -activity holding companies  
1. Without prejudice to the provisions of Title V, Chapter 2, Section 3  ⌦ 5 ⌫, this 
Directive,  Member States shall provide that, wher e the parent undertaking of one or more 
credit institutions is a mixe d-activity holding company, the comp etent authorities responsible 
for the supervision of these credit institutions shall exercise general supervision over transactions between the credit institution and the mixed-activity holding company and its 
subsidiaries. 
2. Competent authorities shall require credit in stitutions to have in place adequate risk 
management processes and internal contro l mechanisms, including sound reporting and 
accounting procedures, in order to  identify, measure, monitor a nd control transactions with 
their parent mixed-activity holding company a nd its subsidiaries appropriately. Competent 
authorities shall require the re porting by the credit institution of any significant transaction 
with these entities other than th e one referred to in Article 48
 ⌦ 110 ⌫ . 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 author ity responsible for the supe rvision of the institution 
shall take appropriate measures.  
 
EN 136   EN  
Ð 2000/12/EC Art. 56 (1) to (3) 
(adapted) 
Article 139 
Measures to facilitate supervis ion on a consolidated basis  
1. Member States shall take the necessary steps to ensure that there are no legal 
impediments preventing the ⌦ exchange, as between ⌫ undertakings included within the 
scope of supervision on a consolidated basi s, mixed-activity holding companies and their 
subsidiaries, or subsidiaries of  the kind covered in Article 52(10)  ⌦ 127(3) ⌫, ⌦ of ⌫ 
from exchanging amongst themselves  any information which w ould be relevant for the 
purposes of supervision in accordance with Articles 52 to 55  ⌦ 124 to 138 ⌫ and this 
Article. 
2. Where a parent undertaking and any of its s ubsidiaries that are credit institutions are 
situated in different Member States, the competent authorities of each Member State shall 
communicate to each other all relevant informa tion which may allow or aid the exercise of 
supervision on a consolidated basis. 
Where the competent authorities of the Me mber State in which a parent undertaking 
is situated do not themselves exercise s upervision on a consolidat ed basis pursuant to 
Article  53 ⌦ Articles 125 and 126 ⌫ , they may be invited by the competent 
authorities responsible for exercising such  supervision to ask the parent undertaking 
for any information which would be releva nt for the purposes of supervision on a 
consolidated basis and to transmit it to these authorities.  
3. Member States shall authorise the exchange  between their competent authorities of the 
information referred to in pa ragraph 2, on the understanding that , in the case of financial 
holding companies, financial in stitutions or ancillary banking  services undertakings, the 
collection or possession of information shall not in any way imply that the competent 
authorities are required to play a supervisor y role in relation to those institutions or 
undertakings standing alone. 
Similarly, Member States shall authorise th eir competent authorities to exchange the 
information referred to in Article 55  ⌦ 137 ⌫ on the understanding that the 
collection or possession of information does not in any way imply that the competent 
authorities play a supervisory role in re lation to the mixed-activity holding company 
and those of its subsidiaries which are not cr edit institutions, or to subsidiaries of the 
kind covered in Article 52(10)  ⌦ 127(3) ⌫. 
 
Ð 2000/12/EC Art 56(4) to (6) 
adapted (adapted) 
Article 140 
41. Where a credit institution, financial holdi ng company or a mixed-activity holding 
company controls one or more subsidiaries which are insurance companies or other 
 
EN 137   EN undertakings providing investment services whic h are subject to authorisation, the competent 
authorities and the authoritie s entrusted with the public ta sk of supervising insurance 
undertakings or those other und ertakings providing investment  services shall cooperate 
closely. Without prejudice to thei r respective responsibilities, t hose authorities shall provide 
one another with any information likely to simplify their task and to allow supervision of the 
activity and overall financ ial situation of the undert akings they supervise. 
52. Information received, in the framework of supervision on a consolidated basis, and in 
particular any exchange of information between  competent authorities which is provided for 
in this Directive, shall be subject to the obligation of professional secrecy defined in ⌦ Title 
V, Chapter 1, Section 2 ⌫ Article 30. 
63. The competent authorities responsible for supervision on a consolidated basis shall 
establish lists of the financial holding companies referred to in Article 52(2)  ⌦ 71(2) ⌫. 
Those lists shall be communicated to the compet ent authorities of the other Member States 
and to the Commission. 
 
Ð 2000/12/EC Art 56(7) (adapted) 
Î1 2002/87/EC Art. 29.10 
Article 141 
7.Where, in applying this Directive, the competent authorities of one Member State wish in 
specific cases to verify the information concer ning a credit instituti on, a financial holding 
company, a financial institution, an ancillary banking  services undertaking, a mixed-activity 
holding company, a subsidiary of the kind covered in Article 55  ⌦ 137 ⌫ or a subsidiary of 
the kind covered in  Article 52(10)  ⌦ 127(3) ⌫, situated in another Member State, they 
⌦ shall ⌫ must  ask the competent authorities of that  other Member State to have that 
verification carried out. The authorities whic h receive such a request must, within the 
framework of their competence, act upon it either  by carrying out the verification themselves, 
by allowing the authorities who made the request to carry it out, or by allowing an auditor or 
expert to carry it out. Î1 The competent authority which made the request may, if it so 
wishes, participate in the verification when it does not carry out th e verification itself.  
 
Ð 2000/12/EC Art 56(8) (adapted) 
Article 142 
8.Without prejudice to their provi sions of criminal law, Member States shall ensure that 
penalties or measures aimed at ending observe d breaches or the causes of such breaches may 
be imposed on financial holding companies and mixed-activity holding companies, or their 
effective managers, that infringe laws, regulat ion or administrative provisions enacted to 
implement Articles 52 to 55  ⌦ 124 to 141 ⌫ and this Article. In c ertain cases, such 
measures may require the in tervention of the courts.  
The competent authorities shall c ooperate closely to ensure that ⌦ those ⌫ the 
abovementioned  penalties or measures produce the desire d results, especially  when the central 
administration or main establishment of a fina ncial holding company or  of a mixed-activity 
holding company is not locat ed at its head office. 
 
EN 138   EN  
Ð 2002/87/EC Art. 29(11) 
(adapted) 
Î1 2004/xx/EC Art. 3.10 
Article 143 
Third -country parent undertakings  
1. Where a credit institution, the parent undert aking of which is a credit institution or a 
financial holding company, the head office of which is ⌦ in a third country ⌫ outside the 
Communit y, is not subject to consolid ated supervision under Article  52 ⌦Articles 125 and 
126 ⌫, the competent authorities shall verify whet her the credit institution is subject to 
consolidated supervision by a third-country comp etent authority which is equivalent to that 
governed by the principles laid down in Article 52  ⌦ this Directive ⌫.  
The verification shall be carried out by the competent author ity which would be 
responsible for consolidated s upervision if the fourth sub  paragraph ⌦ 3 ⌫ were to 
apply, at the request of the parent undertak ing or of any of th e regulated entities 
authorised in the Community or on its own initiative. That competent authority shall 
consult the other competent authorities involved. 
2. Î1 The Commission may request the European Banking Committee to  give 
general guidance as to whethe r the consolidated supervisi on arrangements of competent 
authorities in third countries are likely to achieve  the objectives of consolidated supervision as 
defined in this Chapter, in relation to credit  institutions, the parent undertaking of which has 
its head office ⌦ in a third country ⌫ outside the Community . The Committee shall keep 
any such guidance under review and take in to account any changes to the consolidated 
supervision arrangements applied by such competent authorities. 
The competent authority carrying out the verification specified in the ⌦ first ⌫ 
second  subparagraph ⌦ of paragraph 1 ⌫ shall take into account any such 
guidance. For this purpose the competent authority shall consult the Committee before taking a decision. 
3.
 In the absence of such equivalent s upervision, Member States shall apply the 
provisions of Article 52 Ö this Directive Õ to the credit institution by analogy Ö or shall allow 
their competent authorities to apply other a ppropriate supervisory t echniques which achieve 
the objectives of supervision on a conso lidated basis of credit institutions ⌫. 
As an alternative, Member States shall allo w their competent author ities to apply other 
appropriate supervisor y techniques which achie ve the objectives of the supervision on a 
consolidated basis of  credit institutions.  
Those ⌦ supervisory techniques ⌫ methods  must ⌦ , after consultation with the 
other competent authorities involved, ⌫ 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 a financial 
holding company which has its head office in the Community, and apply the 
 
EN 139   EN provisions on consolidated supervision to th e consolidated position of that financial 
holding company.  
The ⌦ supervisory techniques ⌫ methods  must ⌦ be designed to ⌫ achieve the 
objectives of consolidated supe rvision as defined in this Chapter and must be notified 
to the other competent authori ties involved and the Commission. 
 
Ø new 
SECTION 2 
DISCLOSURE BY COMPETENT AUTHORITIES  
Article 144 
1. Competent authorities shall disclose the following information: 
(a) the texts of laws, regula tions, administrative rules a nd general guidance adopted in 
their Member State in the fi eld of prudential regulation; 
(b) the manner of exercise of the options  and discretions avai lable in Community 
legislation; 
(c) the general criteria and methodologies they use in the review and evaluation referred 
to in Article 124; 
(d) without prejudice to the pr ovisions laid down in Title V, Chapter 1, Section 2, 
aggregate statistical data on key aspects of the implementati on of the prudential 
framework in each Member State. 
The disclosures provided for in the first su bparagraph shall be sufficient to enable a 
meaningful comparison of the approaches a dopted by the competent authorities of the 
different Member States. 
CHAPTER  5 
DISCLOSURE  BY CREDIT  INSTITUTIONS 
Article 145 
1. For the purposes of this Directive, cred it institutions shall publicly disclose the 
information laid down in Annex XII, Part 2, su bject to the provisions laid down in Article 
146. 
2. Recognition by the competent authorities under Chapter 2, Section 3, Subsections 2 
and 3 and Article 105 of the instruments and me thodologies referred to in Annex XII, Part 3 
 
EN 140   EN shall be subject to the public disclosure by credit institutions of the information laid down 
therein. 
3. Credit institutions shall adopt a formal  policy to comply with the disclosure 
requirements laid down in paragraphs 1 and 2, and have policies for assessing the 
appropriateness of their disclosures, in cluding their verifi cation and frequency. 
Article 146 
1. Notwithstanding Article 145, competent author ities shall permit credit institutions not 
to make one or more disclosures listed in Anne x XII, Part 2 if the credit institution concerned 
considers that the information provided by such di sclosures is not, in the light of the criterion 
specified in Annex XII, Part 1, paragr aph 1, to be regarded as material. 
2. Notwithstanding Article 145, competent author ities shall permit credit institutions not 
to publish one or more items of information incl uded in the disclosures listed in Annex XII, 
Parts 2 and 3 if the credit institution concerne d considers that those items would include 
information which, in the light of the criteria speci fied in Annex XII, Part 1, paragraphs 2 and 
3, is to be regarded as pr oprietary or confidential. 
3. In the exceptional cases referred to in  paragraph 2, the cred it institution concerned 
shall state in its disclosures the fact that the specific items of information are not disclosed, 
the reason for non-disclosure, and publish more general information about the subject matter 
of the disclosure requirement. 
Article 147 
1. Credit institutions shall publish the di sclosures requ ired under Article 145 on an 
annual basis at a minimum. Disclosures sh all be published as soon as practicable. 
2. Credit institutions shall also determine wh ether more frequent publication than is 
provided for in paragraph 1 is nece ssary in the light of the criter ia set out in A nnex XII, Part 
1, paragraph 4. 
Article 148 
1. Competent authorities shall permit credit institutions to determine the appropriate 
medium, location and means of verification to  comply effectively with the disclosure 
requirements laid down in Article 145. To the degree feasible, all disclosures shall be 
provided in one medium or location. 
2. Equivalent disclosures made by credit inst itutions under accounting,  listing or other 
requirements may be deemed to constitute comp liance with Article 145. If  disclosures are not 
included in the financial statements, credit inst itutions shall indicate where they can be found. 
 
EN 141   EN Article 149 
Notwithstanding Articles 146 to 148, Member Stat es shall empower the competent authorities 
to require credit institutions: 
(a) to make one or more of the disclosures referred to in Annex XII, Parts 2 and 3; 
(b) to publish one or more disclosures mo re frequently than annually, and to set 
deadlines for publication; 
(c) to use specific media and locations for disclosures other than the financial 
statements;  
(d) to use specific means of verification for the disclosures not covered by statutory 
audit. 
 
Ð 2004/xx/EC Art. 3.11 
----- 
 
Ð 2000/12/EC  
TITLE  VI 
POWERS  OF EXECUTION 
 
Ð 2000/12/EC Art. 60 (adapted) 
Ö new 
Article 150 
Technical adaptations  
1. Without prejudice, regarding own funds, to  the report referred to in the second 
subparagraph of  Article 34(3)  Ö proposal that the Commission is to submit pursuant 
to Article 62 , the techn ical adaptations  Ö amendments  in the following areas 
shall be adopted in accordance with the procedure ⌦ referred to ⌫ laid down  in 
⌦ Article 151 ⌫ paragraph  2: 
(a) clarification of the definitions in or der to take account, in the application 
of this Directive, of developments on financial markets; 
(b) clarification of the definitions to ensure uniform application of this 
Directive in the Community ; 
(c) the alignment of terminology on, and the framing of definitions in 
accordance with, subsequent acts on credit institutions and related 
matters; 
 
EN 142   EN the definition of «Zone A» in Article 1(14),  
the definition of «multilateral development banks» in Article 1(19),  
(d) amendments to the list in Article 2 
(e) alteration of the amount of initia l capital prescribed in Article ⌦ 9 ⌫ 5 
to take account of developments in the economic and monetary field; 
(f) expansion of the content of the list referred to in Articles ⌦ 23 and 
24 ⌫ 18 and 19  and set out in Annex I or adaptation of the terminology 
used in that list to take account of  developments on financial markets; 
(g) the areas in which the competent au thorities must exchange information 
as listed in Article ⌦ 42 ⌫ 28; 
(h) Ö amendments to Article 56 to 67 in order to take into account 
developments in accounting standards or requirements set out in 
Community legislation set out  Community legislation;  
(i) amendment of the ⌦ list ⌫ definitions  of the  assets  ⌦ exposure 
classes ⌫ listed  in Article 43  ⌦ Articles 79 and 86 ⌫ in order to take 
account of developments on financial markets; 
(j) Ö the amount specified in Article 79(2 )(c) and in Article 86(4)(a) to take 
into account the effects of inflation;  
(k) the list and classification of off-bala nce-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  Ö in the determination of exposure values 
for the purposes of Title V, Chapter 2, Section 3 ; 
(l) Ö adjustment of the provisions in A nnexes V to XII in order to take 
account of developments on financial ma rkets in particular new financial 
products, or in accounting standards or requirements set out in 
Community legislation;  
⌦ 2. The Commission may adopt the following implementing measures in accordance 
with the procedure in Article 151. ⌫ 
(a) Öspecification of the size of sudden  and unexpected changes in the 
interest rates referred to in Article 124(5);  
(b) a temporary reduction in the minimum ratio  ⌦ level of own funds laid 
down ⌫ prescribed  in Article 47  ⌦ 75 ⌫ the weighting  ⌦ risk 
weights laid down ⌫ prescribed  in Article  43 ⌦ Title V, Chapter 2, 
Section 3 ⌫ in order to take account of specific circumstances; 
(c) Ö without prejudice to the repo rt referred to in Article 119 , 
clarification of exemptions provided for in Article 49(5) to 
(10) ⌦ 111(4), 113, 115 and 116 ⌫; 
 
EN 143   EN (d) Ö specification of the key aspects on wh ich aggregate statistical data are 
to be disclosed under Article 144 (1) (d) ; 
(e) Ö specification of the format, stru cture, contents list and annual 
publication date of the disclosure s provided for in Article 114;  
 
Ð 2004/xx/EC Art. 3.12 (adapted) 
Article 151 
1. The Commission shall be assisted by th e European Banking Committee instituted by 
Commission Decision 2004/10/EC (hereinafter referred to  as "the Committee"), 
composed of representatives of the Member States and chaired by the representative 
of the Commission . 
2. Where reference is ma de to this paragraph  ⌦ Article ⌫, the "comitology" 
procedure laid down in Artic le 5 of Decision 1999/468/EC shall apply, in compliance 
with Article 7 (3) and Article 8  thereof. 
The period provided for in Article 5(6) of Decision 1999/468/EC shall be three 
months. 
 
Ð 2000/12/EC 
TITLE  VII 
TRANSITIONAL  AND  FINAL  PROVISIONS 
CHAPTER  1 
TRANSITIONAL  PROVISIONS 
 
Ð 2000/12/EC Art 60(2) (adapted) 
Article 61  
Transitional provision s regarding Article 36  
Denmark  may allow its mortgage credit instituti ons organised as coope rative societies or 
funds before 1 January 1990 and converted into public limited liability companies to continue 
to include joint and several commitments of members, or of borrowers as referred  to in 
Article 36(1) claims on whom are treated in the same way as such joint and several 
commitments, in their own funds, subject to the following limits:  
 
EN 144   EN (a) the basis for calculation of the part of joint and severa l commitments of borrowers 
shall be the  total of the items referred to in Article 35 (2)(1) and (2), minus those referred to in 
Article 35(2)(9), (10) and (11);  
b) the basis for calculation on 1 January 1991 or, if  converted at a later date, on the date 
on conversion, shall be the maximum basis  for calculation. The basis for calculation may 
never exceed the maximum basis for calculation  
c) the maximum basis for calculation shall, from 1 January 1997, be reduced by half of 
the proceeds from any issue of new cap ital, as defined in Article 35(2)(1) , made after that 
date; and  
(d) the maximum amount of joint and several comm itments 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.  
 
Ð 2000/12/EC 
Article 62  
Transitional provision s regarding Article 43  
1. Until 31 December 2006, the competent authorit ies of the Member States may authorise 
their credi t institutions to apply a 50% risk weighting to loans fully and completely secured to 
their satisfaction by mortga ges on offices or on multi -purpose commercial premises situated 
within the territory of those Member St ates that allow the 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 prope rty must be calculated by two independent 
valuers making independent assessments at the time the loan is made. The loan 
must be based on the lower of the two valuations.  
 
EN 145   EN  The property shall be revalued at least once a year by one valuer. For loans not 
exceeding EUR 1  million and 5% of the own funds of the credit institution, the 
property shall be revalu ed 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 M ember States that have laid down rigorous 
criteria for the assessment of the mo rtgage lending value in statutory or 
regulatory provisions.  
 The mortgage lending value shall means the value of the property as 
determined by a valuer making a prudent assessme nt of the future 
marketability of the propert y by taking into account long -term sustainable 
aspects of the property, the normal and lo cal market conditions , the current use 
and alternative appropriate uses of the property. Specula tive elements shall not 
be taken into account in the assessment  of the mortgage lending value. The 
mortgage lending value shall be documen ted n a transparent and clear manner.  
 At least every three years or if the market falls by more than 10% the mortgage 
lending value and in part icular the underlying 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 betw een a willing seller and an ar m's-length buyer on the date of 
valuation, it being assumed that the property is publicly exposed to the market, that market 
conditions permit orderly disposal and that a nor mal period, having regard to the nature of the 
property, is available for the nego tiation of the sale;  
(ii) the 100% risk weighting applies to the part of  the loan that exceed s the limits set out in 
(i); 
(iii) the property must be either  used or let by the owner.  
The first subparagraph shall not preven t the competent authorities of a Me mber State, which 
applies a higher risk weighti ng in its territory, from allo wing, under the conditions defined 
above, the 50% risk weighting to  apply for this type of lendi ng in the territo ries of those 
Member States that allo w 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 on 21 July 2000 provided that the conditions 
listed in this paragraph are fulfilled. In this case the property shall be v alued according to the 
assessment criteria laid down a bove 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 institut ion 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 a pply a 50% risk weighting to th e part of the loans fully and 
completely secured to their satisfaction by shares in Finnish housin g companies operating in 
accordance with the Finnish Housing Compa ny Act of 1991 or subsequent equivalent 
legislation, provided that the conditions laid down in this paragraph are fulfilled.  
Member States shall inform the Co mmission of the use they make of  this paragraph.  
 
EN 146   EN 2. Member States may apply a 50% risk weighti ng to property leasing tr ansactions concluded 
before 31 December 2006 and concerning assets for business use situated in the country of the 
head office and governed by statutory provisions where by the lessor retains full ownership of 
the rented asset until the tenant exercises his option to purchase. Member States shall inform 
the Commission of the use they make of this paragraph.  
3. Article 43(3) shall not affect the competent authorities' recog nition 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, b efore 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  
Transitional provision s regarding Article 47  
1. A credit institution, the minimum ratio of wh ich has not reached the 8% prescribed in 
Article 47(1), by 1 January 1991, must gradua lly approach that level by successi ve 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 authorities should be apprised of the 
reasons for it.  
 
EN 147   EN  
Ð 2000/12/EC, Art. 62 (2) and (3) 
(adapted) 
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 Article 22(4) of Directive 85/611/EEC and maintain if for 
credit institutions when and if they consider it nec essary, to avoid grave disturbances in the 
operation of their markets. Such excepti ons shall be reported to the Commission.  
3. For not more than seven years after 1 Janu ary 1993, Article 47(1) sh all not apply to the 
Agricultural Bank of Greece. However, th e latter must approach the level prescribed in 
Article 47(1) by successive stages according to the method described in paragraph 1 of this 
Article.  
 
Ð 2000/12/EC (adapted) 
Î1 2004/xx/EC Art. 3.13 
Article 64  
Transitional provisio ns regarding Article 49  
1. If, on 5 February 1993, a credit institution had already incurred an exposure or exposures 
exceeding either the large exposure limit or the aggregate large exposure limit laid down in 
Article 49, the competent authorities shall r equire the credit institution concerned to take steps 
to have that exposure or thos e exposures brought within the li mits laid down in Article 49.  
2. The process of having such an exposure or expo sures brought within authorised limits shall 
be devised, adop ted, implemented and completed within the period which the competent 
authorities consider cons istent with the principle of sound ad ministration and fair competition. 
The competent authorities shall inform the Commission and the  Î1 European Ba nking 
Committee   of the schedule for the general process adopted.  
3. A credit institution may not take any measure which would cause the exposures referred to 
in paragraph 1 to exceed their level on 5 February 1993  
4. The period applicable u nder paragraph 2 shall expire no later than 31 December 2001. 
Exposures with a longer maturity, for whic h the lending institution is bound to observe the 
contractual terms, may be c ontinued until their maturity.  
 
Ð 2000/12/EC Art. 64 (5) to (7) 
(new) 
Î1 2004/xx/EC Art. 3.13 
5. Until 31 December 1998, Member States may incr ease 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 exis ting at the end of this period 
within the limit laid down in Arti cle 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 ex tend the time limits laid down in 
 
EN 148   EN paragraph 5 by five years. Member  States that avail themselves  of the option provided for in 
this paragraph shall take steps to prevent distortions of competition and shall inform the 
Comm ission and the  Î1 European Banking 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.  
 
Ð 2000/12/EC Art. 64 (8) 
(adapted) 
8. Until 31 December 2001 Member States may substi tute a frequency of at  least twice a year 
for the frequency of notification of large exposures referred to in the second indent of Article 
48(2).  
 
Ð 2000/12/EC Art. 64 (9) 
9. Member States may fully or partially exempt from the application of Article 49(1), (2) and 
(3) exposures incurred by a credit institution c onsisting of mortgage loans as defined in 
Article 62(1) concluded before 1 January 2002 as well as prope rty leasing transactions as 
defined in Article 62(2) conc luded before 1 January 2002, in both cases up to 50% of the 
value of the property concerned.  
The same treatment applies to loans secured, to  the satisfaction of the competent authorities, 
by shares i n Finnish residential housing companies, operating in accordance with the Finnish 
Housing Company Act of 1991 or s ubsequent equivalent legisla tion which are similar to the 
mortgage loans referred to  in the first subparagraph.  
 
Ð 2000/12/EC Art. 65 (adapted) 
Article 65  
Transitional provisions regarding Article 51  
Credit institutions which, on 1 January 1993, exceeded  the limits laid down in Articles 51(1) 
and (2) shall have until 1 January 2003 to comply with them.  
 
Ø new 
Article 152 
1. Credit institutions calculating risk-wei ghted exposure amounts in accordance with 
Articles 84 to 89 or using the Advanced Measur ement Approaches as specified in Article 105 
for the calculation of their capital requirements for operational risk shall during the first, 
second and third twelve-month periods after the date specified in Article 157 provide own 
funds which are at all times more than or equa l to the amounts indicated in paragraphs 2, 3 
and 4. 
 
EN 149   EN 2. For the first twelve-month period referred to  in paragraph 1, the amount of own funds 
shall be 95% of the total minimum amount of ow n funds that would be required to be held 
during that period by the credit institution un der Article 4 of Directive 93/6/EEC as that 
Directive and Directive 2000/12/EC stood prior to the date specifi ed in Article 157 of this 
Directive. 
3. For the second twelve-month period referre d to in paragraph 1, the amount of own 
funds shall be 90% of the total minimum amount of own funds that woul d be required to be 
held during that period by the cr edit institution under Ar ticle 4 of Directive 93/6/EEC as that 
Directive and Directive 2000/12/EC stood prior to  the date specified in Article 157 this 
Directive. 
4. For the third twelve-month period referred to in paragraph 1, the amount of own funds 
shall be 80% of the total minimum amount of ow n funds that would be required to be held 
during that period by the credit institution un der Article 4 of Directive 93/6/EEC as that 
Directive and Directive 2000/12/EC stood prior to the date specifi ed in Article 157 of this 
Directive. 
5. Compliance with the requirements of paragr aphs 1 to 4 shall be on the basis of 
amounts of own funds fully adjusted to reflect  differences in the calculation of own funds 
under Directive 2000/12/EC and Directive 93/6/EEC  as those Directives stood prior to the 
date specified in Article 157 of this Directiv e and the calculation of  own funds under this 
Directive deriving from the sepa rate treatments of expected loss and unexpected loss under 
Articles 84 to 89 of this Directive.- 
6. For the purposes of paragraphs 1 to 5 of this Article, Articles 68 to 73 shall apply. 
7. Until 31 December 2007 credit institutions may treat the articles constituting the 
Standardised Approach set out in Title V, Chapter 2, Section 3, Subsection 1 as being 
replaced by Articles 42 to 46 of Di rective 2000/12/EC as those arti cles stood prior to the date 
referred to in Article 157. 
8. Where the discretion referred to in paragra ph 7 is exercised the following shall apply 
concerning the provisions of Directive 2000/12/EC: 
(a) the provisions of that Directive referr ed to in Articles 42 to 46 shall apply 
as they stood prior to the date  referred to in Article 157; 
(b) ‘risk-adjusted value’ as referred to in Article 42(1) of that Directive shall 
mean ‘risk-weighted exposure amount’; 
(c) the figures produced by Article 42( 2) of that Directive shall be 
considered risk-weighted exposure amounts; 
(d) ‘credit derivatives’ shall be included in the list of ‘Full risk’ items in 
Annex II of that Directive; 
(e) the treatment set out in Article 43 (3) of that Directive shall apply to 
derivative instruments liste d in Annex IV of that Directive whether on- or 
off-balance sheet and the figures produ ced by the treatment set out in that 
Annex shall be considered ri sk-weighted exposure amounts; 
 
EN 150   EN 9. Where the discretion referred to in paragra ph 7 is exercised the following shall apply 
in relation to the treatment of exposures fo r which the Standardised  Approach is used: 
(a) Title V, Chapter 2, Section 3, Subsection 3 relating to the recognition of 
credit risk mitigation shall not apply; 
(b) Title V, Chapter 2, Section 3, Subs ection 4 concerning the treatment of 
securitisation may be disapp lied by competent authorities; 
(b) The following provisions of A nnex XII setting out disclosure 
requirements for credit institutions shall not apply: 
(i) Part 2, paragraph 4(b), 
(ii) Part 2, paragraph 6, 
(iii) Part 2, paragraph 10. 
10. Where the discretion referred to in paragra ph 7 is exercised the capital requirement for 
operational risk under Article 75(e)  shall be reduced by the percen tage representing the ratio 
of the value of the credit in stitution’s exposures for whic h risk-weighted exposure amounts 
are calculated in accordance with the discretion re ferred to in paragraph 7 to the total value of 
its exposures. 
11. Where a credit institution calculates risk-weighted expo sure amounts for all of its 
exposures in accordance with the discretion re ferred to in paragraph 7, Articles 48 to 50 of 
Directive 2000/12/EC relating to large exposures may apply as they sto od prior to the date 
referred to in Article 157;  
12. Where the discretion referred to in paragra ph 7 is exercised, references to Articles 46 
to 52 of this Directive shall be read as references to Articles 42 to 46 of Directive 
2000/12/EC as those articles stood prior to the date referred to in Article 157. 
Article 153 
In the calculation of risk-w eighted exposure amounts for expos ures arising from property 
leasing transactions concerning o ffices or other commercial premises situated in their territory 
and meeting the criteria set out in Annex VI, Part 1, paragraph 51, the competent authorities 
may, until 31 December 2012 allow a 50% risk weighting to be applied without the 
application of Annex VI, Pa rt 1, paragraphs 55 and 56. 
Until 31 December 2010, competent authorities ma y, for the purpose of defining the secured 
portion of a past due loan for the purposes of  Annex VI, recognise collateral other than 
eligible collater al as set out under Articles 90 to 93. 
Article 154 
1. The requirements in Article 84(3 ) and (4) shall apply from the 31 December 2009. 
 
EN 151   EN 2. Until 31 December 2010 the exposure weighted  average LGD for al l retail exposures 
secured by residential properties and not benefiting from guarantees from central 
governments shall not be lower than 10%. 
3. Until 31 December 2017, the competent authorities of the Member States may 
exempt from the IRB treatment certain e quity exposures held at 31 December 2007.  
The exempted position shall be measured as th e number of shares as of that date and 
any additional arising directly  as a result of owning thos e holdings, as long as they 
do not increase the proportional share of  ownership in a portfolio company.  
If an acquisition increases the proportional share of ownership in a specific holding 
the exceeding part of the holding shall not be subject to the exemption. Nor shall the 
exemption apply to holdings that were orig inally subject to the exemption, but have 
been sold and then bought back.  
Equity exposures covered by this transitional provision shall be subject to the capital 
requirements calculated in accordance with Title V, Chapter 2, Section 3, 
Subsection 1. 
4. Until 31 December 2011, for corporate exposures the competent authorities of each 
Member State may set the number of days past  due that all credit institutions in its 
jurisdiction shall abide by under the definition of default set out in Annex VII, Part 4, 
paragraph 44 for exposures to such counterpa rts situated within this Member State. 
The specific number shall fall within 90-  up to a figure of 180 days if local 
conditions make it appropriate. For exposures  to such counterparts situated in the 
territories of other Member States, the co mpetent authorities shall set a number of 
days past due which is not higher than th e number set by the competent authority of 
the respective Member State. 
5. In respect of the observation period referre d to in Annex VII, Part 4, paragraph 66, 
Member States may allow credit institutions which are not permitted to use own 
estimates of LGDs or conversion factors to have, when they implement the IRB 
Approach, but at the latest at the 31 D ecember 2007, relevant data covering a period 
of two years. Until 31 December 2010 the peri od to be covered shall increase by one 
year each year. 
6. In respect of the observation period referre d to in Annex VII, Part 4, paragraphs 71, 
85 and 94 Member States may allow credit in stitutions to have, wh en they implement 
the IRB Approach, but at the latest at the 31 December 2007, relevant data covering 
a period of two years. Until 31 December 2010 the period to be covered shall 
increase by one year each year. 
Article 155 
Until 31 December 2012, for credit institutions the relevant indicator for the trading and sales 
business line of which represents at  least 50% of the total of the relevant indicators for all of 
its business lines accordance with Annex X, Part  2, paragraphs 1 to 8, Member States may 
apply a percentage of 15% to the business line “trading and sales”. 
 
EN 152   EN  
Ð 2000/12/EC 
CHAPTER  2 
FINAL  PROVISIONS 
 
Ø new 
Article 156 
The Commission, in cooperation with Member  States, and taking into account the 
contribution of the European Central Bank, shal l periodically monitor whether this Directive 
taken as a whole, together w ith Directive [93/6/EEC], has si gnificant effects on the economic 
cycle and, in the light of that examination, sh all consider whether any remedial measures are 
justified. 
Based on that analysis and taking into account th e contribution of the European Central Bank, 
the Commission shall draw up a bi ennial report and submit it to the European Parliament and 
to the Council, together with  any appropriate proposals. 
Article 157 
1. Member States shall adopt and publish, by 31 December 2006 at the latest, the laws, 
regulations and administrative provisions neces sary to comply with Articles 4, 22, 57, 61, 62, 
63, 64, 66, 68 to 106, 108, 110 to  115, 117 to 119, 123 to 1 27, 129 to 132, 133, 136, 144 to 
149, 152 to 155 and the Annexes II, III, V to XII.  They shall forthwith communicate to the 
Commission the text of those provisions and a correlation table between those provisions and 
this Directive.  
Notwithstanding paragraph 2, they shall a pply those provisions from 31 December 
2006.  
When Member States adopt those provisions,  they shall contain a reference to this 
Directive or be accompanied by such a reference on the occasion of their official 
publication. They shall also include a statement that references in existing laws, 
regulations and administrative provisions to the directive[s] repealed by this 
Directive shall be construed as references to this Directive. Member States shall 
determine how such reference is to be made and how that statement is to be 
formulated.  
Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 
2. Member States shall apply, by 31 December 2007 at the latest, and not earlier, the 
laws regulations and administrative provisions necessary to comply with Articles 87(9) and 
105.  
 
EN 153   EN  
Ð 2000/12/EC Art. 66 (adapted) 
Article 66  
Commission information  
Member States shall communicate to the Commissi on the text of the ma in laws, regulations 
and administrative  provisions ⌦ of national law ⌫ which they adopt in the field covered by 
this Directive. 
 
Ð 2000/12/EC Art 67 (adapted) 
Article 158 
1. Directives 73/183/EEC, 77/780/EEC, 89/ 299/EEC, 89/646/EEC, 89/647/EEC, 92/30/EEC 
and 92/121/EEC,  Directive 2000/12/EC  as amended by the Directives set out in Annex V  
⌦ XV ⌫ , Part A, are  ⌦ is ⌫ hereby repealed without prejudi ce to the obligations of the 
Member States concerning the deadlines for transposition of the said Directives listed in Annex V
 ⌦ XV ⌫ , Part B. 
2. References to the repealed Directives shall be  construed as references to this Directive and 
should be read in accordance with the correlation table in Annex VI  ⌦ XVI ⌫. 
 
Ð 2000/12/EC Art 68 (adapted) 
Article 159 
Implementation  
This Directive shall enter into force on the 20th day following its publication in the Official 
Journal of the ⌦ Union  ⌫ European Communities . 
 
Ð 2000/12/EC Art. 69 (adapted) 
Article 160 
Addressees  
This Directive is addressed to the Member States. 
Done at Brussels, […]. 
 For the European Parliament 
 The President   
 
EN 154   EN  For the Council 
 The President   
 
EN 155   EN  
Ð 2000/12/EC 
ANNEX I  
LIST OF ACTIVITIES SUBJEC T TO MUTUAL RECOGNITION 
1. Acceptance of deposits and other repayable funds 
2. Lending including,  inter alia:  consumer credit, mortgage cred it, factoring, with or without 
recourse, financing of commercial transactions (including forfeiting) .33 
3. Financial leasing 4. Money transmission services 5. Issuing and administering means of paymen t (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 pr ovision of services re lated 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 securities 13. Credit reference services 14. Safe custody services 
                                                
 
33 Including, inter alia: consumer credit, mortgage credit, factoring, with or without recourse, financing of 
commercial transactions (including forfeiting).  
 
EN 156   EN  
Ð 2004/39/EC Art. 68 (adapted) 
The services and activities provided for in  Section A and B of annex I of Directive 
2004/39/EC of the Europea n Parliament and of the Council  of 21 April 2004 on markets in 
financial instruments34 when referring to the financial instruments provided for in Section C 
of Annex I of that Directive are subject to mu tual recognition according to this Directive.  
 
Ð 2000/12/EC 
ANNEX II  
 
Ð 2000/12/EC 
Ö new 
CLASSIFICATION OF OFF-BALANCE-SHEET ITEMS 
Full risk: 
– Guarantees having the characte r of credit substitutes, 
– Ö Credit derivatives  
– Acceptances, 
– Endorsements on bills not bearing the name of another credit institution, 
– Transactions with recourse, 
– Irrevocable standby letters of credit havi ng the character of credit substitutes, 
– Assets purchased under outright forward purchase agreements, 
– Forward forward deposits, 
– The unpaid portion of partly-p aid shares and securities, 
– Ö Asset sale and repurchase agreements as defined in Article 12(3) and (5) of 
Directive 86/635/EEC,   
– Other items also carrying full risk. 
Medium risk: – Documentary credits issued and confirmed (see also medium/low risk), 
– Warranties and indemnities (including tende r, performance, customs and tax bonds) 
and guarantees not having the char acter of credit substitutes, 
                                                
 
34 OJ n° L 145 of 30.04.2004, p. 1  
 
EN 157   EN – Asset sale and repurchase agreements as defined in Article 12(3) and (5) of Directive 
86/635/EEC,  
– Irrevocable standby letters of credit not ha ving the character of credit substitutes, 
– Undrawn credit facilities (agr eements to lend, purchase se curities, provide guarantees 
or acceptance faciliti es) with an original matur ity of more than one year, 
– Note issuance facilities (NIFs) and re volving underwriting facilities (RUFs), 
– Other items also carrying medium risk Ö and as communicated to the 
Commission  . 
Medium/low risk: – Documentary credits in which underlying ship ment acts as collateral and other self-
liquidating transactions, 
– Ö Undrawn credit facilities (agreement s to lend, purchase securities, provide 
guarantees or acceptance facilities) with an original maturity of up to and including 
one year which may not be cancelled unconditionally at any time without notice or 
that do not effectively provide  for automatic cancellation due to deterioration in a 
borrower’s creditworthiness,  
– Other items also carrying medium/low risk Ö and as communicated to the 
Commission  . 
Low risk: 
– Undrawn credit facilities (agr eements to lend, purchase se curities, provide guarantees 
or acceptance facilities) w ith an original maturity of up to and inclu ding one year or 
which may be cancelled unconditionally at any time without notice, Ö Undrawn 
credit facilities (agreements to lend, pur chase securities, pr ovide guarantees or 
acceptance facilities) which may be cancelle d unconditionally at any time without 
notice, or that do effectively provide for automatic cancellation due to deterioration 
in a borrower’s creditworthiness. Reta il credit lines may be considered as 
unconditionally cancellable if the terms perm it the credit institution to cancel them to 
the full extent allowable under consumer  protection and related legislation;  
– Other items also carrying low risk Ö and as communicated to the Commission  . 
The Member States undertake to inform the Comm ission as soon as they have agreed to 
include a new off -balance -sheet item in any of the last in dents under each category of risk. 
Such items will be definitively classified at Community level once the procedure laid down in 
Article 59 has been completed.  
 
Ð 2000/12/EC 
ANNEX III  
 
EN 158   EN  
Ð 2000/12/EC (adapted) 
Ö new 
THE TREATMENT OF OFF -BALANCE -SHEET ITEMS  Ö DERIVATIVE 
INSTRUMENTS  
1. CHOICE  OF THE  METHOD 
To measure  the credit risks associated w ith Ö determine the exposure value of  the 
contracts listed in point s 1 and 2 of Annex IV, credit instit utions may choose, subject to the 
consent of the competent authorities, one of the methods set out ⌦ in this Annex ⌫ below . 
Credit institutions which have to comply with Article 6(1)  ⌦ 33(1) and (2) ⌫ of Directive 
93/6/EEC35 must use method 1 set out ⌦ in this Annex ⌫ below . To measure the credi t 
risks associated with  Ö determine the exposure value for  the contracts listed in point 3 of 
Annex IV all credit institutions must use method 1 set out ⌦ in this Annex ⌫ below . 
 
Ø new 
Contracts traded on recognised exchanges, and foreign-exchange contr acts (except contracts 
concerning gold) with an original  maturity of 14 calendar days or less are exempt from the 
application of the methods set out  in this Annex and shall be at tributed an exposure value of 
zero. 
Competent authorities may exempt  from the application of the methods set out in this Annex 
and attribute an exposure va lue of zero to over-t he-counter (OTC) cont racts cleared by a 
clearing house where the latter acts as the legal counterparty and all participants fully 
collateralise on a daily basis the exposure they present to  the clearing house, thereby 
providing a protection covering bo th the current exposure and th e potential future exposure. 
The posted collateral must: 
(a) qualify for a 0% risk weight, or 
(b) be cash deposits placed w ith the lending institution, or 
(c) be certificates of deposit or simila r instruments issued by and lodged with 
the latter. 
The competent authorities must be satisfied that  the risk of a build-up of the clearing house's 
exposures beyond the market value of  posted collateral is eliminated. 
                                                 
35 Council Directive 93/6/EEC of 15 March 1993 on the capi tal adequacy of investment firms and credit 
institutions (OJ L 141, 11.6.1993, p. 1). Directive amended by Directive 98/33/EC (OJ L 204, 
21.7.1998, p. 29).  
 
EN 159   EN  
Ð 2000/12/EC (adapted) 
2. METHODS 
Method 1: the «mark to market» approach Step (a): by attaching current market values to contracts (mark to market), the current 
replacement cost of all contracts with positive values is obtained. 
Step (b): to obtain a figure for potential future credit exposure
36, ⌦ except in the case 
of single-currency «floating/floating» intere st rate swaps in which only the current 
replacement cost will be calculated, ⌫ the notional principal amounts or underlying values 
are multiplied by the following  percentages ⌦ in Table 1 ⌫ : 
TABLE 13738 
Residual 
maturity39 Interest-rate 
contracts Contracts 
concerning 
foreign-
exchange 
rates and goldContracts 
concerning 
equities Contracts 
concerning 
precious 
metals except 
gold Contracts 
concerning 
commodities 
other than 
precious 
metals 
One year or less 0% 1% 6% 7% 10% 
Over one 
year, less than five years 0,5% 5% 8% 7% 12% 
Over five 
years 1,5% 7,5% 10% 8% 15% 
 
For the purpose of calculating the potential future exposure in accordance with step 
(b) the competent authorities may allow cr edit institutions until 31 December 2006 to 
apply the following percentages instead of those prescribed  in Table 1 provided that 
                                                 
36 Except in the case of single -currency «floating/floating» interest rate swaps in which only the cu rrent 
replacement cost will be calculated.  
37 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. 
38 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. 
39 For contracts that are structured to settle outstanding exposure following specified payment dates and 
where the terms are reset such that the market value of the contract is  zero on these specified dates, the 
residual maturity would be equal to the time until the next reset date. In the case of interest-rate contracts that meet these criteria and have a remaini ng maturity of over one year, the percentage shall 
be no lower than 0,5%. 
 
EN 160   EN 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 maturity Precious metals 
(except gold) Base 
metals Agricultural 
products (softs) Other, including 
energy products 
One year or less 2% 2,5% 3% 4% 
Over one year, less than five years 5% 4% 5% 6% 
Over five years 7,5% 8% 9% 10% 
 
Ð 2000/12/EC (adapted) 
Step (c): the sum of current replacement co st and potential future credit exposure is 
multiplied by the risk weightings allocated to the relevant counter parties in Article 43  ⌦ is 
the exposure value. ⌫ 
 
Ð 2000/12/EC (adapted) 
Method 2: the «original exposure» approach 
Step (a): the notional principal amount of each instrument is multiplied by the 
percentages given ⌦ in Table 2 ⌫ below : 
TABLE 2 
Original maturity40 Interest-rate 
contracts Contracts 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% 
 
Ð 2000/12/EC 
Ö new 
Step (b): the original exposure thus obtained is multiplied by the risk weightings 
allocated to the relevant counterparties in Article 43 Öshall be the exposure value  
                                                 
40 In the case of interest-rate contracts, credit institu tions may, subject to the consent of their competent 
authorities, choose either original or residual maturity. 
 
EN 161   EN For methods 1 and 2 the competent authorities must ensure that the notional amount to be 
taken into account is an appropria te yardstick for the ri sk inherent in the contract. Where, for 
instance, the contract provides for a multiplica tion of cash flows, the notional amount must be 
adjusted in order to take into  account the effects of the multipli cation on the risk structure of 
that contract. 
 
Ð 2000/12/EC (adapted) 
3. CONTRACTUAL  NETTING  (CONTRACTS  FOR  NOVATION  AND  OTHER  
NETTING  AGREEMENTS) 
(a) Types of netting that competent authorities may recognise 
For the purpose of this ⌦ section ⌫ point 3  «counterparty» means any entity (including 
natural persons) that has the power to c onclude a contractual netting agreement. 
The competent authorities may recognise as ri sk-reducing the following types of contractual 
netting: 
(i) bilateral contracts for novation between a credit institution and its counterparty under 
which mutual claims and obligations are 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 cont ract extinguishing former contracts; 
(ii) other bilateral agreements between a credit institution and its counterparty. 
(b) Conditions for recognition 
The competent authorities may recognise contra ctual netting as risk -reducing only under the 
following conditions: 
(i) a credit institution must have a contract ual netting agreement with its counterparty 
which creates a single legal obligation, coveri ng all included transactions, such that, 
in the event of a counterparty's failure to perform owing to default, bankruptcy, 
liquidation or any other similar circumst ance, the credit institution would have a 
claim to receive or an obligation to pay onl y the net sum of the positive and negative 
mark-to-market values of in cluded individual transactions; 
(ii) a credit institution must have made ava ilable to the competent authorities written and 
reasoned legal opinions to the effect that, in the event of a legal challenge, the relevant courts and administrative authori ties would, in the cases described under (i), 
find that the credit institution's claims and obligations would be limited to the net sum, as described in (i), under: 
– the law of the jurisdiction in which the counterparty is incorporated and, if a 
foreign branch of an undertaking is involved, also under the law of the 
jurisdiction in which the branch is located; 
– the law that governs the individu al transactions included; ,
 and 
 
EN 162   EN – the law that governs any contract or agreement necessary to effect the 
contractual netting; 
(iii) a credit institution must have procedures in place to ensure that the legal validity of 
its contractual netting is kept under review  in the light of po ssible changes in the 
relevant laws. 
The competent authorities must be satisfied, if  necessary after consulting the other competent 
authorities concerned, that the c ontractual 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 reco gnised as risk-reducing for either of the 
counterparties. 
The competent authorities may accept reason ed legal opinions drawn up by types of 
contractual netting. 
No contract containing a provision which pe rmits a non-defaulting counterparty 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 contra cts 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 in clusion in another netting agreement can result in an increase 
or decrease of the capital requirements, co mpetent authorities must oblige their credit 
institution to use a c onsistent treatment. 
(c) Effects of recognition 
(i) Contracts for novation The single net amounts fixed by contracts for novation, rather  than the gross amounts 
involved, may be weighted. Thus, in  the application of method 1, in 
– step (a): the current re placement cost, and in 
– step (b): the notional principa l 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 taki ng account of the contract for 
novation; the percentages of  Table 2 must apply. 
(ii) Other netting agreements 
In application of method 1: 
– in step (a) the current replacement cost  for the contracts in cluded in a netting 
agreement may be obtained by taking account of the actual hypothetical net 
replacement cost which results from the ag reement; in the case where netting leads to 
a net obligation for the credit institution calculating the net replacement cost, the 
current replacement cost is calculated as «0», 
 
EN 163   EN – in step (b) the figure for potential future cr edit exposure for all contracts included in 
a netting agreement may be reduced acco rding to the following equation: PCE red = 
0.4 * PCE gross + 0.6 * NGR * PCE gross 
where: 
— PCE red = the reduced figure for potential future credit exposure for all 
contracts with a given counterpa rty included in a legally valid 
bilateral netting agreement 
— PCE gross = the sum of the figures for potential future credit exposure for all 
contracts with a given counterpart y which are included in a legally 
valid bilateral netting agreement and are calculated by multiplying their notional principal amounts by th e percentages set out in Table 1
— NGR = «net-to-gross ratio»: at the di scretion of the competent authorities 
either: 
(i) separate calculation: the quot ient of the ne t replacement 
cost for all contracts included in a legally valid bilateral 
netting agreement with a gi ven counterparty (numerator) 
and the gross replacement cost for all contracts included in 
a legally valid bilateral ne tting agreement with that 
counterparty (denominator), or 
(ii) aggregate calculation: the quotient of the sum of the net 
replacement cost calculated on a bilateral basis for all counterparties taking into acc ount the contracts included in 
legally valid netting agreemen ts (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 contr acts included in the netting agreemen t may be taken into account as a 
single contract with a notional principal equiva lent to the net receipts. Perfectly matching 
contracts are forward foreign-exchange contra cts or similar contracts in which a notional 
principal is equivalent to cash flows if the cas h 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 w ith a notional principal equiva lent to the net receipts, 
the notional principal amounts are multiplie d by the percentages given in Table 2, 
– for all other contracts included in a netti ng agreement, the percentages applicable 
may be reduced as indicated in Table 3:  
 
EN 164   EN TABLE 3 
Original maturity41 Interest-rate 
contracts Foreign-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% 
 
Ð 2000/12/EC 
ANNEX IV  
 
Ð 2000/12/EC 
Ö new 
TYPES OF OFF -BALANCE -SHEET ITEMS  Ö DERIVATIVES  
 
Ð 2000/12/EC (adapted) 
1. Interest-rate contracts: 
(a) single-currency interest rate swaps; (b) basis-swaps; (c) forward rate agreements; (d) interest-rate futures; (e) interest-rate options purchased; (f) other contracts of similar nature. 2. Foreign-exchange contracts and contracts concerning gold: 
(a) cross-currency interest-rate swaps; (b) forward foreign-exchange contracts; (c) currency futures; (d) currency options purchased; 
                                                
 
41 In the case of interest-rate contracts, credit institu tions may, subject to the consent of their competent 
authorities, choose either original or residual maturity. 
 
EN 165   EN (e) other contracts of a similar nature; 
(f) contracts concerning gold of a nature sim ilar to (a) to (e). 
3. Contracts of a nature similar to  those in points 1(a) to (e) and 2(a) to (d) concerning other 
reference items or indices concerning: 
(a) equities; (b) precious metals except gold; (c) commodities other than precious metals; (d) other contracts of a similar nature. Step (b):
 to obtain a figure for potential future 
credit exposure42, the notional principal amounts or underlying values are multiplied by the 
following percentages:  
 
Ï 
                                                 
42 Except in the case of single -currency «floating/floating» interest rate swaps in which only t he current 
replacement cost will be calculated.  
 
EN 166   EN  
Ø new 
ANNEX V TO XII  
[OMISSIS] 
 
Ø new 
ANNEX XIII  
PART  A 
REPEALED DIRECTIVES TOGETH ER WITH THEIR SUCCESSIVE 
AMENDMENTS 
(referred to in Article 158) 
Directive 2000/12/EC of the European Parl iament and of the Council of 20 March 2000 
relating to the taking up a nd pursuit of the business of credit institutions 
Directive 2000/28/EC of the European Parlia ment and of the Council of 18 September 2000 
amending Directive 2000/12/EC re lating to the taking up and pursuit of th e business of credit 
institutions 
Directive 2002/87/EC of the Eu ropean Parliament and of th e Council of 16 December 2002 
on the supplementary supervision of credit  institutions, insurance undertakings and 
investment firms in a financial conglomerat e and amending Council Di rectives 73/239/EEC, 
79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/ 22/EEC, and Directives 98/78/EC and 
2000/12/EC of the European Parliament and of the Council, 
Only Art. 29.1(a)(b), Art. 29.2,, Art. 29.4(a )(b), Art. 29.5, Art. 29.6, Art. 29.7 (a) (b), 
Art. 29.8, Art. 29.9, Art. 29.10, Art. 29.11 
Directive 2004/39/EC of the European Par liament and of the Council of 21 April 2004 on 
markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and 
Directive 2000/12/EC of the Eur opean Parliament and of the Council and repealing Council 
Directive 93/22/EEC 
Only Art. 68 
Commission Directive 2004/69/EC of 27 Apr il 2004 amending Directive 2000/12/EC of the 
European Parliament and of the Council as rega rds the definition of "multilateral development 
banks" (Text with EEA relevance) 
Directive 2004/39/EC of the European Par liament and of the Council of 21 April 2004 on 
amending Council Directives 73/239/EEC , 85/611/EEC, 91/675/EEC, 92/49/EEC, 93/6/EEC 
and 94/19/EC and Directives 98/78/ EC, 2000/12/EC, 2001/34/EC, 2002/83/EC and 
2002/87/EC, in order to establish a new financia l services committee organisational structure. 
Only Article 3 
 
EN 167   EN NON-REPEALED MODIFICATIONS 
Act of accession 2003 
PART  B 
DEADLINES FOR IMPLEMENTATION 
(referred to in Article 158) 
Directive  Deadline for implementation 
Directive 2000/12/EC  ----- 
Directive 2000/28/EC  27.4.2002 
Directive 2002/87/EC,   11.8.2004 
Directive 2004/39/EC  Not yet available 
Directive 2004/69/EC  30.6.2004 
Directive 2004/xx/EC  Not yet available 
 
EN 168   EN ANΝΕΧ  XIV  
CORRELATION TABLE 
This Directive Directive 
2000/12/EC Directive 
2000/28/EC Directive 
2001/87/EC Directive 
2004/69/EC Directive 
2004/xx/EC 
Article 1 Article 2(1) and 
(2)     
Article 2(1) Article 2(3) 
Act of 
Accession     
Article 2(2) Article 2(4)     
Article 3 Article 2(5) and 
(6)     
Article 3 (1) final 
sentence     Article 3.2 
Article 4.1 (1) Article 1(1)     
Article 4.1 (2) to 
(5)  Article 1(2) to 
(5)    
Article 4.1 (7) to 
(9)  Article 1(6) to 
(8)    
Article 4 .1 (10)   Article 29.1 (a)   
Article 4.1 (11) to 
(14) Article 1 (10), 
(12) and (13)     
Article 4.1 (21) 
and (22)   Article 29.1 (b)   
Article 4.1 (23) Article 1 (23)     
Article 4.1 (45 to 
(47) Article 1 (25 to 
(27)     
Article 4 .2 Article 1(1) 
second sub-
paragraph     
Article 5 Article 3     
Article 6 Article 4     
Article 7 Article 8     
Article 8 Article 9     
Article 9 (1) Article 5(1) and 
1(11)     
Article 9 (2) Article 5(2)     
 
EN 169   EN Article 10 Article 5 (3) to 
(7)     
Article 11 Article 6     
Article 12 Article 7     
Article 13 Article 10     
Article 14 Article 11     
Article 15 (1) Article 12     
Article 15 (2) and 
(3)   Article 29.2   
Article 16 Article 13     
Article 17 Article 14     
Article 18 Article 15     
Article 19 (1) Article 16 (1)     
Article 19 (2)   Article 29.3   
Article 20 Article 16(3)     
Article 21 Article 16 (4) to 
(6)     
Article 22 Article 17     
Article 23 Article 18     
Article 24 (1) Article 19 
paragraphs (1) 
to (3)      
Article 24 (2) Article 19 
paragraph (6)      
Article 24 (3)  Article 19 
paragraph (4)     
Article 25 (1) to 
(3) Article 20 (1) to 
(3) 1 and 2 sub-
paragraph     
Article 25 (3) Article 19 
paragraph (5)     
Article 25 (4) Article 20 (3) 3 
sub-paragraph     
Article 26 Article 20 (4) to 
(7)     
Article 27 Article 1 (3) 
final clause     
Article 28 Article 21     
 
EN 170   EN Article 29 Article 22     
Article 30 Article 22 (2) to 
(4)     
Article 31 Article 22 (5)     
Article 32 Article 22 (6)     
Article 33 Article 22 (7)     
Article 34 Article 22 (8)     
Article 35 Article 22 (9)     
Article 36 Article 22 (10)     
Article 37 Article 22 (11)     
Article 38 Article 24     
Article 39 (1) and 
(2) Article 25     
Article 39 (2)     Article 3.8 
Article 40 Article 26     
Article 41 Article 27     
Article 42 Article 28     
Article 43 Article 29     
Article 44 Article 30(1) to 
(3)     
Article 45 Article 30(4)     
Article 46 Article 30(3)     
Article 47 Article 30(5)     
Article 48 Article 30(6) 
and (7)     
Article 49 Article 30(8)     
Article 50 Article 30(9) 1 
and 2 
paragraphs     
Article 51 Article 30(9) 3 
paragraph     
Article 52 Article 30(10)     
Article 53 Article 31     
Article 54 Article 32     
Article 55 Article 33     
 
EN 171   EN Article 56 Article 34(1)     
Article 57 Article 34(2) 1 
paragraph 
Article 34(1) 
point 2 final 
sentence  Article 29.4(a)   
Article 58   Article 29.4 (b)   
Article 59   Article 29.4 (b)   
Article 60   Article 29.4 (b)   
Article 61 Article 34(3) 
and (4)     
Article 63 Article 35     
Article 64 Article 36     
Article 65 Article 37     
Article 66 (1) and 
(2) Article 38 (1) 
and (2)     
Article 67 Article 39     
Article 73 Article 52(3)     
Article 106 Article 1(24)     
Article 107 Article 1(1) 3 
sub-paragraph     
Article 108 Article 48(1)     
Article 109 Article 48 (4) 1 
paragraph     
Article 110 Article 48(2) to 
(4)2 sub-
paragraph     
Article 111 Article 49 (1) to 
(5)     
Article 113 (1) to 
(3) Article 49 (4) 
(6) and (7)     
Article 115 (1) 
and (2) Article 49(8) 
and (9)     
Article 116 Article 49(10)     
Article 117 Article 49(11)     
Article 118 Article 50     
Article 120 Article 
51(1)(2)(5)     
 
EN 172   EN Article 121 Article 51(4)     
Article 122 (1) 
and (2) Art. 51 (6)  Article 29(5)   
Article 125 Article 53(1) 
and (2)     
Article 126 Article 53 (3)     
Article 128 Article 53(5)     
Article 133 (1) Article 54(1)  Article 29(7)(a)   
Article 133 (2) 
and (3) Article 54 (2) 
and (3)     
Article 134(1) Article 54(4) 
first paragraph     
Article 134 (2) Article 54(4) 
second 
paragraph     
Article 135   Article 29(8)   
Article 137 Article 55(1) 
and (2)     
Article 138   Article 29(9)   
Article 139 Article 56(1) to 
(3)     
Article 140 Article 56(4) to 
(6)     
Article 141 Article 56 (7)  Article 29(10)   
Article 142 Article 56(8)     
Article 143   Article 29(11)  Art. 3.10 
Article 150 Article 60(1)     
Article 151 Article 60(2)    Art. 3.10 
Article 158 Art. 67     
Article 159 Art. 68     
Article 160 Article 69     
Annex I Annex I     
Annex I final 
clause    Article 68  
Annex II Annex II     
Annex III Annex III     
 
EN 173   EN Annex IV Annex IV     
 
EN 174   EN