H COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(91) 491 final - SYN 506 
Brussels, 2 December 1991 
Amended proposal for a 
COUNCIL DIRECTIVE 
RELATING TO THE SUPERVISION OF CREDIT INSTITUTIONS 
ON A CONSOLIDATED BASIS 
(presented by the Commission pursuant to Article 149(3 
of the EEC-Treaty) 
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EXPLANATORY MEMORANDUM 
1. On 9 October 1990 the Commission transmitted to the Council a 
proposal for a Directive relating to the supervision of credit 
institutions on a consolidated basis.1 The main aim of that proposal 
is to reinforce supervision of credit institutions belonging to a 
group, particularly by extending the scope of supervision on a 
consolidated basis to banking groups whose parent undertaking is not a 
credit institution. 
2. The Economic and Social Committee delivered its opinion on 
27 February 1991.2 Parliament has carried out a first reading and 
delivered an opinion on 20 November 1991 on the basis of a report drawn 
up by the Committee on Legal Affairs and Citizens' Rights. In 
accordance with Article 149(3) of the Treaty and in the light of the 
two opinions delivered, the Commission is presenting an amended version 
of its propsoal for a Directive. 
3. The Commission has incorporated into its proposal a number of 
amendments proposed by Parliament and the Economic and Social 
Committee. A number of other amendments designed to improve and 
clarify certain provisions are also proposed. 
The main amendments are commented on below. 
1 COM(90) 451; OJ No C 315, 14.12.1990 
2 OJ No C 102, 18.4.1991, p. 19. 
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Recitals 
Two new recitals, the fifth and the twelfth^ have been added in the 
light of amendments proposed by Parliament. 
Art icle 3: Supervision of credit institutions on a consolidated 
basis 
Paragraph 3 
Given the progress made in discussions in the Council and Parliament on 
the proposal for a Council Directive on capital adequacy of investment 
firms and credit institutions,1 the Commission no longer considers it 
necessary to retain the fourth indent which gave Member States the 
option of excluding from consolidation financial institutions that are 
principally subject to market risks. Pending the adoption of the 
above-mentioned Directive, the consolidation of such institutions will 
be carried out according to the methods determined by Member States 
(see comments below on the new paragraph 2 of Article 9). 
Paragraph 4 
A new first subparagraph has been incorporated in the light of an 
amendment proposed by Parliament. 
Paragraph 5 
Supervision of capital adequacy in relation to market risks has been 
added to the list of subjects to be covered by supervision on a 
consolidated basis. 
A third subparagraph has been added in the light of an amendment 
proposed by Parliament. 
1 COM(90) 141; OJ No C 152, 21.6.1990. 
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Paragraph 7 
Provision has been made, subject to observance of strict conditions, 
for a further option for forgoing supervision on an individual basis, 
namely where a credit institution is the subsidiary of a financial 
holding company with its head office in the same Member State. 
A new second subparagraph sets out, by analogy with the provisions of 
Article 3(4) of Directive 89/647/EEC on the solvency ratio, the 
conditions governing the exemption arrangements. 
Paragraph 10 
This new paragraph authorizes the competent authorities to request 
information from the non-consolidated subsidiaries of a credit 
institution or financial holding company. 
Art icle 4: Competent authorities charged with exercising 
supervision on a consolidated basis 
Paragraph 5 
This paragraph has been inserted in order to ensure cooperation between 
competent authorities where, in the Member States, more than one 
authority is responsible for the prudential supervision of credit and 
financial institutions. 
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Art icle 5: Form and extent of consolidation 
Paragraph 3 
Paragraph 3 has been redrafted so as to cover only cases where there is 
a participation or other capital link. 
In the light of an amendment proposed by Parliament, a few words have 
been added to specify the conditions under which the equity method may 
be used. 
Paragraph 4 
This new paragraph sets out, on an optional basis, other cases that may 
give rise to supervision on a consolidated basis. It covers cases 
where there is no participation or other capital link. 
Art icle 9: Final provisions 
Paragraph 2 
This new paragraph stipulates that, pending adoption of the 
above-mentioned Directive on capital adequacy, the competent 
authorities will determine the methods for consolidating financial 
institutions which are exposed mainly to market risks, and this by way 
of derogation from the rules laid down in Article 3(5) (see above 
comments on Article 3(3)). 
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Amended proposal for a 
COUNCIL DIRECTIVE 
relating to the supervision of credit 
institutions on a consolidated basis 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic 
Community, and in particular Article 57(2), first and third sentences 
thereof, 
Having regard to the proposal from the Commission^1), 
In co-operation with the European Par Iiament^2), 
Having regard to the Opinion of the Economic and Social Committee<3), 
Whereas Council Directive 83/350/EEC of 13 June 1983 on the supervision 
of credit institutions on a consolidated basis(4) established the 
necessary framework for the introduction of supervision of credit 
institutions on a consolidated basis; whereas following the 
transposition of that Directive into the national law of the Member 
States the principle of supervision on a consolidated basis is now 
applied throughout the Community; 
Whereas, in order to be effective, supervision on a consolidated basis 
must be applied to all banking groups, including those the parent 
undertakings of which are not credit institutions; whereas the 
competent authorities must have sufficient legal powers to be able to 
exercise such supervision; 
(1) OJ C 315 of 14.12.1990, p. 15. 
(2) Decision of 20 November 1991 (not yet published in the Official 
Journal). 
(3) OJ C 102 of 18.4.1991, p. 19. 
(4) OJ L 193 Of 18.7.1983, p. 18. 
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Whereas, in the case of groups with diversified activities the parent 
undertakings of which control at least one credit institution 
subsidiary, the competent authorities must be able to assess the 
financial situation of a credit institution in such a group; whereas, 
pending subsequent co-ordination, the Member States may lay down 
appropriate methods of consolidation for the achievement of the 
objective of this Directive; whereas the competent authorities must at 
least have the means of obtaining from all undertakings within a group 
the information necessary for the performance of their function; 
whereas co-operation between the authorities responsible for the 
supervision of different financial sectors must be established to 
ensure the effective supervision of groups carrying on a range of 
financial activities; 
Whereas rules limiting the risks taken by a credit institution on the 
mixed-activity company of which it is a subsidiary, as well as those 
taken on the other subsidiaries of the same mixed-activity company can 
be particularly useful; whereas it would, however, appear to be 
preferable to settle this question in a more systematic manner in the 
framework of a future Directive on the limitation of large exposures; 
Whereas risks taken by one or more credit institutions are revealed not 
only in figures shown in (consolidated) balance sheets and annual 
accounts but are also subject to the manner in which relations within 
groups are organized and the relative independence of the management of 
the credit institutions involved; 
Whereas the Member States can, furthermore, refuse or withdraw banking 
authorization in the case of certain group structures considered 
inappropriate for carrying on banking activities, in particular because 
such structures could not be supervised effectively; whereas In this 
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respect the competent authorities have the powers mentioned in 
Article 8(1)(c) of the first Council Directive 77/780/EEC of 
17 December 1977 on the co-ordination of laws, regulations and 
administrative provisions relating to the taking up and pursuit of the 
business of credit inst i tut ions*1 *, and in Articles 5 and 11 of the 
second Council Directive 89/646/EEC of 15 December 1989 on the co­
ordination 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*2^, in order to ensure the sound and 
prudent management of credit institutions; 
Whereas the Member States can equally apply appropriate supervision 
techniques to groups with structures not covered by this Directive; 
whereas if such structures become common this Directive should be 
extended to cover them-, 
Whereas supervision on a consolidated basis must take in all activities 
defined in the Annex to Directive 89/646/EEC; whereas all undertakings 
principally engaged in such activities must therefore be included in 
supervision on a consolidated basis; whereas in consequence the 
definition of financial institution given in Directive 83/350/EEC must 
be widened to cover such activities; 
Whereas regarding the consolidation of financial institutions involved 
in activities principally subject to market risks and subject to 
particular rules of supervision, the co-ordination of the methods for 
the consolidated supervision of market risks is possible in the 
framework of Community harmonization of capital adequacy of investment 
(1) OJ L 322 of 17.12.1977, p. 30. 
(2) OJ L 386 of 30.12.1989, p. 1. 
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firms and credit institutions, for which the Commission has introduced 
a proposal for a Directive (COM(90) 141)*1>; whereas such 
harmonization concerns inter alia the conditions which must be applied 
when offsetting opposing positions in the group, and the case where 
these financial institutions are subject to specific supervisory rules 
regarding their financial stability; whereas this implies that, pending 
entry into force of the Directive on capital adequacy to cover market 
risks, the competent authorities shall include in consolidated 
supervision financial institutions which are principally exposed to 
market risks in accordance with methods determined by those authorities 
in the light of the particular nature of the risks involved; 
Whereas, following the adoption of Council Directive 86/635/EEC of 
8 December 1986 on the annual accounts and consolidated accounts of 
banks and other financial institut ions*2), which establishes the rules 
applicable to consolidated accounts published by credit institutions, 
together with the provisions of Council Directive 83/349/EEC of 
13 June 1983 on consolidated accounts*3^it is now possible to define 
more precisely the methods to be used in prudential supervision 
exercised on a consolidated basis; 
Whereas this Directive is fully in keeping with the objectives defined 
in the Single European Act; whereas it will in particular ensure the 
homogeneous application throughout the Community of prudential rules 
established by other Community legislation, which must be observed on 
a consolidated basis; whereas this Directive is, in particular, 
necessary for the correct application of Council Directive 89/299/EEC 
of 17 April 1989 on the own funds of credit institut ions*4*; 
(1) OJ C 152 of 21.6.1990, p. 6. 
(2) OJ L 372 of 31.12.1986, p. 1. 
(3) OJ L 193 of 18.7.1983, p. 1. 
(4) OJ L 124 of 5. 5.1989, p. 16. 
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Whereas supervision of credit institutions on a consolidated basis must 
be aimed at protection of the depositors of the credit institutions; 
Whereas it is desirable that agreement should be reached, on the basis 
of reciprocity, between the Community and third countries with a view 
to allowing the practical exercise of consolidated supervision over the 
largest possible geographical area; 
Whereas the amendments to be made to Directive 83/350/EEC are so 
considerable that it is preferable that it be wholly replaced by this 
Directive, 
HAS ADOPTED THIS DIRECTIVE: 
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Article 1 
Definitions 
For the purposes of this Directive: 
"credit institution" shall mean a credit institution within the 
meaning of the first indent of Article 1 of Directive 
77/780/EEC, or any private or public undertaking which corresponds 
to the definition in the first indent of Article 1 of 
Directive 77/780/EEC and has been authorized in a third country; 
"financial institution" shall mean an undertaking other than a 
credit institution, the principal activity of which is to acquire 
holdings or to carry on one or more of the activities listed in 
points 2 to 12 of the Annex to Directive 89/646/EEC; 
"financial holding company" shall mean a financial institution the 
subsidiary undertakings of which are either exclusively or mainly 
credit institut ions or financial institutions, one at least of such 
subsidiaries being a credit institution; 
"mixed-activity holding company" shall mean a parent undertaking, 
other than a financial holding company or a credit institution, the 
subsidiaries of which include at least one credit institution; 
"ancillary banking services undertaking" shall mean an undertaking 
the principal activity of which consists In owning or managing 
property, managingdata-processing services, or any other similar 
activity which is ancillary to the principal activity of one or 
more credit institutions; 
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"participation" shall mean the ownership, direct or indirect, of 
20% or more of the voting rights or capital of an undertaking; 
"parent undertaking" shall mean a parent undertaking within the 
meaning of Article 1(1) of Council Directive 83/349/EEC and any 
undertaking which, in the opinion of the competent authorities, 
effectively exercises a dominant influence over another 
undertaking; 
"subsidiary" shall mean a subsidiary undertaking within the meaning 
of Article 1(1) of Directive 83/349/EEC and any undertaking over 
which, in the opinion of the competent authorities, a parent 
undertaking effectively exercises a dominant influence; all 
subsidiaries of subsidiary undertakings shall also be considered 
subsidiaries of the undertaking that is their ultimate parent; 
"competent authorities" shall mean the national authorities which 
are empowered by law or regulation to supervise credit 
institutions; 
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Article g 
Scope 
This Directive shall apply to credit institutions that have obtained 
the authorization referred to in Article 3 of Directive 77/780/EEC, 
financial holding companies and mixed-activity holding companies which 
have their head offices in the Community. 
The institutions permanently excluded by Article 2 of Directive 
77/780/EEC, with the exception of the Member States' central banks, 
shall be treated as financial institutions for the purposes of this 
Directive. 
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Article 3 
Supervision on a consolidated basis of credit institutions 
1. Every credit institution which has a credit institution or a 
financial institution as a subsidiary or which holds a 
participation in such institutions shall be subject, to the extent 
and in the manner prescribed in Article 5, to supervision on the 
basis of its consolidated financial situation. Such supervision 
shall be exercised at least in the areas referred to in 
paragraphs 5 and 6. 
2. Every credit institution the parent undertaking of which is a 
financial holding company shall be subject, to the extent and in 
the manner prescribed in Article 5, to supervision on the basis of 
the consolidated financial situation of that financial holding 
company. Such supervision shall be exercised at least in the areas 
referred to in paragraphs 5 and 6. The consolidation of the 
financial situation of the financial holding company shall not in 
any way imply that the competent authorities are required to play a 
supervisory role in relation to the financial holding company 
standing alone. 
3. The Member States or the competent authorities responsible for 
exercising supervision on a consolidated basis pursuant to 
Article 4 may decide in individual cases that a credit institution, 
financial institution or auxiliary banking services undertaking 
which is a subsidiary or in which a participation is held need not 
be included in the consolidation: 
- if the undertaking that should be included is situated in a third 
country where there are legal impediments to the transfer of the 
necessary information; 
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if, in the opinion of the competent authorities, the 
undertaking that should be included is of negligible 
interest only with respect to the objectives of monitoring 
credit institutions and in all cases if the balance sheet 
total of the undertaking that should be included is less 
than the smaller of the following two amounts: 
ECU 10 million or 1% of the balance sheet total of the 
parent undertaking or the undertaking that holds the 
participation; if two or more undertakings meet the above 
criteria, they must nevertheless be included in the 
consolidation where collectively they are of non-negligible 
interest with respect to the aforementioned objective; 
if, in the opinion of the competent authorities responsible 
for exercising supervision on a consolidated basis, the 
consolidation of the financial situation of the undertaking 
that should be included would be inappropriate or misleading 
as far as the objectives of the supervision of credit 
institutions are concerned. 
4. Where the first indent of Article 3(1) is applied, the competent 
authorities shall nevertheless obtain any information the transfer 
of which is authorized and inform the Commission of the limits set 
by a specified non-member country. 
When the competent authorities of a Member State do not include a 
credit institution subsidiary in supervision on a consolidated 
basis under one of the cases provided for in the second and third 
indents of paragraph 3, the competent authorities of the Member 
State in which that credit institution subsidiary is situated may 
ask the parent undertaking for information which may facilitate 
their supervision of that credit institution. 
5. Supervision of solvency, and of the adequacy of own funds to cover 
market risks and control of large exposures, as governed by the 
relevant Community acts in force, shall be exercised on a 
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consolidated basis in accordance with this Directive. The Member 
States shall adopt any measures necessary, where appropriate, to 
include financial holding companies in consolidated supervision, in 
accordance with paragraph 2. 
Compliance with the limits set in Article 12(1) and (2) of 
Directive 89/646/EEC shall be supervised and controlled on the 
basis of the consolidated or sub-consolidated financial situation 
of the credit institution. 
Supervision on a consolidated basis shall also include all figures 
and facts, e.g. the economic and financial performance of the group 
the knowledge of which could be Judged as useful with regard to the 
quality of supervision on a consolidated basis. This concerns not 
only financial information but also organization of the business, 
influence exercised by undertaking within a group on other 
undertakings and the existence of adequate information flows. 
The competent authorities shall ensure that, in all the 
undertakings included in the scope of the supervision on a 
consolidated basis that is exercised over a credit institution in 
implementation of paragraphs 1 and 2 above, there are adequate 
internal control mechanisms for the production of any data and 
information which would be relevant for the purposes of supervision 
on a consolidated basis. 
Without prejudice to specific provisions contained in other 
Directives, the Member States may waive application on an 
individual or subconsolidated basis of the rules laid down in 
paragraph 5 to a credit institution that, as a parent undertaking, 
is subject to supervision on a consolidated basis, and to any 
subsidiary of such a credit institution which is subject to their 
authorization and supervision and is included in the supervision on 
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a consolidated basis of the credit institution which is the parent 
company. The same exemption option shall be allowed where the 
parent undertaking is a financial holding company which has its 
head office in the same Member State as the credit institution, 
provided that it is subject to the same supervision as that 
exercised over credit institutions, and in particular the standards 
laid down in paragraph 5. 
In both cases, steps must be taken to ensure that capital is 
distributed adequately within the banking group. 
8. Where a credit institution the parent of which is a credit 
institution has been authorized and is situated in another Member 
State, the competent authorities which granted that authorization 
shall apply the rules laid down in paragraph 5 to that institution 
on an individual or, when appropriate, a subconsolIdated basis. 
9. Notwithstanding paragraph 8, the competent authorities responsible 
for authorizing the subsidiary of a parent undertaking which is a 
credit institution may, by bilateral agreement, delegate their 
responsibility for supervision to the competent authorities which 
authorized and supervise the parent undertaking. The Commission 
must be kept informed of the existence and content of such 
agreements. It shall forward such information to the other 
authorities and to the Banking Advisory Committee. 
10. The Member States shall provide that their competent authorities 
responsible for exercising supervision on a consolidated basis may 
ask the subsidiaries of a credit institution or a financial holding 
company which are not included within the scope of supervision on a 
consolidated basis for the data and information referred to in 
Article 6. In such a case, the procedures for transmitting and 
verifying the information laid down in that Article shall apply. 
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Article 4 
Competent authorities responsible for exercising supervision 
on a consolidated basis 
1. Where a parent undertaking is a credit institution, supervision on 
a consolidated basis shall be exercised by the competent 
authorities that authorized it under Article 3 of 
Directive 77/780/EEC. 
2. Where the parent of a credit institution is a financial holding 
company, supervision on a consolidated basis shall be exercised by 
the competent authorities which authorized that credit institution 
under Article 3 of Directive 77/780/EEC. 
However, where credit institutions authorized in two or more Member 
States have as their parent the same financial holding company, 
supervision on a consolidated basis shall be exercised by the 
competent authorities of the credit institution authorized in the 
Member State in which the financial holding company was set up. 
If no credit institution subsidiary has been authorized in the 
Member State in which the financial holding company was set up, 
the competent authorities of the Member States concerned (including 
those of the Member State in which the financial holding company 
was set up) shall seek to reach agreement as to who amongst them 
will exercise supervision on a consolidated basis. In the absence 
of such agreement, supervision on a consolidated basis shall be 
exercised by the competent authorities that authorized the credit 
institution with the greatest balance sheet total; if that figure 
is the same for two or more credit institutions, supervision on a 
consolidated basis shall be exercised by the competent authorities 
of the first credit institution to be authorized under Article 3 of 
Directive 77/780/EEC. 
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3. The competent authorities concerned may by common agreement waive 
the rules laid down in the first and second subparagraphs of 
paragraph 2. 
4. The agreements referred to In the third subparagraph of paragraph 2 
and in paragraph 3 shall provide for procedures for co-operation 
and for the transmission of information such that the objectives of 
this Directive may be achieved. 
5. Where Member States have more than one competent authority for the 
prudential supervision of credit institutions and financial 
institutions, Member States shall take the requisite measures to 
organize co-ordination between such authorities. 
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Article 5 
Form and extent of consolidation 
1. The competent authorities responsible for exercising supervision on 
a consolidated basis must, for the purposes of supervision, require 
full consolidation of all the credit institutions and financial 
Institutions which are subsidiaries of a parent undertaking. 
However, proportional consolidation may be prescribed where, in the 
opinion of the competent authorities, the liability of a parent 
undertaking holding a share of the capital is limited to that share 
of the capital because of the liability of other shareholders or 
members whose solvency is satisfactory. The liability of the other 
shareholders and members must be clearly established, if necessary 
by means of formal, signed commitments. 
2. The competent authorities responsible for carrying out supervision 
on a consolidated basis must, in order to do so, require the 
proportional consolidation of participations in credit institutions 
and financial institutions managed by an undertaking included in 
the consolidation together with one or more undertakings not 
included in the consolidation, where those undertakings' liability 
is limited to the share of the capital they hold. 
3. In the case of participations or capital ties other than those 
referred to in paragraphs 1 and 2, the competent authorities shall 
determine whether and how consolidation is to be carried out. They 
may permit or require use of the equity method where the risk to 
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which the shareholder is exposed is limited to his investment. 
That method shall not, however, constitute inlusion of the 
undertakings concerned in supervision on a consolidated basis. 
4. Without prejudice to paragraphs 1 to 3, the competent authorities 
shall determine whether and how consolidation is to be carried out 
in the following cases: 
- where, In the opinion of the competent authorities, a credit 
institution exercises a significant influence over one or more 
credit institutions or financial institutions, but without 
holding a participation or other capital ties in these 
institutions; 
- where two or more credit institutions or financial institutions 
are placed under single management other than pursuant to a 
contract or clauses of their memorandums or articles of 
association; 
- where two or more credit institutions or financial institutions 
have administrative, management or supervisory bodies with the 
same persons constituting a majority. 
In particular, the competent authorities may permit or require use 
of the method provided for in Article 12 of Directive 83/349/EEC. 
That method shall not, however, constitute inclusion of the 
undertakings concerned in consolidated supervision. 
5. Where consolidated supervision is required pursuant to Article 3(1) 
and (2), ancillary banking services undertakings shall be included 
in consolidations In the cases and in accordance with the methods 
laid down in paragraphs 1, 2, 3 and 4 of this Article. 
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Article 6 
information to be supplied by mixed-activity holding companies 
and their subsidiaries 
1. Pending further co-ordination of consolidation methods, the Member 
States shall provide that, where the parent undertaking of one or 
more credit institutions is a mixed-activity holding company, the 
competent authorities responsible for the authorization and 
supervision of those credit institutions shall, by approaching the 
mixed-activity holding company and its subsidiaries either directly 
or via credit institution subsidiaries, require them to supply any 
data or information which would be relevant for the purposes of 
supervising the credit institution subsidiaries. 
2. The Member States shall provide that their competent authorities 
may carry out, or have carried out by external inspectors, on-the-
spot inspections to verify data received from mixed-activity 
holding companies and their subsidiaries. If the mixed-activity 
holding company or one of its subsidiaries is an insurance 
undertaking or a firm providing investment services, the procedure 
laid down in Article 7(4) may also be used. If a mixed-activity 
holding company or one of its subsidiaries is situated in a Member 
State other than that in which the credit institution subsidiary is 
situated, on-the-spot verification of information shall be carried 
out in accordance with the procedure laid down in Article 7(7). 
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Article 7 
Measures to facilitate the application 
of this Directive 
1. The Member States shall take the necessary steps to ensure that 
there are no legal impediments preventing the undertakings included 
within the scope of supervision on a consolidated basis, mixed-
activity holding companies and their subsidiaries, or subsidiaries 
of the kind covered in Article 3(10), from exchanging amongst 
themselves any data and information which would be relevant for the 
purposes of supervision in accordance with this Directive. 
2. Where a parent undertaking and any of its subsidiaries that are 
credit institutions are situated in different Member States, the 
competent authorities of each Member State shall communicate to 
each other all relevant data and information which may allow or aid 
the exercise of supervision on a consolidated basis. 
Where the competent authorities of the Member State in which a 
parent undertaking is situated do not themselves exercise 
supervision on a consolidated basis pursuant to Article 4, they may 
be invited by the competent authorities responsible for exercising 
such supervision to ask the parent undertaking for any data and 
information which would be relevant for the purposes of supervision 
on a consolidated basis and to transmit them to those authorities. 
3. The Member States shall permit the exchange between their competent 
authorities of the information referred to in paragraph 2, on the 
understanding that, in the case of financial holding companies, 
financial institutions or ancillary banking services undertakings, 
the collection or possession of information shall not in any way 
imply that the competent authorities are required to play a 
supervisory role in relation to those institutions standing alone. 
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Similarly, the Member States shall authorize their competent 
authorities to exchange the information referred to in Article 6 on 
the understanding that the collection or possession of information 
does not in any way imply that the competent authorities play a 
supervisory role in relation to the mixed-activity holding company 
and those of its subsidiaries which are not credit institutions, or 
to subsidiaries of the kind covered in Article 3(10). 
4. Where a credit institution, financial ho IdIng company or a mixed 
activity holding company controls one or more subsidiaries which 
are insurance companies or other undertakings providing investment 
services which are subject to authorization, the competent 
authorities and the authorities entrusted with the public task of 
supervising insurance undertakings or those other undertakings 
providing investment services shall co-operate closely. Without 
prejudice to their respective responsibilities, those authorities 
shall provide one another with any information likely to simplify 
their task and to ensure supervision of the activity and overall 
financial situation of the undertakings they supervise. 
5. Information received pursuant to this Directive and in particular 
any exchange of information between competent authorities which is 
provided for in this Directive shall be subject to the obligation 
of professional secrecy defined in Article 12 of 
Directive 77/780/EEC. 
6. The competent authorities responsible for supervision on a 
consolidated basis shall establish lists of the financial holding 
companies referred to in Article 3(2). Those lists shall be 
communicated to the other competent authorities and to the 
Commission. 
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Where, in applying this Directive, the competent authorities of one 
Member State wish in specific cases to verify the information 
concerning a credit institution, a financial holding company, a 
financial institution, an ancillary banking services undertaking, a 
mixed-activity holding company, a subsidiary of the kind covered in 
Article 6 or a subsidiary of the kind covered in Article 3(10), 
situated in another Member State, they must ask the competent 
authorities of that other Member State to have that verification 
carried out. The authorities which have received such a request 
must, within the framework of their competence, act upon it either 
by carrying out the verification themselves, by allowing the 
authorities who made the request to carry it out, or by allowing an 
auditor or expert to carry it out. 
Without prejudice to the provisions of criminal law, the Member 
States shall ensure that penalties or measures aimed at ending 
observed breaches or the causes of such breaches may be imposed on 
financial holding companies and mixed-activity holding companies, 
or their effective managers, that infringe laws, regulations or 
administrative provisions enacted to implement this Directive. In 
certain cases such measures may require the intervention of the 
courts. The competent authorities shall co-operate closely to 
ensure that the abovementioned penalties or measures produce the 
desired results, especially when the central administration or main 
establishment of a financial holding company or of a mixed-activity 
holding company is not located at its head office. 
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Article 8 
Third countries 
1. The Commission may submit proposals to the Council, either at the 
request of a Member State or on its own initiative, for the 
negotiation of agreements with one or more third countries with the 
aim of establishing means of exercising supervision on a 
consolidated basis over: 
- credit institutions with parent undertakings in third countries 
and 
- credit institutions situated in third countries the parent 
undertakings of which, whether credit institutions or financial 
holding companies, have their head offices in the Community. 
2. The agreements referred to in paragraph 1 shall in particular seek 
to ensure both: 
- that the competent authorities of the Member States are able to 
obtain the information necessary for the supervision, on the 
basis of their consolidated financial situations, of credit 
institutions or financial holding companies situated in the 
Community and which have as subsidiaries credit institutions or 
financial institutions situated outside the Community, or which 
hold participations in such institutions; 
- that the competent authorities of third countries are able to 
obtain the information necessary for the supervision of parent 
undertakings the head offices of which are situated within their 
territories and which have as subsidiaries credit institutions or 
financial institutions situated in one or more Member States, or 
which hold participations in such institutions. 
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3. The Commission and the Advisory Committee set up under Article 11 of 
Directive 77/780/EEC shall examine the outcome of those 
negotiations and the resulting situation. 
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Art icle 9 
Final provisions 
1. Member States shall implement the laws, regulations and 
administrative provisions necessary to comply with the provisions 
of the present Directive by 1 January 1993. They shall forthwith 
inform the Commission thereof. 
When Member States adopt these provisions, these shall contain a 
reference to this Directive or shall be accompanied by such 
reference at the time of their official publication. The procedure 
for such reference shall be adopted by Member States. 
2. Notwithstanding the provisions of Article 3(5) and pending entry 
into force of the Directive on capital adequacy of investment firms 
and credit institutions, the competent authorities shall include in 
consolidated supervision financial institutions which are 
principally exposed to market risks in accordance with methods to 
be determined by those authorities in the light of the particular 
nature of the risks involved. 
3. Member States shall communicate to the Commission the texts of the 
main provisions laid down by law, regulation or administrative 
action which they adopt in the field governed by this Directive. 
-2P-
Article 10 
1. Council Directive 83/350/EEC is hereby repealed with effect from 
1 January 1993. 
2. In the following provisions, the words "Directive 83/350/EEC" shall 
be replaced by "Directive .../.../EEC": 
- Article 5 of Directive 89/299/EEC; 
- Article 12(6), Article 13(3), Article 15(2) and the fifth indent 
of the first subparagraph of Article 18(2) of 
Directive 89/646/EEC; 
- Article 3(3) of Directive 89/647/EEC. 
3. In Article 1(5) of Directive 89/646/EEC and the first indent of 
Article 2(1) of Directive 89/647/EEC, the definition of competent 
authorities shall be replaced by the following: 
"the national authorities which are empowered by law or regulation 
to supervise credit institutions". 
Article 11 
This Directive is addressed to the Member States 

\ ISSN 0254-1475 
COM(91) 491 final 
DOCUMENTS 
EN 10 
Catalogue number : CB-CO-91-549-EN-C 
ISBN 92-77-78278-1 
Office for Official Publications of the European Communities 
L-2985 Luxembourg