NoC175/4 OfficialJournaloftheEuropeanCommunities 11.7.92
II
(PreparatoryActs)
COMMISSION
AmendedproposalforaCouncilDirectiveonmonitoringandcontrollinglargeexposuresof
creditinstitutions
(92/C175/04)
COM(92)273final—SYN333
(SubmittedbytheCommissionpursuanttoArticle149(3)oftheEECTreatyon22June1992)
THECOUNCILOFTHEEUROPEANCOMMUNITIES ,thebusinessofcreditinstitutions(5),aslastamendedby
Directive89/646/EEC(6),formakingsuggestionstothe
Commissionwithaviewtocoordinatingthecoefficients
applicableintheMemberStates;HavingregardtotheTreatyestablishingtheEuropean
EconomicCommunity,andinparticularthefirstand
thirdsentencesofArticle57(2)thereof,
HavingregardtotheproposalfromtheCommission(!),Whereasmonitoringandcontrollingtheexposuresofa
creditinstitutionisanintegralpartofitssupervision;
whereasanexcessiveconcentrationofexposuresthrough
asingleclientorgroupofconnectedclientsmayresultin
anunacceptableriskofloss;whereassuchasituation
maybedeemedtobeprejudicialtothesolvencyofa
creditinstitution;incooperationwiththeEuropeanParliament(2),
HavingregardtotheopinionoftheEconomicand
SocialCommittee(3),
WhereasthisDirectiveisconsistentwiththeaimssetout
intheCommission'sWhitePaperoncompletingthe
internalmarket(4),Whereascommonguidelinesformonitoringand
controllingexposuresofcreditinstitutionswere
introducedinitiallybyCommissionRecommendation
87/62/EEC(7);whereasthatinstrumentwaschosen
sinceitpermittedexistingsystemstobeadjusted
graduallyandnewsystemstobeestablishedwithout
causingdislocationtothebankingsystemofthe
Community ;whereas,withthatfirstphasenowover,it
isnecessaryforabindinginstrumenttobeadopted,
applicabletoallCommunitycreditinstitutions;Whereastheessentialrulesformonitoringshouldbe
harmonized ;whereasMemberStatesshouldhavethe
optionofadoptingmorestringentprovisionsthanthose
providedforbythisDirective;
WhereasthisDirectivehasbeenthesubjectofconsul­
tationwiththeBankingAdvisoryCommittee,whichis
responsible,pursuanttoArticle6(4)ofCouncil
Directive77/780/EECof12December1977onthe
coordinationoflaws,regulationsandadministrative
provisionsrelatingtothetakingupandpursuitofWhereasthemonitoringrequirementthroughoutthe
Communityshouldbeequivalentascreditinstitutionsin
aunifiedbankingmarketareengagedindirectcompe­
titionwithoneanother;whereas,tothatend,thecriteria
appliedfordeterminingtheconcentrationofexposures
shouldbethesubjectoflegallybindingrulesat
Communitylevelandcannotbeleftentirelytothe
discretionoftheMemberStates;whereastheadoption
oOJNoC123,9.5.1991,p.18.
(2)Notyetpublished.
(3)OJNoC339,31.12.1991,p.35.OOJNoL322,17.12.1977,p.30.
(')OJNoL386,30.12.1989,p.1.
OOJNoL33,4.2.1987,p.10. (4)Doc.COM(85)310.

11.7.92 OfficialJournaloftheEuropeanCommunities NoC175/5
theconsolidatedmonitoringofthegroupedundertakings
allowsforanadequatelevelofsupervision,withoutthe
impositionofmorestringentlimitsonexposurebeing
necessary;whereasunderthisapproachbankinggroups
willalsobeencouragedtoorganizetheirstructuresin
suchawayastomakeconsolidatedmonitoringpossible,
whichisadesirableresultbecauseitallowsamore
comprehensive levelofmonitoringtobecarriedout;
Whereas,inordertoensureharmoniousapplicationof
theDirective,MemberStatesshouldbeallowedtomake
provisionforatwo-stageapplicationofthenewlimits;
whereas,forsmallercreditinstitutions,alongertran­
sitionalperiodmaybewarrantedinasmuchastoorapid
anapplicationofthe25%rulewouldreducetheir
lendingactivitytooabruptly;
Whereas,asregardstherisksassumedinrespectoftwo
undertakingswhosecontinuedfinancingisofvital
importanceforPortugal'senergysupply,thePortuguese
Republicshouldbegivenatransitionalperioduntil31
December1998inordertoallowPortuguesecredit
institutionstoundertakearestructuringoperationto
enablethemtomaintain,attheendofthatperiod,their
capacitytofinancethesaidundertakings while
respectingthelimitslaiddowninthisDirective;ofcommonruleswillthereforebestservetheinterestsof
theCommunity,sinceitwillpreventdifferencesin
competitiveconditions,whileatthesametimestrength­
eningtheCommunity'sbankingsystem;
Whereas,asregardsthepreciseaccountingtechniqueto
beusedforassessingexposures,referenceismadetothe
provisionsofCouncilDirective86/635/EECof8
December1986ontheannualaccountsandconsolidated
accountsofbanksandotherfinancialinstitutions(');
WhereasCouncilDirective89/647/EECof18
December1989onasolvencyratioforcredit
institutions(2)containsalistofcreditriskswhichmaybe
incurredbycreditinstitutions;whereasitistherefore
justifiedtorefertothatlistinthedefinitionofexposure
forthepurposesofthisDirective;whereasitisnot,
however,appropriatetoreferonprincipletothe
weightingsordegreesofrisksetoutbyDirective
89/647/EEC;whereasthoseweightingsanddegreesof
riskhavebeendevisedinordertosetupageneral
solvencyrequirementtocoverthecreditriskofcredit
institutions;whereas,intheframeworkofregulating
largeexposures,thepurposeistolimitthemaximum
potentiallossthatacreditinstitutionmayincurthrough
asingleclientoragroupofconnectedclients;whereasit
isthereforeappropriatetoadoptaprudentapproach
involvingtakingaccountofthenominalvalueof
exposures,withoutapplicationofanyweightingsor
degreeofrisk;
Whereas,whenacreditinstitutionhasanexposuretoits
ownparentundertakingortoothersubsidiariesofits
parentundertaking ,particularprudenceisnecessary,
whereasthemanagementofexposuresincurredbycredit
institutionsmustbecarriedoutinafullyautonomous
manner,withrespecttotheprinciplesofsoundbanking
management ,withoutregardtoanyotherconsiderations
beyondtheseprinciples;whereastheprovisionsofthe
secondCouncilDirective89/646/EECof15December
1989onthecoordinationoflaws,regulationsand
administrative provisionsrelatingtothetakingupand
pursuitofthebusinessofcreditinstitutions,and
amendingDirective77/780/EEC,requirethatwherethe
influenceexercisedbypersonsholdingaqualifying
participationinacreditinstitutiondirectlyorindirectly
islikelytooperatetothedetrimentofthesoundand
prudentmanagementoftheinstitution,thecompetent
authoritiesshalltakeappropriatemeasurestoputanend
tothatsituation;whereas,inthelargeexposuresfield,
specificstandardsshouldalsobelaiddownwithrespect
toexposuresheldbyacreditinstitutiononitsowngroup
andwhereasinsuchcasesmorestringentrestrictionsare
justifiedthanforotherexposures;whereasmore
stringentrestrictionsmust,however,notbeappliedwhen
theparentundertakingisafinancialholdingcompanyor
acreditinstitutionandtheothersubsidiariesareeither
creditorfinancialinstitutionsorundertakingsoffering
ancillarybankingservices,totheextentthatallsuch
undertakingsarecoveredbythesupervisionofthecredit
institutiononaconsolidatedbasis;whereasinsuchcasesWhereasimplementing powersofthesamenatureas
thosewhichtheCouncilreservedforitselfinDirective
89/299/EECof17April1989ontheownfundsof
creditinstitutions(3)weregrantedtotheCommissionin
Directive89/646/EEC;
Whereas,takingaccountofthespecificcharacteristicsof
thesectorinquestion,itisappropriatetogivethe
committeeprovidedforinArticle22ofDirective
89/646/EECtheroleofassistingtheCommissionin
carryingouttheresponsibilities conferredonit
accordingtoProcedureIII,Variant(a)ofCouncil
Decision87/373/EECof13July1987layingdownthe
proceduresfortheexerciseofimplementing powers
conferredontheCommission (4);
Whereas,withregardtothemonitoringoflarge
exposuresconcerningactivitieswhichareprincipally
subjecttomarketrisks,therequisitecoordinationof
methodsofmonitoringcanbeensuredundera
Communityarrangementregardingcapitaladequacyof
investmentfirmsandcreditinstitutions ;whereasthis
impliesthat,pendingCommunity legislation
C)OJNoL372,31.12.1986,p.1.
C)OJNoL386,30.12.1989,p.14.OOJNoL124,5.5.1989,p.16.
(4)OJNoL197,18.7.1987,p.33.

NoC175/6 OfficialJournaloftheEuropeanCommunities 11.7.92
concerningtheabovementioned largeexposures,the
monitoringoflargeexposuresrelatingtoactivitieswhich
areprincipallysubjecttomarketrisk,suchasthetrading
portfolio,underwritingcommitmentsfortheissueof
securitiesandclaimsrelatedtosettlementofsecurities
transactions,maybelefttothecompetentauthoritiesof
eachMemberState.(h)'exposures'meanstheassetsandoff-balance-sheet
itemsinArticle6ofDirective89/647/EECandin
AnnexesIandIIIthereto,withoutapplicationofthe
weightingsordegreesofrisksetoutinthose
provisions;therisksmentionedinAnnexIIImustbe
calculatedinaccordancewiththemethodsetoutin
AnnexIItothatDirective,withoutapplicationofthe
weightingsforcounterpartyrisk;allelements100%
oftheamountofwhichiscoveredbyownfunds
may,withtheapprovalofthecompetentauthorities,
beexcludedfromthedefinitionofexposures
providedthatsuchownfundsarenotincludedinthe
calculationofthesolvencyratioandofothermoni­
toringratioslaiddowninCommunityacts;
exposuresshallnotinclude:HASADOPTEDTHISDIRECTIVE :
Article1
Definitions
—inthecaseofforeignexchangetransactions,
exposuresincurredintheordinarycourseof
settlementduringtheperiodof48hoursafter
paymentismade,or
—inthecaseoftransactionsforthesaleor
purchaseofsecurities,exposuresincurredinthe
ordinarycourseofsettlementduringtheperiod
offiveworkingdaysfollowingthetimewhen
paymentismade,orthesecuritiesaredelivered,
whicheveristheearlier;
(i)'ZoneA'meansthezonedefinedinthesecond
indentofArticle2(1)ofDirective89/647/EEC;ForthepurposesofthisDirective:
(a)'creditinstitution'meansacreditinstitutionas
definedinthefirstindentofArticle1ofDirective
77/780/EEC,includingbranchesinthirdcountries
ofsuchacreditinstitution,andanyprivateorpublic
undertaking ,includingitsbranches,whichcorre­
spondstothedefinitiongiveninthefirstindentof
Article1ofDirective77/780/EECandwhichhas
beenauthorizedinathirdcountry:
(b)'competentauthorities'meansthecompetentauth­
oritiesasdefinedintheninthindentofArticle1of
Directive92/30/EECof6April1992onthesuper­
visionofcreditinstitutionsonaconsolidated
basis(x);
(c)'parentundertaking'meansaparentundertakingas
definedintheseventhindentofArticle1of
Directive92/30/EEC;
d)'subsidiaryundertaking'meansasubsidiaryunder­
takingasdefinedintheeighthindentofArticle1of
Directive92/30/EEC;
(e)'financialholdingcompany'meansafinancial
holdingcompanyasdefinedinthethirdindentof
Article1ofDirective92/30/EEC;
(f)'financialinstitution'meansafinancialinstitutionas
definedinthesecondindentofArticle1ofDirective
92/30/EEC;
(g)'ancillarybankingservicesundertaking'meansan
undertakingasdefinedinthefifthindentofArticle1
ofDirective92/30/EEC;(j)'ZoneB'meansthezonedefinedinthethirdindent
ofArticle2(1)ofDirective89/647/EEC;
(k)'ownfunds'meanstheownfundsofacredit
institutionwithinthemeaningofDirective
89/299/EEC;
(1)'control'meanstherelationshipbetweenaparent
undertakingandasubsidiary,asdefinedinArticle1
ofDirective83/349/EEC,orasimilarrelationship
betweenanynaturalorlegalpersonandanunder­
taking;
(m)'groupofconnectedclients'means:
(i)eithertwoormorepersons,whethernaturalor
legal,who,unlessshownotherwise,constitutea
singleriskbecauseoneofthemhas,directlyor
indirectly,controlovertheotherorothers;or (')OJNoL110,28.4.1992,p.52.

11.7.92 OfficialJournaloftheEuropeanCommunities NoC175/7
(ii)twoormorepersons,whethernaturalorlegal,
betweenwhomthereisnorelationshipofcontrol
asreferredtoin(i)abovebutwhoaretobe
regardedasconstitutingasingleriskbecause
theyaresointerconnectedthat,ifoneofthem
weretoexperiencefinancialproblems,theother
orallofthemwouldbelikelytoencounter
repaymentdifficulties .3.However,exposuresexemptedunderArticle4(7)
(a),(b),(c),(d),(f),(g)and(h)maybedispensedfrom
reportingwithinthemeaningofparagraph2.The
reportingfrequencylaiddowninthesecondindentof
paragraph2maybereducedtotwiceayearinthecase
ofotherexposuresreferredtoinotherpointsof
paragraph7andinArticle4(8),(9)and(10).
4.Thecompetentauthoritiesshallrequirethatevery
creditinstitution hassoundadministrative and
accountingproceduresandadequateinternalcontrol
mechanismsforidentifyingandrecordingalllarge
exposures,andsubsequentchangestothem,asdefined
andrequiredbythisDirective,andformonitoringthese
exposuresagainstthecreditinstitution'sownexposure
policies.Article2
Scope
ThisDirectiveshallapplytocreditinstitutionswhich
haveobtainedtheauthorization referredtoinArticle3
ofDirective77/780/EEC.
However,MemberStatesneednotapplythisDirective
to:
(a)institutionslistedinArticle2(2)ofDirective
77/780/EEC;
(b)institutionsinthesameMemberStatewhich,as
definedinArticle2(4)(a)ofDirective
77/780/EEC,areaffiliatedtoacentralbodyinthat
MemberState,providedthat,withoutprejudiceto
theapplicationofthisDirectivetothecentralbody,
thewholeasconstitutedbythecentralbodyandits
affiliatedinstitutionsissubjecttoglobalmonitoring .Whereacreditinstitutiontakesadvantageofthe
provisionsofparagraph3,itshallkeeparecordofthe
groundsputforwardforatleastoneyearfromtheevent
givingrisetothedispensation ,inordertoenablethe
competentauthoritiestoverifywhetheritisjustified.
Article4
Limitsonlargeexposures
1.Creditinstitutionsmaynotincuranexposuretoa
clientorgroupofconnectedclientswhereitsvalue
exceeds25%ofownfunds.
2.Wherethatclientorgroupofconnectedclientsis
theparentundertakingorsubsidiaryofthecredit
institutionand/oroneormoresubsidiariesofthatparent
undertaking,thepercentageprovidedforinparagraph 1
shallbereducedto20%.However,MemberStatesmay
exempttheabovementioned largeexposuresfromthis
limitiftheyprovideforspecificmonitoringofsuch
exposuresbyothermeasuresorprocedures .Theyshall
informtheBankingAdvisoryCommitteeandthe
Commission ofthecontentofthosemeasuresor
procedures .Article3
Reportingoflargeexposures
1.Anexposureofacreditinstitutiontoaclientor
groupofconnectedclientsshallbeconsideredtobea
'largeexposure 1whereitsvalueisequaltoorexceeds
10%ofitsownfunds.
2.Areportofeverylargeexposurewithinthe
meaningofparagraph 1shallbemadebythecredit
institutiontothecompetentauthorities.MemberStates
shallprovidethatthisreportingistobecarriedout,at
theirdiscretion,inaccordancewithoneofthefollowing
twomethods :
—notificationofalllargeexposuresatleastoncea
year,backedupbycommunication duringtheyear
ofallnewlargeexposuresandanyincreaseof
existinglargeexposuresofatleast20%compared
withthelastcommunication ,
—notificationofalllargeexposuresatleastfourtimesa
year.3.Creditinstitutionsmaynotincurlargeexposures
which,intheaggregate,exceed800%ofownfunds.
4.MemberStatesmayimposemorestringentlimits
thanthoselaiddowninparagraphs 1,2and3.

NoC175/8 OfficialJournaloftheEuropeanCommunities 11.7.92
5.Acreditinstitutionshallcomplywiththelimitslaid
downinparagraphs 1,2and3atalltimesinrespectof
itsexposures.However,ifinanexceptionalcase
exposuresexceedthoselimits,thismustbereported
withoutdelaytothecompetentauthoritieswhichmay,
wherethecircumstances warrantit,allowthecredit
institutionalimitedperiodoftimeinwhichtocomply
withthelimits.
6.MemberStatesmayfullyorpartiallyexemptfrom
theapplicationofparagraphs 1,2and3exposures
incurredbyacreditinstitutiontoitsparentundertaking,
toothersubsidiariesofthatundertakingortoitsown
subsidiaries,insofarasthoseundertakingsareincluded
inthesupervisiononaconsolidatedbasistowhichthe
creditinstitutionitselfissubject,inaccordancewith
Directive92/30/EECorwithequivalentstandardsin
forceinathirdcountry.institutionorwithacreditinstitutionwhichisthe
parentundertakingorasubsidiaryofthelending
institution;
(h)assetitemsandotherexposuressecured,tothesatis­
factionofthecompetentauthorities,bycollateralin
theformofcertificatesofdepositissuedbythe
lendinginstitutionorbyacreditinstitutionwhichis
theparentundertakingorasubsidiaryofthelending
institutionandlodgedwitheitheroneofthem;
(i)assetitemsconstitutingclaimsandotherexposures
oncreditinstitutions,withamaturityofoneyearor
less,butnotconstitutingsuchinstitutions'ownfunds
asdefinedinDirective89/299/EEC;
(j)assetitemsconstitutingclaimsandotherexposures,
withamaturityofoneyearorless,onthose
institutionswhicharenotcreditinstitutionsbut
whichmeetthetermsofArticle8(2)ofDirective
89/647/EEC,andsecuredinaccordancewiththe
termsofthatparagraph;
(k)billsoftradeandothersimilarbills,withamaturity
ofoneyearorless,bearingthesignatureofanother
creditinstitution;
(1)bondsdefinedinArticle22(4)ofCouncilDirective
85/611/EEC,asamendedbyCouncilDirective
88/220/EEC;
(m)pendingsubsequentcoordination ,holdingsinthe
insurancecompaniesreferredtoinArticle12(3)of
Directive89/646/EECuptoamaximumof40%of
theownfundsofthecreditinstitutionacquiringthe
holding;
(n)assetitemsconstitutingclaimsonregionalorcentral
creditinstitutionswithwhichthelendinginstitution
isassociatedaspartofanetworkbyvirtueoflegal
orstatutoryprovisionsandwhichareresponsible,in
accordancewiththoseprovisions,forcashclearing
operationswithinthenetwork;
(o)exposuressecured,tothesatisfactionofthe
competentauthorities,bycollateralintheformof
securitiesotherthanthoseissuedbyZoneAcentral
governmentsorcentralbanksortheEuropean
Communities ,providedthatthesecuritiesarenot
issuedbythecreditinstitutionitselforitsparent
companyoroneoftheirsubsidiaries,orbytheclient
orgroupofconnectedclientsinquestion.The
securitiesgivenascollateralmustbevaluedonthe
basisofmarketpricesandhaveanexcessvalueover
theexposuresguaranteedandeitherbetradedona
stockexchangeorbegenuinelynegotiableand
regularlyquotedonamarketoperatedunderthe
auspicesofrecognizedstockmarketoperatorsand
allowing,tothesatisfactionofthecompetentauth­
oritiesoftheMemberStateoforiginofthecredit7.MemberStatesmayfullyorpartiallyexemptthe
followingexposuresfromtheapplicationofparagraphs
1,2and3:
(a)assetitemsconstitutingclaimsonZoneAcentral
governmentsandcentralbanks;
(b)assetitemsconstitutingclaimsontheEuropean
Communities ;
(c)assetitemsconstitutingclaimscarryingtheexplicit
guaranteesofZoneAcentralgovernmentsand
centralbanksoroftheEuropeanCommunities ;
(d)otherexposuresattributableto,orguaranteedby,
ZoneAcentralgovernmentsandcentralbanksorthe
EuropeanCommunities ;
(e)assetitemswhichconstituteclaimsandother
exposuresonZoneBcentralgovernmentsand
centralbanksandwhicharedenominated and,
whereapplicable,fundedinthenationalcurrencies
oftheborrowers ;
(f)assetitemsandotherexposuressecured,tothesatis­
factionofthecompetentauthorities,bycollateralin
theformofZoneAcentralgovernmentorcentral
banksecurities,orsecuritiesissuedbytheEuropean
Communitiesorbytheregionalorlocalauthorities
intheMemberStatesforwhichArticle7of
Directive89/647/EEClaysdownazeroweighting
asregardssolvency;
(g)assetitemsandotherexposuressecured,tothesatis­
factionofthecompetentauthorities,bycollateralin
theformofcashdepositsplacedwiththelending

11.7.92 OfficialJournaloftheEuropeanCommunities NoC175/9
8.MemberStatesmay,forthepurposesofparagraphs
1,2and3,applyaweightingof20%toassetitems
constitutingclaimsonregionalandlocalauthoritiesin
theMemberStatesandtootherexposuresto,or
guaranteedby,suchauthorities;however,subjecttothe
conditionslaiddowninArticle7ofDirective
89/647/EEC,MemberStatesmayreducethisrateto
0%.institution,fortheestablishmentofanobjectiveprice
whichenablestheexcessvalueofthesecuritiestobe
verifiedatanytime.Therequiredexcessvalueis
100%;however,itis150°/ointhecaseofshares
and50%inthecaseofbondsissuedbycredit
institutions,regionalorlocalauthoritiesofthe
MemberStatesotherthanthosereferredtoinArticle
7ofCouncilDirective89/647/EEC,andinthecase
ofbondsissuedbytheEuropeanInvestmentBank
andmultilateraldevelopmentbanksasdefinedin
Article2ofCouncilDirective89/647/EEC.
Collateralintheformofsecuritiesmaynot
constitutecreditinstitutions'ownfundsasdefinedin
Directive89/299/EEC. 9.MemberStatesmay,forthepurposeofparagraphs
1,2and3,applyaweightingof20%toassetitems
constitutingclaimsandtootherexposuresoncredit
institutionswithamaturityofoveroneyearbutnot
morethanthreeyearsandaweightingof50%toasset
itemsconstitutingclaimsoncreditinstitutionswitha
maturityofoverthreeyears,providedthatthelatterare
representedbydebtinstrumentsissuedbyacredit
institutionandthatthosedebtinstrumentsare,inthe
opinionofthecompetentauthorities,genuinelynego­
tiableonamarketmadeupofprofessionaloperatorsand
aresubjecttodailyquotationonthismarket,ortheissue
ofwhichhasbeenauthorizedbythecompetentauth­
oritiesoftheMemberStateoforiginoftheissuingcredit
institution .Innocasemayanyoftheseitemsconstitute
ownfundswithinthemeaningofDirective89/299/EEC.(p)mortgageloansonresidentialpropertysecured,to
thesatisfactionofthecompetentauthorities,by
collateralaswellastransactionsinrespectofleasing
underwhichthelessorretainsfullownershipofthe
residentialpropertyleasedforaslongasthelessee
hasnotexercisedhisoptiontopurchase,inboth
casesupto50%ofthevalueoftheproperty
concerned .Thevalueofthepropertyshallbe
calculated,tothesatisfactionofthecompetentauth­
orities,onthebasisofstrictvaluationstandardslaid
downbystatuteoradministrative provisions .The
valuationshallbeperformedatleastonceayear.In
thiscontextresidentialpropertyisdefinedasa
residencetobeoccupiedorrentedoutbythe
borrower:
(q)50%oftheoff-balance-sheet itemswithamoderate
riskasmentioned inAnnexItoDirective
89/647/EEC;10.Bywayofderogationfromtheprovisionsofthe
precedingparagraphandofparagraph7(i),Member
Statesmayapplyaweightingof20%toassetitems
constitutingclaimsandotherexposuresoncredit
institutions,regardlessoftheirmaturity.
11.Whereanexposuretoaclientisguaranteedbya
thirdparty,orbycollateralintheformofsecurities
issuedbyathirdpartyundertheconditionssetoutin
paragraph7(o),MemberStatesmay:(r)subjecttoagreementbythecompetentauthorities,
guaranteesotherthanloanguarantees,whichhavea
legalorregulatorybasisandaregivenfortheir
membersbymutualguaranteeschemespossessing
thestatusofcreditinstitutionsasdefinedinArticle1
(a),subjecttoaweightingof20%oftheiramount.
MemberStatesshallinformtheCommissionofthe
usetheymakeofthisoptioninordertoensurethat
itdoesnotinvolvedistortionsofcompetition .No
laterthanfiveyearsafteradoptionofthisDirective,
theCommissionshallsubmittotheCouncilareport
accompanied ,ifnecessary,byanyappropriate
proposals.—deemtheexposuretohavebeenincurredtothethird
partyandnottotheclient,iftheexposureisdirectly
andunconditionally guaranteedbysuchthirdparty,
tothesatisfactionofthecompetentauthorities,
(s)off-balance-sheet itemswithalowriskasmentioned
inAnnexItoCouncilDirective89/647/EECtothe
extentthatanagreementhasbeenconcludedwith
theclientorgroupofconnectedclientsunderwhich
exposuremayonlyberiskedprovidedthatithas
beenascertainedthatitwillnotleadtothelimits
applicableunderArticle4(1),(2)and(3)being
exceeded .—deemtheexposuretohavebeenincurredtothethird
partyandnottotheclient,iftheexposuredefinedin
paragraph7(o)isguaranteedbycollateralunderthe
conditionssetouttherein.

NoC175/10 OfficialJournaloftheEuropeanCommunities 11.7.92
12.Nolaterthanfiveyearsafterthedatelaiddown
inArticle8(1),theCouncilwillexamine,onthebasisof
areportfromtheCommission,thetreatmentofthe
interbankexposuresprovidedforinparagraphs7(i),9
and10.TheCouncilwill,ifnecessary,decideon
changestobemadebutonthebasisofaproposalfrom
theCommission .agreement,transferresponsibility formonitoring
compliancewiththeobligationssetoutinArticles3and
4orinanyotherCommunityprovisionapplicabletothis
areatothecompetentauthoritieswhichhaveauthorized
andwhichmonitortheparentundertaking .The
CommissionandtheBankingAdvisoryCommitteeshall
bekeptinformedoftheexistenceandcontentofsuch
agreements .
Article6
Transitionalprovisionsrelatingtoexposuresinexcessof
thelimits
1.Where,atthetimeofthepublicationofthis
DirectiveintheOfficialJournaloftheEuropean
Communities,acreditinstitutionhasalreadyincurredan
exposureorexposuresexceedingeitherthelarge
exposurelimitortheaggregatelargeexposurelimits,as
referredtointhisDirective,thecompetentauthorities
shallrequirethecreditinstitutionconcernedtotakesteps
tohavetheexposureorexposuresbroughtintolinewith
theprovisionsofthisDirective.
2.Theprocessofhavingtheexposureorexposures
broughtintolineshallbedevised,adopted,implemented
andcompletedwithintheperioddeemedbythe
competentauthoritiestobeconsistentwiththeprinciple
ofsoundadministration andfaircompetition .The
competentauthoritiesshallinformtheCommissionand
theBankingAdvisoryCommitteeofthescheduleforthe
generalprocessadopted.
3.Acreditinstitutionmaynottakeanymeasure
whichwouldcausetheexposuresreferredtoin
paragraph 1toexceedthelevelexistingatthedateof
thepublicationofthisDirectiveintheOfficialJournalof
theEuropeanCommunities .
4.Theperiodapplicableunderparagraph2shall
expirenolaterthan31December2001.Exposureswith
alongermaturityforwhichthelendinginstitutionis
boundtorespectthecontractualtermsmaybecontinued
untiltheirmaturity.
5.Until31December1998,MemberStatesmayasan
optionincreasethelimitlaiddowninArticle4(1)to
40%andthelimitprovidedforinArticle4(2)to30%.
Insuchcasesandsubjecttoparagraphs 1to4,thetime
limitforbringingtheexposuresexistingattheendof
thisperiodintolinewiththelevelsinArticle4shall
expireon31December2001.
6.Inthecaseofcreditinstitutionswhoseownfunds,
withinthemeaningofArticle2(1)ofDirective
89/299/EEC,donotexceedECU7million,andonlyin
thecaseofsuchinstitutions,MemberStatesmayextend
byfiveyearsthetimelimitslaiddowninparagraph5.
MemberStatesmakinguseoftheprovisionsofthis
paragraphshalltakemeasurestopreventdistortionsof
competitionfromoccurringandshallinformthe
CommissionandtheBankingAdvisoryCommittee
thereof.Article5
Supervisiononaconsolidatedorunconsolidated basis
1.Ifthecreditinstitutionisneitheraparentunder­
takingnorasubsidiary,compliancewiththeobligations
setoutinArticles3and4orinanyotherCommunity
provisionapplicabletothisareashallbemonitoredonan
unconsolidated basis.
2.Intheothercases,compliancewiththeobligations
setoutinArticles3and4orinanyotherCommunity
provisionapplicabletothisareashallbemonitoredona
consolidated basisinaccordance withDirective
92/30/EEC.
3.MemberStatesmaywaivemonitoringof
compliancewiththeobligationssetoutinArticles3and
4orinanyotherCommunityprovisionapplicabletothis
areaonanindividualorsubconsolidated basiswith
respecttoacreditinstitutionwhich,asaparentunder­
taking,issubjecttomonitoringonaconsolidatedbasis
andtoanysubsidiaryofsuchacreditinstitutionwhichis
subjecttotheirauthorization andsupervisionandis
includedinthemonitoringonaconsolidatedbasis.
Thesamerightofwaivershallbeallowedwherethe
parentundertakingisafinancialholdingcompanyestab­
lishedinthesameMemberStateasthecreditinstitution,
providedthatthatcompanyissubjecttothesamemoni­
toringascreditinstitutions .
Inboththeabovecases,iftherightofwaiveris
exercised,measuresmustbetakentoensurethesatis­
factoryallocationofriskswithinthegroup.
4.Whereacreditinstitutiontheparentofwhichisa
creditinstitutionhasbeenauthorizedandissituatedin
anotherMemberState,thecompetentauthoritieswhich
grantedthatauthorizationshallrequirecompliancewith
theobligationssetoutinArticles3and4orinanyother
Communityprovisionapplicabletothisarea,onanindi­
vidualbasisor,whenappropriate,asubconsolidated
basis.
5.Notwithstanding paragraph4,thecompetentauth­
oritiesresponsibleforauthorizingthesubsidiaryofa
parentundertakingwhichisacreditinstitutionsituated
inanotherMemberStatemay,bywayofabilateral

11.7.92 OfficialJournaloftheEuropeanCommunities NoC175/11
7.Inthecasesreferredtoinparagraphs5and6,an
exposuremaybeconsideredtobea'largeexposure'ifits
valueisequaltoorexceeds15%ofownfunds.
8.Until31December2001,MemberStatesmay
substituteforthefrequencyofnotificationoflarge
exposures,asreferredtoinArticle3(1),secondindent,
afrequencyofatleasttwiceayear.
9.MemberStatesmayfullyorpartiallyexemptfrom
applicationofArticle4(1),(2)and(3)exposures
incurredbyacreditinstitutionconsistingofmortgage
loansasdefinedinArticle11(4)ofDirective
89/647/EECconcludedwithineightyearsofthedate
laiddowninArticle8(1),aswellaspropertyleasing
transactionsasdefinedinArticle11(5)ofDirective
89/647/EECconcludedwithineightyearsofthedate
laiddowninArticle8(1),inbothcasesupto50%of
thevalueofthepropertyconcerned .
10.Withoutprejudicetotheprovisionsofparagraph
4,Portugalmay,until31December1998,fullyor
partiallyexemptfromtheapplicationofArticle4(1)and
(3)exposuresincurredbyacreditinstitutiontoElec­
tricidadedePortugal(EDP)andPetrogal.
Article7
Subsequentamendments
1.Technicalamendmentstothefollowingpointsshall
beadoptedinaccordancewiththeproceduresetoutin
paragraph2:
—clarificationofdefinitionstotakeaccountofdevel­
opmentsonfinancialmarkets,
—clarification ofdefinitionstoensureuniform
applicationofthisDirective,
—alignmentoftheterminologyandofthewordingof
thedefinitionswiththosecontainedinsubsequent
instrumentsconcerningcreditinstitutionsandrelated
matters,
—clarificationoftheexemptionsprovidedforinArticle
4(5)to(10).
2.TheCommissionshallbeassistedbythecommittee
providedforinthefirstsubparagraphofArticle22(2)of
Directive89/646/EEC.
TherepresentativeoftheCommissionshallsubmittothe
committeeadraftofthemeasurestobetaken.The
committeeshalldeliveritsopiniononthedraftwithinatimelimitwhichthechairmanmaylaydownaccording
totheurgencyofthematter.Theopinionshallbe
deliveredbythemajoritylaiddowninArticle148(2)of
theTreatyinthecaseofdecisionswhichtheCouncilis
requiredtoadoptonaproposalfromtheCommission .
Thevotesoftherepresentatives oftheMemberStates
withinthecommitteeshallbeweightedinthemannerset
outinthatArticle.Thechairmanshallnotvote.
TheCommissionshalladoptthemeasuresenvisagedif
theyareinaccordancewiththeopinionofthe
committee .
Ifthemeasuresenvisagedarenotinaccordancewiththe
opinionofthecommittee,orifnoopinionisdelivered,
theCommissionshall,withoutdelay,submittothe
Councilaproposalrelatingtothemeasurestobetaken.
TheCouncilshallactbyaqualifiedmajority.
If,ontheexpiryofthreemonthsfromthedateof
referraltotheCouncil,theCouncilhasnotacted,the
proposedmeasuresshallbeadoptedbytheCommission .
Article8
Finalprovisions
1.MemberStatesshallbringintoforcethelaws,
regulationsandadministrative provisionsnecessaryto
complywiththisDirectiveby1January1994.Theyshall
forthwithinformtheCommissionthereof.
WhenMemberStatesadoptthesemeasures,theyshall
containareferencetothisDirectiveorbeaccompanied
bysuchreferenceontheoccasionoftheirofficialpubli­
cation.Themethodsofmakingsuchareferenceshallbe
laiddownbyMemberStates.
2.MemberStatesshallcommunicate tothe
Commissionthetextsofthemainprovisionsofnational
lawwhichtheyadoptinthefieldgovernedbythis
Directive .
3.PendingCommunitylegislationgoverningthe
monitoringoflarge'exposuresconcerningactivities
whichareprincipallysubjecttomarketrisksona
consolidatedornon-consolidated basis,thecompetent
authoritiesshalltreatthoselargeexposuresin
accordancewithmethodstobedeterminedbythose
authorities,havingregardtotheparticularnatureofthe
risksinvolved.
Article9
ThisDirectiveisaddressedtotheMemberStates.