EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 19 September 2014  
on the separation and regulation of banking activities 
(CON/2014/70) 
 
Introduction and legal basis 
On 15 June 2014, the European Central Bank (ECB) received a request from the French Minister for 
Finance and Public Accounts for an opinion on a draft ministerial order implementing the Law on the 
separation and regulation of banking activities of 20 13 (hereinafter the ‘draft ministerial order’). 
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 the sixth indent of Article 2(1) of Council Decision 98/415/EC1, 
as the draft ministerial order relates to the rules a pplicable to financial institutions insofar as they 
materially influence the stability of financial instit utions and markets. In accordance with the first 
sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 
has adopted this opinion. 
 1.  Purpose of the draft ministerial order 
1.1 The draft ministerial order implements the first Title of the Law on the separation and regulation of 
banking activities
2. This law applies to credit institutions, financial holding companies and mixed 
financial holding companies (hereinafter ‘designa ted financial institutions’). Its purpose is to 
separate banking activities that finance the econo my from speculative operations. Although the 
latter must be ring-fenced in dedicated subsidiari es, credit institutions can continue proprietary 
trading relating to financial instruments within certain limits and subject to certain conditions. 
The draft ministerial order reinforces requiremen ts relating to internal  controls, requires the 
provision of market activity indicators, lays down conditions for authorised operations with hedge funds and sets up procedures for the oversight of such operations. 
1.2 First, in respect of activities th at may be carried out other than through a dedicated subsidiary, 
designated financial institutions that excee d the threshold set by Article R. 511-16
3 of the Monetary 
and Financial Code (MFC) shall id entify internal units tasked with  conducting transactions relating 
to financial instruments and classify those units into  one of the categories set out in paragraph 1 of 
                                                 
1  Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
2  Law No 2013-672 of 26 July 2013. 
3  Decree No 2014-785 of 8 July 2014. 
ECB-PUBLIC  
2 Article L. 511-47 of the MFC4 in order to ensure that these units conduct financial operations 
within the limits of their mandates. 
At least once a year, designated financial institutions shall provide to the Autorité de Contrôle 
Prudentiel et de Résolution (ACPR,  Prudential Control and Resolution Authority) and, if relevant, 
the Autorité des Marchés Financiers (AMF, Fina ncial Markets Authority), a variety of market 
activity indicators, an organisational chart of the internal units, and an explanation of the way in 
which these internal units’ mandates have been es tablished and monitored. The ACPR shall verify 
that risk limits consistent with such ma ndates are defined for each internal unit. 
1.3 Second, the draft ministerial order provides exce ptions to the general prohibition contained in 
Article L. 511-47 of the MFC on the execution by credit institutions of operations with hedge 
funds. These exceptions permit credit institutions to conduct such operations when guaranteed by 
securities considered as adequate under the criteri a laid down in the draft ministerial order. 
1.4 Finally, with regard to large ex posure risk, the draft ministerial order imposes an exposure limit 
equivalent to 10 % of the own funds of the dedica ted subsidiary on the rest of the financial group. 
 
2. Observations 2.1 In line with its previous opinion on the Law on  the separation and regulation of banking activities
5, 
the ECB reiterates that since these measures primarily address internationally active credit 
institutions, coordination and consistency in the au thorities’ regulatory approach are of the utmost 
importance in order to avoid regulatory arbitrage. Th is is particularly true in view of the ongoing 
preparatory work in respect of the proposal for a regulation on structural measures improving the 
resilience of EU credit institutions6. Consequently, the consulting authority should closely monitor 
the development of Union legislation and consider whether it is appropriate to seek alignment with 
the forthcoming rules to be adopted at Union level.  
2.2 The impact of the forthcoming allocation of supervisory tasks within the Single Supervisory 
Mechanism between the national authorities and the ECB should be taken into account. Some of 
the activities provided for in the draft ministeria l order will fall within the ECB’s competence in 
respect of significant credit institutions after 4 November 2014. These include, for instance, the monitoring of remuneration paid to individuals of the internal units. 
2.3 More generally, the ECB’s interpretations of criteria set out in relevant Union law
7 should be taken 
into account by the ACPR when assessing such crite ria pursuant to the draft ministerial order. For 
instance, the securities and guarantees criteria de fined in Regulation (EU) No 575/2013 of the 
                                                 
4  ibid. 
5  ECB Opinion CON/2012/106, paragraph 2. All ECB opinions  are available on the ECB’s website at www.ecb.europa.eu. 
6  COM(2014) 43 final. 
7  Article 4(3) of Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central 
Bank concerning policies relating to prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). 
ECB-PUBLIC  
3 European Parliament and of the Council8 should be taken into account when assessing the criteria 
for securities to be considered to  provide adequate guarantees for credit institutions when entering 
into transactions with hedge funds (Ar ticle 7 of the draft ministerial order). 
 
This opinion will be published on the ECB’s website.  
 
Done at Frankfurt am Main, 19 September 2014. 
  
[signed] 
The President of the ECB 
Mario DRAGHI 
                                                 
8  Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements 
for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).