REEXAMINED PROPOSAL FOR A COUNCIL DIRECTIVE ON A SOLVENCY RATIO FOR CREDIT INSTITUTIONS
Date: 1989-11-15
Institutions: European Commission
Subjects: credit institution, exchange rate, financial solvency, interest, ratio, venture capital

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

COM  (89) 578  final  - SYN 133 

Brussels,  15  November 1989 

REEXAMINED  PROPOSAL FOR A 

COUNCIL  DIRECTIVE 

ON A SOLVENCY  RATIO FOR 

CREDIT  INSTITUTIONS 

(presented by the Commission  pursuant to 

Article  149(2)(d) of the EEC Treaty) 

GW 0 8 

REEXAMINED PROPOSAL 

FOR A COUNCIL DIRECTIVE 

ON A SOLVENCY RATIO FOR CREDIT INSTITUTIONS 

Explanatory Memorandum 

1. The original  proposal  for a Council  Directive on a Solvency  ratio for 

Credit  Institutions was submitted  by  the Commission  to the Council on 
27 April 19881>. 

2. The Economic and Social Committee delivered  its opinion2) on 27 October 
1988 and  the  European  Parliament  delivered  its opinion3) on  15 March 

1989. 

3. Pursuant  to Article  149(3) of  the Treaty, the Commission  submitted an 
amended  proposal4)  which  largely  took  account  of  the  proposed 

amendments. 

4. On  24 July  1989 the Council unanimously  agreed on a common position5) 
on which the Council has delivered  its reasons6) and the Commission its 
observâtions7^. 

5. The European Parliament had its second reeding on 25 October  1989 under 
the cooperation procedure arid voted in faveur of four amendements8). 

T) ÔJ Ki* C 155 of 25.5.1988, p.4 
2) OJ N° C 337 of 31.12.1988, p. 8 
3) OJ N° C 96 of 17.4.1989, p. 83 
4) OJ N° C 167 of 3.7.1989, p. 40 
5) The Council Doc. 7836/89 of 24.7.19» 
6) The Council  Doc. 7836/89, Add. 1 of 20.7.1989 and CON. 1 of  24.7.1989 

and CON. 2 of 25.10.1989 

7) Sec(89) 206 final - SYN 133 of 24.7.1989 
8) EP 135.514 

< 

-  2. -

6.  The  two  first  amendments  adopted  by  the  European  Parliament  concern  the 

question  of  comito logy  and  they  propose  to  use  the  management 
committee,  procedure  11 B of  the  Council's  decision  of  13  July  19879). 

The  Parliament  rejected  Art.  9(2)  of  the  Council's  common  position  in 

which 

the  Council 

suggested 

the  use  of 

regularoty 

committee 

procedure  III  B. 

7.  The  Commission  thought  it  appropriate  to  propose  in  all  the  banking 

directives  the  procedure  of  regulatory  committee,  procedure  I MA  of  the 

Council's  decision  of  13 July  1967. This  procedure  gives  the  Commission 

ail  the  powers  it  needs  and  it  is  the  only  adequate  procedure  talcing 

into account  the nature  of  the measures which  will  have  to be  taken.  In 

the  banking  field,  the  implementing  powers  will  not  be  used  for  a  day-

to-day  management,  as  it  is the case  in other  sectors  (e.g.  agriculture) 

where  the management  committee  procedure  is appropriate. 

8. This  is the  reason why  the Commission,  although  it welcomes  the  decision 

of  the  European  Parliament  to  reject  the  position  of  the  Council  on 

Comitology, prefers  to persist  in  its reexamined  proposal  and  vigorously 

defend  the  regulatory  committee  version  M I A. 

9. The  third  amendment  adopted  by  the  European  Parliament  proposes  to 

prolong  by  five  years  and  until  2001  the  special  derogation  in  Article 

11(4)  which  grants  credit  institutions  the  right  to  apply  a  50% 

weighting  on  loans  backed  by  mortgage  on  commercial  properties.  The 

Parliament  argues  that  for  reasons of  competition  this derogation  should 

have  the  same  length  of  time  as  the  derogation  in  Article  11(5).  The 

Commission  can  not  accept  this  amendment  for  the  reason  that  the  latter 

derogation  is  a  general  one  which  all  Member  States  can  apply  whereas 

the  derogation  in Article  11(4) only  is  included  in order  to  help  three 

Member  States with  specific problems. 

10 The  last  amendment  is a  textual  improvement  of  Article  11(5)  which  the 

Commission  is prepared  to  accept. 

Ô) ÔJ  Na  L  1Ô7 of  18.7.1987, p. 33 

0. 

REEXAMINED  PROPOSAL 

FOR A COUNCIL DIRECTIVE 

ON A SOLVENCY RATIO FOR CREDIT  INSTITUTIONS 

Common position of  the Council 

Reexamined proposal  of  the Commission 

Recitals  1 to 13 unchanged 

14th Recital 

14th Recital 

Whereas  technical  modifications  to  the 

Whereas  technical  modifications  to  the 

detailed 

rules 

contained 

in  this 

detailed  rules contained  in this directive 

directive  may  from  time  to  time  be 

may  from  time  to  time  be  necessary  to 

necessary  to respond  to new developments 

respond  to new developments  in the banking 

in  the  banking  sector;  whereas  the 

sector;  whereas  the  Commission  shaii 

Commission  shall  accordingly  make  such 

accordingly make such modifications as are 

modifications  as  are  necessary,  after 

necessary,  after  consulting  the  Banking 

consulting 

the 

Banking 

Advisory 

Advisory  Committee,  within  the  limits  of 

Committee,  within  the  limits  of  the 

the  implementing  powers  delegated  to  the 

implementing  powers  delegated  to  the 

Commission  by  the  provisions  of  the 

Commission  by  the  provisions  of  the 

Treaty;  whereas  that  Committee  shaii  act 

Treaty; whereas that Committee  shall act 

as  a  'Regulatory'  Committee,  according  to 

as  a  'Regulatory'  Committee,  according 

the)  rules  of  procedure  laid  down  in 

to  the  rules  of  procedure  laid  down  in 

Article  2,  procedure  III,  variant  (a) of 

Article 2, procedure  M i,  variant  (b) of 

Council  Decision  87/373/EEC  of  13  July 

Council  Decision  87/373/EEC  of  13  July 

1987  laying  down  procedures  for  the 

1987  laying  down  procedures  for  the 

exercise  of  implementing  powers  conferred 

exercise 

of 

implementing 

powers 

orr the  Commission3) 

conferred on  the CornaitssIon3); 

3) ÔJ No L 197, 18.7.1987, p. 33 

3) OJ NO L 197, 18.7.1987, p. 33 

-  2 -

Common  position of  the Council 

Reexamined  proposal  of  the Commission 

Articles 1 to 8: unchanged 

Article 9(1): unchanged 

Article 9(2) 

Article 9(2) 

2. The Commission  shall  be assisted  by a 

2.  The  Commission  shall  be  assisted  by  a 

committee composed  of  representatives of 

committee  composed  of  representatives  of 

the  Member  States  and  chaired  by  a 

the  Member  States  and  chaired  by  a 

representative of  the Commission. 

representative of  the Commission. 

The  Commission  representative  shall 

The Commission  representative shall  submit 

submit  to  the  committee  a  draft  of  the 

to  the  committee  a  draft  of  the  measures 

measures  to  be  taken.  The  committee 

to  be  taken.  The  committee  shall  deliver 

shall  deliver  its opinion  on  the  draft 

its  opinion  on  the  draft  within  a  time 

within  a  time  limit  which  the  chairman 

limit  which  the  chairman  may  lay  down 

may  lay down according  to the urgency of 

according  to  the  urgency  of  the  matter. 

the  matter.  The  opinion  shall  be 

The  opinion  shall  be  delivered  by  the 

delivered  by  the  majority  laid  down  in 

majority  laid  down  in  Article  148(2)  of 

Article  148(2) of  the Treaty  in the case 

the Treaty  in the  case of  decisions  which 

of  decisions  which  the  Council  is 

the  Council  is  required  to  adopt  on  a 

required  to adopt  on a proposal  from the 

proposal  from  the Commission. The votes of 

Commission. 

The 

votes 

of 

the 

the  representatives  of  the  Member  states 

representatives of  the Member  States  in 

in the committee  shall  be weighted  in the 

the  committee  shall  be  weighted  in  the 

manner  set  out  in  that  Article.  The 

manner  set  out  in  that  Article.  The 

Chairman shall  not  vote. 

Chairman  shall  not  vote. 

The  Commission  shall  adopt  the  measures 

envisaged  measures  when  they  are  in 

envisaged  if they are  in accordance with 

conformity  with  the  opinion  of  the 

the opinion of  the Committee. 

Committee. 

The  Commission 

shall 

implement 

the 

5" 

-  3 -

Common  position of  the Council 

Reexamined  proposal  of  the Commission 

If  the  measures  envisaged  are  not  in 

When  the envisaged measures do not confirm 

accordance  with  the  opinion  of  the 

with  the  opinion  of  the  Committee,  or  in 

committee, 

or 

if  no  opinion 

is 

the  absence  of  an opinion,  the  Commission 

delivered, the Commission  shall, without 

shall  without  delay  submit  to  the Council 

delay,  submit  to  the Council  a proposal 

a  proposal  relating  to  the  measures  to 

relating  to  the  measures  to  be  taken. 

take.  The  Council  shall  act  according  to 

The  Council  shall  act  by  a  qualified 

qualified majority  voting. 

major ity. 

If at  the end of  the  period  which  will  be 

If the Council  does not  act within  three 

set  in  the  case  of  each  decision  to  be 

months  of  the  referral  to  it  the 

taken  by  the  Council  as  a  result  of  this 

Commission  shall  adopte  the  measures 

paragraph,  a period  which  must  not  exceed 

adopted,  unless  the  Council  has  decided 

three  months  from  the  day  on  which  the 

against  those  meausres  by  a  simple 

Council  was  informed,  the Council  has not 

major ity. 

acted,  the  Commission  shall  implement  the 

proposed measures. 

Articles 10 to 11(4) unchanged 

Article 11 

Article 11 

5. 50% for property  leasing  transactions 

5. The Member  States may  apply  a weighting 

concluded  within  ten  years  of  the  date 

of  50%  in  respect  of  property  leasing 

laid 

down  in 

Article 

12(1) 

and 

transactions concluded  within  ten years of 

concerning  assets  for  business  use 

the  date  laid  down  in  Article  12(1)  and 

situated  in  the  country  of  the  head 

concerning 

assets 

for 

business 

use 

office 

and 

governed 

by 

statutory 

situated  in the country of  the head office 

provisions  whereby  the  lessor  retains 

and  governed  by  statutory  provisions 

full ownership of  the rented  asset until 

whereby  the  lessor  retains  full  ownership 

the  tenant  exercises  his  option  to 

of  the  rented  asset  until  the  tenant 

purchase. 

exercises his option to purchase. 

Articles 12 and  13: unchanged 

/.; 

Amendments  proposed 

by  the European  Parliament 

but  rejected 

by  the Commission 

f 

Solvency ratio for credit  institutions 

Doc. A 3-45/89 

DECISION 

(COOPERATION PROCEDURE  : second  reading) 

on  the  common  position  of  the  Council  with  a  view  to  the  adoption  of  a 
directive on a solvency ratio for credit  institutions 

The European Parliament, 

having  regard  to  the  common  position  of  the Council  (Doc. C 3-17/89 - SYN 
133) 

having regard 'to the relevant provisions of the EEC Treaty  and  its Rules of 
Procedure, 

1. Has amended the common position as set out below; 

2. Has  instructed  its  President  to  forward  this  decision  to  the  Council  and 

Commission. 

Common position of the Council 

Amendments adopted  by Parliament 

(Amendment No. 1) 

Fourteenth  recital 

the 

Commission 

to  respond 

Whereas technical modification to the 
detailed  rules  contained  in  this 
directive  may  from  time  to  time  be 
necessary 
to  new 
developments  in  the  banking  sector; 
whereas 
shall 
accordingly  make  such  modifications 
as  are  necessary,  after  consulting 
the  Banking  Advisory  Committee, 
within  the limits of the  implementing 
powers delegated  tc the Commission by 
the provisions of the Treaty; whereas 
t.?-.-nt  Committee  shall  act  as  a 
'Regulatory'  Committee,  according  to 
z'r.e  rules  of  procedure,  laid  down  in 
article 2, procedure  III, variant  (a) 
of  Council  Decision  87/373/EEC  of 
13 July  1987  laying  down  procedures 
for  the  exercise  of  implementing 
powers conferred  on the Commission; 

Whereas  technical  modification  to 
the detailed  rules contained  in this 
directive  may  from  time  to  time  be 
necessary 
to  new 
to  respond 
developments  in  the  banking  sector; 
whereas  the  Commission 
shall 
accordingly  make  such  modifications 
as  are  necessary,  being  assisted  by 
of  the 
a  committee 
representatives of the Member  States 
and  chaired  by  the  representative 
of 
whereas 
C o m m i s s i o n; 
appropriate  measures  shall  be 
adopted  in accordance with  procedure 
II, variant  (b) set out  in Article 2 
of  Council  Decision  87/373/EEC  of 
13 July 1987; 

composed 

the 

(Amendment No.  2) 

Article  9(2),  third,  fourth  and 
fifth  subparagraphs 

- 1 -

PL  135.802 

i 

The  Commission  shall  adopt  the 
measures  envisaged  if  they  are  in 
accordance  with  the  opinion  of  the 
committee. 

I_i_ 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 concerning the measures to 
be taken.  The Council  shall act by a 
qualified  majority. 

shall 

The  Commission  shall  adopt  measures 
immediately 
be 
w h i ch 
applicable.  However, where  they  do 
not  conform  with  the  opinion  of the 
Committee,  the  Commission  shall 
without  delay  communicate  them  to 
the Council. 

In  this  event  the  Commission  shall 
defer application of the measures 
ic 
has  adopted  for  a  time-limit  which 
may  in  no  case  exceed  three  months 
from the date of the communication. 

If  the  Council  does  not  act  within 
three  months  of  the  referral  to  it 
the  Commission  shall  adopt  the 
measures proposed, unless the Council 
has decided  against those measures by 
a simply majority. 

The  Council,  acting  by  a  gualified 
majority,  may  take  a  different 
decision  within  the  time-limit  laid 
down  in the preceding paragraph. 

(Amendment No. 3) 

Article  11(4) 

concerned, 

f r om 
u n t il 

d e r o g a t i on 

By 
A r t i c le  6 ( l ) ( c ) ( l ), 
1 January  1996  Germany,  Denmark 
and  Greece  may  apply  a  weighting 
of  50%  to  assets  which  are 
entirely and completely  secured to 
the  satisfaction  of  the  competent 
a u t h o r i t i es 
by 
mortgages on completed  residential 
property,  on  offices  or  on multi 
purpose  commercial  premises, 
situation  within  the  territories 
of  those  three  Member  States, 
provided  that  the  sum  borrowed 
does  not  exceed  60% of  the  value 
of  the  property  in  question, 
calculated  on  the  basis  of 
rigorous  assessment  criteria  laid 
dcwn  in  statutory  or  regulatory 
provisions. 

4. 

d e r o g a t i on 

f r om 
By 
Article  6(l)(c)(l), 
until 
1 January  2001  Member  States 
may  apply  a  weighting  of  50% 
to  assets  which  are  entirely 
and  completely  secured  to  the 
satisfaction  of  the  competent 
authorities  concerned,  by 
mortgages  on  offices  or  on 
m u l t i - p u r p o se 
commercial 
premises, situation within the 
territory  of  the  European 
Community,  provided  that  the 
sum  borrowed  does  not  exceed 
60%  of  the  value  of  the 
q u e s t i o n, 
p r o p e r ty 
calculated  on  the  basis  of 
rigorous  assessment  criteria 
laid  down  in  statutory  or 
regulatory  provisions,  and 
provided  that  the  holder  of 
the  mortgage  ranks  before  any 
other  creditor  in  respect  of 
the mortgaged  property. 

in 

-  2  -

PE 135.802 

3 

ISSN 0254-1475 

COM(89) 578 final 

DOCUMENTS 

EN 

18 

Catalogue number : CB-CO-89-533-EN-C 

ISBN 92-77-54954-8 

Office  for Official  Publications of the European Communities 
L-2985 Luxembourg