Opinion of the European Central Bank of 13 February 2004 at the request of the Austrian Federal Ministry of Finance on a draft Federal law adopting a Federal Law on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending the Insurance Supervision Act, the Banking Act, the Securities Supervision Act and the Financial Markets Supervisory Authorities Act (CON/2004/5)
Date: 2004-02-13
Institutions: European Central Bank
Subjects: Austria, EC Directive, application of EU law, credit institution, financial stability, financial supervision, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 13 February 2004 

at the request of the Austrian Federal Ministry of Finance 

on a draft Federal law 

adopting a Federal Law on the supplementary supervision of credit institutions, insurance 

undertakings and investment firms in a financial conglomerate and amending the Insurance 

Supervision Act, the Banking Act, the Securities Supervision Act and the Financial Markets 

Supervisory Authorities Act 

(CON/2004/5) 

1. 

On 6 January 2004 the European Central Bank (ECB) received a request from the Austrian Federal 

Ministry  of  Finance  for  an  opinion  on  a  draft  Bundesgesetz  mit  dem  ein  Bundesgesetz  über  die 

zusätzliche Beaufsichtigung der Kreditinstitute, Versicherungsunternehmen und Wertpapierfirmen 

eines  Finanzkonglomerats  (Finanzkonglomerategesetz  –  FKG)  erlassen  wird  sowie  das 

Versicherungsaufsichtsgesetz,  das  Bankwesengesetz,  das  Wertpapieraufsichtsgesetz  und  das 

Finanzmarktaufsichtsbehördengesetz geändert werden (Federal law adopting a Federal Law on the 

supplementary supervision of credit institutions, insurance undertakings and investment firms in a 

financial  conglomerate  (Financial  Conglomerates  Law)  and  amending  the  Insurance  Supervision 

Act,  the  Banking  Act,  the  Securities  Supervision  Act  and  the  Financial  Markets  Supervisory 

Authorities  Act)  (hereinafter  the  ‘draft  law’).  The  draft  law  implements  Directive  2002/87/EC  of 

the  European  Parliament  and  of  the  Council  of  16  December  2002  on  the  supplementary 

supervision  of  credit  institutions,  insurance  undertakings  and  investment  firms  in  a  financial 

conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 

93/6/EEC  and  93/22/EEC,  and  Directives  98/78/EC  and  2000/12/EC  of  the  European  Parliament 
and of the Council1 . 

2. 

As  the  purpose  of  the  draft  law  is  to  implement  Directive  2002/87/EC  in  Austria,  the  Austrian 

authorities  were  not  legally  obliged  to  consult  the  ECB  under  Article 1(2)  of  Council 

Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national 
authorities regarding draft legislative provisions2. However, it should be noted that at the request of 

the  Council  of  the  European  Union,  the  ECB  delivered  its  opinion  on  a  draft  of  Directive 
2002/87/EC on 13 September 2001 (CON/2001/25)3 and the ECB has a continuing interest in the 

1  
2  
3  

OJ L 35, 11.2.2003, p. 1. 
OJ L 189, 3.7.1998, p. 42. 
OJ C 271, 26.9.2001, p. 10. 

 
 
 
                                                      
harmonised  implementation  of  Directive  2002/87/EC  in  all  Member  States.  In  the  light  of  the 

previous consultation, the ECB now strongly welcomes the opportunity to give its opinion on the 

draft law, which contains, inter alia, provisions concerning the prudential supervision of financial 

institutions and fosters the stability of financial institutions and markets. 

3. 

The  explanatory  notes  to  the  draft  law  refer  to  the  Commission’s  Financial  Services  Action  Plan 

and state that the transposition of Directive 2002/87/EC is a further step towards the completion of 

the  Internal  Market  by  filling  certain  gaps  in  current  legislation  relating  to  the  supervision  of 

financial conglomerates.  

4. 

In a general context, the ECB notes that increasing links between financial markets calls for careful 

consideration  of  cross-sector  group  structures  to  supervise  and  contain  institutional  and  systemic 

risk. In particular, the combined operations of groups that comprise insurance undertakings, credit 

institutions  and  investment  firms  (referred  to  as  ‘financial  conglomerates’)  may  also  create  new 

prudential risks or exacerbate existing ones. The introduction of the euro has prompted changes in 

financial  markets  that  call  for  a  substantial  enhancement  of  cooperation  procedures  between 

national  authorities  and  the  ECB  and  the  national  central  banks  within  the  Eurosystem.  Capital 

adequacy  requirements  must  therefore  be  sufficient  and  proportionate  so  as  to  counter  the  risks 

undertaken  in  groups  that  straddle  traditional  sectoral  boundaries.  The  purpose  of  Directive 

2002/87/EC is to ensure the stability of European financial markets, to establish common standards 

for the prudential supervision of financial conglomerates throughout Europe and to ensure a level 

playing  field  and  legal  certainty  between  financial  institutions.  Key  elements  of  Directive 

2002/87/EC are to ensure that there is adequate cooperation between the competent authorities and 

that due consideration is given to general requirements for transparent and clear arrangements for 

the  supervision  of  conglomerates  and  the  appropriate  distribution  of  tasks  and  supervisory 

competencies. The ECB supports the transposition of Directive 2002/87/EC into Austrian law as it 

will supplement the existing supervisory framework in Austria, which is currently organised on a 

sectoral basis. This reflects the need to provide increasingly integrated European financial markets 

with an adequate framework to achieve and maintain financial stability.  

5. 

The ECB welcomes the comprehensive provisions of the draft law on supervisory cooperation and 

the exchange of information. The explanatory memorandum to the draft law recalls explicitly the 

excellent 

cooperation  between 

the  Oesterreichische  Nationalbank 

(OeNB) 

and 

the 

Finanzmarktaufsicht  (FMA)  (Austrian  Financial  Markets  Authority)  and  mandates  the  OeNB  to 

use its expertise and resources for on-site supervision of market and credit risk in credit institutions 

and, where appropriate, in investment firms within a financial conglomerate. Moreover, the ECB 

welcomes  Paragraph  12(4)  of  the  draft  law  which  explicitly  includes  the  European  System  of 

Central  Banks  and  the  ECB  in  such  exchange  of  information  on  supervised  entities,  i.e. 

conglomerates, where this is necessary for the fulfilment of their respective tasks. Such entities are 

likely to be systemically important and their operations may affect financial stability, the stability 

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of payment systems and also be relevant to the conduct of monetary policy in the European Union 

(EU).  

6. 

The ECB further notes that defining a conglomerate according to harmonised criteria represents the 

first  crucial  step  towards  consistent  supervision  of  such  financial  groups  throughout  the  EU. 

Paragraph  4(1)  of  the  draft  law  imposes  an  obligation  on  the  financial  institutions  concerned  to 

review  initially  whether  they  satisfy  the  definition  of  a  financial  conglomerate.  The  final 

responsibility however remains with the FMA, which may, under Paragraph 3(5) of the draft law, 

substitute or add to the criteria defining a financial conglomerate. In particular, the FMA may take 

a group’s earning structure and off-balance sheet items into account. Furthermore, the ECB notes 

Paragraph 5(4) of the draft law, which states that in limited circumstances the Federal Minister of 

Finance  may  deviate  in  part  from  the  provisions  of  Directive  2002/87/EC  when  appointing  a 

coordinating authority to carry out supplementary supervision. The ECB recalls the need to achieve 

an  EU-wide  harmonisation  of  the  regulatory  framework  and  advocates  a  high  degree  of  caution 

when  deviating  from  Directive  2002/87/EC  in  order  to  define  a  conglomerate  or  identify  the 

coordinating authority. The ECB regards the main benefit of harmonised and objective criteria as a 

contribution 

to 

the 

transparency,  clarity  and 

legal  certainty  facilitating  a  harmonised 

implementation of Community law throughout the EU. 

7. 

The  ECB  confirms  that  it  has  no  objections  to  the  competent  national  authorities  making  this 

opinion publicly available at their discretion. This opinion will be published on the ECB’s website 

six months after the date of its adoption. 

Done at Frankfurt am Main on 13 February 2004. 

[signed] 

The President of the ECB  

Jean-Claude TRICHET 

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