EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 16 March 2004 
at the request of the Belgian Ministry of Finance  
on certain provisions of the draft law amending, in the field of insolvency procedures, the Law of 
22 March 1993 on the legal status and supervision of  credit institutions and the Law of 9 July 1975 
on the supervision of insurance undertakings 
(CON/2004/9)  
 1. On 24 February 2004 the European Central Bank (ECB) received a request from the Belgian 
Ministry of Finance for an opinion on certain provisions of the draft law amending, in the field of insolvency procedures, the Law of 22 March 1993 on the legal status and supervision of credit 
institutions and the Law of 9 July 1975 on the s upervision of insurance undertakings (hereinafter 
the ‘draft law’).  
2. The ECB’s competence to deliver an opinion is based on the fifth and sixth indents of Article 2(1) 
of Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank 
by national authorities regarding draft legislative provisions
1, as the draft law contains provisions 
concerning, among other things, payment and settleme nt systems and rules applicable to financial 
institutions that could materially influence the st ability of financial institutions and markets. In 
accordance with the first sentence of Article 17. 5 of the Rules of Procedure of the European 
Central Bank, the Governing Council of the ECB has adopted this opinion. 
3. The main purpose of the draft law is to implement into Belgian law Directive 2001/17/EC of the 
European Parliament and of the Council of 19 March 2001 on the reorga nisation and winding-up of 
insurance undertakings2 and Directive 2001/24/EC of the European Parliament and of the Council 
of 4 April 2001 on the reorganisation and winding up of credit institutions3. The provisions on 
which the ECB is consulted relate to the fo llowing aspects which are not harmonised by these 
directives: (i) the mandatory prior consultation of the Belgian Banking, Finance and Insurance 
Commission (CBFA) by the President of the Comm ercial Court when collective proceedings are 
opened against certain financial in termediaries and (ii) improved protection from the attachment of 
funds to be transferred to Belgian payment and securities settlement systems. 
                                                      
1 OJ L 189, 3.7.1998, p. 42. 
2  OJ L 110, 20.4.2001, p. 28. 
3  OJ L 125, 5.5.2001, p. 23. 
2 4. Articles 11, 23 and 29 of the draft law provide that the President of the Commercial Court shall 
request the opinion of the CBFA, before passing judgment on a petition or summons for judicial composition, on the opening of bankruptcy proc eedings or on the provisional withdrawal of 
management regarding credit institutions, clearing institutions or investment undertakings. These 
Articles also state that consultation of the CBFA su spends delivery of a judgment for not more than 
15 days. If the CBFA considers that a case is likely to  pose significant systemic risk implications or 
requires prior coordination with foreign authorities,  this period can be extended, but it may never 
exceed 30 days. The draft law’s explanatory memora ndum clearly states that the need to consult 
the CBFA results primarily from the difficulty that judicial author ities have in initiating judicial 
composition and bankruptcy procedures on the basis of  possibly incomplete information that takes 
no account of the possibility of the supervisory au thorities intervening or of the existence of 
interprofessional solidarity mechanisms (i.e. the possible preventive intervention of the Fund for 
the protection of deposits and financial instruments).  
5. The introduction of such a consultation procedure is broadly welcomed by the ECB since it may 
reinforce the financial stability framework by allowing judicial authorities to consider the 
assessment of the competent supervisory author ity when deciding on the insolvency of credit 
institutions, clearing institutions and investment undert akings. This is also in line with the spirit of 
Directive 2001/24/EC, which provides for the consulta tion of competent authorities. Nevertheless, 
the ECB considers that certain aspects of the consultation procedure could be clarified. 
6. The first clarification that the ECB suggests rela tes to the involvement of the Nationale Bank van 
België/Banque Nationale de Belgique (NBB). In this context, the explanatory memorandum notes 
that ‘It is self-evident that with regard to this  competence of providing an opinion the CBFA will of 
course make any appropriate contacts be it with  the Fund for the protection of deposits and 
financial instruments or the NBB with which cha nnels for the exchange of information exist…’. 
The ECB also notes that the Treaty establishing th e European Community and the Statute of the 
European System of Central Banks and of the Eu ropean Central Bank entrust the Eurosystem and 
the NBB, as an integral part of the Eurosystem , with the tasks of defining and implementing the 
monetary policy of the Community, promoting the smooth operation of payment systems and 
contributing to the stability of the financial system . Considering that the Eu rosystem members have 
a crucial role in preventing financial crises and, if preventive efforts fail, in the management of 
such crises, the NBB should be involved in the CBFA consultation procedure. Amongst other, the 
NBB should be informed by the judicial authorities of the initiation of the proceedings at the same 
time as the CBFA and the law should provide for the involvement of the NBB during the 
consultation procedure. Finally, the ECB also se es merit in the NBB receiving a copy of the CBFA 
opinion at the same time as the President of the Commercial Court.  
7. The ECB also underlines certain consequences of the CBFA consultation procedure. According to 
the current version of the draft law, consultati on of the CBFA automatically suspends bankruptcy 
proceedings. For credit institutions such an au tomatic suspension might have significant and 
3 possibly undesirable side effects considering certa in provisions of the master agreements governing 
financial transactions concluded between a cr edit institution and its counterparties. These 
agreements often provide for an automatic termin ation of all outstanding transactions in the event 
of a so-called ‘insolvency event’, which includes ba nkruptcy proceedings that are not dismissed or 
stayed within 15 or 30 days following the institutio n of such proceedings. Such termination might 
have potentially significant spillover effects on ot her financial institutions  and, thus, for the 
stability of the financial system as a whole.  
In the same vein, the ECB notes that Article 7 of  Directive 94/19/EC of the European Parliament 
and of the Council of 30 May 1994 on deposit-guarantee schemes4 provides that deposits must be 
covered up to EUR 20 000 in the event of deposits be ing unavailable. According to Article 1(3) of 
Directive 94/19/EC a deposit is, inter alia , considered as being unavailable at the latest 21 days 
after the competent authorities have satisfied them selves that a credit institu tion has failed to repay 
deposits which are due and payable. An extension of the suspension period as provided for in the 
draft law, combined with a suspension of the ac tivities decided by the CBFA, should not lead to a 
situation where the intervention of the gu arantee fund is automatically triggered. 
8. According to the explanatory memorandum the CBFA may, during the suspension period, take 
exceptional administrative measures on the basis of Article 57 of the Banking Law of 22 March 1993, such as the total or partial suspen sion of activities which can eventually result in 
the ‘closure of the counters’. In the situations covered by the draft law the CBFA could be obliged 
to take such administrative measures urgently in order to protect the rights of depositors. However, 
under the current Banking Law, the CBFA must first request a rectification of the credit institution’s situation within a fixed time limit befo re being able to take such exceptional measures. 
The ECB proposes empowering the CBFA to take th ese measures immediately if the rights of 
creditors are exposed to serious risks. 
9. The ECB is also consulted on the amendment of Ar ticle 9 of the Law of 28 April 1999, which aims 
to ensure that operators and settlement agents  of payment and securities settlement system in 
Belgium may freely process payments receive d from their correspondent banks to their 
participants’ settlement accounts, as the amounts to be  transferred to such settlement accounts will 
not be subject to attachment by third parties.  This amendment makes clear that the existing 
protection, which settlement accounts in payment and settlement systems already enjoy, also 
applies to cash transfers via any local or foreign bank to those ac counts. Article 9 offers broader 
protection from attachment to cash settlement ac counts held in payment and securities settlement 
systems in Belgium than the provisions of Direc tive 98/26/EC of the European Parliament and of 
the Council of 19 May 1998 on settlement finality in payment and securities settlement systems
5. 
As the explanatory memorandum notes, Article 9 h as not provided sufficient legal certainty since 
recent Belgian case-law has preven ted securities settlement systems from processing payments on 
                                                      
4  OJ L 135, 31.5.1994, p. 5. 
5  OJ L 166, 11.6.1998, p. 45. 
4 certain securities held in those systems. While is not clear whether such case-law would survive 
any future legal challenge, the adoption of the dr aft law nevertheless eliminates such uncertainty 
under Belgian law. In that respect, the draft law enhances legal certainty in relation to payments 
through payment and settlement systems and thus fo sters the safety and efficiency of payment and 
settlement systems. 
10. The ECB confirms that it has no objection to the competent national authorities making this 
opinion publicly available at their discretion. This opinion will be published on the ECB’s website 
six months after the date of its adoption. 
  Done at Frankfurt am Main, 16 March 2004. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET