Opinion of the European Central Bank of 6 August 2013 on the special liquidation of credit institutions (CON/2013/57)
Date: 2013-08-06
Institutions: European Central Bank
Subjects: Greece, credit institution, financial stability, liquidation, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 6 August 2013 

on the special liquidation of credit institutions 

(CON/2013/57) 

Introduction and legal basis 

On 3 July 2013 the European Central Bank (ECB) received a request from the Greek Ministry of Finance 

for an opinion on draft legislative provisions on the special liquidation of credit institutions (hereinafter 

the ‘draft provisions’). 

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  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 provisions  relate  to  the  Bank of  Greece  and 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 provisions 

1.1  The  draft  provisions  amend  the  legal  framework  governing  the  special  liquidation  of  credit 
institutions2,  in  line  with  the  commitment  to  improve  the  management  of  assets  in  liquidation 

undertaken  by  the  Greek  government  during  the  second  review  of  the  Second  Economic 

Adjustment Programme for Greece. To this end, the draft provisions introduce amendments to Law 

3601/2007 on the taking up and pursuit of the business of credit institutions, capital adequacy of 
credit institutions and investment firms and other provisions3 and authorise the Bank of Greece to 

adopt implementing measures, as necessary. 

1.2  The draft provisions specify that the special liquidator appointed by the Bank of Greece may be a 

natural  or  a  legal  person  and  may  liquidate several  credit  institutions, if this  proves  necessary  to 

better serve the purposes of the special liquidation. 

1.3 

In addition, the draft provisions create an advisory Special Liquidation Committee (SLC) with five 

members,  who  are  appointed  by  the  Bank  of  Greece  for  a  three-year  term  of  office.  The  special 

liquidator is required to request the SLC’s consent to carry out specific liquidation tasks, namely 

1  
2  

3  

OJ L 189, 3.7.1998, p. 42. 
The special liquidation framework contains the relevant provisions of Law 3601/2007 on the taking up and pursuit of the 
business  of  credit  institutions,  capital  adequacy  of  credit  institutions  and  investment  firms  and  other  provisions,  the 
relevant provisions of the Law on bankruptcy (Law 3588/2007) and the relevant acts of the Bank of Greece’s Credit and 
Insurance Committee No 21/4.11.2011 and No 77/30.5.2013. 
FEK A 178/1.8.2007. 

 
 
 
 
                                                 
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settlement  of  claims  and  debt  restructuring  as  well  as  sales  of  immovable  property  and  debt 

instruments,  where  the  amount  of  the  claim  or  the  value  of  the  asset  concerned  exceeds  certain 

thresholds. 

1.4  Finally, the draft provisions: (a) specify the Bank of Greece’s scope of supervision over the special 

liquidator; (b) limit the special liquidator’s and the SLC’s liability for debts incurred by the credit 

institution under liquidation with regard to the time period prior to their appointment (c) specify the 

means of notification for certain cases in special liquidation proceedings. 

2. 

Appropriate time to consult the ECB 

2.1  According to Article 4 of Decision 98/415/EC, the ECB must be consulted at an appropriate stage 

in the legislative process, which gives the ECB sufficient time to adopt its opinion and also enables 

the consulting authority to take the ECB’s opinion into consideration before the draft provisions are 

adopted. In this case, the ECB was consulted at a point in the legislative process that did not give 

the consulting authority enough time to introduce substantive amendments to the draft provisions. 

Furthermore, the Greek Parliament adopted the draft provisions shortly after the submission of the 

request for the ECB’s opinion. 

2.2  The ECB understands that the framework for the special liquidation of credit institutions in Greece 

is  evolving,  particularly  due  to  the  framework’s  relevance  for  restructuring  the  Greek  banking 

sector. Therefore, the ECB considers that this opinion, despite being published following adoption 

of the draft provisions, can serve as guidance for future amendments to this framework. However, 

the ECB stresses that even cases of particular urgency do not relieve national authorities of their 

duty  to  consult the  ECB  at  an  appropriate  stage  in the  legislative  process  and  to  allow  sufficient 

time to take into account its views in accordance with Decision 98/415/EC. 

3. 

General observations 

3.1  The  ECB  welcomes  the  draft  provisions  to  the  extent  that  they  seek  to  amend  the  current 

framework  on  the  special  liquidation  of  credit  institutions  in  line  with  the  financial  sector 

objectives  outlined  by  the  Greek  authorities  in  the  Memorandum  of  Economic  and  Financial 
Policies4. In relation to the development of the abovementioned framework, the ECB refers to its 
previous relevant opinions5. 

3.2  The ECB understands that the  main purpose of the draft provisions is to ensure  timely  and cost-

effective  disposal  of  and/or  restructuring  of  assets  in  liquidation  and  to  also  take  advantage  of 

synergies by centralising the administration of assets. Given the high financial stakes involved in 

the  liquidation  of  credit  institutions,  the  ECB  notes  that  establishing  sound,  efficient  and  orderly 

liquidation procedures  based on international practices is essential. Therefore, the ECB considers 

4  

5  

Annex  V  to  Law  No  4046/2012  on  the  approval  of  the  draft  financing  agreements  between  the  European  Financial 
Stability Fund, the Hellenic Republic and the Bank of Greece and of the draft Memorandum of Understanding between 
the Hellenic Republic, the European Commission and the Bank of Greece and other provisions of utmost importance for 
reducing the public debt and saving the national economy (FEK A 28/14.12.2012). 
See, in particular, Opinion CON/2011/72. All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 

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that  further  developing  the  Greek  legal  and  supervisory  framework  governing  the  special 

liquidation of credit institutions is an important step towards increasing the protection of the value 

of assets in liquidation and, ultimately, of creditors’ interests. Furthermore, when significant public 

sector  claims  are  involved  in  the  special  liquidation  procedure,  a  well-designed  framework  is 

necessary in order to minimise taxpayer exposure to costs. 

3.3  The  ECB  notes that  proper  and  swift implementation  of  the  envisaged  framework  by  the  special 

liquidator,  the  SLC  and  other  competent  authorities  is  of  crucial  importance  for  achieving  the 

abovementioned  objectives.  Proper  implementation  of  the  envisaged  framework  involves, 

inter alia,  ensuring  compliance  with  the  principles  of  legal  certainty,  transparency  and 

predictability regarding the treatment of creditors, as well as with the principle of equal treatment 

of creditors. 

4. 

Interaction of the draft provisions with other provisions of the special liquidation framework 
The  ECB  notes  that  the  interaction  between  the  draft  provisions,  the  Law  on  bankruptcy6  and 
secondary  legislation  governing  the  special  liquidation  of  credit  institutions7  should  be  clear  and 

ensure that the framework as a whole is consistent, comprehensive and, thus, enforceable. The ECB 

recommends that the interaction between these provisions be clarified, e.g. in an explanatory note 

to the draft provisions. 

5. 

Development of the framework to support and oversee the special liquidator 

5.1  The  ECB  welcomes  that  the  draft  provisions  develop  the  framework  to  support  and  oversee  the 

special liquidator appointed by the Bank of Greece. There is merit in appointing the same special 

liquidator for more than one credit institution under liquidation. At the same time, the ECB stresses 

that  the  draft  provisions  should  include  safeguards  to  avoid  conflicts  of  interests,  to  ensure  that 

control  over  the  special  liquidator  is  neither  arbitrary  nor  excessive  and  to  specify  that  this 

appointment for multiple credit institutions should be based on specific objective criteria, such as 

the  size  of  the  institutions  concerned.  Furthermore,  the  ECB  understands  that,  under  the  draft 

provisions, allowing the special liquidator to carry out liquidation of several entities does not affect 

the insolvency estate of each entity and that each respective procedure remains separate. 

5.2 

It would be beneficial to provide more detailed guidance to the special liquidator and the SLC for 

the performance of their tasks in the draft provisions. The special liquidator and the SLC should be 

supported  by  specialised  and  impartial  advisers  when  assessing  the  value  of  assets  under 

liquidation, e.g. by providing non-binding evaluations from independent evaluators. As regards the 

thresholds  that  trigger  the  SLC’s  involvement,  the  ECB  stresses  the  need  for  their  adequate 

justification,  taking  into  consideration  the  inherent  aim  of  maximising  the  proceeds  of  the 

liquidation. 

6  
7  

Law 3588/2007, FEK A 153/10.7.2007. 
Acts of the Bank of Greece’s Credit and Insurance Committee No 21/4.11.2011 and No 77/30.5.2013. 

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5.3 

It would be useful to further specify the scope of the control exercised over the special liquidator. 

In line with its previous opinions, the ECB welcomes the Bank of Greece playing the central role in 
the special liquidation procedure, as a means to reinforce the financial stability framework8. At the 

same  time,  it  is  equally  crucial  to  ensure  clarity  and  legal  certainty  as  regards  the  procedure  for 

judicial review of the decisions made by the special liquidator and the SLC. 

6. 

The SLC and Bank of Greece’s role 

6.1  The ECB welcomes the creation of the SLC as a means to reinforce the framework to oversee the 

special  liquidation  of  credit  institutions  and  to  enhance  the  smooth  and  efficient  conduct  of  the 

special  liquidation  procedure.  At the  same  time,  in  order to  enable  the  SLC  to  fulfil its  role  in a 

satisfactory  manner,  the  draft  provisions  should  ensure  that  there  is  no  ambiguity  in  the  SLC’s 

status, role and powers under Greek law. 

6.2  The ECB recommends that the draft provisions clarify whether the  SLC is considered an internal 

body of the Bank of Greece or whether it has the same status as the special liquidator. This is also 

relevant with respect to who should be held accountable for  SLC decisions. The Greek legislator 

should set up an appropriate accountability framework. 

7. 

Relationship between the Bank of Greece and the SLC 

The draft provisions provide that the Bank of Greece is to provide secretarial support to the SLC, 

decide  on  the  qualifications  and  the  selection  criteria  for  SLC  members,  and  nominate  and 

remunerate  SLC  members.  The  ECB  understands  that  these  rights  and  obligations  relate  to  the 

Bank of Greece’s mandate in the special liquidation process for credit institutions, which is already 

controlled  by  the  Bank  of  Greece,  i.e.  opening  of  the  liquidation  process,  appointment  of  the 

special liquidator, and control of the liquidator’s activities. In this regard, the draft provisions do 

not breach the monetary financing prohibition which prevents central bank financing of the public 

sector. At the same time, the draft provisions should clarify that the SLC’s tasks are related to the 

Bank of Greece’s competences in the process of special liquidation of credit institutions. 

8. 

Independence 

The ECB has consistently noted that the principle of central bank independence requires Member 

States to ensure that NCBs have sufficient financial resources to perform their Eurosystem-related 

tasks  as  well  as  their  own  national  tasks.  In  this  respect,  any  remuneration  paid  to  the  SLC 

members by the Bank of Greece should be determined in a manner that is fully compatible with the 

Bank of Greece’s institutional and financial independence. 

8  

See in particular Opinions CON/2004/9 and CON/2004/18. 

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

Done at Frankfurt am Main, 6 August 2013. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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