20. 10. 86 Official Journal of the European Communities No C 263/13 
Opinion on the proposal for a Council Directive on the coordination of laws, regulations 
and administrative provisions relating to the reorganization and the winding-up of credit 
institutions (l) 
(86/C 263/06) 
On 24 January 1986 the Council decided to consult the Economic and Social Committee, in 
accordance with Article 57 of the Treaty, on the abovementioned proposal. 
The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing 
the Committee's work on the matter, adopted its opinion on 4 June 1986, in the light of the 
report by Mr de Bruyn. 
At its 238th plenary session (meeting of 2 July 1986), the Economic and Social Committee 
adopted the following opinion unanimously. 
The Committee welcomes the proposed Directive, subject to the following general and 
specific comments: 
1. General comments 
The proposed Directive embraces three distinct sub­
jects: 
— measures to reorganize credit institutions and the 
extra-territorial validity, within the Community, of 
reorganization measures decided by the state in 
which the institution's head office is located (the 
'home country') in respect of branches set up in 
other Member States, 
— winding-up of credit institutions and extra-terri­
torial validity, within the Community, of decisions 
taken to this effect in the home country in respect 
of branches set up in other Member States, 
— deposit guarantee schemes. 
1.1. Reorganization measures 
1.1.1. Article 2 (1) of the proposed Directive defines 
reorganization measures as 'measures which are intend­
ed to safeguard or restore the financial situation of a 
credit institution'. 
However, the Directive applies only to measures listed 
in the appended Annex. It is clear from this Annex that 
the great majority are administrative measures designed 
to enable the competent authorities to carry out inspec­
tions and checks, take precautionary action (e.g. 
appointment of a special auditor or temporary receiver, 
suspension of all or some activities, ban on certain 
operations) and apply sanctions (suspension, with­
drawal of licence, etc.). 
As the Commission is aware, the aim of these measures 
is obviously not just to safeguard or restore the financial 
situation of a credit institution but, more broadly, to 
serve as administrative instruments to facilitate the 
(') OJ No C 356, 31. 12. 1985, p. 55. supervision and, where appropriate, punishment of con­
duct in breach of the relevant rules. 
Where a credit institution experiences problems in con­
nection with operation margins or solvency, the com­
petent authorities are often seen to intervene with the 
customary discretion to rally other institutions to its 
aid. Some precautionary administrative measures will 
then be taken, again with the utmost discretion, since 
any leak regarding the institution's plight could aggra­
vate the situation, perhaps irrevocably. 
Consequently, the need for the measures taken at this 
stage to be kept confidential as long as necessary cannot 
be over stressed. 
1.1.2. The Commission is well aware that the 
measures listed in the Annex are a mixed bag. 
Article 2 stipulates three positive conditions in order 
for the Directive to be operative (Article 2 (1)) — its 
provisions are not relevant in two sets of circumstances, 
viz. where such measures are taken 
— as part of the normal supervision of credit insti­
tutions and to deal with infringements, 
— in connection with bankruptcy proceedings, an 
arrangement or any other winding-up procedure 
already initiated (Article 2 (2)). 
The wording of one of the positive conditions 
(Article 2 (1) (b)) should make it clear that measures 
need to have been adopted and implemented to avoid 
the opening of a winding-up procedure rather than just 
saying that they must be designed to do so. 
1.1.3. Broadly speaking, under the new Directive, 
the territorial validity of the competent authorities' 
decisions gives way to the rule that the decisions of 
the competent authorities of the home country are 
applicable and extend to all Member States where the 
credit institution has a branch (Article 4), 
No C 263/14 Official Journal of the European Communities 20. 10. 86 
Provision is made for one exception: should the com­
petent authorities of the host country deem it necessary 
to implement one or more reorganization measures in 
their territory and the competent authorities of the 
home country, duly notified of this intention, consider 
that there is no need to intervene, the former authorities 
shall retain territorial competence and may exercise the 
powers vested in them by their national legislation 
(Article 6). 
On the other hand, should the home country's auth­
orities see fit to intervene, their decision shall be binding 
in the host country, whose authorities may not intro­
duce or maintain any reorganization measure for which 
they are responsible (Article 4 (2)). 
The Committee feels that this provision can cause diffi­
culties when the competent authorities of the host 
country conclude, in the light of certain specific national 
circumstances, that the measures taken by the com­
petent authorities of the home country are inadequate 
and fail to take sufficient heed of the host country's 
particular problems. Consequently, Article 4 (3) should 
be replaced by a clause specifying that decisions taken 
by the authorities of the home country do not prevent 
the authorities of the host country from introducing or 
maintaining measures for which they are responsible. 
1.1.4. Conversely, measures taken by the authorities 
of the home country may seem unduly severe to the 
authorities of the host country or seem to conflict with 
the latter authorities' concept of general interest and 
public order. 
On this point the proposed Directive is radical: Member 
States are required to adopt, if need be, any laws, 
regulations and administrative provisions needed to 
remove all legal obstacles to implementation of the 
measures decided by the home country's authorities 
(Article 10). 
1.1.5. Should Article 9 of the proposed Directive 
have to be amended as a result of ratification and 
implementation of the Single Act, the Committee 
expects to be duly consulted. 
1.2. Winding-up 
1.2.1. Given that the Commission's intention — as 
expressed in the explanatory memorandum — is not 
just to enforce application of the home country's laws 
but also the exclusive competence of that Country's 
authorities or courts, Article 11(1) must be interpreted 
as interference in the Member States' domestic legal 
systems. In addition, constitutional objections may arise 
since consultation of an administrative authority by the 
judicial authority is implied. 
1.2.2. The Committee observes that the term 'wind­
ing-up' covers: — bankruptcy, winding-up, arrangements, compo­
sitions and similar proceedings within the meaning 
of the relevant draft convention, 
— other special (notably administrative) winding-up 
arrangements, 
— voluntary winding-up procedures (Articles 12). 
1.2.3. The proposed Directive is founded on the prin­
ciple of unity and universality of the winding-up pro­
cedure: exclusive competence is vested in the authority 
of one State (the home country), whose decisions are 
to be recognized and enforced in respect of all branches, 
in all Member States. 
The introduction of this principle, endorsed in the draft 
convention on bankruptcy, winding-up, arrangements, 
compositions and similar proceedings, would raise no 
problems if that convention had been adopted and come 
into force. Failing this, the legislation of some Member 
States will have to be amended — in some cases 
substantially. 
1.3. Deposit guarantee schemes 
1.3.1. The Committee understands the public's 
anxiety as to whether, and how, their deposits (in many 
cases their savings) are guaranteed in the event of a 
credit institution going bankrupt. 
For this very reason credit institutions are strictly super­
vised in such matters as current operating margins, 
solvency and profits (which are ultimately the best 
security). 
Insurance against insolvency is hardly feasible with 
the normal insurance methods, whereby the laws of 
statistics are applied to cover a sufficiently broad range 
of comparable risks. At one time this was possible in 
the United States because of the large number of 
modest-sized institutions distributed over a wide mar­
ket. This system has ceased to be effective with the 
emergence of institutions on a totally different scale. 
The economic structure of the common market means 
that such risks can hardly be covered by the State, i.e. 
taxpayers as a whole. Yet that is sometimes the case 
for official credit institutions — again raising the issue 
of the potential financial strain on society and possible 
distortion in terms of competition. 
Government intervention can anyway never be ruled 
out, e.g. in major disasters likely to escalate or to 
undermine the national currency and the country's 
international credit standing. These factors also explain 
why existing guarantee schemes almost invariably have 
a pronounced national emphasis, which will persist as 
long as there is more than one currency. 
20. 10. 86 Official Journal of the European Communities No C 263/15 
1.3.2. To meet public concern, credit institutions in 
some Member States have introduced guarantee 
schemes, with or without official assistance. 
The cornerstone of such schemes is the joint liability 
of all credit institutions operating in one and the same 
market place, defined in terms of the currency used as 
legal tender. 
Joint liability presupposes that it is in everyone's inter­
ests that the image projected by the market place, as 
represented by the national currency in which they 
operate, is one of reliability and security, regardless of 
other factors such as the relative size of institutions and 
(potentially hazardous) competition from some at the 
expense of others which will have to pay up in the 
event of a contingency situation. 
1.3.3. These national schemes, all of them based on 
the joint liability of credit institutions (in the shape of 
contributions or undertakings to provide assistance) 
may operate on an entirely private basis. In some cases 
the authorities have stepped in to back the scheme or 
get it off the ground. 
1.3.4. These schemes all preclude the right to go 
bankrupt or wind up. Here the guarantee scheme oper­
ates like an insurer assuming the rights of the compen­
sated party in bankruptcy proceedings. The equality of 
creditors' claims does not apply in this instance. 
1.3.5. Otherwise the details of schemes vary widely 
in respect of all such details as: the ceiling for compen­
sation; protected currency; type of deposits covered; 
calculation of contributions; categories of beneficiaries. 
These variations are due to differences in approach and 
the degree of public concern in the individual Member 
States. 
1.3.6. A directive does not seem an appropriate 
instrument for dealing with this matter. 
Nonetheless, in view of the special nature and national 
connotations of the issue, and bearing in mind the 
potential impact on competition, it seems justified to 
allow any branch of a credit institution having its head 
office in another Member State to subscribe to the host 
country's guarantee scheme, on the same terms as those 
offered to credit institutions having their head office in 
the host country, unless (a) the branch is covered in the 
host country by the home country's scheme, (b) this 
scheme is no less favourable than the host country's 
scheme and (c) membership of the host country's 
scheme is not compulsory. 
On the other hand, while some Member States do not 
have a guarantee scheme, it seems quite unacceptable 
to require existing guarantee schemes to provide cover 
for branches in a Member State where no such scheme 
operates. 2. Specific comments 
2.1. Article 2(1) 
The Committee proposes that this clause be worded as 
follows: 
'For the purposes of this Directive, "reorganization 
measures" means measures taken by the authorities 
referred to in paragraph 3 below and intended to safe­
guard ...' 
2.2. Article 2 (1) (b) 
The Commission's aim (see explanatory memorandum, 
page 5, last paragraph) would be better expressed by 
replacing the proposed wording by the following: 
'(b) they are implemented so as to avoid the opening 
of a winding-up procedure'. 
2.3. Article 4 
The competent authorities of the host country can 
decide whether measures taken in the home country are 
inadequate in the light of the local situation. They must 
therefore be permitted to maintain, where they have 
already intervened under Article 6, or to introduce any 
measure within their competence that they deem useful. 
Article 4 (3) should therefore be deleted (see point 1.1.3 
above). 
2.4. Article 7 
This provision is constructive and welcome in the situ­
ation described in the first paragraph, where measures 
affect creditors' rights and an appeal is lodged against 
them. 
In contrast, the utmost discretion is needed in other 
cases. 
2.5. Article 9 (2) 
Obviously a Member State may only alter or add to 
the measures listed in the Annex where such measures 
relate to its own legal system. 
2.6. Article 11 
The purpose of this provision, in keeping with the 
explanatory memorandum, is to introduce the dual 
principle of unity and universality of winding-up 
procedures. 
However, the second paragraph merely specifies that 
business shall be wound up 'in accordance with the law 
of the home country', without confirming that exclusive 
territorial competence is vested in the home country's 
authorities. In the absence of such clarification, and 
until such time as the convention on bankruptcy, 
winding-up, arrangements, compositions and similar 
No C 263/16 Official Journal of the European Communities 20. 10. 86 
proceedings is adopted, some Member States whose 
laws do not recognize the principle of unity and univer­
sality of bankruptcy proceedings could recognize the 
competence of their own courts for the branch on their 
territory but confine themselves to applying the home 
country's legislation. 
This interpretation could be supported by the third 
paragraph, which implies that a winding-up procedure 
can be opened in respect of a branch, unless such a 
procedure has already been opened in another Member 
State, which does not necessarily have to be the home 
country. 
The Committee therefore proposes that Article 11 (3) 
be reworded as follows: 
'Decisions on the winding-up of a credit institution 
taken by the administrative authorities or courts of the 
home country or winding-up agencies in that country, 
shall also be ...' 
1.7. Article 16(1) 
It would be helpful to specify that any branch in a 
Member State of a credit institution having its head 
office in the Community is entitled to subscribe to the 
host country's guarantee scheme on the same terms as 
those offered to credit institutions having their head 
office in the host country. Should (a) the branch be 
covered in the host country by the home country's scheme, (b) this scheme be no less favourable than the 
host country's scheme and (c) membership of the host 
country's scheme not be compulsory, the branch may 
be exempted from joining the local scheme. If the home 
country's scheme is less favourable than the host 
country's, the branch could be allowed simply to con­
tribute on a supplementary basis, provided that limited 
membership is permitted under the scheme. 
2.8. Article 16 (2) 
This provision should be deleted (see point 1.3.6 of the 
General comments). 
2.9. Article 11 
Instead of setting a deadline already at this stage, a 
period of three to four years from the adoption of the 
Directive should be allowed for Member States to adopt 
the required provisions. 
2.10. Annex 
The Committee has noticed that there seems to be some 
omissions in the list of reorganization measures set out 
in the Annex. Any comments to be made on this 
point will be sent directly to the relevant Commission 
departments. 
Done at Brussels, 2 July 1986. 
The Chairman 
of the Economic and Social Committee 
Gerd MUHR 
Opinion on the proposal for a Council Decision amending Decision 85/8/EEC on specific 
community action to combat poverty (!) 
(86/C 263/07) 
On 16 June 1986 the Council decided to consult the Economic and Social Committee, under 
Article 198 of the Treaty establishing the European Economic Community, on the proposal 
for a Council Decision amending Decision 85/8/EEC on specific Community action to combat 
poverty. 
The Economic and Social Committee decided to appoint Mr Roycroft as rapporteur-general 
with the task of preparing its work on the subject. 
At its 238th plenary session (meeting of 2 July 1986), the Economic and Social Committee 
adopted the following opinion with no votes against and one abstention: 
1. General comments 
1.1. The Committee once again expresses its pro­
found concern that poverty is increasing in the Euro­
pean Community, not least so among its new adherents. There is ample evidence to prove that more and more 
people are falling into the economic margins of our 
society. 
(!) OJ No C 151, 17. 6. 1986.