ARCHIVES HISTORIQUES
DELACOMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (74)2010
Vol.1974/0336

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COMMISSION OPTHEEUROPEAN COMMUNITIES
COM(74)2010 final
Brussels .10December 1974
Proposal fora
COUNCIL DIRECTIVE
onthecoordination oflaws,regulations andadministrative
provisions governing thecommencement andcarrying onofthe
business ofcreditinstitutions
(submittedtotheCouncilbytheCommission )
COM(74)2010final

FINANCIAL CONSEQUENCES
Theorganization ofmeetings oftheCommittee provided forin
Article 11oftheproposal mightgiverisetocertainexpenses ,However ,
anexactevaluation oftheseexpensesisimpossibleforthetimebeing,
giventhefactthattheauthorities represented intheCommittee willbear
apartofthecostwhichwillhavetobedetermined lateron.

TABLEOFC0NT3NT3
Paires
1.Explanatory Memorandum
I.Reasonsforandobjectives oftheDirective 1–5
II.Commentary ontheArticles ' 6-14
{ V.
2,ProposalforaDirective
-Whereas - 15-18
-TitleI:Definitions andfieldsofapplication
(Articles 1and2) 19-20
-TitleII:Provisions applyingtocreditinstitutions .
havingtheirheadofficeinaMemberState
andtotheirbranches inotherMemberStates
(Articles' 3to8) •• 21-27
-TitleIII:Branchesofinstitutions havingtheirhead
officesoutsidetheCommunity
(Article9) 28
-TitleIV:Generalandtransitional provisions
(Articles 10to13) 29-32
TitleV:Finalprovisions
(Article14) 33
I

EXPLANATORY MES-jDSA!TIUM
I.K3A9QTT5 FORANDOBJECTIVES OFTHEDIRECTIVE
1.Thisproposal foraDirective isafurther movetowardsthecreation
ofacommonmarketinbanking.Afirststepinthisdirection wastakenby-
Directive 73/l83/EECof28June1973whichimplemented theprincipleof„
non-discrimination inaccordance vrithArticles 52and59oftheTreaty.
Furtherintegration shouldn6wbesoughtthroughthecoordination of.the
mostinportajat provisions inthebonkingregulations ofMemberStates.
2.Atpresent,ninelargelyseparate bankingsystemsexistsidebyside
intheCommunity .Theaimistopromotetheirinterpenetration aladehould
bepursuedinparallel witheffortstoachieveeconomic andmonetary union,
fortheproperfunctioning oftheactivities ofcreditinstitutions through­
outtheCommunity i3complementary tothefreemovementofcapital."
Furthermore ,approximating monetarypolicymeasureswillbeafarsimpler
matteriftheycanbedirecte& ;atcreditinstitutions withasimilaxstruc­
ture.But,inviewofthedivergences betweenthelegalinstruments and
administrative practices governing supervision oftheactivityinquestion
inthevariouscountries ,thereisstillalongwaytogobeforeattaining
thisobjective . :, ,
3»Itcanonlybetotheadvantage ofthecreditinstitutions themselves
ifthelegalinstruments andpractices arecoordinated sincethiswouldgive
themgreaterscopeforcarrying outtheiroperations inthewholeofthe
commonmarket.Someinstitutions ,itis"true,throughinternational
cooperation agreements ,alreadyoperatebeyondthepurilydomestic .frontiers

-2-
i»8vt;rthelejs ,suchcoop3rationisbasedmainlyontheideathatnational
financial marketsshouldremainseparate andthatthisseparation should-
beovercome byagreements thatrelate,forinstance ,tothefinancing of
multinational undertakings ortojointoperations innon-member countries ,
eachinstitution confiningitsusualbankingoperations toitsnational
territory .Norealintogrc-tioa canbeachievedunlesscreditinstitutions
takeonaEuropean dimension and,incarrying outtransactions onthe
mrrke,tsofallMunberStates,competewithinstitutions froabeyondtheir
ownfrontiers .
4.Oneoftheprincipal aimsofcoordination whichisbasedon
Article 57oftheTreatyistomekeiteasiertosetupbranches aridfor
thesebranches tooperate.Thisobjective couldbeattainedultimately ,
forexample,bymakingitpossible toexempt,asfaraspossible ,credit
institutions thath^.vealreadysetupanetworkofbranches throughout the-
Community fromsupervision byeightdifferent hostcountries while,onthe
otherhand,makingthemsubjecttocentralized supervision inthecountry
oforiginalone.Theeventual implementation oftheprinciple ofsuper­
visioninthecountryoforiginwouldenablebankstooperateatEuropean
levelwhilerationalizing significant aspectsoftheiractivities' .
5.Consequently ,itwillbenecessary forthesupervisory authorities
tocollaborate closely whencarrying outtheircheckstoensurethesound­
nessofcreditinstitutions .Suchcollaboration istobedistinguished
fromthatwhichcouldclsobeestablished betweenthemonetaryauthorities
inthepursuitofeconomicobjectives ."......
«•»/•••
1

Moreover ,itcanbeseenthateventhestagenowreachedininte­
grationinthecreditsector,namelythecooperation agreements concluded
"betweenagreatmany "banks,makesitimpossible foranational authority
actingalonetoexerciseeffective supervision .Concerted actionbythe
supervisory authorities canbeeffective onlyiftheauthorities have
similarinstruments toworkv;ithandacommonviewoftheobjectives tobe
attained .
6.Theexamplejustgivenconcernsbranchesofcreditinstitutions ;
itwouldbedesirableifsimilarmeasures couldbe-ppliedtosubsidiaries .
Forthepurposes ofapplying solvency andliquidity ratiosthisDirective
regardssubsidiaries asautonomous institutions .Inordertoensure
greaterefficiency insupervising creditinstitutions whichoperateina
/
numberofcountries astudywillhavetobemadeinthefutureofthe
possibility ofsubjecting subsidiaries toregulations similartothose ,
governing branches . , 1
7.Theaimsofcoordination outlined aboveccsinothowever beachieved
inonego.Attheoutsetofthepreparatory work,theCommission 's
departments hadplannedtodrawupadraftdirective coveringallthe
majoraspectsofbankinglegislation .Butviththeaccession ofnew
MemberStates,inparticular theUnitedKingdom,inwhichthebanking
legislation wasnotcomparable withthatinforceinth9original Member
States,itwasnolongerpossible tocontinue withthisoverallapproach .
/
Consequently ,theCo-Emission altereditsapproach anddecidedtoproceed
stepbystep,thusmakingitpossible toseparatethefieldswhereproblems
werelikelytobeonlyminorfromthosewheregreaterdifficulties would
arise'andsoachievemorerapidprogress .Thefinalstageofcoordination
[
«**/<>m•

wouldnothowever "beachieved beforealongtermevolution ,thefirst
stagesofwhichwould "bringrelatively modestresultsi
8. ■Forthispurpose,withinthisviewpoint ,thefieldofapplication
oftheDirectiveisinprinciple toincludeallinstitutions thatcanbe
broadly -definedascreditinstitutions ,withouthoweverexcluding the
possibility 'oflayingdownmorespecificprovisions forcertaintypesof'
specialized institutions inthefuture.
9.Themethodofmulti-stago measures impliesthat,onanumberof
•points,theDirective proposed belowmerelyoutlines an-answertocertain
problems ,andonothersisconfinedtolayingdotmaprogramme formeasure
tobetakeninthefuture.Inthiscontext,theCommission attachesparti
cularimportance inthe.firstinstance totheprovisions oftheDirective
relatingtosupervision ofsolvency andliquidity andsecondly ,the-
creation ofacontactcommittee madeupofthesupervisory authorities .
10.Withregardtothefirstoftheseprovisions itshouldbestressed
thatapplying theprinciple ofsupervision inthecountryoforiginwould,
inthefinalstage,meanthatacreditinstitution withbranches insevera
MenberStateswouldnolongerhavetofulfiltherequirements concerning
solvency andliquidity inforceine?.chhostcountry .Infact,ifthis
werenotsotheinstitution wouldfrequently havetocreatefundsinits
branches whichwouldassumetheroleofowncapital,andwouldbeobliged,
withregardtotheoperations ofthelatter,toobservetherule3inbcth
thehostcountryandthecountryoforigin.

Itwouldhoweverbepreferable fortheinstitution toberequired
toobserveonlytheruleswhichwereinforceinthecountryoforigin.
Information concerning itsover?JLlactivities ,i.e.including thedata
forallthebranches ,wouldhavetobecomnunicatsd totheauthorities of
thecountryoforigin.Theliquidity andsolvency oftheinstitutions as
awholewouldbecalculated inacentralized manner,andthiswouldhave
theeffectofpromoting bothintegration andrationalization (forexample,
liquidity clearance fortheinstitution asawhole).Ifthereistobe
nodistortion ofcompetition betweeninstitutions fromdifferent ;Member
States,therelationships betweencertainitemsinthebalancesheets
wouldbeharmonised toointheend.
-11.Asregardsthesecondvitalpointofthe'proposal ,thoCommission
believesthatbycreating acontactcommittee inwhichthesuparvisory
authorities wouldberepresented ,themethods,the'priorities -jad'the'
paceofeventual measures whichwouldhavetobotakeninthe-futurein
aseriesofcoordinating directives concerning thecreditsectorwouldbe
specified .Thecreation -ofacontactcommittee couldevenberegarded as
themainpointofthisDirective .

COM'JTNT ARYOffTIEARTICLE S
Article 1
ThisarticledefinestheVarioustermsusedthroughout thedirective .
Creditinstitution :thisdefinition isbasedonthefunction performed by
banks,savingsbanks,creditcooperatives 'andotherlikeinstitutions ■
concerned withfinanceinnational economies .Theessenti-l taskofsuch
institutions iatoactasalink "betweensavingandinvestment ,inother
wordstoreceivemoniesandgr?ntloans.Thefactthatmoniescollected
arerepayable distinguishes theactivityoftheinstitutions inquest 3on
fromthatofinsurance orcollective investment undertakings ,•'These
moniesmaybeintheformofdeposits (sight,terraorsavings),orthey
mayalsoexistinotherforms,mainly-bonds,cashcertificates ,etc.The
term"assets"coversloans,whicharethemostimportant formofinvest­
mentandofuhichthereisanendlessvariety(debitaccounts,acceptance
credits,t.feTffi]loans,etc.).
The'article'specifies thatloansmustbegrantedfortheaccountof
theinstitution itselfandthusexcludes intermediaries inthebanking
sectorandthe 1function oftransmitting thefundsofthirdparties.
Receiving moniesandgranting loansmustconstitute thenormalbusiness ,
oftheinstitution ,thusexcluding commercial undertakings whichalso
occasionally receivemoniesfromthepublicandgrantloanstotheir
customers .
Authorization:Thisdefinition coversanyformofadministrative instrmnen .
givingauthorization ,;evenifsuchinstrument isnottermedan"authori­
zation",butisforexampleadocument ofregistration orrecognition .

Branch;Theessential purposeofthisdetinition istodistinguish between
theinstitutions inquestion andsubsidiaries ,whicharelegallyindependent ,
andrepresentative offices,whichdonothandletransactions .
\
Competent authorities ;Itwasnecessary tointroduce theoverallconceptof
"competent authorities "since "bankingsupervision isorgrnized indifferent
waysintheMemberStates:insomecasesitiscentralized inspecialized
supervisory bodies,inothersitiscarriedoutbythecentralbank,andin
othersitisdivided amongdifferent authorities .Thedefinition covers
allauthorities whichwillapplythenational provisions basedonthe
directive ,whichsetsouttoprotecttheinterests ofdepositors ,i.e.those
whichascertain thesoundness ofundertakings inthebankingsector.They
aretobedistinguished fromthenonetaryauthorities evenifattimesthe
sameauthorities performbothfunctions ;bankingsupervision andcontrolof
credit..
Article 2
Thefieldofapplication laiddowninthisarticleisverybroad.
Toensureequalconditions ofcompetition ,it'includesinprinciple all
institutions thatperformtheessential functions ofcreditinstitutions
..outlined above,withnodistinction beingmadeinrespectofthelegal
structure (forexamplepublicorprivate),geographical rangeofactivities
(local,national ,oreveninternational ),anyparticular specialization ,
typesofoperation (short-term ,medium-andlong-term oruniversal),
economicsector(agricultural loans,industrial loans,loanstothehotel
trade,etc.)oronanyothersimilargrounds.Thedirectiveissufficiently
generaltobeapplicable toalltheseinstitutions .

Thereisa"brieflistexcluding certaininstitutions towhichthe
directive obviously cannotapply(e.g.central "banks),althoughtheyare
inprinciple coveredbythedefinition ofcreditinstitutions .
Ittranspired fromthepreparatory workthatthepossibility of
exclusion foralimitedtimeshouldremainopentoMemberStates.There
axecertaininstitutions which,although theyundeniably belongtothe
bankingsector,aresubjecttospeciallegislation orspecialsupervisory
authority ,orwhichfortechnical orpolitical reasonsarenotconsidered
onthesamefootingasothercreditinstitutions byoneorotherMember
State.Equaltreatment ,whiledesirable forreasonsofcompetition ,and
feasibleasregardsCommunity law,nevertheless means,inviewofthe
generalnatureofthedirective ,thatMemberStates'may havetomokespecial
adjustments ,anditisnotalwayspossible totakethenecessary measures
immediately .
Provision ismadeforaspecialprocedure toensurethatthedefer­
mentoftheapplication ofthedirective tocertaintypesorgroupsof
institutions shouldnotlasttoolong.
Article 3
Priorauthorization tocommenceactivities isnotyetrequiredfor
creditinstitutions inallMemberStates.Thisrequirement mustbemade
generalsothateachhostcountrymaybecertainthateveryinstitution
benefitting fromfreedomofestablishment andfreedomofprovision of
services hasbeensubjected tocertainchecksinitscountryoforigin
beforecommencing itsbusiness . -

Inthefinalstageofacommonmarketinbanking,suchsupervision
shouldbeconducted inthewholeoftheCommunity inaccordance withthe
samecriteria .Forthetime "being,however,allthataregivenarethe
minimumconditions whicheachMemberStatemustlaydown.•
Aswasdecidedinrespectofthealliedfield'of.insurance ,the.
identical criteria tobeusedinthefinalstageshouldnotincludean
examination oftechnical needandthecompeteojr authorities shouldnotbe
givendiscretionary powerstograntauthorization .To-achievethisend,
provision hasbeenmadeforapplicants tosubmitaschemeofoperations
indicating thetyposofoperations theyexpecttohandle2ndtheplanned
structural organization oftheinstitution' (paragraph ?.).Inthi3way,the
groundsfordecisions ofMemberStateswhich,forthetimebeing,stilltake
technical needintoconsideration andhave .discretionary powers,willbemade
moretransparent andwill,tosomeextent,besubjecttoaninitialmeasure
ofobjective legislation .ThisdoesnotimplythattheotherMemberStates
arerequired byvirtueof'thisprovision toregardtheinformation concerning
theplannedoperations andstructure asthecriteria onwhichtobasetheir
.decision butmaysimplycheckthataschemehasbeensubmitted
Theauthorized institutions shallboenteredinaCommunity register ;
suchregistration shallnotitselfberegarded asauthorization butmerely
havedeclaratory effect.
-Articles 4and5
.....Inthefinalstageofcoordination ,oncetheyhavebeenauthorized
intheircountryof.origin,creditinstitutions maybeconsidered asbeing
authorized throughout theCommunity andrequirenofurtherauthorization for
branches established inotherMemberStates.Initially ,however,

-10-
mostMemberStateswillhavetocontinue torequirecreditinstitutions
-settingupbranchesforthefirsttimeontheirterritory toundergo
individual examination .Justasitwasfoundto"beimpossible toharmonize
allthecriteria fortheauthorization ofanewcreditinstitution ,itis
likewise impossible atpresenttocoordinate thecriteria fortheauthori­
zationofbranches .Itisproposed ,however ,torelaxtwoaspectsofthe
\procédure .
First,thefactthatthecreditinstitution initscountryoforigiii
•'isconstituted inalegalformwhichcannotbeusedbycreditinstitutions
Inthehostcountry maynotbeinvokedasagroundforrefusing authorization .
Thistypeofmutualrecognition ofacceptedlegalformsforcreditinstitutions
doesnot,however,applytoabankformedbyonenaturalperson,atypeof
undertaking thatisnowsubjecttoreservations forreasonsofsoundness in
nearlyallcountries .
Secondly ,Article 5relaxestheconditions concerning theprotection
ofnames seachcreditinstitution isfreetousethesamensmeasthatused
inthecountryoforigin,evenif,inanextremecase,itisnotinaccordance
withthelawofthehostcountry.Thecompetent authorities inthehost
country may,however,toavoidanydangerofconfusion liabletodistort
competition ,requireamoreprecisedescription tobeaddedtothename.
Articles 6and7
TheseArticles areafirststeptowardsharmonizing bankingratios.
First,Artiole 6listsfourratioswhichshouldbeusedbyallMemberStates
forthepurposeofcomparison .However,thislistisnotexhaustive ;Member
Statesmaycontinue toenforceotherratios.
•«•/•••
\

-11-
Theseaxenotfixedrules,therefore ,.butinitially aremerelynon-quantified ,
ratiostobeappliedasanexperiment .Thevariousbalancesheetitemswhich
aretobeusedintheratioswilllikewise notbedefineduntil -aclear :
pictureisavailable offuturedevelopments ,astheCommission isawarethat
theratiosgivenmayneedtobechangedasthestructures ofthebanking
marketchanges.Forthisreason,ageneralreviewclauseisconsidered ,v-
necessary .
Thesedevelopments willdependonthejoint "experience of.the.super­
visoryauthorities andcouldbediscussed initially intheContactCommittee .
Itisobviousthattheratiosfirstspecified v/illneedfurtheradditions
-andrefinements ,thegeneralpatternofwhichisalreadyemerging ..In
■particular ,itisplannedtointroduce axatio "whichwouldreducetherisks
involvedinexchangeoperations ;inviewofrecenteventsontheforeign
exchange marketitcouldbecomeespecially significant inthenearfuture.
Article 7dealswiththeapplication ofthesystemtobranches set
upbyacreditinstitution inanother MemberState.Atpresent,endowment
capitalmaystillberequired forsuchbranches .Inthiscase,itwouldbe
appropriate iftheMemberStatesconcerned wouldagreethatsuchfundsmutt
bodeducted fromtheinstitution 'sownfundsinthecountryoforigin,unless
thecompetent authorities inthatcountryrequireanoverallbalancesheet
tobedrawnupshowingalsotheassetsandliabilities ofthe-branch.-' «
Article 5- • ^
ThisArticleliststhegroundsforwithdrawing authorization .In
particular itconcernsthecasewherethecreditinstitution 'sownfunds
arenolongeradequate (paragraph 1,lit.d;thiscaseisspecifically
excludedinparagraph 1,lit.c,sincelit.creferstoinitialcapital
andnotoperating capital;lossesofinitialcapitalarenormalinthefirst

-12-
yearsofoperation).Itwasnecessary toincludeageneralclausecovering
anyinfringement ofthelaw(forexample,taxlegislation ,exchangecontrol
legislation ,etc.),forwhichthepenaltylaiddowniathewithdrawal of
authorization .
Article9 '- '"'
TheMemberStatestakewidelydiffering attitu«.6S totheaccessof
hanksfromnon-member countries .Policies r^jigefromthetightestrdst–
%rictions toextremely liberalconditions .Theprinciple thatinstitutions
ofMemberStatesshouldbetreatednolessfavourably thanbanksfromnon-
membercountries istheonlypossible commondenominator inthefirststage
'ofcoordination .
>Itistherefore ofvitalimportance thattheCommunity assuchshould
workoutajointapproach onthismatterinthehearfutureandapplythis
policyinnegotiations withnon-member countries forthee2tablishment of
branches inallMemberStates.
Article 10** •'' :•''•"v .
ThisArticlecontainsprovisions makingclearthepositionofexisting
creditinstitutions andbranches underthecoordinated legislation ,
Article 11
.;Theimportance theCommission attaches tocollaboration betweenthe
competent authorities hasalreadybeenmentioned .Toprovideaframework
forthiscollaboration aContactCommittee isto.besetup.Thenumberof
..membersofthe.Committee shouldbelimitedtoensuremaximumefficiency ..
Inthe.viewoftheCommission ,membersoftheCommittee shouldbepersons
,who,intheirrespective MemberStates,areresponsible for.checkingthe

financial soundness ofcreditinstitutions andwho,intheirownadministration
holdaposition whichenables themtotakethemselves thedecisions required
forthecollaboration process.
AmongthetasksoftheCommittee ,thoselistedinparagraph 1,lit.b
andlit.careofparticular importance .
Thefirstofthesetasksconsistsinbringing supervisory practices
morecloselyinto :line,forexamplebyarriving at-amoreprecisedefinition
oftharelationship betweencertainitemsinthebalancesheet.
TheCommittee doesnothavethepowerofdecision on.mattersof •
national bankingsupervision .Nevertheless ,themembersoftheCommittee
should,asfaraspossible ,includediscussion withintheCommittee intheir
national decision-making process .
Thesecondtaskconsistsinexamining thequestion ,,whenever members
oftheCommittee findthatcertaincircumstances hindertheapproximation
ofsupervisory practices ,whetheracoordination measureorsomeother
actionbasedontheESCTreatycouldremovethedifficulty ;theCommittee "
shouldforwardanyrelevant suggestions totheCommission whichwilltake
theactionitconsiders desirable .
Article 12
Thepurposeofthisprovision istosolveanyproblemarisingfrom
thefactthatpersonsemployed bythecompetent authorities areontheone
handboundbytheobligation ofprofessional secrecyandon.the.other
requiredtocollaborate acrossfrontiers and,incertaincases,toexchange
information .Inprinciple suchinformation wouldretaintheconfidential
classification accorded bytheauthority 1inthecountryoforigin.However,
toavoidanyconflict betweenbindingrules,inadditiontothisprovision ,

-14-
amaansmust "befoundofapproximating thelegislation involved :represen­
tativesofthecompetent authorities shouldnotbeobligedbytheirnational
lawstodisclose information theyreceive fromtheircounterparts inother
countries wheresuchinformation isconfidential .Theymayhoweverbe
allowedtodicclose theinformation provided thatexpressauthorization has
beengivenbytheauthorities whocommunicated theinformation .
Article 13
Thisprovision guarantees ,asisusualinthiskindofdirective ,
therightofappealtocourtsinallMemberStates.■
Article 14
ThisArticle ^contains theu.su-1finalprovisions andinparticular
specifies thetimeallowedfortheimplementation oftheDirective :the
MemberStateshavetoadheretoatimelimitoftwoyears,but,onthe
otherhand,shallnotimplement theDirective untileighteen monthsafter
beinginformedofthedeferred implementation oftheDirective by^some
MemberStatesconcerning certaincreditinstitutions .
!

Proposal foraCouncilDirective onthecoordination
oflaws,regulations and.administrative provisions
governing thecommencement andcarrying onofthe
business ofcreditinstitutions
THECOUITCIL OFTE3EUROPEAN COIflMTIES ,
HavingregardtotheTreatyestablishing theEuropean Economic Community ,
andinparticular Article 57thereof ?
Havingregardtotheproposal fromtheCommission ;
HavingregardtotheOpinionoftheEuropean Parliament *
HavingregardtotheOpinionoftheEconomic andSocialCommittee ;
Whereas,inordertofacilitate thecommencement andcarrying onofbusiness
bycreditinstitutions ,itisnecessary toeliminate themostobstructive
differences betweenthel-ffsoftheMemberStatesconcerning theregulations
towhichtheseinstitutions aresubject ;
Whereas,hot-fever ,itisnotpossible ,givenith3i:!Exterilfe N"''TOfdihdKi;;*^
differences ,tocreatetheconditions required foracommonmarketfor
creditinstitutions throughasingleDirective ;whereasitistherefore
necessary toproceedbysuccessive stages;whereasthefinalresultofthis
processshouldenablethecompetent authorities inaMemberStatetosuper-1
viseacreditinstitution anditsbranches throughout theCfimmunity from
thecountryofitsheadoffice;
Whereas,inordertoensurethatcreditinstitutions competeonequalterms,
theprovisions ofthisDirective shouldapplytoallofthese;whereastheir
fieldofapplication shouldtherefore beaswideaspossible ,although V

-ίβ–
exceptions mustbeenvisaged inthecaseofcertaincreditinstitutions ,
suchascentralbanks,towhichtheDirective cannotapply; .
Whereas,however ,thesamesystemofsupervision cannotalways "beapplied
toalltypesofcreditinstitution ;whereasprovision shouldtherefore "be
madeforapplication .oftheDirective tobedeferred inthecaseofcertain
groupsortypesofinstitution towhichitsimmediate application wouldbe
difficult forreasonsofatechnical nature;ivhereasinthefuturemore
specificprovisions covering suchinstitutions mayprovenecessary ;
whereas,however,suchspecific provisions shouldbebasedonanumberof
commonprinciples ; ■
Whereastheeventual aimistointroduce throughout theCommunity aparallel
authorisation procedure basedonuniformrequirements -whereasatthe
initialstageitisnecessary ,however,tospecifyonlycertain minimum
requirements whichallIlemberStatesshouldimpose;
Whereastheaboveaimcanbeachieved onlyifassessment criteria which •
allowcertainsupervisory authorities particularly widediscretionary
powersareprogressively reduced ;whereas,fromthispointofview,the
requirement toproduceanoperating programme shouldbeseenmerelyasa
factorenablingthecompetent authorities toactonthebasisofmore
preciseinformation ,withinthe-framework ofobjective criteria ;
I Ν
Whereasthefinalobjective ofcoordination istointroduce atalater
stage,inparallelwiththeprogressive attainment ofeconomic andmonetary
union,asystemwherebytranches ofanundertaking whichisestablished
inaMemberStatewillthroughout theCommunity besubjecttonoauthori­
zationrequirement ; ' -
, S-
Whereasthisobjective cannotbeattained immediately ;whereasacertain
degreeofflexibility ishoweverpossible fromtheinitialstageasregards
therequirements concerning thelegalformsofcon^iiiai-Sionof credit
institutions andtheprotection oftheuseofcertaindescriptions ;
■•*/«••

-17-
whereas,untilfurthercoordination hasteenachieved ,national lawsshall
remainentirelyapplicable inrespectdifallothermatters;
Whereasthecentralization ofsupervision inthecountryoforiginwillbe
facilitated if.thefinancial requirements whichtheinstitutions must
satisfyareequivalent !whereas,evenpriortoharmonization ofthe
κ
accounting information tobeprovided tothesuperzi'sory authorities by
creditinstitutions ,afirststopinthisdirection canbemadebydrawing
upalistofratiosbetweencertainitemsintheaccounts forobservation
purposes andinaddition toanyotherratioswhichmaybedemanded bythe
various MemberStates;whereaE,moreover ,itisnecessary tobeginwithout
delaythestandardization ofthelay-out^of accounts ;whereas,withinthe
framework ofthecooperation referredtobelow,effortswillbemadeto
ensurethatasystemofidentically definedandequivalent ratiosis (
progressively established forapplication inallmembercountries ;whereas,
inthisconnection itwouldbedesirable tomakeadistinction between
ratiosintendedtoensurethesoundmanagement ofcreditinstitutions and
thoseestablished forthepurposesofeconomic andmonetarypolicy;
Whereasthemilesgoverning branches ofcreditinstitutions havingtheir
headofficeoutsidetheCommunity shouldbeparallelinallMemberStates;
whereasitisimportant atthepresenttimetoprovide 'thatsuchrulesmay
notbemorefavourable tosuchbranches thantothoseofinstitutions from
anotherMemberState;whereasitshouldbespecified forfuturepurposes
thattherulesapplicable tosuchbrancheswillbedefinedinagreements
concluded betweentheCommunity andthethirdcountries concerned ,account
beingtakenoftheprinciple ofreciprocity
I
Whereastheexamination ofpractical problems posedinthefieldscovered
bythedirectives adoptedbytheCouncilandapplying tocreditinstitutions ,
andinparticular inordertoachievefurthercoordination ,closecooperation
betweenthecompetent authorities andtheCommission willbenecessary withir
I.
/

-18-
aContactCommittse ;whereasitisvitalthattheauthorities achievein
thisframework theclosestpossiblecollaboration concerning thesuper­
visionofcreditinstitutions ;-
Whereas,moreover ,thoseprofessionally concerned shouldbeconsulted as
tothepatternoffuturecoordination ;whereastheCommission should
envisage thesettingupofaSommittee onwhichtheseinterests willbe
represented ;
!*-
HASADOPTED THISDIRECTIVE :

-19-
TITLEI
DEFINITIONS ANDFIELDS OFAPPLICATION
Article 1
ForthepurposesofthisDirective :
"creditinstitution "meansanundertaking whoseusualbusinessisto
receive,directly orindirectly ,deposits orotherrepayable moniesfrom
thepublicandtograntcreditsforitsownaccount;
"authorization "meansaninstrument issuedunderanyformbyapublic
authority ,bywhichtherighttocarryonthebusiness ofacredit
institution isgranted ;
"branch"meansaplaceofbusiness whichformsalegallydependent part
ofacreditinstitution andwhichconductsdirectlytheoperations
inherent inthebusinessreferred toabove.Anynumberofbranches set
upinthesameMemberStatebyacreditinstitution havingitsheadoffice
inanother MemberStateshallberegarded asasinglebranch.Anynumber
ofcreditinstitutions affiliated toacentralorganization which,under
nationalregulations ,guarantees thetotalityoftheirengagements ,may
beregarded asbranches ;
"competent authorities "meanstheauthorities towhichMemberStates
entrusttheapplication ofthelaws,regulations andadministrative
provisions relating tocreditinstitutions andthesupervision ofthem.
•'4»•t
\

Article 2
1,ThisDirective appliestothecommencement andcarrying onofbusiness
bycrod.itinstitutions .
2.Itdoesnotapplyto:
–thecentral banksofMemberStates;
–PostOfficeGiroinstitutions :
–institutions whoseobjectistopromoteregional development inMemoerStates
–inGermany,theKreditanstalt fürWiederaufbau ;
–inFrance,theBrjnqueFrançaise duCommerceExtérieur j
-intheNethcrlrnds ,the1T.V.Eücport**Financierun£-iiaatschappij ,the
Nederlandss Financieringsmaatschappij voorOntwikkelingslanden N.V.and
theNederlandse Investeringsbanlc voorOntwikkelingslandenN.V.
3*MemberStatesmaydeferapplication ofthisDirective tocertaintypes
orgroupsofcreditinstitutions tirhereimmediate application ofthecoordi­
natedruleswouldcausetechnical problems whichcannotbeovercome inthe
shortterm,.Theseproblems mayresultfromthefactthatthoseconcerns are
submitted tocontrol byanauthority different fromthatnormally responsible
forcontrolofbanks,orfromthefactthattheyaresubjected toaparticular
systemofcontrol.Inanyeventsuchdeferment cannotbejustified bypublic
lawstatutes ,smallnees ofsizeorlimitedscopeofactivityintheparticu­
larinstitutions concerned *Deferment cmonlyapplytoinstitutions already
existing atthetimeofthenotification ofthedirective .
4.TheSeferment qfapplication underparagraph 3aboveshallbomotivated ,
andnotifiedtotheCommission bytheMemberStateinquestion.
Deferment shallbeforaperiodoftwoyearsandmayberenewedfollowing
consultation oftheCommittee referred toinArticle 11.Itshalltake
effectasfromitspublication intheOfficalJournaloftheEuropean .
Communities ,arhichshallbeeffected notlaterthansixmonthfollowing
notification ofthis.Directive .
Onthe-recommendation oftheCommission ,siiichshallconsultthesaid
Committee ,theCouncilshalldecidethetermination ofsuchdeferment by
aMemberState.
6••J•«•

I-21-
\
TITL3II
PROVISIONS APPLYING 10CREDITIFSTITUTIOIIS
HAA/IITGTHEIRHXADOFFICEINATOIEBR STATE
;JTDTOTHEIRBRANCHES ITTOTHERMEMBER STATES
Article 3
1.MemberStatesshallprovidethatcreditinstitutions subjecttothe
provisions ofthisDirective shallhaveobtainedauthorization beforethey
commencetheiractivities .Theyshr-l'l,subjecttoparagraphs 2and3below,
determine therequirements forauthorization andnotifythemtothe
Commission .
2. .Withoutprejudice toanyotherrequirements whichmaybelaiddown
undernationallegislation ,thecompetent authorities sh?.llnotgr?nt
authorization where:.
-thecreditinstitution doesnotpossessadequate oi-mfunds;
-thepersons whoeffectively manageitsbusiness arenotadequately
qualified orreputable .'
■3.MemberStatesshall,inaddition ,requireapplications forauthori­
zationtobeaccompanied byaprogramme ofoperations inwhich,inparti­
cular,thetypesofbusiness envisaged andthestructural organization of
theinstitution mustbeindicated .
4«TheCommittee providedforinArticle 11shallexsminethedefinitions
usedbythecompetent authorities concerning theconditions contained in
paragraph 2andtheinformation whichshouldbeincludedintheschemeof
operations ,andshallifnecessary proposetotheCommission moredetailed
coordination .
••■/•«*

3-HansonsmustIDagivenforanyrefusalofauthorisation ,andmust
"benotified ,totheapplicant withinsixmonthsofreceiptofthe.expli­
cationor,ifthelatterisincomplete ,notlaterthansixmonths
following recoiptofdocuments containing alltheinformation required
undertheprovisions inforce.
6->Everyauthorization orrefusalshallbenotifiedtotheCommission .
Eachcreditinstitution shallheenteredinalisttobepublished inthe
Official .JournaloftheEuropean Communities andtobemaintained bythe
Comaiscion.
Article 4
1Pendirgfurthercoordination enabling branches toboestablished
throughout theCommunity withoutundergoing anyauthorization procedure ,
MemberStatesmaynalcethecommencement ofbusinessintheirterritory
bybranchesofthecreditinstitutions coveredbythis ^Directive which
havetheirheadofficeinanother MemberStatesubjecttoauthorization
according tothelawandprocedure applicable tocreditinstitutions
established ontheirterritory
2-However,MemberStatesmaynotrefuseauthorization tobranches of
creditinstitutions' onthe.solegroundthatitisestablished incnother
MemberStateinalegalformwhichisnotallowedinthecaseofacredit
institution carrying outanalogous activities inthehostcountry ..This
provision shallnotapply,however,tocreditinstitutions formedbyone
naturalperson.
?>,Thecompetent authorities shallinformtheCommission oftheir
responsetoapplications forauthorization tosetupsuchbranches which
aresubmitted tothem.

23-
4*Thaprovisions ofthisArticleshallbewithoutprejudice tothe
rulesappliedbyMemberStatestobranchessetupintheirterritory by
croditinstitutions whichhavetheirheadofficethere.Notwithstanding
theprovisions ofthothirdindent'ofArticle 1,secondsentence ,thelaw
ofMenberStatesbywhichacep^xatoauthorization isrecruiredforeach
branchopenedbyacreditinstitution inthoirterritory sh~.llapply
equallytothebranches ofcreditinstitutions whoseheadofficeisin
snotherMetiberState.
Article 5
Creditinstitutions towhichthisDirective applies may,notwith­
standing anyprovisions concerning' theuseofthewords"bank","savings
bank"orothersimilardescriptions whichmexistintheho^tcountry,
usethroughout theterritory oftheConmurity thes«unenameastheyuse
inthecountrywhoretheirheadofficeissituated .Intheeventofthere
beinganydangerofconfusion ,thecompetent authorities ofthehost
I'embarStatesmayforpurposes ofclarifioation requiretheaddition to
then:jneofashortexplicative phrase.
Article 6
%Pendingmoreintensive coordination ,thecompetent authorities
shall,forpurposes ofobservation andinadditiontoanyeventualratios
,whichmaybeestablished bythem,ascertain thefollowing ,ratioswitha
viewtoex=imining thefinancial soundness ofinstitutions towhichthis
Directive applies :
>
a)theratioofownfundstodeposits ;
b)theratioofownfundstototalassets;however,thecompetent autho­
ritiesmayexcludecertainclassesofassetswhichdonotc.crryany
risk,suchasclaimsonorguaranteed byaMemberState;
c)theratioofownfundstonon-liquid assets;
'd)theratioofcurrentliabilities tolicruidassets.

-24-
t
2,Theratiosspecified inparagraph 1shallbecalculated .atleast
everythreemonths "bythecompetent authorities .
2,.Thecompetent authorities shallexamine,intheCommittee provided
forinArticle 11,thedesirability
a)ofascertaining ,inadditiontotheratiosspecified inparagraph '1,
theratioofownfundstototalopenforeignexchange positions ,both
spotandforwardontheonehand,andtheratioofownfundstothe
samepositions withthedifferent maturities takenintoaccountonthe
otherhand;,
b)ofextending theratiospecifiedinpara^aph 1,lit.a.,toallor
partofcurrentliabilities andofprescribing thatMemberStatesshall
ascertain eitherthisratioorthatspecified inparagraph 1,litibj
c)ofcompleting orreplacing 1theratiospecifiedinpar?„grrph 1,lit',d-,
byaratioofshorttermcurrentliabilities toliquidassets,andby
aratioofallorpartofcurrentliabilities toassetsinvested at
mediumorlongterm.
4.Afterconsultation oftheCommittee providedforinArticle 11,
theCommission luayalterthelistofratiosinparagraph 1totakeaccount
ofstructural changesinthefieldcoveredbythisDirective .
5.Thecompetent authorities shall,-.ritliintheCommittee provided for
inArticle 11andwithaviev:totheircoordination ,examinethemethods
ofcalculating theratiosspecified inparagraph 1aboveand,inparti­
cular,theprecisedefinitions tobegiventothevariousconstituent
parts;thisexamination shallbebasedontheresultsofthecalculations
obtained forcomparable groupsofcreditinstitutions ;

-25-
./Article T .
1. i'lithaviewt6supervising thosecreditinstitutions whichhave
setupbrandies inoneormoreKemberStatesotherthanthatinv.-hich .
theirheadofficeissituated theMemberStatesconcerned shallcolla­
borateclosely.The;''shallsupplyoneanotherwithallinformation
likelytofacilitate thesupervision ofsuchbranches ?ndofthecredit
institution towhichtheybelong.
2.Thecompetent authorities ofaMemberStateinwhoseterritory such
abranchissotupm:y,pendinjamoraintensive coordin-.tion ,require
endowment capitaltobeplacedatthedisposalofthebranchandm?ywatch
overthesolvencyofthelatterbymeansoftheratiosspecified in
Article 6tparagraph 1,lit.a,bandconthe.basis ofsuchcapital ?
theyshallinformthecompetent authorities ofthecountryoforiginof
theresultsthereof.

-26-
Article 8
1Thecompetent authorities shallwithdraw theauthorization issued
toacreditinstitution towhichthisDirective applies'ortokbranch
authorized underArticle 4wheresuchinstitution orbranoh :
a)doesnotmakeuseoftheauthorization withinsixmonths,expressly
.renounces theauthorization orhasceasedtoengageinbusiness for
morethansixmonths(iftheMemberStateconcerned doesnotprovide
fortheauthorization tolapseinsuchcases);
b)obtainedtheauthorization bydeliberately givingfalseinformation
orbyotherirregular means;
c)nolongerfulfilstheconditions underwhichauthorization wasgranted,
.withtheexception ofthoseinrespectofownfunds;
d)nolongerpossesses sufficient ownfundsorendowment capital,oriio
nolongerhastherequired solvencyorliquidity ;
e)failsfundamentally tofulfilitsotherobligations undernational
regulations wheretheseexpressly containameasureproviding forthe
withdrawal ofauthorization onthisground.
2..Inaddition ,theauthorization issuedtoabranchunderArticle4
shallbewithdrawnifthecompetent authority ofthecountryinwhich
thecreditinstitution whichestablished thebranchhasitsheadoffice
haswithdrawn Authorization fromthatinstitution .
3Withdrawal underparagraph 1,lit.candd,shallbeeffectedonly
ifthemeasures prescribed bythecompetent authorities forcorrecting
thesituatior.of theinstitution orthebranchdonotseemlikelytobe
successful orarenotadoptedbytheinstitution orbranch.

'-27-
4-.Beforewithdrawing fromabranchanauthorization grantedunder
Article4tthecompetent authority oftheMemberStateinwhichitshead
officeissituated shallbeconsulted .Inhereimmediate actionisoalled
for,notification maytaketheplaceofsuchconsultation .Thesame
procedure .shalloccur,,byanalogy,incasesofwithdrawal ofauthorization
fromaninstitution whichhasbranches inotherMemberStates.
ι »
5-Reasonsmustbegivenforanywithdrawal ofauthorization ,which
mustbenotified tothepartiesconcerned andtotheCommission .

28*"
TITLEIII
BRANCHES OFINSTITUTIONS HAVING THEIRHEADOFFICEOUTSIIE
THECOMMUNITY
Article 9
1. •Pondingmoreintensive coordination ofthelaws,,regulations and
administrative provisions relating totranches ofcredit .institutions
havingtheirheadofficeoutsidetheCommunity ,MemberStatesshallnot
applytosuch "branches ,inrespectofthecommencement orcarrying onof
theirbusiness ,provisions whichresultinmorefavourable treatment than
thataccorded tobranches ofcreditinstitutions ofMemberStates..
2.•••Thecompetent authorities shallinformtheCommittee provided for "
inArticle 11ofnilapplications fortheauthorization ofbranches sub­
mittedtothembycreditinstitutions havingtheirheadofficeoutside
theCommunity .,
3.-.TheCommunity may,throughagreements concluded inaccordance
withtheTreatywithoneormorethirdcountries ,agreetoapply ,
provisions which,havingregardtotheprinciple ofreciprocity ,accord
tobranches ofaninstitution havingitshead .officeoutsidethaCom­
munityidentical treatment throughout theCommunity .

-29-
TITLEIV
GEMERILANDTRiìITSITIOITAL PROVISIOFS ,='
•* ••.
•».».
Article 10
» Λ
1.Creditinstitutions towhichthisDirective applieswhichlawfully
commenced ,"business "beforetheentryintoforceof.theprovisions ofthis
Directiveshall "bedeemedto"beauthorized .Theymustsatisfythe-
condition !laiddowninthesecondindentofArticle 3»paragraph 2,and
shall "besubjecttotheprovisions ofthisDirective -concerning the
carrying onofbusiness by>creditinstitutions .-,Theyshallbeincluded
inthelistprovidedfor.inArticle 3»paragraph 6. ■;
2.;Branches ,whichbeforetheentryintoforceofthisDirective were
lawfully SetupinaMemberStatewhichrequires suchbranches .tobe
authorized byacreditinstitution subjecttothisDirective ,shall ,be
deemedtobeauthorized andshallbesubjecttothisDirective .
3.'•Ifaninstitution orabranchdeemedtobeauthorized underpara­
graphs 1or2hasnotundergone anyauthorization procedure priorto
commencing business ,aprohibition onthecaryying onoftheirbusiness
shalltaketheplaceofwithdrawal ofauthorization -Article8sh?.llin
suchcircumstances applybyanalogy.

1.Thereshallbesetupalongside theCommission aContactCommittee
havingthefollowing taskss
a)offacilitating ,withoutprejudice totheprovisions ofArticles 169and
170oftheTreaty,auniformapplication oftheDirectives adopted "bythe
Councilwithregardtocreditinstitutions ,byregularconsideration of
theconcrete problems involvedintheirapplication :
b)offacilitating acommonattitude amongcompetentauthorities concerning
thesettingupofcreditinstitutions azidtheiroperations ;thisconcer-
'tationshallcoverinparticular :
-decisions ofMemberStatesaboutdeferring theapplication ofthis
Directive ; v
-conditions ofauthorization fornewcreditinstitutions orforbranches
ofcreditinstitutions basedinanother MemberStateoroutside the
Community ; '
-ratiosofcertainitomsofbalancesheetssetoutinArticle 6;
-withdrawal ofauthorizations ;
-notifications totheCommission ofchangesinnational lewsaffecting
thesectorcoveredbythisDirective ; ■
c)ofassisting theCommission inthepreparation ofnewproposals tothe
Councilconcerning furthercoordination ,ofadvising ontheevolution
andstructure ofthebankingsector;
»• -.
d)ofputtingintoeffectthecooperation providedforinArticle7ofthe
Directive 73/I03/EECof28June1973.

2.TheContactCommittee shall "becomposedofamaximumoftworepresenta­
tivesofthesupervisory authorities ofeachMemberState,togetherwithtwo
representatives oftheCommission .Theserepresentatives may"beaccompanied ,
fromtimetotimeandbyprioragreement oftheCommittee byoneormore
advisers .Thesecretariat willbeprovided bytheCommission .
3.ThefirstmeetingoftheCommittee shallbeconvened bytheCommission
undertheChairmanship ofoneofitsrepresentatives .Atthatmeeting ,the
Committee shalladoptitsRulesofProcedure ,whichwillalsoincludepro­
visionsconcerning itslinkswiththeEuropean Monetary Cooperation Fund,
andshallalsoelectitsChairman andDeputy-Chairman .
4.Theofficesofpresident andvice-president shallbefilledinrotation ,
foroneyearatatime,bymembersrepresenting thecompetent authorities of
oneandthesameMemberState.
5.Meetings oftheCommittee shallbeconvoked byitspresident ,either
onhisowninitiative orattherequestofoneofitsmembers .
6.AlltheCommittee'sdiscussions shallbesubjecttotheobligation of
professional secrecy,asspecified inArticle 12,paragraphs 1and2,The
contentofsuchdiscussion maynotbemadepublicinanywaysavewiththe
expressconsentoftheCommittee .
Article 12
1.MemberStatesshallensurethatallpersonsemployed bythecompetent
authorities axeboundbytheobligation ofprofessional secrecy.Thisobliga­
tionofsecrecyshallimplythatnoinformation received bytheminthecourse
oftheirdutiesmaybedisclosed exceptbyvirtueofprovisions laiddownby
lav/.Itshallalsoimplyanabsenceofanyobligation tocommunicate such
information tootherauthorities .
2.Paragraph 1shallalsoapplytotherepresentatives oftheCommission on
theCommittee provided forinArticle 11.
3.Theprovisions ofparagraph 1shallnothoweverpreclude ,asprovided
inthisDirective ,thecommunication ofinformation betweenthecompetent
authorities ofthevarious MemberStates,Personsemployed bycompetent
authorities reoeiving suchinformation shallbesubjecttotheobligation of
professional secrecyinrespectthereof.Theymayonlydivulgesuchinforma­
tionontheexpressauthorization inwritingofthecompetent authority which
communicated theinformation .

Article 13
MemberStatesshallprovidethatdecisions takeninrespectofa
creditinstitution inpursuance oflaws,regulations oradministrative
;provisions adoptedinaccordance withthisDirective maybesubjectto
appealtothecourts.Thesameshallapplywherenodecisionistaken
withinsixmonthsofitssubmission inrespectofanapplication for
authorization whichcontainsalltheinformation required tinderthe
provisions currently inforce. ...

TITLEV
FINALPROVISIONS
Article 14
1.Withineighteen monthsofthepublication providedforinArticle 2,
paragraph 4>andinanycasewithintwenty-four monthsofthenotification
ofthisDirective ,theMemberStatesshalltakethemeasures necessriry to
implementit.TheyshallnotifytheCommission ofthesemeasures without
delay.
2.OncethisDirective hasbeennotified ,theMemberStatesshall,
insufficient timetoenableittogiveitsviewsthereon,informthe
Commission ofalllaws,regulations oradministrative provisions which
theyproposetoadoptinthefieldgoverned bythisDirective .
3.ThisDirective isaddressed totheMemberStates.