Opinion of the European Central Bank of 24 January 2012 on measures for the stabilisation of the financial market (CON/2012/2)
Date: 2012-01-24
Institutions: European Central Bank
Subjects: Germany, banking supervision, credit institution, financial stability, national law, nationalisation

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 24 January 2012 

on measures for the stabilisation of the financial market 

(CON/2012/2) 

Introduction and legal basis 

On 23 December 2011, the European Central Bank (ECB) received a request from the German Federal 

Ministry of Finance for an opinion on a Second draft law implementing a package of  measures for the 

stabilisation of the financial market (hereinafter the ‘draft law’). 

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 

1.1  The  draft  law  is  based  on  the  Law  of  17  October  2008  on  financial  market  stabilisation2  and  its 
extensions on, inter alia, nationalisation of credit institutions and bad banks schemes3; some of the 

provisions have subsequently been phased out.  

1.2  The  recent  government  debt  crisis  in  several  countries  has  impaired  confidence  in  the  financial 

markets  and  led  to  refinancing  problems.  Moreover,  the  high  interconnectedness  in  the  European 

Union  financial  system  has  led  to  a  rapidly  rising  risk  of  significant  contagion,  potentially 

threatening  the  financial  stability  of  the  Union  as  a  whole  and  adversely  impacting  the  real 
economy  in  Europe  and  beyond4.  In  the  Communiqué  of  Finance  Ministers  and  Central  Bank 
Governors of the G-20 of 22 September 20115, a commitment was expressed to take all necessary 

actions to preserve the stability of banking systems and financial markets and restore confidence. 

1  
2  
3  

4  
5  

OJ L 189, 3.7.1998, p. 42.  
[2008] Bundesgesetzblatt I p. 1982, as amended. 

The  ECB  provided  its  opinion  on  the  underlying  legal  act  in  Opinion  CON/2008/57  and  on  extensions  in  Opinions 
CON/2009/24,  CON/2009/54  and  CON/2010/83.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu. 
See also the European System Risk Board’s (ESRB) press release of 21 September 2011. 
Available on the G-20’s website at www.g20.org.  

 
 
 
 
                                                 
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The current legal framework enables banks under stress to be recovered in an orderly procedure or 

resolved. Furthermore, for the banking supervisor to transfer systemically relevant parts of a bank 

to another private bank or temporarily to a state owned bridge bank, there needs to be a threat to the 

existence of the bank affecting financial stability.  

1.3  Pursuant  to  the  draft  law,  several  measures  provided  for  under  the  Law  on  the  financial  market 

stabilisation  fund  may  be  temporarily  reintroduced  to  counter  a  possible  threat  to  the  financial 

system in a timely and efficient manner, if private law solutions for strengthening the capital base 

fail. The draft law enables new applications for stabilisation measures, using the instruments which 

expired  in  late  2010,  subject  to  State  aid  clearance.  These  measures  will  apply  until 

31 December 2012. The SPV model, i.e. the assumption of guarantees for securities outsourced to 

special  purpose  vehicles  (SPVs),  is  extended  to  cover  also  securities  other  than  structured 

securities. Under the draft law, €400 billion will be available for funding guarantees for liabilities 

with a maturity of up to five years (or seven for covered bonds), and €70 billion (plus € 10 billion 

subject  to  approval  by  the  German  Parliamentary  Budget  Committee)  for  credit  empowerments. 

Furthermore, the conditions related to the use of stabilisation measures are improved. 

1.4  The German Federal Financial Supervisory Authority (BaFin) may order an institution to increase 

its  own  funds  in  order  to  prevent  an  imminent  threat  to  the  orderly  functioning  of  the  financial 

markets or to avoid a threat to financial market stability. BaFin may do so, in particular, in case of 

an  ESRB  recommendation,  related  decisions  or  recommendations  of  the  European  Council  or 

coordinated action by the European Supervisory Authorities, i.e. not only where there is a threat to 

an  individual  institution.  This  power  is  temporary  and  will  expire  on  31  December  2012.  BaFin 

may  also  request  an  institution  to  submit  a  plan  on  how  it  intends  to  meet  the  increased  capital 

requirements. If such plan touches upon the competence of the Financial Market Stabilisation Fund 

(hereinafter  the  ‘Fund’),  BaFin  will  assess  the  plan  in  agreement  with  the  Financial  Market 

Stabilisation Authority’s steering committee. BaFin may ask for an improved version of the plan. In 

that context, the institution also needs to assess the possibility of applying for stabilisation measures 

if  there  are  no  alternative  measures  at  hand.  If  the  plan  fails,  BaFin  can  appoint  a  special 

representative  to  develop  a  capital  measures  plan  and  ensure  its  implementation.  If  necessary, 

BaFin  may  use  its  other  instruments  to  ensure  the  institution's  compliance  with  the  capital 

requirements.  

1.5  Additionally,  the  draft  law  inter  alia:  (a)  clarifies  the  legal  framework  applying  to  the  Fund, 

providing that governing committee members are appointed on the basis of a public law contract; 

(b) strengthens legal and expert supervision by the Ministry of Finance over the Financial Market 

Stabilisation  Authority;  and  (c)  amends  certain  provisions  of  the  Law  on  financial  market 
stabilisation  acceleration6  and  the  Financial  Market  Stabilisation  Fund  Order7  to  facilitate  their 

application. 

6  
7  

[2008] Bundesgesetzblatt I p. 1982, 1986, as amended. 
[2008] Bundesanzeiger No 123 p. 1, as amended. 

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2. 

General observations  

2.1 

In line with its previous opinions8, the ECB emphasises that when adopting measures to deal with 

the  financial  crisis,  Member  States  should  act  in  a  coordinated  manner.  In  this  respect,  the  ECB 

welcomes  that  the  draft  law  proposes  a  requirement  to  observe,  inter  alia,  decisions  of  the 

European  Council  and  the  Council  of  the  European  Union,  recommendations  of  the  European 

Banking  Authority  and  requirements  of  the  European  Commission,  in  particular  with  regard  to 
compatibility with Articles 107 and 108 of the Treaty9.  

2.2.  Concerning  Commission  requirements  in  the  context  of  Articles  107  and  108  of  the  Treaty,  the 

ECB understands that the pricing terms and conditions for the stabilisation measures provided for 
in the draft law10 will respect the guidelines and conditions set at Union level11. In this respect, the 
ECB  understands  that  in  accordance  with  the  Law  on  financial  market  stabilisation12,  all 

stabilisation measures, including recapitalisation measures will be subject to the Union framework, 

although this is not explicitly mentioned in the provision regarding recapitalisation in the Financial 
Market Stabilisation Fund Order13. 

3. 

Increased capital requirements 

3.1  The ECB notes that the draft law14 allows BaFin to require an institution to meet increased capital 

requirements for a limited period of time, to avert an imminent disruption of the functioning of the 

financial market or a risk to financial market stability.  

3.2  With  respect  to  the  capital  requirements  and  in  order  to  preserve  financial  stability  within  the 

Union, the ECB strongly supports the development of a single European rulebook for all financial 
institutions, as put forward by the Commission in its recent proposals15. Nonetheless, the ECB also 

supports  that  national  authorities  adjust  certain  prudential  requirements  and  impose  stricter 

prudential requirements for macro-prudential purposes at national level to address financial stability 

concerns stemming from the structural features of a national financial system or systemic risks in a 

comprehensive and effective manner. 

8  
9  
10  
11  

12  
13  

14  
15  

Opinions CON/2008/57, CON/2009/24, CON/2009/54 and CON/2010/83. 
Article 1 no. 5 of the draft law, amending Section 4(1) no 5 of the Law on the financial market stabilisation fund. 
See the amendment to Section 4(1) of the Law on the financial market stabilisation fund. 
See  notably  the  ‘Communication  from  the  Commission  on  the  application,  from  1  January  2012,  of  State  aid  rules  to 
support measures in favour of banks in the context of the financial crisis’ (OJ C 356, 6.12.2011, p.7). 
Section 4(1) of the Law on the financial market stabilisation fund. 
See Section 3(2) of the Financial Market Stabilisation Fund Order, relating to recapitalisation, which unlike the amended 
Section  2(2)  of  the  Financial  Market  Stabilisation  Fund  Order,  relating  to  guarantees,  does  not  contain  an  explicit 
reference to the Union framework.  
Article 2(1) of the draft law, amending Section 10(1b) of the Law on Banking. 
See,  for  example,  the  proposals  of  20  July  2011  for  a  Directive of  the  European  Parliament  and  of  the  Council  on  the 
access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms and 
amending  Directive 2002/87/EC  of  the  European  Parliament  and  of  the  Council  on  the  supplementary  supervision  of 
credit institutions, insurance undertakings and investment firms in a financial conglomerate (COM (2011) 453 final) and 
for a Regulation on prudential requirements for credit institutions and investment firms(COM(2011) 452 final). 

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3.3  With a view to maintaining transparency and ensuring the consistency of measures adopted within 

the  Union,  the  ECB  recommends  that  the  possible  application  of  more  stringent  requirements  by 

national authorities be subject to safeguards. In this respect, the ECB welcomes that the draft law 

acknowledges the importance of a coordinated procedure at Union level to strengthen confidence in 

the  resilience  of  the  European  banking  sector  and  avert  an  imminent  risk  to  financial  market 

stability in Europe. The ECB understands that this reference to coordination is meant to require ex 

ante coordination at Union level, which the ECB supports. Furthermore, the ECB appreciates that 

the draft law explicitly clarifies that BaFin will take into account the standards agreed upon by the 

competent European authorities, when it decides on the amount and the composition of the capital 

required. 

4. 

Qualifying holdings 

In view of the general obligation imposed under Directive 2006/48/EC16 for any natural or legal person to 

notify the competent authorities of a decision to acquire a qualifying holding, the ECB understands that 
this obligation would also apply to the Fund and would recommend amending the draft law accordingly17.  

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

Done at Frankfurt am Main, 24 January 2012. 

[signed] 

The President of the ECB 

Mario DRAGHI 

16  

17  

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 (OJ L 177, 30.6.2006, p. 1).  
See Article 2c of the Law on banking. 

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