Proposal for a Council Decision laying down multiannual financial guidelines for managing the assets of the "ECSC in liquidation" (COM(2000) 520 final) (Text with EEA relevance)
Date: 2001-01-30
Institutions: European Commission
Subjects: ECSC loan, ECSC operating budget, EU financing, validation of expenditure

30.1.2001

EN

Official Journal of the European Communities

C 29 E/251

Proposal for a Council Decision laying down multiannual financial guidelines for managing the
assets of the (cid:145)ECSC in liquidation(cid:146)

(2001/C 531 E/11)

(Text with EEA relevance)

COM(2000) 520 final

(Submitted by the Commission on 20 September 2000)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

the governments of

Having regard to the Decision [. . ./. . ./ECSC] of the represen-
tatives of
the Member States meeting
within the Council on [...] concerning the financial conse-
quences of the expiry of the Treaty establishing the European
Coal and Steel Community, and in particular Article 3,
paragraph 2, thereof,

Having regard to the proposal from the Commission,

Having regard to the Opinion of the European Parliament,

Whereas:

(1) For

the purposes of

the Decision [. . ./. . ./ECSC],

the
Commission shall manage the assets of the (cid:145)ECSC in liqui-
dation(cid:146) or, after the liquidation, the (cid:145)Assets of the Coal and
Steel Research Fund(cid:146).

(2) The management of these assets should be aimed at the
highest possible yield that is compatible with security.

(3) The entire capital of

the (cid:145)Assets of

Research Fund(cid:146), yielded by the liquidation,
preserved intact.

the Coal and Steel
should be

(4) The management of

the transferred assets should take
the experience gained in conducting the

account of

the European Coal and Steel
financial operations of
Community, and these multiannual
financial guidelines
for the management of the assets of the (cid:145)ECSC in liqui-
dation(cid:146) should therefore be based on this experience,

HAS DECIDED AS FOLLOWS:

Article 1

The multiannual Financial Guidelines for the management of
the assets of the (cid:145)ECSC in liquidation(cid:146), or, after the liquidation,
the (cid:145)Assets of the Coal and Steel Research Fund(cid:146), hereinafter
called (cid:145)Financial Guidelines(cid:146), are set out in the Annex.

Article 2

If need be, the Financial Guidelines shall be reviewed or supple-
mented every five years, commencing from 1 January 2008. To
this end, and at the latest in the first semester of the last year
of each five-year period, the Commission shall reassess the
operation and effectiveness of
the Financial Guidelines and
shall propose any appropriate amendments.

If it sees fit, the Commission may carry out such reassessment
and shall propose any appropriate amendments before the
expiry of the five-year period.

Article 3

This Decision shall take effect on 24 July 2002.

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Official Journal of the European Communities

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ANNEX

FINANCIAL GUIDELINES FOR THE INVESTMENT OF THE ASSETS OF THE (cid:145)ECSC IN LIQUIDATION(cid:146)
TRANSFERRED BY THE MEMBER STATES TO THE COMMISSION

1. Introduction

The Member States of the European Coal and Steel Community (ECSC), meeting in the Council, have transmitted to
the European Community the assets of the ECSC, which is to be wound up, after the expiry of the Treaty, on 23 July
2002. They have charged the European Community with the task of using these assets to discharge all legal liabilities
of the ECSC, and have agreed that these assets are to be managed according to their instructions in such a way as to
complete this task and to provide funds for the benefit of financing continuing research in the coal and steel sectors.

The following financial guidelines are to be followed when managing these assets in order to provide for the
discharge of the liabilities, and to the extent of any eventual surplus to finance the research activities.

2. Use of funds

All the assets of the (cid:145)ECSC in liquidation(cid:146), including both its loan portfolio and its investments, are to be used as
follows:

(cid:151) first, such assets as necessary shall be used to meet the remaining obligations of the ECSC, both in terms of its

outstanding borrowings (1) and of its commitments resulting from previous operating budgets; and

(cid:151) secondly, to the extent that such assets are not needed to meet obligations as described above, they should be
invested so as to provide income to be used to fund the continuation of research in the coal and steel industries.

3. Allocation of assets

Following from point 2 above, the Commission will allocate the financial assets received from the Member States
between the following three categories:

(i) reserves needed to provide an assurance to the creditors of the ECSC that all of its outstanding borrowings and
the interest thereon will be paid in full on their due date, thus enabling the obligor to maintain its (cid:145)AAA(cid:146) rating;

(ii) funds needed to guarantee the disbursement of all amounts legally engaged under the Operating Budget of the

ECSC prior to the end of the ECSC Treaty;

(iii) to the extent that funds are no longer needed for the above purposes (due either to the reimbursement of
borrowings or payment of interest without call on the reserves or the eventual cancellation of budgetary
obligations) such funds will be allocated to a long-term investment category.

4. Investment categories

Financial assets allocated under this scheme are to be invested in such a way as to ensure that funds are available as
and when needed, while still generating the highest return available, consistent with maintaining a high degree of
security and stability over the long-term.

(a) To obtain these objectives, the following investment instruments shall be permitted, subject to the exposure limits

set out below:

(i) term deposits with authorised banks;

(ii) money market instruments, with a final maturity of less than one year, issued by authorised banks or by

other categories of authorised issuers as set out in these guidelines;

(iii) fixed and floating rate bonds, with a maturity not exceeding 10 years, provided that they are issued by any of

the categories of authorised issuers;

(iv) equity shareholdings in collective investment funds, provided that such investments are limited to funds
whose aim is to respond to the performance of a financial index and only for the investments referred to in
3(iii) above.

(1) In the event of a non-performing loan, any shortfall is made good by the application of ECSC’s assets.

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(b) The Commission may also make use of the following operations:

(i) repurchase and reverse repurchase agreements, provided the counterparts are authorised for such transactions,

and provided that:

(a) securities held under such contracts may not be re-sold to parties other than the contracting counterparty

prior to the contractual deadline, and

(b) the Commission remains in a position to re-purchase securities that it may have sold at the contractual

deadline;

(ii) bond-lending operations, but only under the conditions and procedures laid down by recognised clearing
systems such as Clearstream (formerly CEDEL) and Euroclear, or by leading financial institutions specialising
in this type of operation.

(c) The Commission may not undertake the following operations:

(i) purchases of precious metals or certificates representing precious metals;

(ii) purchases of real estate, except buildings occupied by EU institutions;

(iii) buying or selling of derivatives contracts.

5. Investment limits

(a) The Commission’s investment shall be limited to the following amounts:

(cid:151) for obligations issued or guaranteed by Member States or institutions of the EU, EUR 250 million per

Member State or institution;

(cid:151) for obligations issued or guaranteed by other sovereign or supranational borrowers, with a credit rating of

not less than (cid:145)AA-(cid:146) or equivalent, EUR 100 million;

(cid:151) for deposits with and/or monetary instruments of an authorised bank, the lower of either EUR 100 million

or 5 % of the bank’s own funds;

(cid:151) for obligations of corporate issuers with a credit rating of not less than (cid:145)AAA(cid:146), EUR 50 million;

(cid:151) for obligations of corporate issuers with a credit rating of not less than (cid:145)AA-(cid:146) or equivalent, EUR 25 million;

(cid:151) for holdings of collective investment vehicles with a credit rating of not less than (cid:145)AA-(cid:146) or equivalent, EUR 25

million for each such vehicle.

(b) The investment in any single bond issue, subject to the limits given in (a) above, shall not be more than 20 % of

the total amount of such issue.

(c) Not more than 20 % of the total amount held shall be invested in respect of any single issuer.

(d) The abovementioned ratings should be those applied by at least one of the major international credit rating

agencies, as generally understood.

6. Transfer to EU budget

The net balance of the income will be committed to the general budget of the EU as dedicated revenue and will be
disbursed by the fund as necessary to meet the obligations from the budget line directed to research programmes for
the coal and steel sectors.

7. Investment procedures

The Commission shall carry out, on behalf of (cid:145)ECSC in liquidation(cid:146), the abovementioned investment operations
according to the regulations and procedures in force for the ECSC at the time of its dissolution subject to change
by the Commission, which is required by best market practice.

8. Accounting

The management of the funds shall be accounted for in the annual profit-and-loss account and the annual balance
sheet prepared for the (cid:145)ECSC in liquidation(cid:146). These shall be based upon generally accepted accounting principles
similar to those provided for the ECSC. The accounts will be approved by the Commission and certified by the Court
of Auditors. The Commission may employ an external firm to carry out an annual audit of its accounts.