EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 15 April 2009  
on certain amendments to the Law on banks  
in connection with the financial markets crisis   
(CON/2009/34) 
 
Introduction and legal basis  
On 8 April 2009 the European Central Bank (ECB) received a request from the Czech Ministry of 
Finance for an opinion on a draft law amending Law No 21/1992 Coll. on banks (hereinafter the ‘draft 
law’). 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community 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 law relates to rul es applicable to financial instituti ons 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 Eur opean Central Bank, the Governing Council has adopted 
this opinion. 
 
1.  Purpose of the draft law 
The draft law is a preventive measure in response to the turbulent situation on the financial markets in 
connection with the global financial crisis. The main  purpose of the draft law is to establish a legal 
framework which would facilitate increasing a distressed  bank’s capital or the transfer of its business or 
liabilities to a sound institution. The proposed chang es include: (i) a state-owned special purpose bank, 
i.e. a bridge bank, may be established for the purpose of acquiring and operating the business of a 
distressed bank. This is considered necessary in the ev ent that at the relevant time there would be no bank 
on the market willing to take over the business of a distr essed bank; (ii) special rules are laid down for the 
increase of a bank’s capital in the event that the purpo se of such increase is to comply with regulatory 
capital requirements. The objective is to ensure the f astest possible supply of real money to a distressed 
bank while maintaining maximum transparency and fairness when increasing a bank’s capital under such 
circumstances; (iii) Č eská národní banka (CNB), the integrated financial market supe rvisor, is provided 
with a special regulatory instrument (a measure of ge neral application) for a limited period in the event 
the banking or financial system is threatened. By mean s of this measure it would be possible to mitigate 
certain regulatory requirements, prohibit certain types of operations or increase reporting frequency; 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
(iv) the appli cable regi me governing the takeover of a debt based on an agreement with the debtor is, i n 
the context of conservatorship, m odifie d so that the consent of creditors to the  takeover of a distress ed 
bank’s obliga tions by  anot her bank will not be necessary . Given its i mportance,  such transact ion will be 
subject to the prior consent  of CNB, whi ch will be given onl y if the person taking over the debts ensures 
the proper and sm ooth continuation of the relationships with client s rela ting to the debts taken over; and 
(v) the purchase price for the sale of th e business of  a bank under conservatorship m ust be based on a 
valuation pre pared by  a CNB-appointed valuator. To this end, basic valuation principles and procedures 
are provided for in the draft law.   
 
2. General observations  
2.1 The ECB has issued a number of opi nions at the request of the com petent Mem ber State au thorities  
on national measures ad opted in res ponse to the  global financial crisi s2. The ECB invites the 
Ministry of Finance to take into account the rele vant observations  made in its recent opinions on 
similar dr aft legislative p rovisions in other Me mber States, some of which a re repe ated a gain 
below. 
2.2 The ECB also draws attention to the guidan ce provided b y the Ecofin Council to the Mem ber 
States in the conclusions of its Meeting of 7 October 20083 as well as the  Declaration issued by  the 
Heads of State of the euro area on 12 Oc tober 2008 (hereinafter th e ‘Declaration’)4. In particular,  
the ECB str esses that any  initiatives put in place by  the com petent national authorities to restore 
confidence in the financial markets should be coordinated an d should ai m to im plement the 
common principles in question, in a spirit of clo se cooperation with other Mem ber States and the  
Community  institutions5. The principles contained in the Declar ation as well a s the conclusions  
raised by  the Ecofin Counc il were endorsed by th e European Counc il of 15  and 1 6 October 20 086. 
2.3 With these g eneral observ ations in mind, and against the background of the guidance previousl y 
given by the  ECB and the Co mmunity instituti ons in this regard, the ECB has the following 
observations on the draft la w. 
 
                                                 
2  All ECB opinions are available on th e ECB’s website at www. ecb.europa.eu.  
3  See ‘Immediate Responses to Financia l Turmoil’ , Ecof in Council Conclusions of  7 October 2008, available on th e former 
French Presidency ’s website at www. ue2008.fr. The Ecofin Council recommended that: (i) interven tions should be 
timely  and the s upport should in pr inciple be temporar y; (ii) the interests of taxpayers should be protected; (iii) existin g 
shareholders should bear the due conseque nces o f the interv entio n; (iv) the Gove rnment should b e in a position t o bring  
about a ch ange o f management; ( v) management should not retain  undue be nefits; (vi) governments may  have, inter alia , 
the power to in tervene in rem unerat ion; (vii ) legitimate intere sts of com petitors must be protected, in part icular through  
the St ate aid rul es; and (v iii) negative spill-ov er effects should  be avoided.  
4  The text of the Declarati on is available on the fo rmer French Presidency ’s website at www. ue2008. fr. The Member States 
agreed  to: (i)  ensure appropriate liquid ity cond itions for  financial institutions; (ii) facilitate the funding  of banks; 
(iii) provide  fina ncial insti tution s with addit ional cap ital resour ces to con tinue  to ensure th e proper finan cing of the  
econom y; (iv) allow for an efficient r ecapitalisation  of distressed banks; (v ) ensure su fficient flexib ility in the 
implementation of accounting  rules; and (v i) enh ance coop eration procedur es among European countries. 
5  See ECB Opinion CON/2009/12 of 9 Februar y 2009 at the reque st of the C ypriot Ministr y of Finance on a draft law 
amending th e Laws of 2002 and 2004 on the management of  revenues and expen diture and on the accounting s ystem of  
the R epublic and other  related matters. 
6   See Brussels Eu ropean Coun cil of 15 to  16 O ctober 2008, par agraph 3 of  the Presidency  Con clusio ns. 
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3. Specific obse rvations 
Valuati on 
3.1 Article 29b(1) of the draft law provides that where the business of a bank placed into 
conservatorship is being sold, the  purcha se price must be based on a valuation drawn up according 
to the situation on the date the contract comes into effect. Article 2 9b(2) and (3) of the draft law set 
out certain re quirements concerning su ch valuation.  In particular , the valuati on is to  be drawn up  
impartially , thoroughl y, without  unnecessary  dela y, with due pr ofessional care and in accordance 
with generally accepted procedures in the fiel d of valuation of businesses a nd other property7. 
Finally , Article 29c(8) of the draft law s tates that whe n a part of the business of a bank placed into  
conservatorship is being sold, the provi sions of Articles 29b and 29c will apply mutatis mutandis . 
In this context, insofar as public m easures of relie f for im paired as sets may be im plemented within 
the framework of Articles 29b and 2 9c of the draft la w, the ECB would like to draw attention to the 
Euros ystem ’s Guiding pri nciples for bank asset su pport schemes of 25 Febr uary 20098 and the  
Commission Co mmunication of 25 Februar y 200 9 on the treat ment of i mpaired as sets in the 
Community  banking sector9, which prov ide important guidance, inter alia , as regards valuation.  
The temporary nature of state involveme nt 
3.2 Article 16(5) of the draft law provides for the es tablishment of a bridge ba nk. Under this provision,  
a  bank’ s business may be transferred to a State ow ned j oint-stock com pany that fulfils the stat utory 
 minim um capital requirements10. If CNB  grants its p rior consent to the sale o f the business, it will 
concurrently  issue a lic ence to the bridge bank that  is identical in scope to the licence held b y the 
bank transferring the business. Accord ing to the explanator y memorandum  to the draft la w, the 
acquisition and operation of a distr essed bank’ s business by  a bridge bank would, as r ule, be  
temporary  and would cater  for situations where, at the relevant time, there would be no bank o n the 
market willing to take over the distressed bank’ s business. The E CB welco mes the introduction in 
the draft law of the possibilit y to addr ess a crisi s situation through the transfer of a distr essed 
bank ’s busine ss to a bridge  bank. S uch reorganisa tion mechanism  is in line with similar procedures 
introduced in other countries to resc ue distressed  banks. However, in this context, the ECB  
reiterates the im portance of ensuring t hat the Stat e’s involvem ent is lim ited in tim e to the extent 
deemed nec essary for the success of the reorganisation m easure. 
Prohibition or rest riction on transfers of funds  
3.3 The ECB understands that the draft law introduces the possibili ty for CNB to prohi bit or restri ct 
certain per mitted activities, the execution of certain  transactions, the transfer  of funds or  other 
transactions of a bank or a foreign ba nk branch by a measure of general application issued in 
                                                 
7  See Article 29b( 2).  
8  Available on the ECB’s we bsite at www. ecb.europa. eu. 
9 Availab le on the Com mission’ s website at ec.eur opa.eu . 
10  According to the explanator y memorandum to th e draft law, a bridge bank may  acquire a busin ess b y means of a contract 
made directly  with th e con cerned bank (through  a decision of  its General Meeting) or from the conservator  during th e 
period of  conser vatorship of  the bank.  
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accordance with Article 26bb. The E CB notes that prohibiting or re stricting the t ransfer of funds or  
other transact ions of foreign bank branc hes could im pair the possibility  for fore ign banks to manag e 
their liqui dity. Therefore, the ECB recommends that the draft la w require CNB to coordi nate its 
actions with  the ho me authorities of the fore ign branches concerned. Moreover, should such  
measures co ncern branches of Me mber State ban ks, Community  law obligations, requiring in 
particular the provision  of inform ation to the Commission and the concerned Me mber States, 
should be dul y com plied with. 
Role of the central ba nk 
3.4 The ECB expects that CNB’s invol vement in the procedures provided for in the  draft law will not 
go be yond t he proper pe rformance of its existing tasks and that it will compl y fully wit h the 
prohibit ion on monetary  financing laid down in  Article 101(1) of  the Treaty , read in conju nction 
with Council  Regulation (EC) No 3603/93 of 13 D ecem ber 1993 specify ing definitions for the 
application o f the prohibit ions referred to in Articles 104 [ now 101 ] and 104b( 1) [now 103(1)]  of 
the Treaty . 
 
This opini on will be publis hed on t he ECB’s website.  
 
 
Done at Frankfurt am  Main, 15  April 2 009. 
 
[signed ] 
 
The President of the ECB 
Jean-Claude TRICHET 
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