Opinion of the European Central Bank of 18 May 2004 at the request of the Portuguese Ministry of Finance on a draft decree-law on the reorganisation and winding up of credit institutions (CON/2004/18)
Date: 2004-05-18
Institutions: European Central Bank
Subjects: Portugal, credit institution, financial stability, liquidation, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 18 May 2004 

at the request of the Portuguese Ministry of Finance 

on a draft decree-law on the reorganisation and winding up of credit institutions 

(CON/2004/18) 

1. 

On  16  April  2004  the  European  Central  Bank  (ECB)  received  a  request  from  the  Portuguese 

Ministry of Finance for an opinion on a draft decree-law on the reorganisation and winding up of 

credit institutions (the ‘draft decree-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  legislative  proposal  contains 

provisions  on  payment  and  settlement  systems  and  financial  institutions  that  would  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 has 

adopted this opinion. 

3. 

The  draft  decree-law  will  transpose  into  domestic  law  Directive  2001/24/EC  of  the  European 

Parliament  and  of  the  Council  of  4  April  2001  on  the  reorganisation  and  winding  up  of  credit 
institutions2. In addition, Chapters I and II contain a full review of the legal requirements applying 

to the process of winding up credit institutions with their head offices in Portugal, as defined by a 

legal  act  from  1940.  Chapter  IV  also  provides  for  professional  secrecy  under  winding-up 

proceedings. As draft national legal acts exclusively transposing directives fall outside the scope of 

Article 2(1)  of  Council  Decision  98/415/EC,  the  current  opinion  is  restricted  to  these  latter 

provisions of the draft decree-law.  

4.  Whereas Decree-Law No 298/92 of 31 December 1992, approving the general legal framework for 

credit  institutions  and  financial  companies  (the  ‘Decree-Law  No  298/92’),  currently  governs  the 

reorganisation of credit institutions with their head offices in Portugal, Decree-Law No 30 689 of 

27 August 1940 continues to regulate winding up. The ECB notes that the Portuguese legislator’s 

initiative  reviews  the  existing  regime  for  winding up  credit  institutions  with  their  head  offices  in 

1  
2  

OJ L 189, 3.7.1998, p. 42. 
OJ L 125, 5.5.2001, p. 15. 

 
 
 
                                                      
Portugal  so  that  the  legal  framework  can  be  brought  closer  to  Community  legal  principles  and 

standards on this matter.  

5. 

Article 4 restricts the scope of application of Chapter II of the draft decree-law to the following: 

- 

- 

- 

the winding up of credit institutions having their head offices in Portugal, and  

with the necessary adaptations, to financial companies having their head offices in Portugal, 

and 

the winding up of branches located in Portugal of credit institutions having their head offices 

in countries which are not Member States, and of branches located in Portugal of financial 

institutions.  

The ECB assumes that the term ‘financial institutions’ in the draft decree-law is the legal term used 

by  Decree-Law  No  298/92  and  Directive  2000/12/EC  of  the  European  Parliament  and  of  the 

Council  of  20  March  2000  relating  to  the  taking  up  and  pursuit  of  the  business  of  credit 
institutions3,  as  amended  by  Directive  2000/28/EC4,  which  laid  down  the  definition  of  those 

entities  and  specified  which  branches  are  subject  to  supervision  by  the  Banco  de  Portugal. 

Therefore, the ECB understands that the scope of Chapter II, when read together with Article 1(1) 

of the draft decree-law, also includes those branches of ‘financial institutions’ when those branches 

are  located  in  Portugal.  The  ECB  notes  from  Article 4(2)  that  special  legislation  will  continue  to 

cover the winding up of the caixas de crédito agrícola mútuo (mutual agricultural credit banks).  

6. 

According  to  Article  5(1)  of  the  draft  decree-law,  credit  institutions  with  their  head  offices  in 

Portugal may only be wound up by either: (i) withdrawing the authorisation to pursue the business 

of banking; or (ii) shareholders’ decision. 

Article 5(3) provides that decisions to withdraw authorisation shall indicate the date and time of the 

act, it being considered, in the event of omission, that the act occurred at 12.00 this being deemed, 

for all legal purposes, the moment when the winding up proceedings are opened. The ECB notes 

that the date and time of adoption of the act withdrawing the authorisation will thus constitute, for 

legal  purposes,  the  moment  when  the  winding-up  proceedings  are  opened.  Hence,  the  ECB 

understands that the date on which the Banco de Portugal applies to the competent court for a credit 

institution to be wound up is not deemed to be the moment when the winding-up proceedings are 

opened.  The  ECB  also  notes  that  the  Banco  de  Portugal  will  give  to  the  decision  withdrawing 

authorisation  the  publicity  it  deems  convenient  pursuant  to  Article  23(3)  of  Decree-Law 

No 298/92, to ensure third parties are  adequately informed. The  ECB notes that this rule ensures 

legal certainty. The ECB considers however that this rule could be improved by clarifying that the 

omission should only concern the time but not the date, as otherwise it  would not be possible to 

identify to which day the time rule established in Article 5(3) refers. 

3  
4  

OJ L 126, 26.5.2000, p. 1. 
OJ L 275, 27.10.2000, p. 37.  

2 

                                                      
7. 

Articles  6  and  7  of  the  draft  decree-law  provide  for  winding  up  by  shareholders’  decision. 

Article 6(1)  provides  that  voluntary  winding  up  is  governed  by  Article  35-A  of  Decree-Law 

No 298/92.  This  ensures  that  any  plan  to  voluntarily  wind  up  a  credit  institution  is  notified  to 

Banco  de  Portugal  at  least  90  days  in  advance  of  the  date  of  its  implementation.  The  ECB 

understands  that  voluntary  winding  up  of  a  credit  institution  entails  its  extra-judicial  winding  up 

within the terms and conditions set by Article 7 of the draft decree-law. Notwithstanding this, the 

ECB welcomes the power granted by Article 6(2) of the draft decree-law to the Banco de Portugal 

to request the judicial winding up of a credit institution, as foreseen in Article 8, even when wound-

up  by  shareholders’  decision.  The  ECB  considers  that  such  a  discretionary  power  will  allow  the 

Banco  de  Portugal  to  strengthen  creditor  protection,  where  it  deems  necessary,  in  particular  by 

allowing a request for the judicial application of interim measures. 

8. 

Articles 8 to 15 of the draft decree-law regulate judicial winding up where the authorisation of a 

credit  institution  is  withdrawn,  with  the  abovementioned  exception  in  Article  6(2).  The  ECB 

understands that these judicial winding up proceedings will be carried out within the framework of 

the  Portuguese  Insolvency  and  Company  Reorganisation  Code  subject  to  the  specific  rules  laid 

down  in  the  draft  decree-law.  In  respecting  the  Member  States’  procedural  autonomy,  the  ECB 

recommends  granting  national  supervisory  authorities  and  national  central  banks,  if  not  granted 

supervisory  powers  over  credit  institutions,  ample  intervention  rights  in  winding-up  proceedings. 

This  reinforces  the  financial  stability  framework  by  allowing  judicial  authorities  to  consider  the 

assessment and concerns of national supervisory authorities and national central banks, as the case 
may be5. This is also in line with the spirit of Directive 2001/24/EC, which highlights the important 

role played by the competent authorities of the home Member State before winding-up proceedings 

may continue during the process of winding-up so that these proceedings can be properly carried 
out6.  

In this regard, the ECB welcomes the extensive set of rights granted to the Banco de Portugal in the 

context of the judicial winding-up proceedings by the draft decree-law. In particular, the ECB notes 

that  Article  8(3)  grants  the  Banco  de  Portugal  exclusive  standing  to  request  the  winding  up  of  a 

credit institution before the appropriate court. The ECB notes further that, pursuant to Article 10(1) 

and  (2)  respectively,  the  judge  appoints  the  liquidator  or  the  liquidating  commission,  as  the  case 

may be, on proposal by the Banco de Portugal. The latter may propose the dismissal or substitution 

of  the  liquidator  or  of  the  members  of  the  liquidating  commission,  as  the  case  may  be,  or  the 

substitution of a liquidator by a liquidating commission, or the latter by the former. The ECB notes 

also  that  the  credit  institution  may  only  be  continued  pending  winding-up,  under  the  terms  and 

conditions in Article 12(1), with the Banco de Portugal’s approval under Article 12(2). Finally, the 

ECB  supports  the  ample  intervention  rights  of  the  Banco  de  Portugal  in  the  judicial  winding-up 

proceedings  established  in  Article  14.  In  particular,  it  supports  the  possibility  of  examining  the 

5  
6  

See, in the same vein, the considerations made in paragraph 5 of ECB Opinion CON/2004/9 of 16 March 2004. 
See recital 15 of Directive 2001/24/EC. 

3 

                                                      
credit institution’s accounts and requesting the liquidator or liquidating authority, as the case may 

be, to provide all information and documents deemed necessary by the Banco de Portugal.  

9. 

The  ECB  welcomes  the  wide  scope  of  Article  40  in  Chapter  IV  of  the  draft  decree-law,  as  all 

persons  intervening  in  winding-up  proceedings  are  subject  to  professional  secrecy  under 

Articles 78 to 84 of Decree-Law No 298/92. 

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, 18 May 2004. 

The President of the ECB 

Jean-Claude TRICHET 

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