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OPINION OF THE EUROPEAN CENTRAL BANK 
of 20 July 2011 
on crisis intervention measures for fi nancial institutions in difficulty 
(CON/2011/60) 
 
Introduction and legal basis  
On 19 April 2011, the European Central Bank (ECB) received a request from the Dutch Minister for 
Finance for an opinion on the draft law on crisis inte rvention measures (hereinafter the ‘draft law’). 
The ECB’s competence to deliver 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 provisions1, as the draft law relates to De Nederlandsche Bank (DNB) and to 
rules applicable to financial institutions insofar as they materially influence the stability of financial 
institutions and markets. In accordance with the first sen tence 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 law 
1.1 The draft law introduces, inter alia , a number of amendments to th e Law on financial supervision. 
In particular, it grants new powers to DNB and the Minister for Finance to intervene in situations 
where an institution
2 faces financial difficulty3 or where there is a serious and immediate risk to the 
stability of the financial system caused by an institution in difficulty.  
1.2 Pursuant to the draft law, DNB may prepare a plan  for the partial or total transfer of the shares, 
and/or assets and liabilities, including deposits, of an institution in difficulty to a private purchaser4. 
The plan becomes effective upon the district cour t’s approval. Transfers and related measures do 
not trigger the rights of the contracting parties of  a credit institution to exercise early termination, 
set off and netting5. 
1.3 Furthermore, the draft law grants the Minister for Finance the power to take ‘special measures 
related to the stability of the financial system’. A ccordingly, the Minister may expropriate the assets 
of an institution in difficulty for the purpose of  stabilising the financial system. The draft law 
                                                 
1  OJ L 189, 3.7.1998, p. 42. 
2  Under the draft law, an ‘institution’ refers to credit institutions and insurance companies. 
3  Defined in the new Article 3:159a(g), in conjunction with  the new Article 3:159b, of the Law on financial supervision. 
4  The new Section 3.5.4A of the Law on financial supervision. Pursuant to the new Article 3:159f of the Law on financial 
supervision, the State cannot be the purchaser. 
5  The new Article 3:267f of th e Law on financia l supervision. 
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2 provides for a right of indemnification for such ac tion, based on the actual value of the assets or 
securities seized. The value will be determined by est imating the market price at the time of the 
expropriation, less the amount of any financial support6. 
1.4 In addition to the amendments to the Law on fi nancial supervision, the draft law amends the Law 
on bankruptcy7, the Civil Code8, the Law on general administration9 and the Law on securities bank 
giro transactions10. 
 2. General observations 2.1 In line with its previous opinions, the ECB emphasi ses that, when adopting measures to deal with a 
financial crisis, Member States should act in a c oordinated manner to avoid significant differences 
in national implementation, which could have a counterproductive effect and cause distortions in 
global financial markets. Moreover, it is crucia l to ensure consistency with the Eurosystem’s 
operational framework and liquidity management
11. Against this background, any national measure 
should ensure a sufficiently level playing field with in the euro area, which is of key importance to 
maintaining the integrity of the euro area financial system. 
2.2 The ECB supports the plans put forward by th e European Commission to develop a crisis 
management and resolution framework for Union financial institutions. The Union clearly needs 
better tools with well-designed triggers to tackle  problems faced by financial institutions more 
effectively. National regimes should be as harm onised as possible and there should be better 
coordination between Member States in crisis situat ions. In particular, the ECB shares the view that 
the overriding policy objective of the new Union regi me should be to allow any institution to fail in 
a way that safeguards the stability of the Union financial system as a whole and minimises public 
costs and economic disruptions. 
 3. The role of DNB and measures taken 3.1 The ECB understands that the tasks allocated to  DNB under the draft law do not interfere with the 
performance of any of DNB’s Eurosystem-related  tasks provided for by the Treaty and do not 
prejudice the financial means necessary for ca rrying out DNB’s Eurosystem-related tasks
12.  
3.2 Any involvement of DNB and its Governor in th e application of measures to strengthen financial 
stability must be compatible with the Treaty an d consequently with DNB’s institutional and 
financial independence, as well as with the G overnor’s personal indepe ndence to safeguard the 
                                                 
6  The new Article 6:8 and 6:9 of the Law on financial supervision. 
7  Article II of the draft law. 
8  Article III of the draft law. 
9  Article IV of the draft law. 
10  Article V of the draft law. 
11  See paragraph 2.1.1 of Opinion CON/2009/ 54 . All ECB Opinions are published on the ECB’s website at 
www.ecb.europa.eu. 
12  The ECB’s Convergence Report May 2010, p. 22. 
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3 proper performance of their tasks under the Treaty and the Statute of the European System of 
Central Banks and of the European Central Bank13.  
3.3  The draft law defines ‘transitional institution’ as an institution whose role is to purchase, on a  
temporary basis, deposit agreements, assets or liabilities (other than pursuant to deposit 
agreements), and shares of an institution in di fficulty. The draft law does not specify who is 
responsible for setting up a transitional institution or the procedure to be used. Moreover, it is 
unclear under which circumstances a transitional ins titution would play a role. Under the draft law, 
the new Article 3:159f(2) of the Law on financial supervision provides that ‘Rules can be established by general administrative regulation with  respect to the transfer to a transitional 
institution’, but does not offer an explanation rega rding the transitional institution itself. The ECB 
would welcome clarification with respect to these open issues, as without clear specifications, the 
transitional institutions cannot serve as effectiv e tools and their function and design cannot be 
coordinated among the Member States. It should also  be made clear how the transitional institutions 
relate to the ‘bridge bank tool’ discussed at Union level
14. 
 4.  Prohibition of monetary financing and financing of resolution measures 4.1 It is important to safeguard compliance with the monetary financing prohibition under Article 123 
of the Treaty. This prohibition of monetary fina ncing is designed to prevent central banks from 
providing overdraft facilities or any other type of credit facility to the public sector, which includes 
any financing of the public sector’s obligations vi s-à-vis third parties. The draft law provides for 
the possibility for DNB to furnish an amount for the transfer of deposit agreements
15 and allows 
DNB to subsequently recover such amount from credit institutions16. The ECB notes that the 
amount that DNB may provide for the transfer of  deposit agreements under the draft law may not 
exceed the total amount of the guaranteed depos its held by an institution in difficulty17. It should be 
explicitly spelled out that a transfer of a deposit agreement may only be fina nced by funds from the 
deposit guarantee scheme.  From this perspective, the ECB notes that the draft law does not change 
in substance the regime currently in force, e nvisaging that the Dutch deposit guarantee scheme is 
financed by advance payments from DNB, with a collection of contributions from credit institutions at a later point in time. 
4.2 Advance payments by DNB in the context of the operation of the Dutch deposit guarantee scheme 
are generally considered incompatible with the monetary financing prohibi tion and legislation is 
required to make the deposit guarantee scheme compliant with the monetary financing 
                                                 
13  See paragraph 3.1.4 of Opinion CON/2009/93. 
14  See the Commission’s consultation document ‘Technical deta ils of a possible EU framework for bank recovery and 
resolution’, p. 52, available at http://ec.europa.eu (hereina fter the ‘Commission’s consultation on crisis resolution’). A 
‘bridge bank’ is an institution or other legal person that  is wholly owned by one or more public authority. 
15  New Article 3:159g(1) of th e Law on financial supervision. 
16  New Article 3:159l of the Law on financial supervision. 
17  The new Article 3:159g(2) of th e Law on financial supervision. 
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4 prohibition18. The ECB understands that a law is being prepared that will provide for ex ante 
funding as regards the deposit guarantee scheme. Until such legislation is in place, advance 
payments by DNB and the resulting claims for DNB in relation to the transfer of deposit agreements, even though financed ex post by contributions from credit institutions, would in 
principle not be compatible with the prohibition of monetary financing.  
4.3 Also from a financial stability perspective, the E CB calls for the relevant authorities to set up an ex 
ante funding scheme for institutions  in the deposit guarantee scheme
19, which would have, inter 
alia, the advantage of greater reliability and availa bility. It would avoid the risk of being an 
additional strain on the banking sector in times of  crisis. An ex ante funding scheme should also 
include the possibility to call upon the private sector  for additional financial support, as it cannot be 
excluded that in a crisis situation, pre-collected funds from the industry may be insufficient and that 
supplementary use of public funds may be necessary. This principle of ex post recovery from the 
private sector should promote additional market di scipline and address the risk of moral hazard. 
 5.  Shareholder rights 5.1 Under the draft law, the transfer plan prepared  by DNB may provide for the transfer of deposit 
agreements, assets and liabilities, and shares from the institution in difficulty to a private sector 
purchaser.  
5.2 The draft law
20 sets out the procedure for the transfer of shares from an institution in difficulty to a 
private sector purchaser, according to which consent or  cooperation on the part of the shareholders 
is not required. The new Article 3:159q(c) of th e Law on financial supervision requires that a 
transfer plan include the price the purchaser is willin g to pay and the reason that price is considered 
reasonable for the shares.  
5.3 In order to strike the right balance between the need for prompt and effective action by the 
authorities on the one hand and the preservation of  shareholders’ property rights on the other, 
safeguards need to be put in place to render such a procedure compatible with the right to property, 
as guaranteed in Article 17 of the Charter of Fundamental Rights of the European Union21. In this 
respect, the ECB notes that the draft law and in particular the new Article 3:159u of the Law on financial supervision, provides for such safeguard s. Given the importance of timely and effective 
crisis management, inclusion of an ex ante heari ng of large shareholders is undesirable and the new 
Article 3:159t of the Law on financial s upervision should be amended accordingly
22. 
                                                 
18  See ECB Annual Report 2010, p. 120. See also the ECB’s convergence re port, May 2010, p. 25. 
19  An introduction of partial ex ante funding arrangements for the deposit guarantee schemes is also considered crucial from 
a financial stability perspective, as already stated in Opinion CON/2011/12. 
20  New Articles 3:159p to 3:159r of the Law on financial supervision. 
21  See also the ESCB’s contribution to the Commission’s consultation document ‘Technica l details of a possible EU 
framework for bank recovery and resolution’, p. 3, available at http://ec.europa.eu (hereina fter the ‘ESCB’s response to 
Commission’s consultation’). 
22  New Article 3:159t of the Law on fina ncial supervision provides for the possibility for shareholders, holding more than 
10% of the shares, to be heard by the district court ex an te, before the court approves the transfer plan and pronounces 
that the transfer agreements may proceed. The shareholders  may challenge DNB’s assessment that the trigger conditions 
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5 6. Close-out netting and set off rights 
6.1 The new Article 3:267f of the Law on financia l supervision provides that measures taken in the 
context of a transfer are not considered trigger even ts for early termination, set off or netting rights. 
In this respect, as stated in recommendation 9 of the Report and Recommendations of the Basel Committee on Banking Supervision’s Cross-border Bank Resolution Group (CBRG)
23, ‘the ability 
of relevant [national] authorities to impose a brie f delay on the exercise of early termination and 
netting rights would maximise the possibility of transfer to a sound company, a bridge bank or another public entity provided that: the period of time during which the authorities can delay 
immediate operation of contractual early termination rights pending a tr ansfer is clearly defined and 
limited, after which full termination and close-out  rights would be available for all financial 
contracts not transferred to a solvent transferee’.  
6.2 The ECB notes that a solution aligned with the CBRG recommendations has been contemplated as 
part of the proposed Union framework on crisis resolution
24. The response of the European System 
of Central Banks (ESCB) to the Commission’s consultation, states th at it ‘supports the proposal to 
give the resolution authority the legal power to temp orarily delay the exercise by any party of close-
out netting rights under a netting agreement with the institution in difficulty to complete a transfer 
of certain financial markets contracts to anot her sound company, a bridge bank or other public 
entity’25. Until this recommendation is incorporated into Union law, due regard needs to be paid to 
ensuring compliance with resolution measures intr oduced into the national legislation of the 
Member States with the relevant elements of the existing Union legal framework, as specified below. 
6.3 Against this background, the ECB notes that the rejection of counterparties’ close-out netting or 
other rights following a ‘measure’
26 should not jeopardise rights protected under financial collateral 
arrangements, as defined in Article 2(1)(a) of Directive 2002/47/EC of th e European Parliament 
and of the Council of 6 June 2002 on financial collateral arrangements27 as well as further rules 
specified in Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions
28 and Directive 1998/26/EC of the 
European Parliament and of the Council of 19 May 1998 on settlement finality in payment and 
securities settlement systems29. 
                                                                                                                                                             
justifying the intervention are met and the adequateness of th e price for the shares. Furthermore, new Article 3:159u of 
the Law on financial supervision provides for the possibility for t hose shareholders the district court did not hear ex ante, 
to oppose the court decision approving the transfer plan ex post. 
23  Report and recommendations of the Cross-border Bank Resolution Group, March 2010, available on the Bank for 
International Settlement’s  website at www.bis.org. 
24  See the Commission’s consultati on on crisis resolution, p. 64. 
25  See the ESCB’s response to the Commission’s consultation, p.12. 
26  As defined in the new Article 3:267e  of the Law on financial supervision. 
27   OJ L 168, 27.6.2002, p. 43. 
28  OJ L 125, 5.5.2001, p. 15. 
29  OJ L 166, 11.6.1998, p. 45. 
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6 6.3.1 Article 7(1)(b) of Directive 2002/47/EC requir es Member States to ensure that for a financial 
collateral arrangement, a close-out netting provisio n can take effect in accordance with its terms 
notwithstanding the commencement or continua tion of winding-up proceedings, reorganisation 
measures or any other type of judicial proceed ing, attachment, assignment or other disposition 
concerning such rights. Until draft amendments to Union law related to the preparation of a Union 
crisis management framework are adopted, the above  rules should continue to be fully implemented 
in national legislation. As specified in the explanatory memorandum to the draft law30, the ECB 
understands that the exclusion of ‘financial co llateral arrangements’ fro m the operation of new 
Article 3:267f of the Law on financial supervision, as introduced in paragraph 4(b) of this Article, 
is intended to achieve this result. 
6.3.2 Article 25 of Directive 2001/24/EC provides that netting agreements are governed by the law of the 
contract which governs such agreements. Following  the new Article 3:267d of the Law on financial 
supervision this section ‘applies to agreements  … regardless of the law that governs the 
agreement’. The ECB notes that the master agreem ents on which close-out netting rights are based 
are often concluded by Dutch credit institutions under the laws of other jurisdictions such as 
England or New York. It is unclear under Union law whether the proposed stay could be enforced against a Dutch credit institution that has entere d into a netting agreement governed by English, 
New York or other third country’s laws. In view  of these legal uncertainties, any statutory powers 
to impose a temporary stay on such contracts or a rejection of counterparties’ close-out netting rights should be coordinated closely at Union level. 
6.3.3 Article 9 of Directive 1998/26/EC protects rights to collateral security to which the central banks 
and participants in the systems are entitled within th e scope of this Directive. As specified in the 
explanatory memorandum to the draft law
31, the ECB understands that the new Article 3:267f (4)(a) 
of the Law on financial supervision is intended to  maintain this protection in that it will exclude 
from the operation of Article 3:267f ‘a right to  which a central bank or, in connection with 
participation in a system as referred to in Artic le 212a, part b, of the Bankruptcy Act, another 
institution that participates in the system is entitle d pursuant to a legal relationship as referred in the 
first paragraph of [Article 3:267f]’. 
 7. Measures to ensure the stability of the financia l system, including the right of expropriation 
7.1 A new Part 6 of the Law on financial supervis ion establishes a special expropriation regime to 
ensure stability of the financial system, which specifies that the Dutch Expropriation Act will not be applicable
32. The ECB notes that the new Article 6:1(1) of the Law on financial supervision gives 
the Minister for Finance the power to ‘take imme diate measures’ without specifying which kind of 
measures are covered by this power. In this respect , the draft law should specify if those ‘immediate 
                                                 
30  See comments on the new Article 3:267f  of the Law on financial supervision. 
31  See comments on Article 3:267f. of the Law on financial supervision. 
32  See the new Article 6:2(7) of the Law on financial supervision. 
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7 measures’ cover other measures besides expropriati on and, if this is the case, it should clearly 
define the scope of these other measures. 
7.2 The power of the Minister to expropriate assets of an institution in difficulty is laid down in the new 
Article 6:2 of the Law on financia l supervision. The ECB highlights that expropriation is a severe 
measure with far-reaching effects on market participan ts. For this reason, expropriation by the State 
in relation to institutions in difficulty should remain  a tool for use in clearly defined and exceptional 
circumstances. The new Article 6:2(1) specifies that  the expropriation can take place if the Minister 
‘is of the opinion that the stability of that system is coming into serious and immediate risk by the 
situation of an institution domiciled in the Neth erlands’. It should be made clear that such 
expropriation is a last resort measure and can only take place if there is no other less intrusive, 
equally effective measure available. 
7.3 It is very important that indemnification for an  expropriation provides for a transparent valuation of 
the assets, which adequately reflects market cond itions. The new Articles 6:8 and 6:9 of the Law on 
financial supervision provide that the value will be determined by estimating the market price at the 
time of the expropriation, less the amount of an y financial support. Th e ECB welcomes that the 
new Article 6:9(2) provides for a discount of any public financial support previously received by an 
institution. Moreover, the ECB understands that expropriation under the draft law will ultimately 
not amount to a bailout or state aid. 
7.4 Any State’s role taken with  respect to an institution shoul d be clearly limited in time33. It is 
therefore important to have an adequate exit strate gy in place. The new Article 6:1(3) of the Law on 
financial supervision, which provides that th e Minister ‘will determine the period of those 
measures’ and that he ‘can extend this period by a separate decision’, is not clear enough in order to 
limit the time of expropriation and to define a clear exit strategy. In this respect, the draft law should contain clearer and more detailed provisions. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 20 July 2011. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
33  See also paragraphs 3.2.1 and 3.2.6 of Opini on CON 2009/24 and paragraph 3.3 of Opinion CON/2009/6.