Opinion of the European Central Bank of 24 May 2013 on the status of credit institutions and the creation of financing companies (CON/2013/36)
Date: 2013-05-24
Institutions: European Central Bank
Subjects: France, credit institution, financial stability, financial supervision, national law, terminology

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 24 May 2013 

on the status of credit institutions and the creation of financing companies 

(CON/2013/36) 

Introduction and legal basis 

On  22  April  2013,  the  European  Central  Bank  (ECB)  received  a  request  from  the  French  Ministry  of 

Economic  Affairs  and  Finance  for  an  opinion  on  a  draft  ordinance  amending  the  status  of  credit 

institutions (hereinafter the ‘draft ordinance’). 

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 ordinance 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. 

1.1 

Purpose of the draft ordinance 

In view of the expected adoption and entry into force of the Regulation on prudential requirements 
for  credit  institutions  and  investment  firms  (hereinafter  the  ‘CRR’)2,  the  French  government  has 

decided  to  align  the  definition  of  ‘credit  institutions’  under  national  legislation  with  the  Union 

definition.  Pursuant  to  Article  4(1)(a)  of  Directive  2006/48/EC  of  14  June  2006  relating  to  the 
taking  up  and  pursuit  of  the  business  of  credit  institutions3,  a  ‘credit  institution’  means  ‘an 

undertaking whose business is to receive deposits or other repayable funds from the public and to 
grant credits for its own account’. The definition laid down in the CRR4 contains both elements as 

well.  From  a  French  national  law  perspective,  this  requires  aligning  the  definition  of  credit 

institution with the Union definition. 

1.2  First,  under  French  legislation,  ‘credit  institutions’  are  defined  as  ‘legal  entities  having  as  their 

customary activity the carrying out of banking transactions’ which ‘comprise the receipt of funds 

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OJ L 189, 3.7.1998, p. 42. 
Proposal for a Regulation of the European Parliament and of the Council on prudential requirements for credit institutions 
and investment firms (COM(2011) 0452 final). 
OJ L 177, 30.6.2006, p. 1. 
Article  4(1)  of  the  CRR  provides  that:  ‘credit  institution’  means  ‘an  undertaking  the  business  of  which  is  to  receive 
deposits or other repayable funds from the public and to grant credits for its own account’. 

 
 
 
 
                                                 
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from the public, credit transactions and bank payment services’5. The cumulative character of the 

criteria,  i.e.  receiving  deposits  and  granting  credits,  was  transposed  as  alternatives  in  the  French 

national  legislation.  The  draft  ordinance  proposes  to  redefine  credit  institutions  as  ‘legal  entities 
whose business consists of receiving repayable funds from the public6 and granting loans for their 
own  account’7,  with  a  view  to  making  it  clear  that  both  activities  are  required  for  an  entity  to 

qualify as a ‘credit institution’. 

1.3  Second, the draft ordinance creates a new type of financial institution, i.e. the ‘financing company’. 

Financing  companies  are  defined  as  ‘legal  persons  that  are  not  credit  institutions  whose  regular 

professional activity is to perform credit transactions in accordance with the conditions set out in 
their  authorisation’8.  Financing  companies  will  be  entitled  to  grant  credit,  but  will  not  collect 

deposits  or  other  repayable  funds  from  the  public.  The  draft  ordinance  provides  that  financing 

companies  ‘may  provide  payment  services,  issue  and  manage  electronic  money  and  provide 
investment  services  on  condition  that  they  have  obtained  the  relevant  authorisation’9.  Financing 

companies, as well as credit institutions, will be authorised to issue negotiable debt securities under 

the conditions laid down by the Minister for the Economy, provided that the financial instruments 
issued are not repayable funds received from the public10.   

1.4  Finally,  the  draft  ordinance  makes  reference  to  the  national  prudential  regime  applicable  to 

financing  companies.  The  French  supervisory  authority  (Autorité  de  contrôle  prudentiel)  will 
supervise financing companies11. In particular, before starting their activities, financing companies, 
as well as credit institutions, will have to obtain approval from the French supervisory authority12. 

The draft ordinance is intended to empower the Minister for the Economy to enact implementing 

decrees  under  which  financing  companies  will  be  subject  to  rules,  equivalent  to  Union 

requirements for credit institutions, relating to solvency and large exposures. Additionally, the draft 

ordinance  provides  that  liquidity  and  leverage  requirements  of  financing  companies  will  be 

specified in an implementing decree. 

2. 

General observations 

The  ECB  welcomes  the  harmonisation  of  the  definition  of  credit  institution  under  French  law  with  the 

Union  definition  as  the  adjustments  required  by  the  CRR  contribute  to  a  more  uniform  application 

throughout the Union. This also ensures a level-playing field within the Union. In this context, the ECB 

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See Article L.511-1 in conjunction with Article L. 311-1 of the French Monetary and Financial Code (MFC). 
‘Repayable  funds  from  the  public’  are  defined  in  the  new  proposed  Article  L  312-2  as  ‘funds  which  an  entity  accepts 
from a third party with the right to assign them for its own account subject to its returning them. These funds are received 
in particular in the form of deposits or through the issuing of debt securities’. 
Proposed Article L.511-1.-I of the MFC. 
Proposed Article L.511-1.-II of the MFC. 
Proposed Article L.515-1 of the MFC. 
Proposed paragraph 1a of Article L.213-3 of the MFC. 
Proposed 9th indent in paragraph A of Article L.612-2.-I of the MFC. 
Proposed paragraph L.511-10 of the MFC. 

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would  like  to  highlight  the  observations  made  in  the  context  of  its  Opinions  on  the  proposal  for  a 
Directive amending Directive 2006/48/EC13. 

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

Done at Frankfurt am Main, 24 May 2013. 

[signed] 

The President of the ECB 

Mario DRAGHI 

13  

See for instance Opinion CON/2010/65 as regards capital requirements for the trading book and for resecuritisations, and 
the supervisory review of remuneration policies. 

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