EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 25 February 2011  
on amendments to the legislation on the deposit guarantee fund  
(CON/2011/15) 
 
Introduction and legal basis  
On 28 January 2011 the European Central Ba nk (ECB) received two requests from Banca Na ţională a 
României (BNR), for an opinion on a draft Government Emergency Ordinance amending and supplementing Government Ordinance No 39/1996 on  the setting up and operation of the deposit 
guarantee fund in the banking system
1 (hereinafter the ‘first draft ordinance’) and on a draft Government 
Emergency Ordinance amending and supplementing G overnment Emergency Ordinance No 99/2006 on 
credit institutions and capital adequacy2 (hereinafter the ‘second draft ordinance’).  
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 sixth indent  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 ordinances relate to rules app licable to the financial institutions insofar 
as they materially influence 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 ordinances 
1.1  The first draft ordinance  
Government Ordinance (GO) No 39/1996 is the ma in Romanian legislation regulating the activity 
of the deposit guarantee fund in the banking system (hereinafter ‘the Fund’), which is the Romanian 
deposit guarantee scheme. Its purpose is to gua rantee deposits and to pay compensation to 
depositors for covered deposits held with credit institutions and declared unavailable4. The aim of 
the first draft ordinance is to:  
                                                 
1  Republished in Monitorul Oficial al Româ niei, Part One, No 587 of 19 August 2010. 
2  Published in Monitorul Oficial al Români ei, Part One, No 1027 of 27 December 2006. 
3  OJ L 189, 3.7.1998, p. 42.  
4  According to Article 2(3)(c)(i) of GO No 39/1996 an ‘unavaila ble deposit’ is a deposit that is due and payable but has not 
been paid by a credit institution, where either: 
2 (a) enable the use of the Fund’s financial res ources to finance, including through the issuance of 
guarantees, transactions involving the transfer of covered deposits5. This would be possible 
in the context of the restructuring measures a dopted in the special administration procedure6, 
but only if the amount to be paid by the Fund is smaller than the direct payment of compensation for covered deposits. The amounts rela ted to this financing would be recorded 
as a debt of the credit institution from wh ich the covered deposits are transferred; 
 
(b) extend the possible lending by the Government to the Fund to the situation where the Fund 
finances (including through the issuance of guara ntees) transactions involving a transfer of 
covered deposits;  
(c) establish that the Fund’s claims  on the credit institution in distr ess and related to the transfer 
of covered deposits are compensated from the patrimony of the credit institution. These 
claims have the same position in the payment order as the Fund’s claims resulting from the 
payment of compensation to covered depositors; 
(d) make any decision on the use of the Fund 's financial resources to finance transactions 
involving the transfer of covered depos its subject to BNR’s prior approval; 
(e) exclude own capital from the uncovered liabiliti es taken into account for the calculation of 
the contribution to another fund, that is the Special Fund created for payment of 
compensations to persons negatively affected  by the measures implemented during the 
special administration procedure7. The purpose of this exclusion is to prevent the negative 
treatment of credit institutions which have a prominent equity support from shareholders.  
1.2.  The second draft ordinance  
1.2.1 Government Emergency Ordinance (GEO) No 99/2006 is the main legislation regulating the 
activity of credit institutions and financial inv estment companies in Romania. The second draft 
ordinance is designed to amend in GEO No 99/2006 the special administration procedure8 
applicable to credit institutions in distress in order to facilitate the proposed changes to GO No 
39/1996. In relation to restructuring measures invol ving a transfer of deposits it establishes the 
following: 
(a) the need for an adequate financial standing of the credit institution which is the beneficiary 
of the assets sale, deposits transfer, purchase of assets with assumption of liabilities transactions (‘P&A transacti ons’) or merger/split-up; 
                                                                                                                                                             
(a) BNR has determined that the credit institution concer ned appears to be unable to repay the deposit and has no 
immediate prospect of being able to do so; 
(b) a court has ordered the opening of a bankruptcy procedure with regard to the credit institution, before BNR 
findings as referred to in point (i) are provided. 
5  Article 1(2) of the first draft ordinance. 
6  Such restructuring measures as the transfer of covered deposits are already foreseen in Article 24012 of GEO No 99/2006; 
see also Article 24014 of GEO No 99/2006. 
7  According to Article 24021 of GEO No 99/2006.  
8  The ECB was consulted on the regulation of the special administration procedure. Opin ion CON/2010/12 is available on 
the ECB’s website at www.ecb.europa.eu. 
3 (b) the criteria for receiving information by the cr edit institutions interested in participating in 
the implementation of restructuring measures; 
(c) the mechanism for P&A transactions, which c onsists of a tender-like procedure based on the 
best price offered by an eligible credit institution;  
(d) in the case of partial P&A transactions, the tran sfer of covered deposits has priority; it can be 
concluded only if all covered deposits are transferred and the eligible assets have a high degree of liquidity and/or are of good quality
9; 
1.2.2 By adopting restructuring measures, the credit in stitution’s creditors may not be in a less favourable 
position than if the measures had not been implemen ted and the credit institution had gone directly 
into liquidation. 
1.2.3. In the case of restructuring measures consisti ng of transactions involving the transfer of deposits 
placed with a credit institution under special admi nistration, BNR withdraws the authorisation of 
that credit institution on the date when the contract  related to the relevant transaction takes effect 
and, if necessary, will notify the competent cour t for the initiation of bankruptcy proceedings.  
 2. General observations  2.1 According to BNR, the amendments in the dr aft ordinances are the subject of the structural 
benchmarks of the Stand-by Arrangement between  Romania and the International Monetary Fund
10 
and their entry into force is envisaged for 15 Ma rch 2011. In view thereof, the consulting authority 
invokes reasons of extreme urgency and asks the ECB to deliver its opinion by 25 February 2011 to 
enable the Romanian legislator to take the E CB’s opinion into account, before deciding on the 
substance of the draft ordinances. The ECB would li ke to draw the consulting authority’s attention 
to the fact that according to Article 4, second sentence of Decision 98/415/EC the ECB must be 
consulted ‘at an appropriate stage’ in the legisl ative process. This implies that the consultation 
should take place at a point in the legislative process that affords the ECB sufficient time to 
examine the draft legislative provisions and to ad opt its opinion in the required language versions 
and which also enables the relevant national authorities to take the ECB’s opinion into 
consideration before the provisions are adopted.   
2.2 The ECB also notes the ongoing work in the Union to establish a harmonised Union crisis 
management and resolution framework fo r the financial sector which covers, inter  alia, similar 
areas as those covered by the draft ordinances. While  the Romanian framework seems to be in line 
with the Ecofin Council's recent c onclusions on crisis management11, it may require further 
                                                 
9  To be determined  by BNR regulations. 
10  According to the Letters of Intent of 9 September 2010 and 22 December 2010. 
11  Council conclusions on crisis prevention, management an d resolution – Ecofin Council meeting of 7 December 2010. 
4 adaptations, depending on the fi nal outcome of the Union framework and the recast of Directive 
94/19/EC of the European Parliament and of the Council on deposit-guarantee schemes12. 
 3. Specific observations 3.1 The ECB has previously expressed its view
13 that further efforts could be devoted to identifying 
additional tasks that could be de legated to deposit guarantee schemes.  Using the financial resources 
of a deposit guarantee scheme to facilitate the transf er of covered deposits or a P&A transaction is 
an example of such possible tasks that, if properly designed, could contribute to improving crisis management preparedness and thereby financial stability. Nonetheless, given the limited size of 
deposit guarantee schemes, provisions that aim to sa feguard the core functions of these funds (i.e. 
payout of covered deposits) ar e important. Against this bac kdrop, the ECB welcomes that, 
according to the draft ordinances (a) the resources of  the Fund can only be used to finance such 
transfers if this is less costly than the direct payment of covered deposits; and (b) in the case of a 
P&A transaction, all guaranteed deposits have to be transferred. However, the ECB also identifies 
some areas in the proposed legal acts, described be low, that may require further consideration.  
3.2 The ECB notes that some important aspects of th e mechanism intended to be implemented through 
the draft ordinances are not clearly regulated, inter alia : (a) the legal regime for guarantees to be 
issued by the Fund, in order to facilitate the impl ementation of a restructuring measure consisting of 
operations that involve the transfer of deposits; (b) the cost of the transfer of covered deposits; and 
(c) the debt of the credit institution from which the covered deposits are transferred, as referred to 
in paragraph 1.1(a). 
In order to foster the stability of financial institutio ns and the market and to have a clear legal basis 
for the Fund, as well as for reasons of legal certainty, the ECB recommends a clear regulation of these issues.  
3.3 The ECB appreciates that any decision on the us e of the Fund’s financ ial resources to finance 
transactions involving the transfer of covered de posits is subject to BNR’s approval and hence 
recognises BNR’s expertise in this context. However,  the ECB restates its view that the functions to 
be performed by BNR to aid the stabilisation meas ures to be carried out must be conducted in a 
manner that is fully compatible with BNR’s in stitutional and financial independence and that 
safeguards the proper performance of its existing tasks under the Treaty and the Statute of the European System of Central Banks and of the European Central Bank
14.  
 
                                                 
12   OJ L 135, 31.5.1994, p. 5. 
13  See ‘The Eurosystem’s stance on the Commission’s consu ltation document on the review  of Directive 94/19/EC on 
deposit-guarantee schemes’, 13 Augus t 2009 and ‘Commission Communication on “An EU Framework for Cross-Border 
Crisis Management in the Banking Sect or”: Eurosystem’s reply to the public  consultation’, 4 February 2010 (both 
published on the ECB’s webs ite at www.ecb.europa.eu). 
14  See paragraph 3.7 of Opinion CON/2008/68 and paragraph 3.3 of Opinion CON/2009/51. 
5 This opinion will be published on the ECB’s website.  
  Done at Frankfurt am Main, 25 February 2011. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET