CELEX: 51985PC0755
Language: en
Date: 1985-12-20
Title: SECOND AMENDED PROPOSAL FOR A COUNCIL DIRECTIVE CONCERNING THE ANNUAL ACCOUNTS AND CONSOLIDATED ACCOUNTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

No C 351/24                            Official Journal of the European Communities                                    31. 12. 85
                  Second amended proposal for a Council Directive concerning the annual accounts and
                              consolidated accounts of banks and other financial institutions (*)
                                                      COM(85) 755 final
                    (Submitted by the Commission to the Council pursuant to the second paragraph of
                                     Article 149 of the EEC Treaty on 26 December 1985
                                                         (85/C 351/09)
                   FIRST AMENDED PROPOSAL                                             SECOND AMENDED PROPOSAL
First amended proposal                                             Second amended proposal
Amended proposal for a Council Directive concerning the            Second amended proposal for a Council Directive concern-
annual accounts of banks and other financial institutions          ing the annual accounts and consolidated accounts of
                                                                   banks and other financial institutions
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                          THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European              Having regard to the Treaty establishing the European
Economic Community, and in particular Article 54 (3) (g)           Community, and in particular Article 54 (3) (g) thereof,
thereof,
Having regard to the proposal from the Commission,                 Having regard to the proposal from the Commission (3),
Having regard to the opinion of the European Parliament,           Having regard to the opinion of the European Parlia-
                                                                   ment (4),
Having regard to the opinion of the Economic and Social           Having regard to the opinion of the Economic and Social
Committee,                                                         Committee (5),
Whereas Council Directive 78/660/EEC (2) concerning the           Whereas Council Directive 78/660/EEC (6), as last amen-
annual accounts of limited companies need not be applied          ded by Directive 84/564/EEC (7), concerning the annual
to banks and other financial institutions, hereinafter            accounts of limited companies need not be applied to banks
referred to as 'credit institutions', pending subsequent          and other financial institutions pending subsequent
coordination; whereas, in view of the central importance of       coordination; whereas, in view of the central importance of
these undertakings in the Community, such coordination            these undertakings in the Community, such coordination
cannot be delayed any longer following implementation of          cannot be delayed any longer following implementation of
Directive 78/660/EEC;                                             that Directive;
                                                                  Whereas Council Directive 83/349/EEC (8) on con-
                                                                  solidated accounts provides for derogations for credit
                                                                  institutions only until expiry of the deadline imposed for
                                                                  the application of this Directive; whereas this Directive
                                                                  must therefore also contain provisions specific to credit
                                                                  institutions in respect of consolidated accounts;
Whereas such coordination has also become urgent because          Whereas such coordination has also become urgent because
more and more credit institutions are operating across            more and more credit institutions are operating across
national frontiers; whereas, for creditors, debtors and           national frontiers; whereas, for creditors, debtors and
members and for the general public, improved compar-              members and for the general public, improved compar-
ability of the annual accounts of these institutions is           ability of the annual accounts and consolidated accounts of
therefore of crucial importance;                                  these institutions is therefore of crucial importance;
(!) OJ No C 83, 24. 3. 1984, p. 6.                                    OJ No   C 130, 1. 6. 1981, p. 1 and No C 83, 24. 3. 1984, p. 6.
(2) OJ No L 222, 14. 8. 1978, p. 11.                                  OJ No   C 163, 10. 7. 1978, p. 60; OJ No C 242, 12. 9. 1983,
                                                                      p. 33.
                                                                      OJ No   C 112,3.5.1982, p. 17.
                                                                      OJ No   L222, 14.8. 1978, p. 11.
                                                                      OJ No   L 314, 4. 12. 1984, p. 28.
                                                                      OJ No   L 193, 18.7. 1983, p. 1.
 ---pagebreak--- 31. 12. 85                                Official Journal of the European Communities                             No C 351/25
                    FIRST AMENDED PROPOSAL                                             SECOND AMENDED PROPOSAL
Whereas, in virtually all the Member States of the                   Whereas, in virtually all the Member States of the
Community, institutions of differing legal forms are in              Community, institutions of differing legal forms are in
competition with one another in the credit sector; whereas           competition with one another in the credit sector; whereas
it is therefore appropriate not to confine coordination to           it is therefore appropriate not to confine coordination to
the legal forms covered by Directive 78/660/EEC, but to              the legal forms covered by Directive 78/660/EEC, but to
choose a scope which is in line with that of Council                 choose a scope which includes all companies or firms as
Directive 77/780/EEC (!) relating to the taking up and               defined in the second paragraph of Article 58 of the Treaty,
pursuit of the business of credit institutions;                      where these are credit institutions within the meaning of
                                                                     Council Directive 77/780/EEC (2) relating to the business
                                                                     of credit institutions or financial institutions within the
                                                                     meaning of Council Directive 83/350/EEC (3) relating to
                                                                     the supervision of credit institutions on a consolidated
                                                                     basis;
Whereas the link with the coordination of legislation                Whereas the link with the coordination of legislation
relating to credit institutions is also important because            relating to credit institutions is also important because
aspects of the provisions governing annual accounts will             aspects of the provisions governing annual accounts and
inevitably have an impact on other areas of such                     consolidated accounts will inevitably have an impact on
coordination, such as authorization requirements and the             other areas of such coordination, such as authorization
indicators used for supervisory purpose;                             requirements and the indicators used for supervisory
                                                                     purposes;
Whereas, although in view of the specific characteristics of         Whereas, although in view of the specific characteristics of
credit institutions, it appears appropriate to propose a             credit institutions, it appears appropriate to propose a
separate Directive on annual accounts for such undertak-             separate Directive on the annual accounts and consolidated
ings, this must not result in a set of standards being               accounts of such undertakings, this must not result in a set
established which is separate from Directive 78/660/EEC;             of standards being established which is separate from
whereas such separate standards would be neither                     Directives 78/660/EEC and 83/349/EEC; whereas such
appropriate nor consistent with the principles underlying            separate standards would be neither appropriate nor
the coordination of company law, since, given the central            consistent with the principles underlying the coordination
place which they occupy, credit institutions cannot be               of company law, since, given the central place which they
excluded from the framework of standards devised for                 occupy in the economy of the Community, credit
undertakings generally; whereas, for this reason only the            institutions cannot be excluded from the framework of
particular characteristics of credit institutions are taken          standards devised for undertakings generally; whereas, for
into account, and this Directive therefore deals only with           this reason, only the particular characteristics of credit
exceptions to the rules contained in Directive 78/660/EEC;           institutions are taken into account, and this Directive
                                                                     therefore deals only with exceptions to the rules contained
                                                                     in Directives 78/660/EEC and 83/349/EEC;
Whereas in each Member State an essential characteristic of          Unchanged.
credit institutions is the difference in structure and content
of their balance sheets; whereas this Directive must
therefore lay down the same structure and the same item
designations for the balance sheets of all credit institutions
in the Community;
Whereas, if the annual accounts are to be comparable, a              Whereas, if the annual accounts and consolidated accounts
number of basic questions regarding the presentation of              are to be comparable, a number of basic questions
certain transactions in the balance sheet must be settled;           regarding the presentation of certain transactions in the
                                                                     balance sheet must be settled;
Whereas, in the interests of greater comparability, it is also       Unchanged.
necessary that the content of certain balance sheet items be
determined precisely;
Whereas the same also applies to the composition and                 Unchanged.
definition of certain items in the profit and loss account;
(!) OJ No. L 322, 17. 12. 1977, p. 30.                               (2) OJ No L 322, 17. 12. 1977, p. 30.
                                                                     (->) OJ No L 193, 18. 7. 1983, p. 18.
 ---pagebreak--- No C 351/26                              Official Journal of the European Communities                                  31. 12. 85
                     FIRST AMENDED PROPOSAL                                            SECOND AMENDED PROPOSAL
Whereas the comparability of figures in the balance sheet           Unchanged.
and profit and loss account also depends crucially on the
values at which assets or liabilities are entered in the
balance sheet; whereas, in view of the principle of prudence
and the need to maintain confidence in the stability of the
credit industry, it is necessary to allow credit institutions
some flexibility in the valuation of loans and advances;
whereas credit institutions should also be permitted to
show in the profit and loss account only the balance
resulting from the set-off between charges corresponding to
value adjustments in respect of certain items and income
from the writing-back of such value adjustments;
Whereas, in view of the special nature of credit institutions,      Unchanged.
certain changes are also necessary with regard to the notes
on the annual accounts;
Whereas,in line with the intention to cover as many credit          Whereas, in line with the intention to cover as many credit
institutions as possible, as was the case with Council              institutions as possible, as was the case with Directive 77/
Directive 77/780/EEC, derogations are not provided for              780/EEC, derogations are not provided for small and
small and medium-sized credit institutions, such as are             medium-sized credit institutions, such as are provided for
provided for under the terms of Directive 78/660/EEC;               under the terms of Directive 78/660/EEC; whereas,
whereas, nevertheless if, in the light of experience, such          nevertheless if, in the light of experience, such derogations
derogations prove necessary, it will be possible to provide         prove necessary, it will be possible to provide for them in a
for them in a subsequent measure of coordination;                   subsequent measure of coordination; whereas for the same
                                                                    reasons, the scope allowed Member States under Directive
                                                                    83/349/EEC to exempt parent undertakings from the
                                                                    consolidation requirement if the undertakings to be
                                                                    consolidated do not together exceed a certain size has not
                                                                    been extended to credit institutions;
                                                                    Whereas the specific application of the provisions on
                                                                    consolidated accounts to credit institutions requires a
                                                                    number of adjustments to some of the general rules
                                                                    applicable to all industrial and commercial companies;
                                                                   whereas accordingly specific rules have been provided for
                                                                   in the case of mixed groups and exemption from sub-
                                                                   consolidation is made subject to an additional condition;
Whereas, taking account of the importance of banking               Whereas, taking account of the importance of banking
networks which extend beyond national frontiers and their          networks which extend beyond national frontiers and their
constant development, it is important that the annual              constant development, it is important that the annual
accounts of a credit institution having its head office in one      accounts and consolidated accounts of a credit institution
Member State should be published in all the Member States          having its head office in one Member State should be
where it is established;                                           published in all the Member States where it is established;
Whereas the examination of problems which arise in                 Unchanged.
connection with the present Directive, notably concerning
its application, require the cooperation of representatives
of the Member States and the Commission in the form of a
Contact Committee; whereas, in order to avoid the
proliferation of such committees, it is desirable that the said
cooperation be achieved by means of the committee
provided for in Article 52 of Directive 78/660/EEC;
whereas, nevertheless, when examining problems concern-
ing credit institutions, the committee will be appropriately
constituted;
 ---pagebreak--- 31. 12. 85                              Official Journal of the European Communities                                 No C 351/27
                    FIRST AMENDED PROPOSAL                                            SECOND AMENDED PROPOSAL
Whereas, in view of the complexity of the matter, the credit       Unchanged.
institutions covered by this Directive must be allowed a
longer period than usual to implement the provisions
thereof; whereas, pending subsequent coordination, the
Member States should also be allowed to defer the
application of certain provisions of this Directive to certain
specialized credit institutions where immediate application
would cause major adjustment problems,
HAS ADOPTED THIS DIRECTIVE:
                                                Articles 1 to 41 u n c h a n g e d .
                                                                                             SECTION 9a
                                                                   Provisions relating to consolidated accounts
                                                                                             Article 41a
                                                                   The credit institutions referred to in Article 2 shall draw up
                                                                   consolidated accounts and a consolidated annual report in
                                                                   accordance with Directive 83/349/EEC, in so far as this
                                                                   section does not provide otherwise.
                                                                                             Article 41b
                                                                   Directive 83/349/EEC shall apply subject to the following
                                                                   provisions:
                                                                   1. Articles 4, 5, 6, 15 and 40 shall not apply.
                                                                   2. The requirement or option provided for in Articles 7,8
                                                                        and 11 whereby Member States shall or may exempt a
                                                                       parent undertaking governed by their national laws
                                                                       which is a credit institution, and is also a subsidiary
                                                                        undertaking, from the requirement of drawing up
                                                                       consolidated accounts and a consolidated annual
                                                                        report, shall apply only if its own parent undertaking
                                                                        has in addition declared that it guarantees the
                                                                       commitments entered into by the credit institution.
                                                                        The declaration shall be published by the credit
                                                                        institution in accordance with Article 38.
                                                                   3.   The information referred to in the first two indents of
                                                                        Article 9 (2), namely:
                                                                       — the amount of the fixed assets,
                                                                       — the net turnover,
                                                                        of shall be replaced by:
                                                                        — the sum of items 1 to 3 and 6 in Article 29 or B.l to
                                                                             3 and 6 in Article 30 of this Directive.
                                                                   4.   Where the parent undertaking is a credit institution,
                                                                        Article 13 (3) (c) shall not apply if shares in a subsidiary
                                                                        undertaking which is a credit institution or a financial
                                                                        institution are temporarily held as a result of a financial
                                                                        assistance operation with a view to the reorganization
                                                                        or rescue of the undertaking in question.
 ---pagebreak--- No C 351/28                     Official Journal of the European Communities                                   31. 12. 85
            FIRST AMENDED PROPOSAL                                           SECOND AMENDED PROPOSAL
                                                           5. Article 14, with the exception of paragraph 2 thereof,
                                                              shall apply subject to the following provision:
                                                              Where the parent undertaking is a credit institution and
                                                              where one or more subsidiary undertakings to be
                                                              consolidated do not have that status, such subsidiary
                                                              undertakings may not be excluded from the consolid-
                                                              ation if their activities are a direct extension of banking
                                                              activities or concern services ancillary to banking
                                                              activities such as leasing, factoring, the management of
                                                              unit trusts, the management of data-processing services
                                                              or any other similar activity.
                                                           6. For the purposes of the layout of consolidated accounts
                                                              (a) the reference in Article 17 to Articles 9 and 10
                                                                   (balance sheet) and 23 to 26 (profit and loss
                                                                  account) of Directive 78/660/EEC shall be deemed
                                                                  to be a reference to Articles 4 (balance sheet) and
                                                                  29 and 30 (profit and loss account) of this
                                                                  Directive. Articles 3, 5 to 28 and 31 to 35 of this
                                                                  Directive shall also apply;
                                                              (b) the reference in Article 17 to Article 15 (3) of
                                                                  Directive 78/660/EEC shall apply to the items
                                                                  deemed to be fixed assets pursuant to Article 36 of
                                                                  this Directive.
                                                           7. For the purpose of valuing assets and liabilities to be
                                                              included in consolidated accounts, the reference in
                                                              Articles 29 and 33 to Articles 31 to 42 and 60 of
                                                              Directive 78/660/EEC shall be deemed to be a reference
                                                              to those Articles as amended in their application by
                                                              Articles 36 to 38 of this Directive.
                                                           8. Concerning Article 34 relating to the consolidated
                                                              accounts:
                                                              (a) In place of the information required in point 6,
                                                                  credit institutions shall in the notes on the
                                                                  consolidated accounts state separately for each of
                                                                  the Assets items 4 (b) and 5 and the Liabilities
                                                                  items 1 (b), 2 (b) and (c) and 3 (b) the amounts of
                                                                  those loans and advances and liabilities on the basis
                                                                  of their remaining maturity as follows:
                                                                  — not more than three months,
                                                                  — more than three months but not more than one
                                                                       year,
                                                                  — more than one year but not more than five
                                                                        years,
                                                                  — more than five years.
                                                                  For Assets item 5, the following shall also be
                                                                  shown:
                                                                  — indefinite-period accounts in credit
                                                                        (a) repayable on demand;
                                                                        (b) other.
 ---pagebreak--- 31. 12. 85                     Official Journal of the European Communities                                No C 351/29
           FIRST AMENDED PROPOSAL                                            SECOND AMENDED PROPOSAL
                                                                  If loans and advances or liabilities involve pay-
                                                                  ments by instalments, the remaining maturity shall
                                                                  be the period between the balance sheet date and
                                                                  the date on which each instalment falls due.
                                                                  However, for five years after the date referred to in
                                                                  Article 44 (2), Member States may require or
                                                                  permit the listing by maturity of the assets and
                                                                  liabilities referred to in this Article to be based on
                                                                  the originally agreed maturity or period of notice.
                                                                  In that event, where a credit institution has
                                                                  acquired an existing loan not represented by a
                                                                  certificate, the Member State shall require classifi-
                                                                  cation of that loan to be based on the remaining
                                                                  maturity as at the date on which it was required.
                                                                  For the purposes of this subparagraph, the
                                                                  originally agreed maturity for loans shall be the
                                                                  period between the date of first drawing and the
                                                                  date of repayment; the period of notice shall be
                                                                  deemed to be the period between the date on which
                                                                  notice is given and the date on which repayment is
                                                                  to be made; if loans and advances or liabilities are
                                                                  redeemable by instalments, the agreed maturity
                                                                  shall be the period between the date on which such
                                                                  loans and advances or liabilities arose and the date
                                                                  on which the last instalment falls due.
                                                             (b) In addition, credit institutions shall, in respect of
                                                                  the consolidated balance sheet items specified in
                                                                  subparagraph (a) and also in respect of Assets
                                                                  item 6 (debt securities held in portfolio) and
                                                                  Liabilities item 3 (a) (debt securities issued)
                                                                  indicate what proportion of assets and Liabilities
                                                                  with an original maturity of five years or more will
                                                                  become due within one year of the consolidated
                                                                  balance sheet date.
                                                              (c) Member States may stipulate that the information
                                                                  referred to in (a) and (b) be given in the
                                                                  consolidated balance sheet.
                                                              (d) The notes on the consolidated accounts shall in
                                                                  addition include information on the assets which
                                                                  have been pledged as security for the consolidating
                                                                  credit institution's own liabilities (including con-
                                                                  tingent liabilities); the information should be in
                                                                  sufficient detail to indicate for each item below the
                                                                  line, the total amount of the assets pledged as
                                                                  security.
                                                              (e) Where the information referred to in point 7 has to
                                                                  be provided in items below the line, it need not be
                                                                  repeated in the notes on the consolidated accounts;
 ---pagebreak--- No C 351/30                     Official Journal of the European Communities                                 31. 12. 85
            FIRST AMENDED PROPOSAL                                           SECOND AMENDED PROPOSAL
                                                              (f) In place of the information required in point 8,
                                                                   credit institutions shall, in the notes on the
                                                                   consolidated accounts, indicate their operating
                                                                   income (items 1 to 3 and 6 of Article 29 or items
                                                                   B.l to B.3 and B.6 of Article 30) broken down into
                                                                   geographical markets in so far as, taking account
                                                                   of the manner in which the credit institution is
                                                                   organized, these markets differ substantially from
                                                                   one another.
                                                              (g) The reference in point 10 to Articles 31 and 34
                                                                   to 42 of Directive 78/660/EEC shall be deemed to
                                                                   be a reference to those Articles as amended in their
                                                                   application by Articles 36 to 38 of this Directive.
                                                              (h) By way of derogation from point 13, credit
                                                                   institutions need indicate only the amounts of
                                                                   advances and credits granted to the members of the
                                                                   administrative, managerial and supervisory bodies
                                                                   of the parent undertaking by that undertaking or
                                                                   by one of its subsidiary undertakings and the
                                                                   commitments entered into on their behalf by way
                                                                   of guarantees of any kind with an indication of the
                                                                   total for each category.
                                                           9. Member States shall require credit institutions to give
                                                              the following further information in the notes on the
                                                              consolidated accounts:
                                                              (a) a breakdown of the securities included in Assets
                                                                   items 6, 8, 9 and 9a into listed and unlisted
                                                                   securities and into securities which, pursuant to
                                                                   Article 36 of this Directive, were or were not
                                                                   considered fixed assets;
                                                               (b) the value of leasing transactions apportioned
                                                                   between the relevant items in the consolidated
                                                                   balance sheet;
                                                               (c) a breakdown of Assets item 14, Liabilities item 4,
                                                                   items 11 and 15 in the vertical layout or A.7 and 9
                                                                   in the horizontal layout and items 6 and 14 in the
                                                                   vertical layout or B.6 and 8 in the horizontal layout
                                                                   of the consolidated profit and loss account into
                                                                   their main component amounts, where such
                                                                   amounts are important for the purpose of assessing
                                                                   the consolidated accounts, as well as explanations
                                                                   of their nature and amount;
                                                               (d) the amounts of interest which the undertakings
                                                                   included in the consolidation have received for
                                                                   subordinated assets in the year under review, or
                                                                   have expended for subordinated liabilities.
 ---pagebreak--- 31. 12. 85                              Official Journal of the European Communities                             No C 351/31
                   FIRST AMENDED PROPOSAL                                             SECOND AMENDED PROPOSAL
                         SECTION 10                                                          SECTION 10
                         Publication                                                         Publication
                          Article 42                                                          Article 42
 1.    The properly authorized annual accounts of credit           1.    The duly approved annual accounts of credit
institutions, together with the annual report and the              institutions, together with the annual report and the
opinion of the person responsible for auditing the accounts        opinion submitted by the person responsible for auditing
shall be published in the manner required by the legislation       the accounts shall be published as laid down by the laws of
in each Member State in accordance with Article 3 of               each Member State in accordance with Article 3 of
Council Directive 68/151/EEC ( ] ).                                Directive 68/151/EEC (2).
                                                                   The laws of a Member State may, however, permit the
                                                                   annual report not to be published as stipulated above. In
                                                                   that case, it shall be made available to the public at the
                                                                   company's registered office in the Member State con-
                                                                   cerned. It must be possible to obtain a copy of all or part of
                                                                   any such report upon request. The price of such a copy
                                                                   must not exceed its administrative cost.
                                                                   (la) Paragraph 1 shall also apply to the duly approved
                                                                   consolidated accounts, the consolidated annual report and
                                                                   the opinion submitted by the person responsible for
                                                                   auditing the accounts.
2.     However, where the credit institution which drew up         2.    However, where a credit institution which has drawn
the annual accounts is not established as one of the types of      up annual accounts or consolidated accounts is not
company listed in Article 1 (1) of Directive 78/660/EEC            established as one of the types of company listed in
and is not required by its national law to publish the             Article 1 (1) of Directive 78/660/EEC and is not required by
documents referred to in paragraph 1 in the same manner as         its national law to publish the documents referred to in
prescribed in Article 3 of Directive 68/151/EEC, it must at       paragraphs 1 and l a in the same manner as prescribed in
least make them available to the public at its head office. It     Article 3 of Directive 68/151/EEC, it must at least make
must be possible to obtain a copy of such documents on             them available to the public at its head office. It must be
request. The price of such a copy must not exceed its             possible to obtain a copy of such documents on request.
administrative cost.                                              The price of such a copy must not exceed its administrative
                                                                  cost.
3.     The annual accounts of a credit institution shall be       3.     The annual accounts and consolidated accounts of a
published in each Member State where the credit institution       credit institution must be published in every Member State
has branches, as defined by Article 1, third indent, of            in which the credit institution has branches, within the
Directive 77/780/EEC. Such Member States may require               meaning of the third indent of Article 1 of Directive 77/
that the publication of these documents be made in their          780/EEC. Such Member States may require that the
official language.                                                publication of those documents be effected in their official
                                                                  language.
                                                                  4.     Member States shall provide for appropriate sanc-
                                                                  tions for failure to comply with the publication obligations
                                                                  imposed in this Article.
                                               Articles 43 to 45 u n c h a n g e d .
(!) OJ No L 65, 14. 3. 1968, p. 8.                                 (2) OJ NoL65, 14.3. 1968, p. 8.