Opinion of the European Central Bank of 11 January 2010 on recovery measures that apply to undertakings in the banking and financial sector, on the supervision of the financial sector and financial services and on the statutes of the Nationale Bank van België/Banque Nationale de Belgique (CON/2010/7)
Date: 2010-01-11
Institutions: European Central Bank
Subjects: Belgium, central bank, financial stability, financial supervision, national law, payment system, securities

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 11 January 2010 

on recovery measures that apply to undertakings in the banking and financial sector,  

on the supervision of the financial sector and financial services and  

on the statutes of the Nationale Bank van België/Banque Nationale de Belgique 

(CON/2010/7) 

Introduction and legal basis 

On 23 November 2009 the European Central Bank (ECB) received a request from the Belgian Ministry of 

Finance for an opinion on three draft laws: (a) a draft law supplementing the recovery measures that apply 

to  undertakings  in  the  banking  and  financial  sector  (hereinafter  the  ‘first  draft  law’),  (b)  a  draft  law 

providing remedies supplementing the first draft law (hereinafter the ‘second draft law’), and (c) a draft 

law amending the law of 2 August 2002 on the supervision of the financial sector and financial services, 

as  well  as  the  Law  of  22  February  1998  establishing  the  Organic  Statute  of  the  Nationale  Bank  van 

België/Banque Nationale de Belgique (hereinafter the ‘third draft law’). Given the current turmoil in the 

financial markets and the need for firm intervention by the authorities involved, the consulting authority 

has requested the ECB to provide its opinion as a matter of urgency to allow for the swift adoption of the 

draft laws.  

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union,  and  the  third,  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  laws  relate  to  the  Nationale  Bank  van 

België/Banque  Nationale  de  Belgique  (NBB), payment  and  settlement  systems  and  rules  applicable  to 

financial institutions insofar as they materially influence the stability of financial institutions and markets. 

In addition, the Eurosystem shall contribute to the smooth conduct of policies relating to the prudential 

supervision  of  credit  institutions  and  the  stability  of  the  financial  system  under  Article  127(5)  of  the 

Treaty. 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  

OJ L 189, 3.7.1998, p. 42.  

 
 
 
 
                                                 
1.  

Purpose of the draft laws 

1.1  The  first  draft  law  extends  the  scope  of  the  measures  that  the  Banking,  Finance  and  Insurance 

Commission (BFIC) and the King may take as part of the general rescue package put in place by 

the Belgian authorities in response to the current turmoil in the financial markets. Under the first 

draft law, the BFIC  may suspend the execution of contracts of insurance undertakings and credit 
institutions  that  are  subject  to  its  supervision2.  In  addition,  if  an  insurance  undertaking,  credit 
institution, securities settlement institution3 or assimilated institution is not operated in compliance 

with applicable laws and if such non-compliance is likely to affect the stability of the Belgian or 

international financial system, the King may adopt any measure in favour of the State or any other 

person  or  entity,  whether  Belgian  or  foreign,  and  whether  subject  to  public  or  private  law.  Such 

measure may provide for the transfer, sale or contributions relating to: (a) assets, liabilities or one 

or more fields of activity or all or part of the rights and obligations of an insurance undertaking or 

credit institution, as well as (b) securities or shares issued by all such institutions and undertakings, 
whether capital or not, and whether or not they entail voting rights4.  

1.2   The ECB understands from the explanatory memorandum that the purpose of such transfer, sale or 

contribution is to enable the underlying assets of the non-compliant undertakings and institutions to 

be transferred to ‘bad banks’, ‘good banks’ or ‘bridge banks’. This legal framework is significantly 

inspired  by  the  Law  of  26  July  1962  on  emergency  proceedings  for  expropriations  for  public 

purposes,  the  constitutionality  of  which  has  been  confirmed  several  times  by  the  Belgian 
Constitutional  Court5.  If  the  Belgian  State  decides  to  carry  out  a  transfer,  sale  or  contribution,  it 

must file a request with the Court of First Instance of Brussels. The Court will verify the legality of 

the  transfer,  sale  or  contribution  and  the  fairness  of  the  compensation.  The  transfer,  sale  or 

contribution will only take effect once the Court confirms that these two conditions are met. The 

owners  of  the  assets  subject  to  transfer,  sale  or  contribution  are  only  entitled  to  request  that  the 

Court review the issue of compensation, without prejudice to the transfer, sale or contribution being 

executed.  When  assessing  the  fairness  of  the  compensation,  the  Court  takes  particular  account  of 

the credit institution’s actual situation prior to the transfer, including its financial situation, or the 

financial situation it would have been in if the public aid, from which it has benefited directly or 

indirectly,  had  not  been  granted.  For  the  purposes  of  this  provision,  advances  of  emergency 

liquidity and guarantees given by legal entities governed by public law are treated as public aid. 

1.3 

In  addition,  the  first  draft  law  amends  the  loss-sharing  arrangements  applicable  to  the  owners  of 

securities whose financial instruments are held by financial intermediaries involved in the issuance 

2  
3  

4  
5  

Articles 2(1) and 4(1) of the first draft law. 
The  ‘securities  settlement  institution’  is  generally  defined  under  Article  2(17)  of  the  Law  of  2  August  2002  on  the 
supervision of the financial sector and financial services as ‘an institution performing the settlement of transfer orders of 
financial instruments, of the entitlements relating to such financial instruments or forward exchange transactions, with or 
without  cash  settlement’.  The  securities  settlement  institution  that  may  be  subject  to  the  new  measure  should  also  be 
licensed  as  central  depository  under  Royal  Decree  No  62  on  the  deposit  of  fungible  financial  instruments  and  the 
settlement of operations concerning those instruments, coordinated by the Royal Decree of 27 January 2004.    
Articles 2(2), 4(2) and 6(2) of the first draft law.   
Second draft law, explanatory memorandum, p. 2.  

2 

                                                 
or holding of book-entry securities6. Under the current provisions7, in the event of the insolvency or 

administration  of  a  financial  intermediary  that  issues  or  holds  book-entry  securities,  if  the 

remaining value of securities of a given category is insufficient to discharge the obligation of that 

financial intermediary towards all owners of these securities, the loss is borne by all owners of the 

same  category  of  instrument  in  proportion  to  their  holdings.  If  the  financial  intermediary  holds 

securities  of  the  same  category  in  its  own  name  and  for  its  own  account,  these  securities  will  be 

shared  between  all  other  owners  of  the  same  category  of  security,  thereby  mitigating  the  loss 

incurred  by  the  owners  of  those  securities.  Under  the  first  draft  law,  if  the  owners  of  securities 

authorise a financial intermediary to dispose of their securities, and if the securities are disposed of 

as  authorised,  in  the  event  of  the  insolvency  or  administration  of  the  financial  intermediary,  the 

owners  of  the  securities  may  not  recover  all  the  securities  of  the  same  category.  The  owners  of 

these securities continue to have a claim against the financial intermediary, which will be satisfied 

after the claims of those owners of securities who have not authorised the re-use of their securities.  

1.4  The  third  draft  law  sets  up  the  ‘Committee  for  systemic  risks  and  system-relevant  financial 
institutions’  (CSRSFI)8  as  an  autonomous  institution  with  legal  personality,  with  the  task  of 

contributing to maintaining the stability of the financial system and, in particular: 

(a)  monitoring the financial system in order to intervene if it identifies any threats to the stability 

of the system; 

(b) 

advising the Federal Government and the Federal Parliament on measures that are necessary 

to  contribute  towards  stability,  and  the  proper  functioning  and  efficiency  of  the  country’s 

financial system; 

(c) 

coordinating crisis management; 

(d) 

supervising financial institutions that are important to the financial system and in particular  
monitoring and evaluating the strategic developments and risk profiles of these institutions9;  

6  

7  

8  

Articles 32, 33 and 34 of the first draft law. These financial intermediaries include: 
- 

all possible participants of securities settlement institutions (namely those authorised under Directive 98/26/EC of 
the  European  Parliament  and  of  the  Council  of  19  May  1998  on  settlement  finality  in  payment  and  securities 
settlement  systems  (OJ  L  166,  11.6.1998,  p.  45),  to  become  participants  of  a  ‘system’,  including  the  credit 
institutions,  investment  undertakings,  public  authorities,  central  counterparties,  settlement  agents,  clearing 
houses, securities settlement systems and system operators),  
all licensed account holders (teneurs de compte agréés) under the Law on Companies and the Royal Decree of 
12 January  2006,  namely  all  credit  institutions  incorporated  under  Belgian  law,  stock  exchange  brokers 
incorporated  under  Belgian  law,  all  branches  of  the  aforementioned  institutions  when  authorised  in  their  home 
state to carry out similar activities, the NBB, as well as all securities settlement institutions incorporated under 
Belgian law, and 
the  entities  authorised  to  hold  government  bonds  under  the  Law  of  2  January  1991,  namely  credit  institutions 
incorporated  under  Belgian  law,  investment  undertakings  incorporated  under  Belgian  law,  branches  of  the 
aforementioned institutions incorporated under the laws of an EU Member State, as well as securities settlement 
institutions. 

- 

- 

Law of 2 January 1991 on the market in public debt securities and monetary policy instruments, and Royal Decree No 62 
on  the  deposit  of  fungible  financial  instruments  and  the  settlement  of  operations  concerning  such  instruments, 
coordinated by the Royal Decree of 27 January 2004 as well as the Law on Companies. 
Article 22 of the third draft law, inserting Chapter IV in the Law of 2 August 2002 on the supervision of the financial 
sector and financial services. 

3 

                                                 
(e) 

ensuring the exchange of information and the coordination of policies between the NBB and 

the BFIC; 

(f) 

contributing to the performance of these tasks on an international and European level, in so 

far as this concerns cooperation with the European Systemic Risk Board (ESRB). 

1.4.1  The CSRSFI is exclusively authorised to take administrative decisions pertaining to the prudential 

supervision  of  financial  institutions  that  are  important  to  the  financial  system,  including  taking 

extraordinary recovery measures and imposing penalty payments. In exercising these powers, the 

CSRSFI will support the BFIC and the NBB, in accordance with their respective powers. The BFIC 

and the NBB are responsible for implementing the decisions within the areas of their responsibility. 

The  CSRSFI  may oppose  the  strategic  decisions  of  a  financial  institution  that  is  important  to  the 

financial  system,  if  its  decisions  would  be  contrary  to  the  prudent  management  of  the  financial 

institution or if this would have a significant adverse effect on the stability of the financial system. 

1.4.2  In the performance of its tasks, the CSRSFI is supported by the BFIC and the NBB, which provide 

information for the proper discharge of its tasks. The operating costs of the CSRSFI are to be borne 

by  the  budgets  of  the  BFIC  and  the  NBB,  in  accordance  with  the  decision  of  the  King  on  the 

recommendation of the CSRSFI. 

1.4.3  The CSRSFI is composed of the members of the BFIC’s Executive Committee and of the NBB’s 

Board  of  Directors  with  an  observer  from  the  Federal  Public  Service  Finance  appointed  by  the 

Minister for Finance. The CSRSFI is chaired by the NBB’s Governor. Decisions are taken on the 

basis of a majority of the votes cast. The Chair has a casting vote. 

1.4.4  The  CSRSFI  staff  members  and  governing  body  members,  as  well  as  the  persons  previously 

fulfilling the functions referred to above, are bound by obligations of confidentiality and may not 

disclose  confidential  information  concerning  the  CSRSFI’s  activities  or  policies  to  any 

unauthorised person or authority.  

1.4.5  By 30 September 2010, the King will adopt royal decrees that will allow for the structures related 
to  supervision  of  the  financial  sector  to  be  developed10.  Under  the  royal  decrees,  NBB  will  be 

entrusted  with  (a)  the  powers  and  tasks  of  the  CSRSFI,  insofar  as  they  concern  the  prudential 

supervision  of  financial  institutions  that  are  important  to  the  financial  system,  and  (b)  with  the 

powers  and  tasks  of  the  BFIC,  insofar  as  they  concern  the  prudential  supervision  of  credit 

institutions,  insurance  companies,  investment  firms,  management  companies  of  undertakings  for 

collective investment, reinsurance companies and institutions for corporate pension schemes, with 

the  exception  of  the  supervision  of  codes  of  conduct  that  apply  to  the  savings,  investments, 

9  

10  

Financial institution that are important to the financial system are defined by reference to a combination of institutional 
criteria (it may be a credit institution or an insurance undertaking) and economic criteria (the amount of the balance sheet 
of the consolidated annual accounts, market share of the savings market or the supply of credit in Belgium, or its deciding 
role with regard to custodian or payment activities, or transactions relating to Belgian securities on Belgian territory). See 
Article 2 of the third draft law.  
Article 26 of the third draft law.  

4 

                                                                                                                                                             
pensions and insurance markets. Under the royal decrees NBB will have the power to establish one 

or more legal entities (hereinafter the ‘entities’) to exercise all or some of the powers referred to 

above and some of the tasks assigned to the NBB by the Law of 22 February 1998 establishing the 

Organic  Statute  of  the  NBB.  The  NBB,  on  behalf  of  those  entities,  will  be  responsible  for 

establishing their tasks, bodies and methods of funding, providing personnel, and using any other 

means  necessary  to  ensure  their  effectiveness.  Furthermore,  the  royal  decrees  will  regulate  the 

transfer of NBB staff members to the entities and the transfer of BFIC staff members to the NBB or 

to the entities; the legal entity to which the staff members are transferred will assume all existing 

rights and obligations as regards such staff members.  

2.   General observations 

2.1  Reorganisation of the supervisory structure of the Belgian authorities  

2.1.1  The ECB supports the Belgian supervisory reform, which is aimed at enhancing the Government’s 

ability  to  identify  and  monitor  systemic  risks.  The  establishment  of  the  CSRSFI,  which  will  be 

followed  next  year  with  NBB  being  assigned  responsibility  for  the  prudential  supervision  of  all 

financial institutions (thereby adopting a ‘twin-peaks’ supervisory model) is welcome and is in line 

with the ECB’s consistent position regarding the need for the close involvement of central banks in 
prudential supervision11. The ECB understands that the supervisory reform that is the subject of the 

third draft law will be accomplished by way of separate legislation, yet to be adopted by the King. 

This separate legislation should be the subject of a separate consultation based on Articles 127(4) 

and 282(5) of the Treaty; the general comments that follow are without prejudice to a more detailed 

analysis of the supervisory reform, based on the royal decrees to be adopted by the King.  

2.1.2  In order to avoid any legal risks associated with the independent discharge of the NBB’s European 

System  of  Central  Banks  (ESCB)-related  tasks,  any  new  legal  entity  established  by  the  NBB  to 

carry out existing or new tasks of the NBB under the supervisory reform could be placed under the 

control of the NBB’s decision-making body responsible for the discharge of its ESCB-related tasks. 
However, as specified by the ECB in its Convergence Reports12, ‘if the law provides for separate 

decision-making by such supervisory authorities, it is important to ensure that decisions adopted by 

them do not endanger the finances of the NCB [national central bank] as a whole. In those cases, 

the national legislation should enable the NCBs to have ultimate control over any decision by the 

supervisory  authorities  that  could  affect  an  NCB’s  independence,  in  particular  its  financial 

independence.’  The  exposure  of  the  NBB  to  liabilities  resulting  from  the  funding  and  budgetary 

decisions  of  such  entities  that  are  outside  the  control  of  the  NBB’s  decision-making  body 

responsible for the discharge of its ESCB-related tasks, but that are at the same time a constituent 
part of the NBB, could be seen as a threat to the NBB’s financial independence13. The new entities 

11  
12  
13  

Opinion CON/2007/33, paragraph 2.1. All ECB opinions are available on the ECB’s website www.ecb.europa.eu. 
ECB’s Convergence Report 2008, p. 21 and 22. 
ECB’s Convergence Report 2008, p. 21 to 23. See also footnote 15. 

5 

 
                                                 
should  not  seek  to  influence  the  NBB’s  decision-making  body  in  the  performance  of  its  ESCB-
related tasks, and the NBB should in particular preserve its institutional independence14.  

2.2  Establishment of the CSRSFI 

2.2.1  The  ECB  understands  that  the  CSRSFI,  an  autonomous  institution  with  a  legal  personality, 

decision-making competences, and regulatory as well as sanctioning powers, will have the task of 

contributing  to  maintaining  the  stability  of  the  financial  system.  As  the  ESRB  has  similar 

responsibilities,  and  as  the  task  of  contributing,  at  national  level,  to  the  stability  of  the  financial 
system  is  shared  with  the  NBB15,  the  ECB  makes  the  following  observations  regarding  the 

establishment of this committee. 

2.2.2  First, the establishment of national financial stability committees can enhance the ability of national 

central  banks  and  supervisory  authorities  to  contribute  analytical  support  to  the  ESRB.  The  tasks 

performed by these committees should complement the activities performed by the ESRB, therefore 

it is particularly important to develop appropriate synergies. However, it is necessary to avoid such 

national  committees  being  entrusted  with  tasks  and  powers  that  potentially  conflict  with  those  of 

the ESRB, and which may undermine the effectiveness of the newly-established European macro-

prudential  supervisory  body.  Moreover,  the  legal  frameworks  of  these  committees  should 

appropriately  reflect  the  roles  of  central  banks,  should  not  constrain  the  independence  of  the 

governors of the central banks or unduly affect the quality and impartiality of their contributions as 

members of the ESRB. Lastly, in view of the importance of ensuring the effectiveness of macro-

prudential  supervisory  arrangements  at  the  EU  level,  it  is  essential  to  safeguard  the  ability  of  the 

ESRB to perform its tasks independently and to guarantee an authoritative and effective channel for 

transmitting the warnings and recommendations issued by the ESRB. 

2.2.3  Second,  the  Memorandum  of  Understanding  on  cooperation  between  Financial  Supervisory 

Authorities, Central banks and Finance Ministries of the European Union on cross-border financial 

stability  (MoU)  that  entered  into  force  on  1  June  2008,  provides  for  the  establishment  in  each 

Member State of a domestic standing group, i.e. a national level group consisting of the financial 

supervisory  authorities,  central  banks  and  finance  ministries,  with  the  objective  of  enhancing 

preparedness  under  normal  market  conditions  and  facilitating  the  management  and  resolution  of 

financial  crises.  Following  the  conclusion  of  the  MoU,  the  Belgian  authorities  designated  the 

Belgian Financial Stability Committee as the national domestic standing group. For the purposes of 

legal certainty, the related tasks, i.e. enhancing preparedness under normal market conditions and 

facilitating the management and resolution of a financial crisis, could be listed in the third draft law 

among the tasks entrusted to the CSRSFI. 

2.2.4  Third, it is necessary to ensure that the tasks assigned to the CSRSFI, i.e. to supervise the financial 

institutions that are important to the financial system and in particular to guarantee the monitoring 

14  
15  

Opinion CON/2002/16, paragraph 6.  
Article 12 of the Law of 22 February 1998 establishing the Organic Statute of the NBB.  

6 

                                                 
and evaluation of the strategic developments and risk profiles of these institutions, do not prejudice 

nor overlap with the exclusive responsibility of the NBB to ensure the proper, efficient and sound 
operation  of  clearing  systems16,  as  such  securities  settlement  systems  qualify  as  financial 
institutions  that  are  important  to  the  financial  system  under  the  third  draft  law17,  as  well  as  the 

responsibilities of NBB as an integral part of the Eurosystem based on Article 127(2) of the Treaty 

and Article 22 of the Statute of the European System of Central Banks and of the European Central 

Bank (hereinafter the ‘Statute of the ESCB’).  

2.2.5  Fourth, as regards the financing of the CSRSFI by the NBB18, the ECB refers to the principle of 

financial independence according to which an NCB must have sufficient means not only to perform 
its  ESCB-related  tasks,  but  also  its  own  national  tasks19.  Also,  the  supervisory  tasks  should  be 

carried out while complying with the prohibition of monetary financing laid down in Article 123(1) 

of the Treaty, read in conjunction with Council Regulation (EC) No 3603/93 of 13 December 1993 

specifying definitions for the application of the prohibitions referred to in Articles 104 and 104b(1) 
[now Articles 123 and 125(1)] of the Treaty20. Thus, the assignment to the NBB of the tasks and 

powers  of  the  BFIC  must  be  accompanied  by  measures  that  insulate  the  NBB  from  financial 
obligations resulting from the prior activities of the BFIC21. 

2.2.6  Fifth, one of the CSRSFI’s tasks will be to ensure the exchange of information between the NBB 

and  the  BFIC.  Such  information  is  protected  by  the  rules  on  confidentiality  applicable  to  the 

members of the CSRSFI’s governing body and its staff members. The ECB recommends that these 

rules on confidentiality should be complemented with appropriate information disclosure standards 

that  are  consistent  with  Union  law  provisions  that  regulate  the  exchange  of  supervisory  and 
statistical information between supervisory authorities22. 

16  
17 

18  
19  
20  
21  

22  

Opinion CON/2002/13, paragraph 11.  
See  the  definition  of  ‘system-relevant  financial  institution’  in  Article  2  of  the  third  draft  law;  see  also  the  explanatory 
memorandum to the third law, p. 4 and 5.  
In accordance with a Royal Decree to be adopted by the King. 
Opinion CON/2009/93, paragraph 3.1.5. 
OJ L 332, 31.12.1993, p. 1. 
ECB’s  Convergence  Report  May  2008,  p.  23  and  24;  see  Opinion  CON/2005/24,  paragraph  12,  and  Opinion 
CON/2005/39, paragraph 9. 
See, e.g., Article 12 of 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  Council  (OJ  L  35,  11.2.2003,  p.  1), 
Article 58(5)  of  Directive  2004/39/EC  of  the  European  Parliament  and  of  the  Council  of  21  April  2004  on  markets  in 
financial  instruments  amending  Council  Directives  85/611/EEC  and 93/6/EEC  and  Directive 2000/12/EC  of  the 
European  Parliament  and  of  the  Council  and  repealing  Council  Directive  93/22/EEC  (OJ  L  145,  30.4.2004,  p.  1), 
Article 49  of  Directive  2006/48/EC  relating  to  the  taking  up  and  pursuit  of  the  business  of  credit  institutions  (recast) 
(OJ L 177, 30.6.2006 p. 1), and Article 70 of the Directive of the European Parliament and of the Council on the taking-
up and pursuit of the business of insurance and reinsurance (Solvency II) (recast), 19 October 2009 (not yet published in 
the Official Journal of the European Union). 

7 

 
                                                 
3.  

Specific remarks  

3.1  Transfer, sale or contribution of assets, liability, branches of activities, securities or shares  

3.1.1  The  draft  laws  provide  a  new  legal  framework  for  the  transfer,  sale  or  contribution  of  assets, 

liabilities or shares of  credit institutions, insurance  undertakings, securities settlement institutions 

and assimilated institutions, to enhance the tools for managing crises of financial institutions and in 

particular  to  enable  the  transfer  of  underlying  assets  to  ‘bridge  banks’.  Such  a  development  is 

welcome  and  is  in  line  with  current  policies  both  at  European  and  international  levels  for 

establishing  a  sound  crisis  resolution  framework  to  intervene  when  financial  institutions  have  a 

systemic impact on the financial system. 

3.1.2  The ECB notes that the first draft law provides that the King, either at the BFIC’s request or on his 

own initiative, after receiving an opinion from the BFIC and the CSRSFI, has the power to initiate 

the  sale,  transfer  or  contribution  by  an  insurance  undertaking,  a  credit  institution,  a  securities 

settlement institution or assimilated institution, of assets in favour of the State or any other person 

or entity (whether Belgian or foreign, and whether subject to public or private law). This procedure 

does not sufficiently recognise the important role of the NBB when evaluating the consequences of 

such  measures  on  overall  financial  stability,  as  the  first  draft  law  envisages  a  role  for  the  NBB 

limited to providing opinions at the request of the BFIC. 

3.1.3  The  ECB  understands  that  the  Belgian  legislator  has  framed  the  proceedings  leading  to  such 
measures in the light of the decisions of the European Court for Human Rights23 as well as of the 

Belgian Constitutional Court, and so to comply with the principle that no one may be deprived of 

their possessions except in the public interest and in accordance with the law. The second draft law 

establishes a detailed legal framework, with the involvement of a court to verify that the conditions 

of the law are complied with, and that the compensation paid to the owners of the underlying assets 
is fair24. The ECB assumes that such measures will be taken in exceptional circumstances where, in 

compliance with the principle of proportionality, the seriousness of the measure is commensurate to 

the threat to the financial stability that the measure seeks to remedy. As already mentioned in its 
opinion  on  rescue  measures  adopted  by  the  Belgian  legislator25,  it  is  important  that  national 

authorities  seek  to  coordinate  their  responses  to  the  current  financial  situation  with  their  Union 
partners, in line with applicable Union law and the arrangements in place, such as the MoU26.   

3.1.4  As for paragraph 6 of the second draft law, in line with its previous opinions27, the ECB emphasises 

that emergency liquidity assistance should consist of temporary liquidity provision to illiquid but 

solvent  institutions.  In  this  respect,  the  provision  of  emergency  liquidity  assistance  is  a  normal 

central  bank  task  and  cannot  be  considered  as  State  aid.  Therefore,  the  sentence  referring  to 

23  
24  
25  
26  
27  

7 November 2002, Olczak v Poland, No 30417/96 and 1 April 2004, Camberrow MMS AD v Bulgaria, No 50357/99. 
Articles 2, 4 and 6 of the second draft law.  
Opinion CON/2008/46, in particular paragraph 2.2. 
Available on the ECB’s website at www.ecb.europa.eu. 
In particular, see Opinion CON/2008/46, paragraph 3.1. 

8 

                                                 
emergency liquidity assistance as a form of State aid28 could be misleading. For the sake of clarity, 

it is suggested that the word ‘publiques’ should be deleted from this sentence of the draft law and 

the explanatory memorandum. 

3.1.5  The  above  measures  are  without  prejudice  to  the  NBB’s  oversight  function  on  the  basis  of 

Article 127(2)  of  the  Treaty  and  Article  22  of  the  Statute  of  the  ESCB.  Securities  settlement 

institutions and assimilated institutions, to the extent that they are subject to the abovementioned 

exceptional measures upon the occurrence of exceptional circumstances, should continue to employ 

all  necessary  accounting  practices  and  safekeeping  procedures,  as  well  as  internal  and  external 

controls to comply with ESCB/Committee of European Securities Regulators’ ‘Recommendations 

for  Central  Counterparties’  (CESR),  in  particular  Recommendations  7  and  14,  and  provide 

participants  with  sufficient  information  for  them  to  identify  and  evaluate  accurately  the  risks 

associated with using these services. Custodians entrusted with financial instruments by a Central 

Counterparty  should  continue  to  comply  with  ESCB/CESR  Recommendations  for  Security 

Settlement Systems, including Recommendations 12 and 18. 

3.2  Amendment of the loss-sharing arrangements upon insolvency of a financial intermediary 

Notwithstanding  the  loss-sharing  arrangement  proposed  under  the  first  draft  law  and  without 

prejudice  to  the  NBB’s  oversight  functions  in  accordance  with  Articles  127(2)  of  the  Treaty  and 

Article 22 of the Statute of the ESCB, there must always be a number of procedures, controls and 

remedies  in  place to  reflect  ESCB/CESR  Recommendations  for  securities  settlement  systems,  in 

particular Recommendations  6  and  12, making  the  materialisation  of  such  a  loss  actually  highly 

unlikely. Moreover, the records maintained by financial intermediaries must include details of the 

clients  and  financial  instruments  that  may  be  used  to  enable  the  correct  calculation  in  any  loss 

allocation  mechanism  that  might  be  applicable.  Finally,  financial  intermediaries  should  provide 

securities  owners  with  sufficient  information  for  them  to  accurately  evaluate  the  risks  and  costs 

associated with any applicable loss sharing arrangements. 

28  

See Article 2 of the second draft law, inserting an Article 26ter in the Law of 9 July 1975 concerning the regulation of 
insurance  undertakings,  §6  in  fine,  which  reads  as  follows:  ‘The  Court  shall  in  particular  take  into  the  insurance 
undertaking’s practical situation before the transfer, especially the financial situation it was in, or the financial situation it 
would  have  been  in  if  public  aid,  from  which  the  insurance  undertaking  directly  or  indirectly  benefited,  had  not  been 
granted. For the purposes of the current provision, the following shall be treated as public aid: advances of emergency 
liquidity and guarantees given by a legal entites governed by public law’. See the similar provisions in Article 3, inserting 
an Article 57ter §6 in the Law of 22 March 1993 concerning the status and supervision of credit institutions and Article 4 
inserting  an  Article  23/2  in  the  Law  of  2  August  2002  on  prudential  supervision  of  the  financial  sector  and  financial 
services.  

9 

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

Done at Frankfurt am Main, 11 January 2010. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

10