Opinion of the European Central Bank of 13 January 2010 on the consolidation of deposit banks (CON/2010/9)
Date: 2010-01-13
Institutions: European Central Bank
Subjects: Finland, bank, banking supervision, financial solvency, financial stability, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 13 January 2010  

on the consolidation of deposit banks 

(CON/2010/9) 

Introduction and legal basis 

On 9 December 2009, the European Central Bank (ECB) received a request from the Finnish Ministry of 

Finance  for  an  opinion  on  a  proposal  for  a  law  on  the  consolidation  of  deposit  banks  (hereinafter  the 

‘draft law’) and certain related 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 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  draft  law  concerns  the  consolidation  of  deposit  banks,  in  particular  the  rules  applicable  to  central 
bodies  and  affiliated  credit  institutions  as  referred  to  in  Article  3  of  the  Banking  Directive2.  The  main 

purpose of the draft law is to allow such group structures to apply to all deposit banks irrespective of their 

company form, thus widening the scope of the present legislation which only applies to cooperative banks 

in  this  respect.  According  to  the  explanatory  memorandum,  the  draft  law  further  aims,  inter  alia,  to 

clarify the rules concerning the supervision of the solvency of the affiliated institutions, to strengthen the 

supervisory powers of the central body and to strengthen the system of mutual liability of the affiliated 

institutions. 

The draft law provides for general requirements for the formation of a consortium, namely that: (1) the 

central body supervises and monitors its affiliated credit institutions; (2) the combined minimum amount 

of  assets  and  liquidity  of  the  companies  belonging  to  the  consortium  are  monitored  in  a  consolidated 

manner at the consortium level; (3) the central body is liable for the debts of affiliated credit institutions, 

which are obliged to take part in support measures to prevent the liquidation of an individual institution 

1  
2  

OJ L 189, 3.7.1998, p. 42.  
Directive  2006/48/EC  of  the  European  Parliament  and  of  the  Council  of  14  June  2006  relating  to  the  taking  up  and 
pursuit of the business of credit institutions (recast), OJ L 177, 30.6.2006, p. 1. 

 
 
 
 
                                                 
and to contribute towards payments by the central body to settle the debt of an individual institution; and 

(4) the majority of affiliated credit institutions are deposit banks. 

The draft law requires a central body to apply for a licence from the Financial Supervisory Authority and 

imposes certain restrictions with regard to the business activities of a central body. In order to strengthen 

the  binding  effect  of  the  rules  laid  down  by  a  central  body,  the  draft  law  provides  that  an  affiliated 

institution can lose its affiliate status in the event of significant non-compliance with such rules. 

In addition, proposed amendments to the Law on the Government guarantee fund would allow financial 

support to also be granted to a central body which distributes the support to affiliated institutions. 

2. 

Specific observations 

According to Section 8 of the draft law, an affiliated credit institution can withdraw or be dismissed from 

the central body under certain conditions. In the case of a voluntary withdrawal, the combined amount of 

assets of each company belonging to the consortium must remain as required under Section 19 of the draft 

law. Grounds for dismissal are, inter alia, a failure of the affiliated credit institution to comply with the 

guidelines issued or general operational principles verified by the central body. 

The  ECB  understands  that,  according  to  Section  29  of  the  draft  law,  in  the  event  of  a  withdrawal  or 

dismissal, the provisions concerning a member credit institution’s liability to pay its share to the central 

body are applicable for up to five years from the end of the calendar year during which the withdrawal or 

dismissal took place. In the case of voluntary withdrawal it is understood from Section 8 that the solvency 

of the credit institution shall be confirmed by calculations verified by the auditors of the central body. The 

ECB notes however, that the draft law does not include provisions as to how the solvency and liquidity of 

the  disconnected  credit  institution  shall  be  ensured  in  case  of  dismissal  due  to  non-compliance.  For 

reasons of clarity and to safeguard the interests of depositors and creditors as well as the stability of the 

financial system, the ECB would recommend clarifying this aspect in the draft law. 

The  ECB  understands  that  the  withdrawal  or  dismissal  of  an  affiliated  credit  institution  from  a  central 

body would be without prejudice to the minimum reserve holding obligations of the credit institution in 

question, in the event that its minimum reserves have been held, until its withdrawal or dismissal, through 
that central body, in its capacity as intermediary, pursuant to Article 10 of Regulation ECB/2003/93 on the 

application of minimum reserves. 

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

Done at Frankfurt am Main, 13 January 2010. 

3   

OJ L 250, 2.10.2003, p. 10. 

2 

[signed] 

The President of the ECB 

Jean-Claude TRICHET