Opinion of the European Central Bank of 10 August 2009 on strengthening bank resolution techniques (CON/2009/65)
Date: 2009-08-10
Institutions: European Central Bank
Subjects: Latvia, bank, banking supervision, company in difficulties, credit institution, financial stability, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 10 August 2009 

on strengthening bank resolution techniques 

(CON/2009/65) 

Introduction and legal basis 

On  30  July  2009  the  European  Central  Bank  (ECB)  received  a  request  from  the  Latvian  Financial  and 

Capital  Market  Commission  (FCMC)  for  an  opinion  on  draft  amendments  to  the  Law  on  credit 

institutions (hereinafter the ‘draft law’).  

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European  Community  and  the  sixth  indent  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 relates to rules applicable to financial institutions insofar as they 

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. 

1. 

Purpose of the draft law 

The main objective of the draft law is to strengthen bank resolution techniques in Latvia by: (i) allowing 

set-off  under  certain  conditions  for  banks  facing  difficulties,  and  (ii)  by  empowering  administrators  to 

terminate  contracts  that  reduce  a  credit  institution’s  assets  and  are  not  concluded  to  provide  financial 

services. The draft law also amends the definition of set-off bringing it in line with international practice 

and clarifies the rights of FCMC authorised representatives appointed to banks facing difficulties. 

2.  General observations 

As noted in its previous opinion on amendments to the Law on credit institutions2, the ECB welcomes the 

draft law to the extent that it will strengthen the FCMC’s powers to intervene when the stability of either 

individual credit institutions or the financial system as a whole is jeopardised. The ECB also welcomes 

1  
2 

OJ L 189, 3.7.1998, p. 42.  
See paragraph 3.2 of Opinion CON/2009/10. All ECB opinions are available on the ECB website at www.ecb.europa.eu. 

 
 
 
 
 
                                                 
the  clarification  of  set-off  procedures  and  the  strengthening  of  administrator  rights  in  insolvency 

proceedings insofar as they do not undermine Latvijas Banka’s fulfilment of its tasks. 

3. 

Specific observations 

Regarding  amendments  to  Article  117(4)(3)  of  the  Law  on  credit  institutions,  the  ECB  has  already 

commented  on  the  transfer  of  credit  institution’s  assets  and  liabilities  with  the  aim  of  ensuring  the 
payment of guaranteed deposits3. To the extent relevant, the observations made in Opinion CON/2009/31 

also apply to the amendments proposed by the draft law. 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 10 August 2009. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

3  

See paragraphs 3.5 and 3.6 of ECB Opinion CON/2009/31. 

2