EN ECB-P UBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 31 October 2011  
on stabilisation measures and bridge banks 
(CON/2011/86) 
 
Introduction and legal basis  
On 20 October 2011, the European Central Ba nk (ECB) received a request from Banca Na ţională a 
României (BNR) for an opinion on a draft governme nt emergency ordinance amending and supplementing 
Government Emergency Ordinance No 99/2006 on cr edit institutions and cap ital adequacy (GEO No 
99/2006)1 and Government Ordinance No 39/1996 on the setting up and operation of the deposit guarantee 
fund in the banking system (GO No 39/1996)2 (hereinafter the ‘draft ordinance’).  
The ECB’s competence to de liver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third and 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 provisions3, as the draft ordinance relates to BNR and to rules applicable to the 
financial institutions insofar as they materially influe nce the stability 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 has adopted this opinion. 
 1.
  Purpose of the draft ordinance 
1.1  The draft ordinance will provide the supervisory au thority with the tools to manage financial stability 
threats posed by the deterioration of the financial s ituation of authorised credit institutions or of the 
group to which they belong. To th is end, it will introduce a set of stabilisation measures for the credit 
institution in distress, in addition to the special  administration procedure already applicable.  
1.2 Amendments to GEO No 99/2006  
The draft ordinance will introduce the following st abilisation measures in th e legal framework for 
credit institutions and financial investment companies in Romania:  
                                                 
1  Published in Monitorul Oficial al României , Part One, No 1027, 27.12.2006.  
2  Republished in Monitorul Oficial al României , Part One, No 587, 19.8.2010.  
3  OJ L 189, 3.7.1998, p. 42.  
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2 (a) the total or partial transfer of assets and liabiliti es of a credit institution to one or more eligible 
institutions;  
(b) the appointment of the Bank Deposit Guaran tee Fund (BDGF) as a delegated administrator 
and shareholder of the credit institution4, by increasing that credit institution’s share capital 
and subscribing to the new shares issued by  the BDGF. The shares acquired by the BDGF 
must be sold within two years following the date of acquisition; 
(c) the transfer of assets and liabilities of a credit institution to a bridge bank, established for this 
purpose, if measures (a) and (b) cannot be applie d or if their application does not ensure the 
removal of the threat to financial stability. 
The BDGF, which is a public law legal entity5, provides the financing for the stabilisation measures: 
first, from the resources of the Bank Resolution Fund and, then, if those resources have been used up, 
from its own resources. Such financing may not exceed  a level by which the coverage degree of the 
BDGF’s exposure decreases below the limit of 0.5%  of the total value of the guaranteed deposits. 
Where the BDGF’s resources are in sufficient, the difference is pr ovided by loans granted by the 
Ministry of Public Finance to the BDGF within 15 banking days from receipt of the request from the 
BDGF. A government decision will regulate the loan. 
The bridge bank is established and operates for up to  two years - unless extended for serious reasons 
- according to the legislation applicable to the cr edit institutions and is subject to BNR’s prudential 
supervision. The stated purpose of the bridge bank is to ensure the prudent continuous provision of 
banking services related to the assets and liabilities take n over in view of its subsequent sale to an 
eligible third party purchaser. The bridge bank s ubrogates to the rights and obligations arising from 
agreements entered into by the credit institution from which the tran sfer was made. The bridge bank 
is sold on the basis of BNR’s decision by: (a) se lling shares, or (b) selling assets with assumption of 
liabilities. 
1.3 Amendments to GO No 39/1996  
The legal framework for the Romanian Deposit Guar antee Scheme is also amended to foster the 
stabilisation measures and its new competences: the BDGF may become the delegated administrator and shareholder of a credit institution which is subject to a stabilisation measure; where a bridge bank is created, the BDGF is its sole shareholder and exercises the tasks of the supervisory committee. In 
these cases, the BDGF finances the stabilisa tion measures with BNR’s prior approval. 
The draft ordinance also modifies the regime for the special fund initially created for compensating 
persons negatively affected by the measures implemented during the special administration procedure. This Fund is renamed the Bank Resolutio n Fund and it may also finance the stabilisation 
measures.  
                                                 
4  Article 2545 to be inserted in GEO No 99/2006.  
5  Article 1(2) of GO No 39/1996.  
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3 2. General observations  
2.1 The amendments in the draft ordinance are part of  Romania’s commitments in the Letter of Intent of 
14 September 2011 in the context of the Sta nd-by Arrangement between Romania and the 
International Monetary Fund and the European Uni on; their entry into force is envisaged for 31 
October 2011. The consulting authority therefore invokes extreme urgency and asks the ECB to deliver its opinion by 26 October 2011 to enable the Romanian legislator to take the ECB’s opinion into account. The ECB draws the consulting authority’ s attention to the second sentence of Article 4 
of Decision 98/415/EC according to which the ECB must  be consulted ‘at an appropriate stage’ in the 
legislative process. This implies that the consulta tion should take place at a point in the legislative 
process that affords the ECB sufficien t time to carefully examine the draft legislative provisions and 
to adopt its opinion in the required language vers ions and which also enables the relevant national 
authorities to take the ECB’s opinion into cons ideration before the provisions are adopted.   
2.2 Furthermore, the ECB notes that the draft ordinance will need to be reviewed in the light of the future 
Union regulatory framework on bank recovery and reso lution, in particular with regard to resolution 
tools and resolution authorities’ powers, and of th e forthcoming recast Directive on deposit guarantee 
schemes. 
 3. Specific observations 3.1 The ECB welcomes the introduction of a bridge bank as a stabilisation measure, with the specific 
purpose of transferring to it the assets and liab ilities of a troubled credit institution in the 
circumstances set out by the draft law. As regard s the period of two years for the existence of the 
bridge bank
6, the ECB considers that BNR should have th e power to extend this period if it deems 
necessary. In that case, the ECB considers that it is not sufficient that this decision will be taken ‘for 
serious reasons…in order to ensure continuity of ba nking services’. In the interest of legal certainty 
and in keeping with the interim nature of the br idge bank as a resolution tool, the grounds on which 
BNR may decide to extend the bridge bank should be  set out precisely; such grounds may include a 
continuing risk to financial stability or the fact  that negotiations with a purchaser are not yet 
completed.  
3.2  The draft ordinance provides that ‘After the transfer, the BDGF shall appoint an authorised 
independent expert to assess the quality of assets taken over by the bridge bank, to calculate, 
according to the applicable accounting regulations, the fair value of the transferred assets and 
liabilities and the total value of the transfer’7. It is important for the draft law to express clearly that 
any State or central bank financial assistance provide d or potentially to be provided, apart from 
ordinary market operations on the usual terms, will be deducted from the calculation of the fair value 
of the transferred assets and liabilities.   
                                                 
6  New Article 2546 of GEO No 99/2006.  
7  New Article 25411(5) of GEO No 99/2006.  
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4 3.3  Funding of resolution measures by th e Bank Resolution Fund and by the BDGF  
 The purpose of the Bank Resolution Fund (BRF), wh ich is based on the form er Special Fund, needs 
to be clarified. The new BRF appears to support compensation of ‘persons prejudiced by measures 
taken’ both at an early interv ention and resolution phase. In add ition the BRF’s financial resources 
may be used to finance the stabilisation measures8 but the draft ordinance does not specify 
unambiguously when and how such financing will be triggered. Furthermore, the respective roles of 
the BRF and the BDGF in financing the stabilisat ion measures are not sufficiently clear and the 
relationship between the BRF and the BDGF needs to be clarified. 
 Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on 
deposit-guarantee schemes9 requires that deposit-guarantee schemes  (DGSs) should be in a position 
to pay duly verified claims by depositors in the periods specified by this Directive10 which also 
implies that the DGSs should have adequate financ ial means at their disposal to realise this 
objective11. Generally, the ECB considers that, to avoid confusing the deposit guarantee role of the 
BDGF and the resolution role of the BRF, it woul d be more appropriate for the BRF’s financial 
resources12, rather than the BDGF’s resources, to be u sed to finance the stabilisation measures and to 
capitalise the bridge bank. In any case, the B DGF’s financial resources available for paying 
guaranteed deposits should be ring-fe nced and, if necessary, only used to cover the part of the 
resolution cost that indirectly ensures the depositors’ protection13. In resolution, the amount paid by 
the BDGF for the financing of stabilisation measures14 should therefore be limited to the amount of 
guaranteed deposits transferred to a private sector purchaser or a bridge bank15. This is crucial to 
ensure that the objective of the deposit guarantee scheme is fully respected. In the same vein, the 
BDGF’s involvement as shareholder and administra tor of the ailing or bridge bank should be 
reconsidered and the BRF should instead assume this role. 
 The ECB considers it very important for a sat isfactory level of funds to be collected ex ante  from the 
financial sector for the deposit guarantee and the reso lution fund, given the countercyclical nature of 
such pre-collected funds. The ECB welcomes  the special supplementary contributions ex post as a 
complement to the ex ante  funding regime for the BDGF and the BRF where BNR considers the 
financial resources accumulated in the BDGF and in the BRF to be insufficien t to ensure payments 
due.  
                                                 
8  Article 58(1)1 to be inserted in GO No 39/1996.  
9  OJ L 135, 31.5.1994, p. 5.  
10  See Article 10(1) of the Directive 94/19/EC.  
11  See recital (23) of Directive 94/19/EC specifying that financing capacity of DGSs must be in proportion to their liabilities;  
see also paragraph 2.5 of ECB Opinion CON/2007/26.  
12  Article 60 of GO No 39/1996.  
13  See ESCB contribution to the Commission’s public consultatio n on the technical details of a possible EU framework for 
bank recovery and resolution, p. 18.  All ECB documents are available on the ECB’s website at www.ecb.europa.eu.  
14  Section 2 Article 2541 to be inserted in GEO No 99/2006.  
15  This is not the case in the draf t ordinance. See Section 2 Article 2542(1) to be inserted in GEO No 99/2006 and Article 9(2) 
of GO No 39/1996 to be amended.  
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5 3.4 Central bank independence 
 The ECB appreciates that any decision on the u se of the BDGF’s financial resources to finance 
transactions involving the transfer of covered de posits is subject to BNR’s approval and hence 
recognises BNR’s expertise. The ECB restates its view  that the functions to be performed by BNR to 
assist stabilisation measures must be conducted in a manner that is fully compatible with BNR’s 
institutional and financial independence which safe guards the proper performance of its tasks under 
the Treaty and the Statute of the European System  of Central Banks and of the European Central 
Bank16. 
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 31 October 2011. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
16  See paragraph 3.7 of Opinion CON/2008/68 and paragraph 3.3 of Opinion CON/2009/51.