14. 12. 90 Official Journal of the European Communities No C 315/15 
II 
(Preparatory Acts) 
COMMISSION 
Proposal for a Council Directive relating to the supervision of credit institutions on a 
consolidated basis 
COM(90) 451 final — SYN 306 
(Submitted by the Commission on 9 October 1990) 
(90/C 315/09) 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Article 57 (2), 
first and third sentences thereof, 
Having regard to the proposal from the Commission, 
In cooperation with the European Parliament, 
Having regard to the opinion of the Economic and 
Social Committee, 
Whereas Council Directive 83/350/EEC of 13 June 
1983 on the supervision of credit institutions on a 
consolidated basis (*) established the necessary 
framework for the introduction of the consolidated 
supervision of credit institutions; whereas following the 
transposition of the abovementioned Directive into the 
national law of the Member States the principle of 
consolidated supervision is applied throughout the 
Community; 
Whereas in order to be effective consolidated supervision 
must be applied to all banking groups, including those 
whose parent undertaking is not a credit institution; 
whereas the competent authorities must have sufficient 
legal powers to be able to undertake such supervision; 
Whereas in the case of groups with diversified activities 
whose parent undertaking controls at least one credit 
institution subsidiary, the competent authorities must be 
able to assess the situation regarding inter-group credit 
within such groups; whereas the Member States can, until full coordination is achieved, lay down the method 
of consolidating such groups, bearing in mind the 
objective described in this Directive; whereas the 
competent authorities at least must have the means of 
obtaining (from all undertakings within the group) the 
information necessary to carry out their supervisory 
responsibilities; whereas cooperation between the auth­
orities responsible for the supervision of different 
financial sectors and institutions must be established to 
ensure the effective supervision of groups undertaking a 
range of financial activities; 
Whereas the rules of limiting the risks taken by a credit 
institution subsidiary on a mixed activity holding 
company of which it is a subsidiary, as well as those 
taken on the other subsidiaries of this mixed activity 
holding company, can be established to be particularly 
helpful; it would seem however preferable to settle this 
question in a more systematic manner in the framework 
of a future directive on the limitation of large exposures; 
Whereas the Member States can furthermore refuse or 
withdraw the banking licence in the case of certain 
group structures considered inappropriate for the under­
taking of banking activities, notably because such 
structures would not be susceptible to effective super­
vision; whereas in this respect the competent authorities 
have the powers mentioned in Article 11 of the Second 
Council Directive 89/646/EEC of 15 December 1989 on 
the coordination of laws, regulations and administrative 
provisions relating to the taking up and pursuit of the 
business of credit institutions and amending Directive 
77/780/EEC (2) in order to ensure the safe and prudent 
management of credit institutions; 
Whereas the Member States can equally apply, to groups 
with structures not covered in this Directive, appropriate 
techniques of supervision; whereas if such structures 
become common this Directive should be extended to 
embody them; 
(') OJ No L 193, 18. 7. 1983, p. 18. O OJ No L 386, 30. 12. 1989, p. 1. 
No C 315/16 Official Journal of the European Communities 14. 12.90 
Whereas in principle all undertakings engaging in acti­
vities designated as banking activities in the Annex to 
Directive 89/646/EEC must be included in consolidated 
supervision; whereas in consequence the definition of 
financial institution must be modified; 
Whereas until further coordination of the own funds 
requirements against market risks has been completed, 
the competent authorities may continue to exclude from 
the scope of consolidated supervision those financial 
institutions engaged in activities which are principally 
subject to market risks and which are subject to 
particular rules of supervision; 
Whereas following the adoption of Council Directive 
86/635/EEC of 8 December 1986 concerning the annual 
accounts and the consolidated accounts of banks and 
other financial establishments (*) establishing rules of 
consolidation applicable to consolidated accounts 
published by credit institutions, it is possible to define 
more precisely the methods to be used in prudential 
supervision conducted on a consolidated basis; 
Whereas the consequent modifications to Directive 
83/350/EEC are so considerable that it is preferable that 
this should be directly replaced by the present Directive; 
Whereas the present Directive realizes general objectives 
defined in the Single European Act; whereas it will in 
particular ensure the homogenous application 
throughout the Community of prudential rules estab­
lished by other Community legislation which must be 
observed on a consolidated basis: Commission recom­
mendation 87/62/EEC of 22 December 1986 relating 
to the monitoring and control of large exposures of 
credit institutions (2), Council Directive 89/647/EEC of 
18 December 1989 regarding the solvency ratio of credit 
institutions (3) and rules harmonized by Directive 
89/646/EEC; whereas the present Directive is of 
particular importance in order to ensure the correct 
application of Council Directive 89/299/EEC of 
17 April 1989 defining the own funds of credit 
institutions (4); 
Whereas it is desirable that agreement should be 
reached, on the basis of reciprocity, between the 
Community and third countries with a view to allowing 
the implementation of consolidated supervision on the 
widest possible geographical scale, 
O OJ No L 372, 31. 12. 1986, p. 1. 
O OJ No L 33, 4. 2. 1987, p. 10. 
(») OJ No L 386, 30. 12. 1989, p. 14. 
(4) OJ No L 124, 5. 5. 1989, p. 16. HAS ADOPTED THIS DIRECTIVE: 
Article 1 
Definitions 
For the purposes of this Directive: 
— credit institution means a credit institution within the 
meaning of the first indent of Article 1 of Council 
Directive 77/780/EEC (5), 
— financial institution means an undertaking other than 
a credit institution whose principal activity is to 
acquire and hold participations or to exercise one or 
more of the operations included in numbers 2 to 12 
of the Annex to Directive 89/646/EEC, 
— financial holding company means a financial 
institution the subsidiary undertakings (one or more) 
of which are either exclusively or mainly credit 
institutions or financial institutions, one at least of 
these subsidiaries being a credit institution, 
— mixed-activity holding company means a parent 
undertaking other than a financial holding company 
whose subsidiaries include at least one credit 
institution, 
— ancillary banking services undertaking means an 
undertaking whose principal activity consists in 
holding or managing property, managing data-
processing services, or any other similar activity 
which is ancillary to the main activity of one or 
several credit institutions, 
— participation means the ownership, direct or indirect, 
of 20 % or more of the voting rights or capital of an 
undertaking, 
— parent undertaking means a parent undertaking within 
the meaning of Article 1 (1) of Council Directive 
83/349/EEC (6), 
— subsidiary means a subsidiary undertaking within the 
meaning of Articles 1 (1) and 2 of Directive 
83/349/EEC; all subsidiaries of subsidiary under­
takings are treated as subsidiaries of the parent 
undertaking at the top of the group structure, 
(5) OJ No L 322, 17. 12. 1977, p. 30. 
(') OJ No L 193, 18. 7. 1983, p. 1. 
14. 12. 90 Official Journal of the European Communities No C 315/17 
— competent authorities means the national authorities 
which are empowered by law or regulation to 
supervise credit institutions, 
— trading book means the proprietary positions defined 
in Article 2 of Council Directive .../... /EEC on 
capital adequacy of investment firms and credit 
institutions 
Article 2 
Scope 
This Directive shall apply to all credit institutions, 
financial holding companies and mixed activity holding 
companies. 
The institutions permanently excluded by Article 2 of 
Directive 77/780/EEC, with the exceptions of the 
central banks of the Member States, shall be treated as 
financial institutions for the purposes of the Directive. 
Article 3 
Supervision on a consolidated basis of credit institutions 
and financial holding companies 
1. Any credit institution which has a participation in 
another credit or financial institution shall be subject, to 
the extent and in the manner required by Article 5, to 
supervision on the basis of the consolidation of its 
financial situation with that of the institution in which it 
has such a participation. This supervision shall be applied 
at least in the areas referred to in paragraphs 5 and 6 of 
this Article. 
2. Any financial holding company shall be subject, to 
the extent and in the manner required by Article 5, to 
supervision on the basis of the consolidation of its 
financial situation with that of the credit institutions and 
financial institutions in which it has a participation. This 
supervision shall be applied at least in the areas referred 
to in paragraphs 5 and 6 of this Article. This supervision 
shall not imply in any way that the competent authorities 
have a supervisory role in relation to the financial 
holding company in its own right. 
3. The competent authorities charged with exercising 
consolidated supervision pursuant to Article 4 can 
exclude a credit institution or financial institution from 
consolidation: 
— if the credit institution or financial institution in 
which there is a participation is situated in a 
non-member country where there are legal 
impediments to the transfer of the necessary infor­
mation, or 
— if the enterprise included is, in the opinion of the 
competent authorities, of only negligible interest in 
regard to the goal of monitoring credit institutions 
and in all cases if the total balance sheet of the credit 
or financial institution in which there is a partici­
pation represents less than the smaller of the 
following two amounts: 1 % of the total balance sheet of the credit institution or the financial holding 
company which has the participation or ECU 
10 million; if several enterprises meet the above 
criteria, they must nevertheless be included in the 
consolidation where they collectively present a 
non-negligible amount with respect to the goal 
alluded to above, or 
— if the nature of the business of the credit institution 
or financial institution in which there is a partici­
pation is such that, in the opinion of the competent 
authorities charged with exercising supervision on a 
consolidated basis, the consolidation of its financial 
situation would be inappropriate or misleading, or 
— until further coordination of the capital requirements 
relating to market risks, if the financial institution in 
which the participation is held is involved in activities 
which are principally subject to market risks and it is 
subject to particular rules of supervision; the 
competent authorities may similarly exclude from 
consolidation the trading books of credit or financial 
institutions in which there is a participation, provided 
that those trading books are subject to special rules 
of supervision. 
4. When the competent authorities of a Member State 
do not exercise supervision on a consolidated basis on 
the basis of the cases provided for in paragraph 3, the 
parent undertaking shall provide to the competent auth­
orities of Member States where credit institution subsi­
diaries are situated, on request by the said authorities, 
information to enable supervision on a consolidated basis 
to be exercised in accordance with this Directive. 
5. Supervision of solvency and control of large 
exposures of a credit institution or a financial holding 
company shall be carried out on a consolidated basis in 
accordance with the provisions of the Community acts in 
force. Member States may adopt any adjustments 
necessary to apply these acts to financial holding 
companies. 
When the parent undertaking is a credit institution, its 
submission to the limits set in Article 12 (1) and (2) of 
Directive 89/646/EEC must be supervised and 
controlled on a consolidated basis. 
6. The competent authorities shall ensure the 
existence of adequate internal control mechanisms in all 
the credit institutions and financial institutions included 
in the scope of the consolidated supervision which is 
exercised on a credit institution or a financial holding 
company. 
7. Member States may forgo supervision on an indi­
vidual basis of credit institutions that, as parent under­
takings, are subject to supervision on a consolidated 
basis. If the competent authorities do undertake solo 
No C 315/18 Official Journal of the European Communities 14. 12. 90 
supervision of such credit institutions they may, for the 
calculation of own funds, make use of the provision 
contained in Article 2 (1), third subparagraph of 
Directive 89/299/EEC. 
8. In the case where a credit institution whose parent 
is a credit institution has been authorized and is situated 
in another Member State, the competent authorities 
which granted that authorization shall exercise a 
sub-consolidated or non-consolidated supervision of this 
credit institution subsidiary. 
9. Notwithstanding paragraph 8, the competent auth­
orities responsible for authorizing the subsidiary of a 
parent undertaking which is a credit institution may 
delegate by way of a bilateral agreement their responsi­
bility for supervision to the competent authorities which 
have authorized and which supervise the parent under­
taking. The Commission shall be kept informed of the 
existence and content of such agreements. It shall 
forward such information to the other authorities and to 
the Banking Advisory Committee. 
Article 4 
Competent authorities charged with exercising super­
vision on a consolidated basis 
1. When the parent undertaking is a credit institution, 
supervision on a consolidated basis shall be exercised by 
the competent authorities that authorized it under Article 
3 of Directive 77/780/EEC. 
2. When the parent of a credit institution is a financial 
holding company, supervision on a consolidated basis 
shall be exercised by the competent authorities which 
authorized this credit institution under Article 3 of 
Directive 77/780/EEC. 
However when credit institutions authorized in more 
than one Member State have for their parent the same 
financial holding company, supervision on a consolidated 
basis shall be undertaken by the competent authorities of 
the credit institution authorized in the Member State 
where the financial holding company has been set up. 
If there is no credit institution subsidiary in the Member 
State where the financial holding company has been set 
up, the competent authorities of the Member States 
concerned (including the Member State where the 
financial holding company has been set up) will seek to 
reach a common agreement as to who amongst them will 
exercise supervision on a consolidated basis. In the 
absence of such an agreement, supervision on a 
consolidated basis will be exercised by the competent 
authorities of the credit institution with the biggest 
balance sheet; if this is the same for two or more credit 
institutions, supervision on a consolidated basis shall be 
undertaken by the competent authorities of the credit 
institution which was authorized first under Article 3 of 
Directive 77/780/EEC. 3. The competent authorities concerned can by 
common agreement waive the rules set out in the first 
and second subparagraphs of paragraph 2. 
4. The agreements referred to in the third 
subparagraph of paragraph 2 and in paragraph 3 shall 
provide for concrete cooperation procedures to be estab­
lished and the transmission of information to be effected, 
which is necessary for the goals of this Directive to be 
achieved. 
Article 5 
Form and extent of consolidation 
1. The competent authorities charged with the 
exercise of supervision on a consolidated basis must, for 
the purposes of supervision, require full consolidation of 
credit institutions and financial institutions which are 
subsidiaries of the parent undertaking or over which the 
latter effectively exercises a dominant influence in the 
opinion of the competent authorities. This consolidation 
must ensure the supervision on a consolidated basis of at 
least all the activities which are included in the Annex to 
Council Directive 89/646/EEC. 
However, pro rata consolidation may be prescribed in 
the cases where, in the opinion of the competent auth­
orities, the responsibility of the undertaking holding the 
participation is limited to its part of the capital, because 
of the responsibilities of other shareholders or members 
whose solvency is considered satisfactory. The responsi­
bility of the other shareholders and members must be 
clearly established, if necessary by means of formal, 
signed commitments. 
2. The competent authorities charged with the 
exercise of supervision on a consolidated basis must, in 
order to do so, require proportional consolidation of 
participations in credit institutions and financial 
institutions managed by an undertaking included in the 
consolidation together with one or more undertakings 
not included in the consolidation, where the liability of 
the said undertakings is limited according to the share of 
the capital held by them. 
3. In cases of participations other than those in para­
graphs 1 and 2, or where a significant influence is 
exercised in fact, the competent authorities shall 
determine whether and how consolidation is to be 
carried out. In particular, they may permit or require the 
equity method to be used. 
14. 12. 90 Official Journal of the European Communities No C 315/19 
4. Anciliary banking services undertakings shall be 
included in the consolidation in accordance with the 
methods laid down in paragraphs 1, 2 and 3. 
Article 6 
Information to be supplied by mixed-activity holding 
companies and their subsidiaries 
1. Until further coordination of the methods for 
consolidating, Member States shall provide that the 
competent authorities require mixed-activity holding 
companies and their subsidiaries to supply any data or 
information which would be relevant for the purposes of 
supervising credit institutions which are subsidiaries of 
the said mixed-activity holding companies. 
2. Member States shall provide that the competent 
authorities may themselves carry out, or have carried out 
on their behalf by external inspectors, inspections on the 
spot to verify data received from mixed-activity holding 
companies and their subsidiaries. 
Article 7 
Measures to facilitate application of supervision on a 
consolidated basis 
1. Member States shall take the necessary steps to 
ensure that there are no legal impediments preventing 
any credit institution, financial institution, ancillary 
banking services undertaking or a subsidiary of the kind 
covered in Article 6 from supplying to a credit 
institution, a financial holding company or a mixed-
activity holding company which has a participation in it 
information which is necessary for supervision on a 
consolidated basis to be effected in accordance with this 
Directive. 
2. When the parent undertaking and the credit 
institution/institutions which is/are its subsidiary/ 
subsidiaries are situated in different Member States, the 
competent authorities of each Member State shall 
communicate all information which may allow or aid the 
exercise of supervision on a consolidated basis. 
When the competent authorities of the Member State 
where the parent undertaking is situated do not exercise 
supervision on a consolidated basis by virtue of the 
provisions in Article 4 they must obtain from the parent 
undertaking the necessary information for supervision on 
a consolidated basis and transmit it to the competent 
authorities charged with exercising this supervision. 
3. Member States shall permit the exchange between 
their competent authorities of the information provided 
for in paragraph 2, it being understood that, in the case 
of financial institutions or ancillary banking services 
undertakings, the collection or possession of information 
shall not in any way imply that a supervisory function is 
being exercised on a single basis over those institutions 
by the competent authorities. Likewise, the Member States shall authorize the 
exchange of information between their competent auth­
orities provided for in Article 6 on the understanding 
that the collection or receipt of information does not in 
any way imply that the competent authorities are super­
vising the mixed activity holding company and its subsi­
diaries which are not credit institutions. 
4. Where a credit institution, a financial holding 
company or a mixed-activity holding company controls 
one or more subsidiary insurance companies or other 
institutions providing investment services which are 
subject to licensing arrangements, the competent auth­
orities and the authorities entrusted with the public task 
of supervising insurance companies or the said other 
institutions providing investment services shall cooperate 
closely. Those authorities shall provide one another with 
any information likely to simplify their task and to 
ensure supervision of the activity and overall financial 
situation of the undertakings they supervise. 
5. Information received as a result of the provisions of 
this Directive and in particular any exchange of infor­
mation between competent authorities which is provided 
for in this Directive shall be subject to the obligation of 
professional secrecy as set out in Article 12 of Directive 
77/780/EEC. 
6. The competent authorities shall establish a list of 
financial holding companies they supervise on a 
consolidated basis. This list shall be notified to other 
competent authorities and to the Commission. 
7. When in applying this Directive to a credit 
institution, a financial holding company or a mixed-
activity holding company, the competent authorities of 
one Member State wish in specific cases to verify the 
information concerning a credit institution, a financial 
institution, an ancillary banking services undertaking or 
a subsidiary of the kind covered in Article 6, situated in 
another Member State, they must ask the competent 
authorities of that other Member State for this verifi­
cation to be carried out. The authorities which have 
received the request must, within the framework of their 
competence, act upon it either by carrying out the verifi­
cation themselves, or by allowing the authorities who 
made the request to carry it out, or by allowing an 
auditor or expert to carry it out. 
8. Without prejudice to cases covered by criminal law, 
Member States shall ensure that their respective 
competent authorities may impose on financial holding 
companies and mixed activity holding companies or 
those who effectively direct the business of those 
financial holding companies which breach legislative, 
regulatory or administrative provisions implemented in 
compliance with this Directive, penalties or measures 
No C 315/20 Official Journal of the European Communities 14. 12. 90 
aimed specifically at ending observed breaches or the 
causes of such breaches. In certain cases these measures 
may require the intervention of the courts. The 
competent authorities shall cooperate closely in order to 
ensure that the abovementioned penalties or measures 
will produce the due results, especially when the head 
office of a financial holding company or of a mixed-
activity holding company is not located in the same place 
as its central administration or its main establishment. 
Article 8 
Third countries 
1. The Commission may submit proposals to the 
Council, whether at the request of a Member State, or 
on its own inititative, in order to negotiate agreements 
with one or more third countries with the goal of estab­
lishing means of applying supervision on a consolidated 
basis: 
— to credit institutions having a head office in a third 
country, and 
— to credit institutions situated in a third country whose 
parent undertaking, whether a credit institution or a 
financial holding company, has its head office in the 
Community. 
2. The agreements referred to in paragraph 1 tend in 
particular to ensure both: 
— that the competent authorities of Member States are 
able to obtain the information necessary to supervise, 
on a consolidated basis, a credit institution or a 
financial holding company from the Community 
which holds participations in a credit institution or a 
financial institution situated outside the Community, 
and — that the competent authorities of third countries are 
able to obtain the necessary information to supervise 
the parent undertakings whose head office is situated 
in their territory and which hold participations in 
credit institutions or in financial establishments 
situated in one or more Member States. 
3. The Commission will examine with the Advisory 
Committee set up under Article 11 of Directive 
77/780/EEC the result of these negotiations and the 
situation which ensues. 
Article 9 
Final provisions 
1. Member States shall implement the provisions 
necessary to comply with the provisions of the present 
Directive at the latest by 1 January 1993. They shall 
forthwith inform the Commission thereof. 
When Member States adopt these provisions, these shall 
contain a reference to this Directive or shall be accom­
panied by such reference at the time of their official 
publication. The procedure for such reference shall be 
adopted by Member States. 
2. Member States shall communicate to the 
Commission the text of the main provisions which they 
adopt in the field covered by this Directive. 
Article 10 
Council Directive 83/350/EEC is hereby repealed with 
effect from 1 January 1993. 
Article 11 
This Directive is addressed to the Member States.