Opinion of the European Central Bank of 16 March 2004 at the request of the Belgian Ministry of Finance on certain provisions of the draft law amending, in the field of insolvency procedures, the Law of 22 March 1993 on the legal status and supervision of credit institutions and the Law of 9 July 1975 on the supervision of insurance undertakings (CON/2004/9)
Date: 2004-03-16
Institutions: European Central Bank
Subjects: Belgium, credit institution, financial solvency, financial stability, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 16 March 2004 

at the request of the Belgian Ministry of Finance  

on certain provisions of the draft law amending, in the field of insolvency procedures, the Law of 

22 March 1993 on the legal status and supervision of credit institutions and the Law of 9 July 1975 

on the supervision of insurance undertakings 

(CON/2004/9) 

1. 

On  24  February  2004  the  European  Central  Bank  (ECB)  received  a  request  from  the  Belgian 

Ministry of Finance for an opinion on certain provisions of the draft law amending, in the field of 

insolvency  procedures,  the  Law  of  22  March  1993  on  the  legal  status  and  supervision  of  credit 

institutions and the Law of 9 July 1975 on the supervision of insurance undertakings (hereinafter 

the ‘draft law’).  

2. 

The ECB’s competence to deliver an opinion is based on the fifth and sixth indents of Article 2(1) 

of Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank 
by national authorities regarding draft legislative provisions1, as the draft law contains provisions 

concerning, among other things, payment and settlement systems and rules applicable to financial 

institutions  that  could  materially  influence  the  stability  of  financial  institutions  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 of the ECB has adopted this opinion. 

3. 

The main purpose of the draft law is to implement into Belgian law Directive 2001/17/EC of the 

European Parliament and of the Council of 19 March 2001 on the reorganisation and winding-up of 
insurance undertakings2 and Directive 2001/24/EC of the European Parliament and of the Council 
of  4  April  2001  on  the  reorganisation  and  winding  up  of  credit  institutions3.  The  provisions  on 

which  the  ECB  is  consulted  relate  to  the  following  aspects  which  are  not  harmonised  by  these 

directives:  (i)  the  mandatory  prior  consultation  of  the  Belgian  Banking,  Finance  and  Insurance 

Commission  (CBFA)  by  the  President  of  the  Commercial  Court  when  collective  proceedings  are 

opened against certain financial intermediaries and (ii) improved protection from the attachment of 

funds to be transferred to Belgian payment and securities settlement systems. 

1 
2  
3  

OJ L 189, 3.7.1998, p. 42. 
OJ L 110, 20.4.2001, p. 28. 
OJ L 125, 5.5.2001, p. 23. 

 
 
 
                                                      
4. 

Articles  11,  23  and 29 of  the  draft  law  provide  that  the  President  of  the  Commercial  Court  shall 

request the opinion of the CBFA, before passing judgment on a petition or summons for judicial 

composition,  on  the  opening  of  bankruptcy  proceedings  or  on  the  provisional  withdrawal  of 

management  regarding  credit  institutions,  clearing  institutions  or  investment  undertakings.  These 

Articles also state that consultation of the CBFA suspends delivery of a judgment for not more than 

15 days. If the CBFA considers that a case is likely to pose significant systemic risk implications or 

requires prior coordination with foreign authorities, this period can be extended, but it may never 

exceed  30  days.  The  draft  law’s  explanatory  memorandum  clearly  states  that  the  need  to  consult 

the  CBFA  results  primarily  from  the  difficulty  that  judicial  authorities  have  in  initiating  judicial 

composition and bankruptcy procedures on the basis of possibly incomplete information that takes 

no  account  of  the  possibility  of  the  supervisory  authorities  intervening  or  of  the  existence  of 

interprofessional  solidarity  mechanisms  (i.e.  the  possible  preventive  intervention  of  the  Fund  for 

the protection of deposits and financial instruments).  

5. 

The introduction of such a consultation procedure is broadly welcomed by the ECB since it may 

reinforce  the  financial  stability  framework  by  allowing  judicial  authorities  to  consider  the 

assessment  of  the  competent  supervisory  authority  when  deciding  on  the  insolvency  of  credit 

institutions, clearing institutions and investment undertakings. This is also in line with the spirit of 

Directive 2001/24/EC, which provides for the consultation of competent authorities. Nevertheless, 

the ECB considers that certain aspects of the consultation procedure could be clarified. 

6. 

The first clarification that the ECB suggests relates to the involvement of the Nationale Bank van 

België/Banque Nationale de Belgique (NBB). In this context, the explanatory memorandum notes 

that ‘It is self-evident that with regard to this competence of providing an opinion the CBFA will of 

course  make  any  appropriate  contacts  be  it  with  the  Fund  for  the  protection  of  deposits  and 

financial instruments or the NBB with which channels for the exchange of information exist…’. 

The ECB also notes that the Treaty establishing the European Community and the Statute  of the 

European System of Central Banks and of the European Central Bank entrust the Eurosystem and 

the NBB, as  an integral part of the Eurosystem, with the tasks of defining and implementing the 

monetary  policy  of  the  Community,  promoting  the  smooth  operation  of  payment  systems  and 

contributing to the stability of the financial system. Considering that the Eurosystem members have 

a  crucial  role  in  preventing  financial  crises  and,  if  preventive  efforts  fail,  in  the  management  of 

such crises, the NBB should be involved in the CBFA consultation procedure. Amongst other, the 

NBB should be informed by the judicial authorities of the initiation of the proceedings at the same 

time  as  the  CBFA  and  the  law  should  provide  for  the  involvement  of  the  NBB  during  the 

consultation procedure. Finally, the ECB also sees merit in the NBB receiving a copy of the CBFA 

opinion at the same time as the President of the Commercial Court.  

7. 

The ECB also underlines certain consequences of the CBFA consultation procedure. According to 

the current version of the draft law, consultation of the CBFA automatically suspends bankruptcy 

proceedings.  For  credit  institutions  such  an  automatic  suspension  might  have  significant  and 

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possibly undesirable side effects considering certain provisions of the master agreements governing 

financial  transactions  concluded  between  a  credit  institution  and  its  counterparties.  These 

agreements often provide for an automatic termination of all outstanding transactions in the event 

of a so-called ‘insolvency event’, which includes bankruptcy proceedings that are not dismissed or 

stayed within 15 or 30 days following the institution of such proceedings. Such termination might 

have  potentially  significant  spillover  effects  on  other  financial  institutions  and,  thus,  for  the 

stability of the financial system as a whole.  

In the same vein, the ECB notes that Article 7 of Directive 94/19/EC of the European Parliament 
and of the Council of 30 May 1994 on deposit-guarantee schemes4 provides that deposits must be 

covered up to EUR 20 000 in the event of deposits being unavailable. According to Article 1(3) of 

Directive  94/19/EC  a  deposit  is,  inter  alia,  considered  as  being  unavailable  at  the  latest  21  days 

after the competent authorities have satisfied themselves that a credit institution has failed to repay 

deposits which are due and payable. An extension of the suspension period as provided for in the 

draft law, combined with a suspension of the activities decided by the CBFA, should not lead to a 

situation where the intervention of the guarantee fund is automatically triggered. 

8. 

According  to  the  explanatory  memorandum  the  CBFA  may,  during  the  suspension  period,  take 

exceptional  administrative  measures  on  the  basis  of  Article  57  of  the  Banking  Law  of 

22 March 1993, such as the total or partial suspension of activities which can eventually result in 

the ‘closure of the counters’. In the situations covered by the draft law the CBFA could be obliged 

to take such administrative measures urgently in order to protect the rights of depositors. However, 

under  the  current  Banking  Law,  the  CBFA  must  first  request  a  rectification  of  the  credit 

institution’s situation within a fixed time limit before being able to take such exceptional measures. 

The  ECB  proposes  empowering  the  CBFA  to  take  these  measures  immediately  if  the  rights  of 

creditors are exposed to serious risks. 

9. 

The ECB is also consulted on the amendment of Article 9 of the Law of 28 April 1999, which aims 

to  ensure  that  operators  and  settlement  agents  of  payment  and  securities  settlement  system  in 

Belgium  may  freely  process  payments  received  from  their  correspondent  banks  to  their 

participants’ settlement accounts, as the amounts to be transferred to such settlement accounts will 

not  be  subject  to  attachment  by  third  parties.  This  amendment  makes  clear  that  the  existing 

protection,  which  settlement  accounts  in  payment  and  settlement  systems  already  enjoy,  also 

applies to cash transfers via any local or foreign bank to those accounts. Article 9 offers broader 

protection from attachment to cash settlement accounts held in payment and securities settlement 

systems in Belgium than the provisions of Directive 98/26/EC of the European Parliament and of 
the Council of 19 May 1998 on settlement finality in payment and securities settlement systems5. 

As the explanatory memorandum notes, Article 9 has not provided sufficient legal certainty since 

recent Belgian case-law has prevented securities settlement systems from processing payments on 

4  
5  

OJ L 135, 31.5.1994, p. 5. 
OJ L 166, 11.6.1998, p. 45. 

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certain  securities  held  in  those  systems.  While  is  not  clear  whether  such  case-law  would  survive 

any future legal challenge, the adoption of the draft law nevertheless eliminates  such uncertainty 

under  Belgian  law.  In  that  respect,  the  draft  law enhances  legal  certainty  in  relation  to  payments 

through payment and settlement systems and thus fosters the safety and efficiency of payment and 

settlement systems. 

10.  The  ECB  confirms  that  it  has  no  objection  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, 16 March 2004. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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