Opinion of the European Central Bank of 3 December 2010 on the temporary holding of shares by credit institutions in the course of financial reconstructions or rescue operations of undertakings (CON/2010/86)
Date: 2010-12-03
Institutions: European Central Bank
Subjects: Romania, company in difficulties, credit institution, financial stability, financial supervision, national law, share

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 3 December 2010  

on the temporary holding of shares by credit institutions in the course of financial reconstructions 

or rescue operations of undertakings 

(CON/2010/86) 

Introduction and legal basis 

On  5  November  2010,  the  European  Central  Bank  (ECB)  received  a  request  from  Banca  Naţională  a 

României  (BNR)  for  an  opinion  on  a  draft  Regulation  on  shares  held  temporarily  during  a  financial 

reconstruction or rescue operation of an undertaking operating outside the financial sector (hereinafter the 

‘draft regulation’). 

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 regulation relates to rules applicable to the 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. 

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Purpose of the draft regulation 

1.1  The  draft  regulation  sets  out  requirements  for  credit  institutions’  prudent  decision-making 

processes when they seek to temporarily acquire shares in (and possibly control of) a non-financial 

undertaking  during  a  financial  reconstruction  or  a  rescue  operation,  by  way  of  a  debt-to-equity 

swap.  

1.2  For  this  reason,  the  draft  regulation  provides  further  details  on  the  exemption  clause  under 
Article 145  of  the  Government’s  Emergency  Ordinance  No  99/2006  (GEO  99/2006)2,  which 
transposes Article 121 of Directive 2006/48/EC3. This clause provides that shares held temporarily 

during  a  financial  reconstruction  or  rescue  operation  shall  not be counted  as  qualifying holdings. 

Therefore,  the  limitation  applicable  to  qualifying  holdings  of  credit  institutions  in  non-financial 

1  
2  

3  

OJ L 189, 3.7.1998, p. 42.  
Emergency  Ordinance  No  99  of  6  December  2006  on  Credit  Institutions  and  Capital  Adequacy,  Monitorul  Oficial  al 
României, Part One, No 1027 of 27 December 2006. 
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. 

 
 
 
 
                                                 
undertakings, as laid down in Articles 143 and 144 of GEO 99/2006, which transposes Article 120 

of Directive 2006/48/EC, does not apply.  

1.3  Article 5 of the draft regulation sets out the specific requirements to be met by a credit institution 

before  acquiring  shares  in  order  for  it  to  benefit  from  the  exemption.  In  particular,  the  credit 
institution needs  to  provide  a  strategy  and  an  overall  policy4.  It  must  formulate  and  implement a 

concrete,  viable  and  well-founded  financial  reconstruction  or  rescue  plan  for  the  undertaking 
concerned5. It must also properly justify its view that the acquisition of shares is a measure of last 
resort6 and it must have suitable risk management policies/procedures7 in place.  

1.4  Furthermore, the credit institution needs to notify BNR’s Supervision Department of its intention to 

acquire  the  shares  and  to  submit  documentation  demonstrating  that  it  meets  the  requirements 

stipulated  in  Article  5  of  the  draft  regulation.  The  Supervision  Department  shall  then  deliver  an 
opinion as to whether these requirements8 have been met.  

1.5  The  ‘temporary’  holding  of  shares  acquired  under  the  exemption  clause  is  limited  to  a  period  of 

36 months, with the possibility of a one-off extension which may be granted by BNR’s Supervision 
Department. However, shares cannot be held for more than a total of 48 months9.  

2. 

Specific observations  

2.1  The  ECB  welcomes  the  intention  of  the  Romanian  authorities  to  provide  further  details  on  the 

conditions under which credit institutions may acquire shares in non-financial undertakings and on 

the restrictions which apply in this context. This approach is in line with the spirit of the exemption 

clause in Article 121 of Directive 2006/48/EC, as implemented by Article 145 of GEO 99/2006. 

2.2  The ECB notes that, for the purposes of clarity and legal certainty, some of the provisions in the 

draft regulation need to be further clarified. In particular, the consequences of a negative opinion of 

BNR’s  Supervision  Department  on  whether  a  credit  institution  meets  the  requirements  to 

temporarily  acquire  shares  in  accordance  with  the  exemption  clause  should  be  clearly  stated.  To 

this end, concrete provisions setting out the measures that BNR could take in such cases, including 

sanctions for non-compliance, would contribute to the enforcement of prudential supervision in this 

field.    

4  
5  
6  
7  
8  
9  

Article 5 (1)(a) of the draft regulation. 
Article 5 (1)(b) of the draft regulation. 
Article 5 (1)(c) of the draft regulation. 
Article 5 (1)(d) of the draft regulation. 
Article 7 of the draft regulation. 
Article 9 of the draft regulation. 

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

Done at Frankfurt am Main, 3 December 2010.  

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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