EN ECB -PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 24 May 2013  
on the status of credit institutions and the creation of financing companies  
(CON/20 13/36) 
 
Introduction and legal basis  
On 22 April 2013, the European Central Bank (ECB) received a request from the Frenc h Ministry of 
Economic Affairs and Finance for an opinion on a draft ordinance amending the status of credit 
institutions  (hereinafter the ‘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 provisions1, as the draft ordina nce relates to rules applicable to 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 Europea n Central Bank , the Governing Council 
has adopted this opinion.  
 
1. Purpose of the draft ordinance  
1.1 In view of the expected adoption and entry into force of the R egulation on prudential requirements 
for credit institutions and investment firms  (hereinafter the ‘CRR’)2, the French government has 
decided  to align the definition of ‘credit institutions’ under  national l egislation  with the Union 
definition. Pursuant to Article 4(1) (a) of Directive 2006/48/EC  of 14 June 2006 relating to the 
taking up and pursuit of the busine ss of credit institutions3, a ‘credit institution ’ means ‘an 
undertaking whose  business is to receive deposits or other repayable funds f rom the public and to 
grant credits for its own account ’. The definition laid down in the  CRR4 contains both elements a s 
well. From a  French national  law perspective, this requires  aligning  the definition of credit 
institution with  the Union  definition . 
1.2 First, under French  legislation , ‘credit institutions ’ are defined as ‘legal entities having as their 
customary activ ity the  carrying out of banking transactions ’ which ‘comprise the receipt of funds 
                                                 
1   OJ L 189, 3.7.1998, p. 42.  
2  Proposal for a R egulation of the European Parliament and of the Counc il on prudential requirements for credit institutions 
and investment firms  (COM (2011 ) 0452 final ). 
3  OJ L 177, 30.6.2006, p. 1.  
4  Article 4(1) of the CRR provides  that: ‘credit institution’ means ‘an undertaking the business of which is to receive 
deposi ts or other repayable funds from the public and to grant credits for its own account’.  
ECB -PUBLIC  
2 from the public, credit transactions and bank payment services’5. The cumulative  character of the 
criteria , i.e. receiving deposits and granting credits , was transposed as a lternative s in the French 
national legislation.  The draft ordinance proposes to redefine  credit institutions as ‘legal  entities 
whose business consists of receiving repayable funds from the public6 and granting loans for their 
own account ’7, with a view  to making it  clear that both activities are required for an entity to 
qualify as a ‘ credit institution ’. 
1.3 Second, t he draft ordinance creates a new type of  financial institution, i.e. the ‘ financing  company’ . 
Financing  companies  are defined as ‘ legal persons that are not credit institutions whose regular 
professional activity is to perform credit transactions in accordance with the conditions set  out in 
their authorisation’8. Financing compan ies will be entitled to grant credit , but will not collect 
deposi ts or other repayable funds from the public . The draft ordinance provides  that financing 
companies  ‘may provide payment services, issue and manage electronic money and provide 
investment services on condition that they have obtained the relevant authorisat ion’9. Financing  
companies , as well as credit institutions , will be  authorised to issue negotiable debt securities under 
the conditions laid down by  the Minister for the Economy , provided that the financial instruments  
issued are not repayable funds receiv ed from the public10.  
1.4 Finally , the draft ordinance makes reference to the national prudential regime applicable to 
financing  companies. The French supervisory authority  (Autorité de contrôle prudentiel ) will 
supervise  financing companies11. In particula r, before starting  their activities , financing  companies , 
as well as credit institutions , will have to  obtain approval from the French supervisory authority12. 
The draft ordinance  is intended to empower the Minister for the Economy to enact implementing 
decrees under which  financing companies will be subject to rules, equivalent to Union 
requirements for credit institutions, relating to solvency  and large exposure s. Additionally, the draft 
ordin ance provides that liquidity  and leverage requirements of financ ing companies will be 
specified in an implementing decree.  
 
2. General observation s 
The ECB welcomes the harmonisation of the definition of credit institution under French  law with the 
Union definition  as the adjustments required by the CRR contribute  to a more uniform application 
throughout the U nion. This also ensures a level -playing field within the U nion. In this context , the ECB 
                                                 
5  See Article L.511 -1 in conjunction with Article L. 311-1 of the French Monetary and Financial Code ( MFC ). 
6  ‘Repayable funds from the public’ are defined in the new proposed Article L 312-2 as ‘funds which an entity accepts 
from a third party with the right to assign them for its own account subject to its returning them. These funds are received 
in particular in the form of deposits or through the issuing of debt  securitie s’. 
7   Proposed Article L.511- 1.-I of the MFC . 
8  Proposed Article L.511- 1.-II of the MFC . 
9  Proposed Article L.515- 1 of the MFC . 
10  Proposed paragraph 1a of Article L.213-3  of the MFC . 
11  Proposed 9th indent in paragraph A of Article L.612-2 .-I of the MFC . 
12  Proposed paragraph L.511- 10 of the MFC . 
ECB -PUBLIC  
3 would like to highlight  the observations made in the context of its Opinions  on the proposal for a 
Directive amending Directi ve 2006/48/EC13. 
 
This opinion will be published on the ECB’s website.  
  
Done at Frankfurt am Main, 24 May 2013.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI  
                                                 
13  See for instance Opinion CON/2010/65 as regards capital requirements for the trading book and for resecuritisations, and 
the supervisory review of remuneration policies.