EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 16 May 2014 
on the legal framework for credit institutions and financial companies 
(CON/2014/34) 
 
Introduction and legal basis 
On 5 March 2014, the European Central Bank (ECB) received a request from the Portuguese 
Minister of State and for Finance for an opinion on a draft law (hereinafter the ‘draft law’) amending Decree-Law No 298/1992 of 31 December  1992 establishing the legal framework for 
credit institutions and financial companies a nd other closely related laws and decree-laws
1 
(hereinafter the ‘legal framework’). 
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 on th e third and sixth indents of Article 2(1) of 
Council Decision 98/415/EC2, as the draft law relates to the Banco de Portugal (BdP) and 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 European Central Bank, th e Governing Council has adopted this opinion. 
 1.  Purpose of the draft law  
1.1 The draft law introduces changes to the le gal framework whose main purpose is to 
implement Directive 2013/36/EU of the Eu ropean Parliament and of the Council
3 by 
incorporating the relevant provisions in th e banking law, and to effect changes and 
                                                            
1  The draft law also amends the following legal acts: La w No 25/2008 of 5 July 2008 establishing measures of a 
preventive and repressive nature to combat money la undering of illicit origin and terrorist financing which 
transposes Directive 2005/60/EC of the European Pa rliament and of the Council of 26 October 2005 and 
Commission Directive 2006/70/EC of 1 August 2006 on the prev ention of the use of the financial system for the 
purpose of money laundering and terrorist financing a nd amends Law No 52/2003 of 22 August 2003 and repeals 
Law No 11/2004 of 27 March 2004; Law No 28/2009 of 19 June 2009 which reviews the legal framework on 
criminal and misdemeanour penalties in the financial sector; Decree-Law No 260/94 of 22 October 1994 
establishing the legal framework for investment compan ies; Decree-Law No 72/95 of 15 April 1995 establishing 
the legal framework for financial leasing companies; Decree-Law No 171/95 of 19 July 1995 amending the legal 
framework for factoring companies; Decree-Law 211/98 of 16 July 1998 regulating the activity of mutual 
guarantee companies; and Decree-Law No 317/2009 of 30 October 2009 which approve s the legal framework 
governing the taking up of the business of payment ins titutions and the provision of payment services.  
2  Council Decision 98/415/EC of 29 June 1998 on the cons ultation of the European Central Bank by national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
3  Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of 
credit institutions and the prudential supervision of cr edit institutions and investment firms (OJ L 176, 27.6.2013, 
p. 338). 
ECB-PUBLIC  
2 clarifications to Portuguese law made neces sary by Regulation (EU) No 575/2013 of the 
European Parliament and of the Council4. The draft law introduces changes with regard to, 
inter alia , capital buffers, risk management, co rporate governance and administrative 
sanctions, as required by Directive 2013/36/E U. It also proposes amendments to several 
related laws, such as Decree-Law No 317/2009 of 30 October 2009 which approves the legal 
framework governing the taking up of the busin ess of payment institutions and the provision 
of payment services. 
1.2 The draft law also contains amendments to the resolution framework for credit institutions in 
order to clarify some of the provisions of Decree-Law No 31-A/2012 of 10 February 2012, 
which introduced a resolution regime into th e legal framework for credit institutions and 
financial companies. In addition to the implementation of Directive 2013/36/EU, the draft law introduces the following amendments: (a) reduction of the list of entities that are 
considered as credit institutions; (b) in-depth  revision of the sanctions regime; (c) express 
introduction of the ‘no creditor worse off principl e’ in the resolution of credit institutions, 
which has until now only been implicit; (d) reorganisation of the bank accounts database 
regarding the disclosure of information to releva nt authorities; and (e) revision of the regime 
for assessing suitability of members of the ma nagement body and its extension to key 
function holders. 
 2. General observations  The ECB generally welcomes the draft law, which implements Directive 2013/36/EU while 
reflecting the participation of the BdP in the single supervisory mechanism, and clarify the 
‘no creditor worse off principle’ in the cu rrent framework. It is important that the 
transposition into national law of the micro-  and macro-prudential tools contained in 
Directive 2013/36/EU and the implementation of the requirements that fall under the remit of 
the SSM Framework Regulation
5 are carried out accurately6. 
 3. Implementation of Directive 2013/36/EU 3.1 The draft law revises the criteria and requi rements for assessing the suitability of the 
members of the management body and of the key function holders of a credit institution in order to comply with Directive 2013/36/EU and with guidelines from the European Banking 
                                                            
4  Regulation (EU) No 575/2013 of the European Parlia ment and of the Council of 26 June 2013 on prudential 
requirements for credit institutions and inve stment firms (OJ L 176, 27.6.2013, p. 1). 
5  Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014 establishing the framework for 
cooperation within the Single Superv isory Mechanism between the Eur opean Central Bank and national 
competent authorities and with national designated authorities (ECB/2014/17), (OJ L 141, 14.5.2014, p. 1).  
6  Namely the countercyclical capital buffer, minimum risk  weights, loss given defau lt floors on exposures secured 
 by mortgages, the G-SII buffer and the O-SII buffer. 
ECB-PUBLIC  
3 Authority (EBA)7. It also implements the options und er Articles 412(5), 413(3), 458(1) and 
493(3) of Regulation (EU) No 575/2013. By these means, the draft law helps promote consistency across all participating Member Stat es, thereby helping to ensure a level playing 
field and lowering the risk of regulatory arbitrage
8.  
3.2 The draft law also revises the sanctions regime in order to align it with Articles 64 to 72 of 
Directive 2013/36/EU and with the rules laid down in Directive 2005/60/EC of the European 
Parliament and of the Council9 and in Commission Directive 2006/70/EC10. Furthermore, it 
contains new and clearer rules regarding th e disclosure of information relating to bank 
accounts to certain entities in circumstanc es where exceptions to the obligation of 
professional secrecy apply11. 
3.3 The draft law provides that the categories of  entities to be considered as credit institutions 
will be limited to: (a) banks; (b) savings banks ; (c) central mutual agricultural credit banks 
and mutual agricultural credit banks; (d) credit financial institutions12; and (e) any other 
undertakings which fulfil the definition of credit institution and are classified as such in the 
law.  
3.4  A new Article 4A lists the investment firms and specifies which of them are subject to the 
legal framework and to the prude ntial supervision of the BdP13 (dealers, brokers, wealth 
management companies, foreign exchange and money market mediating companies). 
3.5 Although the draft law leaves unchanged the defi nition of ‘credit institution’, it reduces the 
list of entities that may be considered as such in Portugal. It removes certain categories of 
credit institutions that are currently provided for in the banking law but not used in practice 
(e.g. credit purchase financing companies) and classifies certain other categories of credit institutions as ‘financial companies’ (e.g. investment companies, financial leasing companies, factoring companies)
14. The ECB understands that ‘financial companies’ will not 
be authorised to accept deposits from the public  and will not be subject to all of the 
                                                            
7  See Articles 30 to 33 and the new Articles 30A to 30D and 31A to 33A of the draft law, and the guidelines on the 
assessment of the suitability of members of the management body and key function holders, EBA, 
22 November 2012 (available on the EB A’s website at www.eba.europa.eu). 
8  See paragraph 2 of Opinion CON/2013/82 and paragra ph 3.1 of Opinion CON/2014/21. All ECB opinions are 
published on the ECB’s webs ite at www.ecb.europa.eu. 
9        Directive 2005/60/EC of the European Parliament  and of the Council of 26 October 2005 on the prevention of the 
use of the financial system for the purpose of mone y laundering and terrorist fina ncing (OJ L 309, 25.11.2005, 
p. 15). 
10  Commission Directive 2006/70/EC of 1 August 2006 la ying down implementing m easures for Directive 
2005/60/EC of the European Parliament and of the Council as regards the definition of ‘politically exposed 
person’ and the technical criteria for simplified custom er due diligence procedures and for exemption on grounds 
of a financial activity conducted on an occasional or  very limited basis (OJ L 214, 4.8.2006, p. 29). 
11  See Article 81A of the draft law.  
12  The ECB notes that credit financial institutions will not be permitted to receive deposits from the public, although 
they will be permitted to accept repayable funds from th e public and to engage in all other usual banking 
activities. 
13        These were already classified as financial companies and subject to the prudential supervision of the BdP. 
14  See Articles 3 and 6 of the draft law. 
ECB-PUBLIC  
4 prudential provisions laid down in Directiv e 2013/36/EU and Regulation (EU) No 575/2013, 
and that the BdP will lay down rules specifically applicable to them. 
3.6 The ECB considers that the above might allo w financial companies to be more competitive 
by reducing their administrative costs in the cont ext of European regulation. It is confident 
that a level playing field will be preserved, t hus safeguarding all of the interests in a well-
functioning banking system and th e financial system as a whole15. The relevant authorities 
should, however, ensure that the transfer of  these institutions, which were previously 
regulated as credit institutions, to a less onerous  regime of prudential regulation is in line 
with Union law. This is particularly the case if they still fulfil the criteria for authorisation as 
credit institutions. 
 4 Amendments to the resolution framework   As mentioned above, the draft law introduces so me amendments to the resolution framework 
to clarify some of its provisions. In particular, it introduces the ‘no creditor worse off principle’
16, which is not expressly set out in the current legal framework. The ECB 
welcomes this amendment as it is an essential core  principle of the  European Commission’s 
proposal for a directive on the recovery and resolution of credit institutions and investment firms
17 (hereinafter the ‘proposed BRRD’). Howeve r, this does not preclude the need to 
amend more broadly the resolution framework in view of the entry into force of the proposed BRRD. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 16 May 2014. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI 
                                                            
15  Financial companies are allowed to carry on, on a professional basis, the activities of cred it institutions referred to 
in Article 4(1)(b) to (i) and (q) to (s) of the legal fra mework with the exception of the consultancy activities 
referred to in (i). 
16  See Article 145B(1) and (3) of the draft la w and paragraph 3.2 of Opinion CON/2013/87. 
17  Proposal for a directive of the European Parliament a nd of the Council establishing a framework for the recovery 
and resolution of credit in stitutions and investment firms (COM(2012) 280 final).