EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 13 February 2004 
at the request of the Austrian Federal Ministry of Finance 
on a draft Federal law 
adopting a Federal Law on the supplementary supervision of credit institutions, insurance 
undertakings and investment firms in a financ ial conglomerate and amending the Insurance 
Supervision Act, the Banking Act, the Securiti es Supervision Act and the Financial Markets 
Supervisory Authorities Act 
(CON/2004/5 ) 
 1. On 6 January 2004 the European Central Bank (ECB)  received a request from the Austrian Federal 
Ministry of Finance for an opinion on a draft Bundesgesetz mit dem ein  Bundesgesetz über die 
zusätzliche Beaufsichtigung der Kreditinstitute , Versicherungsunternehmen und Wertpapierfirmen 
eines Finanzkonglomerats  (Finanzkonglomerategesetz – FKG)  erlassen wird sowie das 
Versicherungsaufsichtsgesetz, das Bankw esengesetz, das Wertpapieraufsichtsgesetz  und das 
Finanzmarktaufsichtsbehördengesetz  geändert werden  (Federal law adopting a Federal Law on the 
supplementary supervision of credit institutions, in surance undertakings and investment firms in a 
financial conglomerate (Financial Conglomerates Law) and amending the Insurance Supervision 
Act, the Banking Act, the Securities Supervisi on Act and the Financial Markets Supervisory 
Authorities Act) (hereinafter the ‘draft law’). The draft law implements  Directive 2002/87/EC of 
the European Parliament and of the Council of 16 December 2002 on the supplementary 
supervision of credit institutions, insurance undert akings and investment firms in a financial 
conglomerate and amending C ouncil Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 
93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament 
and of the Council
1 . 
2. As the purpose of the draft law is to implemen t Directive 2002/87/EC in Austria, the Austrian 
authorities were not legally obliged to c onsult the ECB under Article 1(2) of Council 
Decision 98/415/EC of 29 June 1998 on the consulta tion of the European Central Bank by national 
authorities regarding draft legislative provisions2. However, it should be noted that at the request of 
the Council of the European Union, the ECB delivered its opinion on a draft of Directive 2002/87/EC on 13 September 2001 (CON/2001/25)
3 and the ECB has a continuing interest in the 
                                                      
1  OJ L 35, 11.2.2003, p. 1. 
2  OJ L 189, 3.7.1998, p. 42. 
3  OJ C 271, 26.9.2001, p. 10. 
2 harmonised implementation of Directive 2002/87/EC in all Member States. In the light of the 
previous consultation, the ECB now strongly welcomes the opportunity to give its opinion on the draft law, which contains, inter alia , provisions concerning the pruden tial supervision of financial 
institutions and fosters the stability of financial institutions and markets. 
3. The explanatory notes to the draft law refer to the Commission’s Financial Services Action Plan 
and state that the transposition of  Directive 2002/87/EC is a further step towards the completion of 
the Internal Market by filling certain gaps in cu rrent legislation relating to the supervision of 
financial conglomerates.  
4. In a general context, the ECB notes that increasing links between financial markets calls for careful 
consideration of cross-sector group structures to supervise and contain in stitutional and systemic 
risk. In particular, the combined operations of gr oups that comprise insurance undertakings, credit 
institutions and investment firm s (referred to as ‘financial congl omerates’) may also create new 
prudential risks or exacerbate existing ones. The in troduction of the euro has prompted changes in 
financial markets that call for a substantial enhancement of cooperation procedures between 
national authorities and the ECB and the national central banks within the Eurosystem. Capital 
adequacy requirements must therefore be suffici ent and proportionate so as to counter the risks 
undertaken in groups that straddle traditional sectoral boundaries. The purpose of Directive 
2002/87/EC is to ensure the stability of European financial markets, to establish common standards 
for the prudential supervision of financial conglom erates throughout Europe and to ensure a level 
playing field and legal certainty between fina ncial institutions. Key elements of Directive 
2002/87/EC are to ensure that there is adequate cooperation between the competent authorities and 
that due consideration is given to general requirements for transparent and clear arrangements for 
the supervision of conglomerates and the appr opriate distribution of tasks and supervisory 
competencies. The ECB supports the transposition of Directive 2002/87/EC into Austrian law as it 
will supplement the existing supervisory framework in Austria, which is currently organised on a 
sectoral basis. This reflects the need to provide increasingly integrated European financial markets 
with an adequate framework to achieve  and maintain financial stability.  
5. The ECB welcomes the comprehensive provisions of the draft law on supe rvisory cooperation and 
the exchange of information. The explanatory me morandum to the draft law recalls explicitly the 
excellent cooperation between the Oeste rreichische Nationalbank (OeNB) and the 
Finanzmarktaufsicht  (FMA) (Austrian Financial Markets Authority) and mandates the OeNB to 
use its expertise and resources for on-site supervisi on of market and credit risk in credit institutions 
and, where appropriate, in investment firms with in a financial conglomerate. Moreover, the ECB 
welcomes Paragraph 12(4) of the draft law whic h explicitly includes the European System of 
Central Banks and the ECB in such exchange of information on supervised entities, i.e. conglomerates, where this is necessary for the fulf ilment of their respective tasks. Such entities are 
likely to be systemically important and their opera tions may affect financial stability, the stability 
3 of payment systems and also be relevant to the conduct of monetary policy in the European Union 
(EU).  
6. The ECB further notes that defining a conglomerate a ccording to harmonised criteria represents the 
first crucial step towards consistent supervis ion of such financial groups throughout the EU. 
Paragraph 4(1) of the draft law imposes an oblig ation on the financial institutions concerned to 
review initially whether they satisfy the defi nition of a financial conglomerate. The final 
responsibility however remains with the FMA, which may, under Paragraph 3(5) of the draft law, 
substitute or add to the criteria defining a financia l conglomerate. In particular, the FMA may take 
a group’s earning structure and off-balance sheet  items into account. Furthermore, the ECB notes 
Paragraph 5(4) of the draft law, which states that in limited circumstances the Federal Minister of 
Finance may deviate in part from the provisions of Directive 2002/87/EC when appointing a coordinating authority to carry out supplementary su pervision. The ECB recalls the need to achieve 
an EU-wide harmonisation of the regulatory fra mework and advocates a high degree of caution 
when deviating from Directive 2002/87/EC in orde r to define a conglomerate or identify the 
coordinating authority. The ECB regards the main benefit of harmonised and objective criteria as a 
contribution to the transparency, clarity and legal certainty facilitating a harmonised implementation of Community law throughout the EU. 
7. The ECB confirms that it has no objections to the competent national authorities making this 
opinion publicly available at their discretion. Th is opinion will be published on the ECB’s website 
six months after the date of its adoption. 
  Done at Frankfurt am Main on 13 February 2004. 
 
[signed] 
 
The President of the ECB  
Jean-Claude TRICHET