31. 3. 88 Official Journal of the European Communities No C 84/1 
II 
(Preparatory Acts) 
COMMISSION 
Proposal for a Second Council Directive on the coordination of laws, regulations and 
administrative provisions relating to the taking-up and pursuit of the business of credit 
institutions and amending Directive 77/780/EEC 
COM(87) 715 final 
(Submitted by the Commission to the Council on 23 February 1988) 
(88/C 84/01) 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European 
Economic Community, and in particular the third sentence 
of Article 57(2) thereof, 
Having regard to the proposal from the Commission, 
In cooperation with the European Parliament, 
Having regard to the opinion of the Economic and Social 
Committee, 
Whereas this Directive is to constitute an instrument which 
is essential for achieving the internal market, a course 
determined by the Single European Act and set out in 
timetable form in the Commission's White Paper, from the 
point of view of both the freedom of establishment and the 
freedom to provide financial services, in the field of credit 
institutions; 
Whereas the approach which has been adopted is to achieve 
only the essential harmonization necessary and sufficient to 
secure mutual recognition of authorization and of 
supervisory systems, thus enabling the application of the 
principle of home country control and the granting of a 
single licence recognized throughout the Community; 
Whereas, in this context, this Directive can be implemented 
only simultaneously with specific Community legislation 
dealing with the harmonization of technical matters 
relating to own funds, and a solvency ratio; 
Whereas, moreover, work to harmonize the conditions 
relating to the reorganization and winding-up of credit 
institutions is also being undertaken; 
Whereas harmonization will also have to be undertaken for 
the treatment of liquidity, market, interest rate and foreign 
exchange rate risks run by credit institutions; Whereas the home Member State may establish stricter 
standards than those laid down in Articles 3,4,9,10 and 14 
in relation to credit institutions authorised by its competent 
authorities; 
Whereas responsibility for the financial soundness of a 
credit institution, and in particular for its solvency, will rest 
with the competent authorities of its home Member State 
and whereas the host country authorities retain respons­
ibility for matters relating to liquidity and the implemen­
tation of monetory policy; whereas supervision of market 
risk should be the subject of close cooperation between the 
competent authorities of the home and host countries; 
Whereas this Directive will join the body of Community 
legislation already enacted in particular Council Directive 
77/780/EEC on the coordination of banking legislation (*), 
as last amended by Directive 86/524/EEC (2), Council 
Directive 83/350/EEC on supervision on a consolidated 
basis (3), and Council Directive 86/635/EEC on the annual 
and consolidated accounts of banks and other financial 
institutions (4); whereas, moreover, the harmonization of 
certain financial and investment services is undertaken, 
where the need exists, in specific Community instruments, 
notably with the intention of protecting consumers and 
investors; 
Whereas the Commission has adopted recommendations 
on large exposures [87/62/EEC (5)] and on deposit 
guarantee schemes [87/63/EEC (6)]; 
(!) OJ No L 322, 17. 12. 1977, p. 30. 
(2) OJ No L 309, 4. 11. 1986, p. 15. 
(3) OJ No L 193, 18. 7. 1983, p. 18. 
(4) OJ No L 372, 31. 12. 1986, p. 1. 
(5) OJ No L 33, 4. 2. 1987, p. 10. 
(6) OJ No L 33, 4. 2. 1987, p. 16. 
No C 84/2 Official Journal of the European Communities 31. 3. 88 
Whereas the chosen approach permits, by virtue of mutual 
recognition, credit institutions authorized in their home 
Member States freely to undertake, throughout the 
Community, all the activities shown in the annexed list 
either by the establishment of branches or by supplying 
services; 
Whereas, as a result, the host Member State can, in relation 
to the exercise of the right of establishment and the freedom 
to provide services, require adherence to specific provisions 
of its own laws or national regulations on the part of 
institutions not authorized as credit institutions in their 
home Member State and with regard to activities not 
mentioned in the list, provided that, on the one hand, such 
provisions are compatible with Community law and seek to 
protect the public good and that, on the other, such 
institutions or such activities are not subject to equivalent 
legislation or regulation in their home Member State; 
Whereas it is appropriate to extend the benefits of mutual 
recognition to the activities mentioned in the annexed list 
when they are undertaken by financial institutions which 
are subsidiaries of credit institutions, provided that such 
subsidiaries are included in the consolidated supervision of 
their parent undertakings and meet certain strict con­
ditions; 
Whereas the undertaking of activities which do not appear 
in the list shall continue to benefit from the rights of 
establishment and freedom to supply services under the 
general provisions of the Treaty; 
Whereas the Member States should ensure that there are no 
obstacles to the activities benefiting from mutual recog­
nition being undertaken using the financial techniques of 
the home Member State, as long as the latter are not in 
violation of the legal provisions governing the public good 
in the host Member State; 
Whereas the abolition of the authorization requirement 
with respect to branches of Community credit institutions, 
once the harmonization in progress has been completed, 
necessitates the abolition of endowment capital; whereas 
Article 5(2) constitutes a first transitional step in this 
direction; 
Whereas there is an intimate link between the objective of 
this Directive and the liberalisation of capital movements 
being achieved by other Community legislation; whereas in 
any case the measures regarding the liberalisation of 
banking activities should be in harmony with the measures 
regarding the liberalisation of capital movements; whereas in the event that the Member States may invoke by virtue of 
Council Directive .../.../EEC safeguard clauses in respect of 
the movement of capital, they may suspend the provision of 
banking services to the extent necessary to comply with 
abovementioned safeguard clauses; 
Whereas the procedures established in Directive 77/780/ 
EEC, notably in relation to the authorization of branches of 
credit institutions authorized in third countries, should 
continue to apply to such institutions; whereas those 
branches will not benefit from the freedom to supply 
services under the second paragraph of Article 59 of the 
Treaty; whereas 'however' requests for authorization or 
for the acquisition of a participation from institutions 
governed by the laws of a third country are subject to a 
procedure intended to ensure that Community institutions 
are granted reciprocal treatment in the third countries in 
question; 
Whereas the smooth running of the internal market in 
banking will require, in addition to common legislative 
standards, close and regular cooperation between the 
competent authorities of the Member States; whereas in 
the case of problems concerning credit institutions the 
Contact Committee of bank supervisors of the Member 
States, referred to in the final recital of Directive 
77/780/EEC, remains the appropriate forum for discussion 
and consultation; whereas that Committee is also the body 
best suited to deal with the reciprocal flows of information 
covered in Articles 6 and 7; 
Whereas, at all events, that procedure does not replace the 
bilateral collaboration and cooperation established by 
Article 7 of Directive 77/780/EEC; whereas, in that 
context, the competent host country authorities can 
continue, either on their own initiative or following the 
initiative of the competent home country authorities, to 
verify that the activities of a credit institution established 
on their territory are in conformity with the relevant laws, 
with the principles of sound administrative and accounting 
procedures and adequate internal control; 
Whereas it is necessary, in order to facilitate the 
achievement of the objectives of this Directive and to take 
account of the rapid development of national and 
international financial markets, to introduce a procedure 
for adaptation of certain technical features; whereas, 
because of the important and sensitive nature of that 
adaptation, procedure III, type (a), as defined in Article 2 of 
Council Decision 87/373/EEC (*), is the most appropriate, 
(!) OJ No L 197, 18. 7. 1987, p. 33. 
31. 3. 88 Official Journal of the European Communities No C 84/3 
HAS ADOPTED THIS DIRECTIVE: 
TITLE I 
Definitions and scope 
Article 1 
For the purposes of this Directive: 
— 'credit institution' is defined in accordance with the first 
indent of Article 1 of Directive 77/780/EEC, 
— 'authorization' is defined in accordance with the second 
indent of Article 1 of Directive 77/780/EEC, 
— 'branch' is defined in accordance with the third indent 
of Article 1 of Directive 77/780/EEC, 
— 'own funds' is defined in accordance with Council 
Directive .../.../EEC, 
— 'competent authorities' is defined in accordance with 
Article 1 of Directive 83/350/EEC, 
— 'financial institution' is defined in accordance with 
Article 1 of Directive 83/350/EEC, 
— 'home Member State' means the Member State where a 
credit institution is authorized in accordance with 
Article 3 of Directive 77/780/EEC, 
— 'host Member State' means the Member State where a 
credit institution has a branch or into which it supplies 
services, 
— 'qualified participation' means a holding, direct or 
indirect, in an undertaking which represents 10 % or 
more of the capital or of the voting rights or which 
enables the exercise of a significant influence within the 
meaning of Article 33 of Council Directive 83/349/ 
EEC (i), 
— 'initial capital' means paid-up capital or items of a 
similar nature according to the national legislation of 
the home Member State, 
— 'parent undertaking' is defined in accordance with 
Article 1 of Directive 83/349/EEC, 
— 'subsidiary' means a subsidiary undertaking in accord­
ance with Article 1 of Directive 83/349/EEC. 
Article 2 
1. This Directive shall apply to all credit institutions. 
2. It shall not apply to the institutions exempted under 
Directive 77/780/EEC and listed in Article 2(2) thereof. 
(!) OJ No L 193, 18. 7. 1983, p. 1. 3. The credit institutions which, as defined in Article 2(4) 
(a) of Directive 77/780/EEC, are affiliated to a central body 
in the same Member State may be exempted from the 
provisions of Articles 3,8, and 10 of this Directive provided 
that, without prejudice to the application of those 
provisions to the central body, the whole — constituted by 
the central body and its affiliated institutions — must be 
the subject of consolidated supervision with regard to the 
abovementioned provisions. 
In cases of exemption, Articles 5 and 16 to 19 shall apply to 
the whole, as constituted by the central body and its 
affiliated institutions. 
TITLE II 
Harmonization of authorization conditions 
Article 3 
1. The competent authorities shall not grant author­
ization in cases where initial capital is less than five million 
ECU. 
2. Member States may propose that initial capital be 
fixed at an amount lower than that provided for in 
paragraph 1 in the case of institutions whose scope of 
authorized business is restricted by law or statute. They 
shall notify the Commission of the institutions concerned 
and the amounts proposed within six months of the 
adoption of this Directive. The Commission shall adopt the 
list of categories of institutions concerned and the relevant 
initial capital requirements, according to the procedure laid 
down in Article 20. 
Article 4 
Competent authorities shall not grant authorization 
permitting the taking-up of the business of a credit 
institution before they have been informed of the identity of 
shareholders or members, whether direct of indirect, be 
they physical or legal persons, holding a qualified 
participation and of the amount of such participations. The 
competent authorities shall appraise the suitability of the 
abovementioned shareholders or members. 
Article 5 
1. Host Member States may no longer require, as 
provided for in Article 4 of Directive 77/780/EEC, 
authorization for branches of credit institutions authorized 
in other Member States. The establishment and supervision 
of such branches shall be subject to the provisions laid 
down in Articles 17 and 19 of this Directive. 
2. Until the entry into force of the provisions in 
implementation of paragraph 1, host Member States may 
not require, as a condition for authorization to be granted 
No C 84/4 Official Journal of the European Communities 31. 3. 88 
to branches of credit institutions authorized in other 
Member States, an initial endowment capital greater than 
50 % of the initial capital required by national rules for 
authorization to be granted to a credit institution of the 
same nature. 
3. Credit institutions shall recover the free use of the 
funds no longer required as a consequence of the provisions 
of paragraphs 1 and 2. 
Article 6 
In the following cases there must be prior consultation with 
the competent authorities of the other Member State 
involved: 
— the authorization of a subsidiary of a credit institution 
authorized in another Member State, 
— the authorization of a subsidiary of the parent 
undertaking of a credit institution authorized in another 
Member State, 
— the authorization of an undertaking controlled by 
persons, whether physical or legal, who control a credit 
institution authorized in another Member State. 
Article 7 
1. Requests for authorization of a subsidiary whose 
parent undertaking is governed by the laws of a third 
country or the acquisition of a participation therein as 
provided for in paragraph 3 shall be subject to the 
procedure laid down in this Article. 
2. The competent authorities of the relevant Member 
State shall inform the competent authorities of the other 
Member States and the Commission of the request for 
authorization. 
3. In the same manner, when informed, according to the 
provisions of Article 9, that an undertaking governed by the 
laws of a third country is considering the acquisition of a 
participation in a credit institution such that the latter 
would become its subsidiary, the competent authorities of 
the relevant Member State shall inform the competent 
authorities of the other Member States and the Commis­
sion. 
4. The competent authorities of the Member State 
concerned must suspend their decision regarding requests 
as referred to in paragraphs 2 and 3 until the procedure 
provided for in paragraphs 5 and 6 is completed. 
5. The Commission shall, within three months of 
receiving the information provided for in paragraphs 2 and 
3, examine whether all credit institutions of the Com­
munity enjoy reciprocal treatment, in particular regarding 
the establishment of subsidiaries or the acquisition of 
participations in credit institutions in the third country in 
question. 6. If the Commission finds that reciprocity is not ensured 
it may extend suspension of the decision referred to in 
paragraph 4, using the procedure provided for in Article 20. 
7. The Commission shall present suitable proposals to 
the Council with a view to achieving reciprocity with the 
third country in question. 
TITLE III 
Harmonization of conditions relating to the pursuit of 
the business of credit institutions 
Article 8 
1. The own funds of credit institutions must not fall 
below the initial capital required when they were 
authorized. In appropriate circumstances, the competent 
authorities may allow an institution a certain limited 
period in which to restore its own funds to the agreed 
minimum. 
2. The own funds of credit institutions in existence at the 
time of the date of implementation of this Directive must by 
31 December 1996 at the latest be at least equal to the level 
of initial capital stipulated in Article 3. 
Article 9 
1. Member States shall require any physical or legal 
person, who is considering the direct or indirect acquisition 
of a qualified participation in a credit institution, to first 
inform the competent authorities, telling them of the size of 
the intended participation. The abovementioned persons 
must similarly inform the competent authorities if they 
propose to increase their qualified participation such that 
the credit institution would become a subsidiary. The 
competent authorities shall assess the suitability of the 
abovementioned persons. 
2. Credit institutions shall each year furnish the com­
petent authorities with the names of major shareholders 
and members as referred to in paragraph 1 and the size of 
their qualified participations, in accordance with the names 
registered at the annual general meeting of shareholders 
and members or in accordance with information received 
as a result of compliance with the regulations relating to 
companies quoted on stock exchanges. 
3. Member States shall require that in cases where the 
persons referred to in paragraph 1 exercise their influence 
in a way which is likely to be to the detriment of the prudent 
and sound management of the banking activities of the 
institution, the competent authorities shall take ap­
propriate measures to bring such a situation to an end. Such 
measures may consist in particular in injunctions, sanctions 
31. 3. 88 Official Journal of the European Communities No C 84/5 
against directors and managers, or the suspension of voting 
rights in respect of the shares held by the shareholders or 
members in question. 
Article 10 
1. A credit institution shall not hold a qualified 
participation of an amount greater than 10 % of its own 
funds in an undertaking which is neither a credit 
institution, nor a financial institution, nor an undertaking 
pursuing an activity as defined in Article 43 (2) (f) of 
Directive 86/635/EEC. 
2. The total amount of qualified participations in 
undertakings other than credit institutions, financial 
institutions or undertakings pursuing an activity as defined 
in Article 43(2) (f) of Directive 86/635/EEC shall not exceed 
50 % of the own funds of the credit institution. 
3. Shares held temporarily during a financial rescue or 
restructuring operation or during the normal course of the 
underwriting process or in an institution's own name on 
behalf of others shall not be included among qualified 
participations for the purposes of calculating the limits laid 
down in paragraphs 1 and 2. Shares not having the 
character of financial fixed assets as defined in Article 35(2) 
of Directive 86/635/EEC shall never be included. 
4. The limits laid down in paragraphs 1 and 2 may be 
exceeded in exceptional circumstances. However, in such 
cases, the competent authorities shall require the credit 
institution either to increase the volume of own funds or 
take other remedial measures. 
5. Compliance with the limits laid down in paragraphs 1 
and 2 shall be ensured by means of supervision on a 
consolidated basis in accordance with the provisions of 
Directive 83/350/EEC. 
6. Member States need not apply the limits laid down in 
paragraphs 1 and 2 if they provide that the qualified 
participations in question are to be deducted when 
calculating the own funds of a credit institution. 
Article 11 
1. The competent authorities of the home Member State 
shall ensure the existence within each credit institution of 
sound administrative and accounting procedures and 
adequate internal control mechanisms. 
2. The competent authorities shall also ensure that such 
procedures and mechanisms exist in credit institutions 
included in the scope of consolidated supervision provided 
for in Directive 83/350/EEC. 'Article 12 
1. In Article 7(1) of Directive 77/780/EEC, the end of the 
second sentence is hereby replaced by the following: 'and 
all information likely to facilitate the monitoring of such 
institutions, in particular with regard to liquidity, solvency, 
control of large exposures, administrative and accounting 
procedures and mechanisms of internal control'. 
2. Host Member States shall retain primary responsibility 
for the supervision of the liquidity of credit institutions 
until further coordination. Without prejudice to the 
measures necessary for the reinforcement of the European 
Monetary System, host Member States shall retain 
complete responsibility for the measures resulting from the 
implementation of monetary policy. These measures shall 
not embody discriminatory or restrictive treatment based 
on the fact that the credit institution is authorized in 
another Member State. 
3. Until further coordination of the risks arising out of 
open positions, the competent authorities of host Member 
States may take the necessary measures to require credit 
institutions authorized in other Member States to make 
sufficient provision against market risk in respect of 
operations on securities markets in their territory. They 
shall cooperate for this purpose with the competent 
authorities of home Member States. 
Article 13 
1. Host Member States shall ensure that, where a credit 
institution authorized in another Member State conducts 
its business there through a branch, the competent 
authorities of the home Member State are able, after having 
first informed the competent authorities of the host 
Member State, to carry out themselves on-the-spot 
verification of the information referred to in Article 7(1) of 
Directive 77/780/EEC. 
2. The competent authorities of the home Member State 
may equally have recourse to one of the verification 
procedures for branches laid down in Article 5(4) of 
Directive 83/350/EEC, other than that referred to in 
paragraph 1. 
3. This Article shall not affect the right of the competent 
authorities of the host Member State to carry out on-the-
spot verification of branches established in their territory in 
the discharge of their responsibilities under this Directive. 
No C 84/6 Official Journal of the European Communities 31. 3. 88 
Article 14 
Article 12 of Directive 77/780/EEC is hereby replaced by 
the following text, paragraph 2 of which also applies to 
exchanges of information between competent authorities 
provided for in this Directive: 
'Article 12 — the disclosure of information necessary to enable 
institutions which manage deposit guarantee 
schemes to exercise their functions, 
the exchange of information between the competent 
authorities and public authorities responsible for the 
supervision of other financial institutions and 
insurance companies, 
1. Member States shall ensure that all persons now or 
in the past employed by the competent authorities, as 
well as auditors or experts acting on behalf of the 
competent authorities, are bound by the obligation of 
professional secrecy. This means that any confidential 
information which they may receive in the course of 
their duties may not be divulged to any person or 
authority, without prejudice to cases covered by 
criminal law. 
2. Notwithstanding paragraph 1, the competent 
authorities of the various Member States shall exchange 
information in accordance with provisions of this 
Directive and Council Directive 83/350/EEC (l) as well 
as of the Annex to Commission recommendation 87/ 
62/EEC (2). This information shall be subject to the 
same conditions of professional secrecy as those 
indicated in paragraph 1. 
3. Member States may conclude cooperation agree­
ments, providing for exchanges of information, with the 
competent authorities of third countries only if the 
information communicated is subject to guarantees of 
professional secrecy equivalent to those referred to in 
this Article. 
4. Competent authorities receiving information under 
paragraph 1 or 2 shall use it only: the exchange of information between the competent 
authorities and persons responsible for carrying out 
statutory audits of the accounts of credit institutions. 
The authorities and institutions to which such inform­
ation is sent shall use it only in the discharge of their 
supervisory functions. The information received shall 
fall within the professional secrecy rules by which those 
authorities and institutions are bound. 
6. Notwithstanding paragraph 1, Member States may 
authorize, by virtue of provisions laid down by law, the 
disclosure, when it is necessary for reasons of prudential 
control, of certain information to other departments of 
their central government administration. Member 
States shall ensure that information received in 
accordance with paragraph 2 is not disclosed in such 
cases, except where there is the explicit consent of the 
authorities which have communicated the information. 
7. Member States shall ensure that the professional 
secrecy provisions laid down by this Article shall apply 
to information given by the competent authorities to 
persons responsible for carrying out statutory audits of 
the accounts of credit institutions. 
— to examine the conditions for the taking-up of the 
business of credit institutions and to facilitate 
monitoring, on a non-consolidated or consolidated 
basis, of the pursuit of such business, especially with 
regard to the monitoring of liquidity, solvency, large 
exposures, and the administrative and accounting 
procedures and mechanisms of internal control, or 
— when the decisions of the competent authority are 
the subject of an administrative appeal, or 
— in court proceedings initiated pursuant to Article 13. 
5. Paragraphs 1 and 4 shall not preclude within a 
Member State or between Member States: 
where there are several competent authorities in the 
same Member State, the exchange of information 
between them, (!) OJ No L 193, 18. 7. 1983, p. 18. 
(2) OJ No L 33, 4. 2. 1987, p. 10.' 
Article 15 
Without prejudice to the procedures for withdrawal of 
authorizations and cases covered by criminal law, Member 
States shall ensure «that their respective competent 
authorities may adopt, as against credit institutions, or 
those who effectively control the business of those credit 
institutions, which breach legislative, regulatory or 
administrative provisions concerning the control of their 
businesses or the pursuit of their activities, penalties or 
measures aimed specifically at ending observed breaches or 
the causes of such breaches. 
31. 3. 88 Official Journal of the European Communities No C 84/7 
TITLE IV 
Provisions relating to freedom of establishment and 
freedom to provide services 
Article 16 
1. Member States shall ensure that at least the activities 
set out on the list in the Annex may be pursued in any 
Member State, in accordance with the provisions of 
Articles 17 to 19, either by the establishment of a branch or 
by way of the provision of services, by any credit institution 
authorized and supervised by the competent authorities of 
the home Member State, in accordance with the provisions 
of this Directive, whose authorization permits the pursuit 
of such activities. 
2. Member States shall also provide that at least the 
activities set out on the list in the Annex may be pursued in 
any Member State in accordance with the provisions of 
Articles 17 to 19, either by the establishment of a branch or 
by way of the provision of services by any financial 
institution being a subsidiary of a credit institution, or such 
a subsidiary belonging to several credit institutions, whose 
articles of association do not prevent the pursuit of those 
activities and which meets each of the following con­
ditions : 
— the parent undertaking or undertakings are authorized 
as credit institutions in the Member State by whose law 
the subsidiary is governed, 
— the parent undertaking or undertakings hold 90 % or 
more of the shares in the subsidiary, 
— the parent undertaking or undertakings have declared 
that they jointly and severally guarantee the commit­
ments entered into by the subsidiary, 
— the subsidiary is effectively included, in particular for 
the activities in question, in the consolidated super­
vision of its parent undertaking, or of each of its parent 
undertakings, in accordance with Directive 83/350/ 
EEC, notably for the calculation of the solvency ratio, 
for the control of large exposures and for the purposes 
of limiting participations in accordance with Article 10 
of this Directive. 
Conformity with these conditions must be verified by the 
competent authority of the home Member State and the 
latter must supply the subsidiary with a certificate of 
compliance which must form part of the notification 
envisaged in Articles 17 and 18. 
The competent authority of the home Member State must 
ensure the supervision of the subsidiary in accordance with 
the provisions of Articles 8(1), 9,11,12(2), 13,14 and 15 of 
this Directive, as well as those of Article 7(1) of Directive 
77/780/EEC. 
The provisions mentioned in this paragraph shall be 
applicable to subsidiaries subject to the necessary modifi­
cations. In particular, 'credit institution' should read 'financial institution conforming to the conditions laid 
down in Article 16(2)', and 'authorization' as 'articles of 
association'. In Article 17(2), point (c) should read 'the 
amount of own funds of the subsidiary financial institution 
and the consolidated solvency ratio of the credit institution 
which is the parent undertaking'. 
If the financial institutions benefiting from the provisions 
of this paragraph should cease to meet any of the requisite 
conditions, the host Member State may bring an end to the 
pursuit, under the provisions of this Directive, of the 
activities in question on its territory. 
Article 17 
1. A credit institution wishing to establish a branch in the 
territory of another Member State shall give notification 
thereof to the competent authority of its home Member 
State. 
2. Member States shall require the notification men­
tioned in paragraph 1 to be accompanied by the following 
information from the credit institution wishing to establish 
a branch in another Member State: 
(a) the Member State in whose territory it intends to 
establish a branch; 
(b) a programme of operations setting out inter alia the 
types of business envisaged and the structural organiza­
tion of the establishment; 
(c) the amount of own funds and the solvency ratio of the 
credit institution; 
(d) the address in the host Member State from which 
documents may be obtained; 
(e) the names of those responsible for controlling the 
activities of the branch. 
3. Unless the competent authority of the home Member 
State has reason to doubt the adequacy of the organiza­
tional structure of the credit institution, taking into 
account the envisaged operations, it shall, within three 
months of the notification referred to in paragraph 1, 
communicate the information mentioned in paragraph 2 to 
the competent authority of the host Member State. 
Where the competent authority of the home Member State 
refuses to send the information mentioned in paragraph 2 
to the competent authority of the host Member State it shall 
give reasons to the institution concerned within three 
months of receipt of the notification. This refusal shall be 
subject to a right of appeal to the courts in the home 
Member State. 
4. Before the branch of the credit institution commences 
its activities the competent authority of the host Member 
No C 84/8 Official Journal of the European Communities 31. 3. 88 
State shall, within a period of three months following 
receipt of the information mentioned in paragraph 3, 
prepare for the supervision of the institution pursuant to 
Article 19 and if necessary may decide, in the interest of the 
public good, to prohibit the credit institution from 
engaging in some of the activities envisaged, where the 
conditions of authorization in its home country do not 
preclude such activities, but those activities are not 
contained on the list in the Annex. 
5. On receipt of notice from the competent authority of 
the host Member State, or in the event of the expiry of the 
three-month period referred to in paragraph 4 without 
receipt of any communication from the latter, the branch 
may be established and commence business. 
6. A credit institution wishing to change any of the 
matters notified pursuant to paragraph 2 shall give written 
notice of the proposed change to the competent authorities 
in the relevant home and host Member States at least one 
month before making the change. If necessary, those 
authorities may decide whether it will not be possible, in 
the interest of the public good, for the credit institution to 
engage in any additional activities which it may envisage 
which are not precluded under the conditions of author­
ization in its home country and which are not contained on 
the list in the Annex. 
Article 18 
1. Any credit institution wishing to exercise the freedom 
to supply services in the territory of another Member State 
for the first time shall notify the competent authorities of 
the home Member State of the activities included on the list 
in the Annex which it intends to undertake. 
2. The competent authorities of the home Member State 
shall, within one month of receipt of the notification 
mentioned in paragraph 1, send that notification to the 
competent authorities of the host Member State. 
Article 19 
1. Responsibility for the supervision of a credit insti­
tution, including supervision of activities undertaken 
according to the provisions of Article 16, shall rest with the 
competent authorities of the home Member State. 
2. Host Member States may require, for statistical 
purposes, that all credit institutions having branches in 
their territories shall report quarterly on their operations in 
the host Member State to the competent authority of that 
host Member State. 
In order to conform with the responsibilities laid down in 
Article 12 (2) and (3), host Member States may require that branches of credit institutions from other Member States 
provide the same information as they require from their 
national credit institutions for that purpose. 
3. If the competent authority of the host Member State 
ascertains that an institution having a branch or providing 
services in its territory is not complying with the legal 
provisions in force in that Member State which are justified 
on the grounds of the public good, or pursuant to the 
provisions of this Directive on the powers of the host 
Member State, that authority shall request the institution 
concerned to put an end to the irregular situation. 
4. If the institution concerned fails to take the necessary 
steps, the competent authority of the host Member State 
shall inform the home Member State accordingly. The 
authority of the home Member State shall take, in the 
shortest time possible, all appropriate measures to ensure 
that the institution concerned puts an end to the irregular 
situation. The nature of those measures shall be com­
municated to the competent authority of the host Member 
State. 
5. If, despite the measures taken by the home Member 
State pursuant to paragraph 4, or because such measures 
prove inadequate or are not taken by the Member State in 
question, the institution persists in violating the legal rules 
referred to in paragraph 3 in force in the host Member 
State, the latter State may, after informing the competent 
authority of the home Member State, take appropriate 
measures to prevent further irregularities including, insofar 
as is necessary, the prevention of the initiation of further 
transactions by that institution within its territory. The 
Member States shall ensure that within their territory it is 
possible to serve the legal documents necessary for these 
measures on credit institutions. 
6. Any measure adopted pursuant to paragraphs 3, 4 and 
5 involving penalties or restrictions on the provision of 
services must be properly justified and communicated to 
the institution concerned. Every such measure shall be 
subject to a right of appeal to the courts in the Member 
State whose authorities adopted it. 
7. Before following the procedure set out in paragraphs 3, 
4 and 5, the competent authorities of the host Member State 
may, in exceptional circumstances, take measures neces­
sary to protect the interests of depositors, investors and 
others to whom services are provided. The Commission 
and the other Member States shall be informed of such 
measures in the shortest possible time. In this event the 
Commission may, after consulting the Member States 
concerned, decide that the Member State in question shall 
amend or abolish the measures. 
31. 3. 88 Official Journal of the European Communities No C 84/9 
8. In the event of withdrawal of authorization the 
competent authority of the host Member State shall be 
informed and shall take appropriate measures to prevent 
the institution concerned from undertaking further 
transactions in its territory. 
9. Member States shall inform the Commission of the 
number and type of cases in each Member State in which 
there has been a refusal pursuant to Article 17 or in which 
measures have been taken in accordance with the 
provisions of paragraph 5 of this Article. Every two years, 
the Commission shall submit a report summarizing such 
cases to the Advisory Committee set up under Article 11 of 
Directive 77/780/EEC. 
TITLE V 
Final provisions 
Article 20 
1. Technical amendments to this Directive in the 
following areas: 
— extension of the activities on the list mentioned in 
Article 16 and set out in the Annex, 
— the amount of initial capital laid down in Article 3(1), 
— the list of categories of institution referred to in Article 
3(2), 
— the thresholds set in Article 10, 
— the fields in which the competent authorities must 
exchange information, as enumerated in Article 7(1) of 
Directive 77/780/EEC, 
shall be made according to the procedure set out in 
paragraph 2. 
2. The Commission shall be assisted by a committee 
composed of representatives of the Member States and 
chaired by a representative of the Commission. 
The representative of the Commission shall submit to the 
committee a draft of the measures to be taken. The 
committee shall deliver its opinion on the draft within a 
time limit which the chairman may lay down according to 
the urgency of the matter. The opinion shall be delivered by 
the majority laid down in Article 148(2) of the Treaty in the 
case of decisions which the Council is required to adopt on 
a proposal from the Commission. The votes of the 
representatives of the Member States in the committee shall 
be weighted in the manner set out in that Article. The 
chairman shall not vote. The Commission shall adopt the measures envisaged if they 
are in accordance with the opinion of the committee. 
If the measures envisaged are not in accordance with the 
opinion of the committee, or if no opinion is delivered, the 
Commission shall, without delay, submit to the Council a 
proposal relating to the measures to be taken. The Council 
shall act by a qualified majority. 
If, on the expiry of a period to be laid down in each act to be 
adopted by the Council under this paragraph but which 
may in no case exceed three months from the day of referral 
to the Council, the Council has not acted, the proposed 
measures shall be adopted by the Commission. 
Article 21 
1. Branches which have commenced their activities, in 
accordance with the provisions in force in the host Member 
State, before the entry into force of the provisions adopted 
in implementation of this Directive are presumed to have 
been subject to the procedures envisaged in Article 17(1) to 
(5). They shall be governed, from the date of entry into 
force of the provisions adopted in implementation of this 
Directive, by the provisions of Articles 16, 17(6) and 19. 
They shall benefit from the provisions of Article 5(3). 
2. Article 18 shall not adversely affect rights acquired 
before the entry into force of the provisions adopted in 
implementation of this Directive by credit institutions 
operating through the supply of services. 
Article 22 
1. Subject to paragraph 2, Member States shall bring into 
force the laws, regulations and administrative provisions 
necessary to comply with this Directive on the later of the 
two dates laid down for the adoption of measures to 
comply with the Council Directives on the harmonization 
of own funds and solvency ratios of credit institutions and 
at the latest by 1 January 1993. They shall forthwith inform 
the Commission thereof. 
2. Member States shall adopt the measures necessary to 
comply with the provisions laid down in Article 5(2) of this 
Directive by 1 January 1990. 
3. Member States shall communicate to the Commission 
the texts of the main laws, regulations and administrative 
provisions which they adopt in the field covered by this 
Directive. 
Article 23 
This Directive is addressed to the Member States. 
No C 84/10 Official Journal of the European Communities 31. 3. 88 
ANNEX 
Business which is integral to banking and shall be included within the scope of mutual recognition 
1. Deposit-taking and other forms of borrowing 
2. Lending (*) 
3. Financial leasing 
4. Money transmission services 
5. Issuing and administering means of payment (credit cards, travellers cheques and bankers drafts) 
6. Guarantees and commitments 
7. Trading for own account or for account of the customers in: 
(a) money market instruments (cheques, bills, CDs, etc.) 
(b) foreign exchange 
(c) financial futures and options 
(d) exchange and interest rate instruments 
(e) securities 
8. Participation in securities issues and the provision of services related to such issues 
9. Money broking 
10. Portfolio management and advice 
11. Safekeeping of securities 
12. Credit reference services 
13. Safe custody services 
(!) Including in particular: 
— consumer credit, 
— mortgage lending, 
— factoring and invoice discounting, 
— trade finance (including forfeiting). 
Proposal for a Council Regulation (EEC) amending Regulation No 136/66/EEC 
on the establishment of a common organization of the market in oils and fats 
COM(88) 80 final 
(Submitted by the Commission to the Council on 23 February 1988) 
(88/C 84/02) 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Article 43 thereof, 
Having regard to the proposal from the Commission, 
In cooperation with the European Parliament, Having regard to the opinion of the Economic and Social 
Committee, 
Whereas, for rape seed on the one hand and for sunflower 
seed on the other, it is advisable to set the same maximum 
guaranteed quantity for 1988/1989, 1989/1990 and 1990/ 
1991; whereas, for the purposes of the system of maximum 
guaranteed quantities, it is advisable to estimate produc­
tion after the beginning of the marketing year in order to 
make the estimates concerned more accurate; whereas