CELEX: 51987PC0715
Language: en
Date: 1988-02-16
Title: PROPOSAL FOR A SECOND COUNCIL DIRECTIVE ON THE COORDINATION OF LAWS, REGULATIONS AND ADMINISTRATIVE PROVISIONS RELATING TO THE TAKING-UP AND PURSUIT OF THE BUSINESS OF CREDIT INSTITUTIONS AND AMENDING DIRECTIVE 77/780/EEC

31. 3. 88                               Official Journal of the European Communities                                   No C 84/1
                                                               II
                                                       (Preparatory Acts)
                                                   COMMISSION
                    Proposal for a Second Council Directive on the coordination of laws, regulations and
                   administrative provisions relating to the taking-up and pursuit of the business of credit
                                       institutions and amending Directive 77/780/EEC
                                                      COM(87) 715 final
                            (Submitted by the Commission to the Council on 23 February 1988)
                                                          (88/C 84/01)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                           Whereas the home Member State may establish stricter
                                                                   standards than those laid down in Articles 3,4,9,10 and 14
Having regard to the Treaty establishing the European              in relation to credit institutions authorised by its competent
Economic Community, and in particular the third sentence           authorities;
of Article 57(2) thereof,
Having regard to the proposal from the Commission,                 Whereas responsibility for the financial soundness of a
                                                                   credit institution, and in particular for its solvency, will rest
In cooperation with the European Parliament,                       with the competent authorities of its home Member State
                                                                   and whereas the host country authorities retain respons-
Having regard to the opinion of the Economic and Social            ibility for matters relating to liquidity and the implemen-
Committee,                                                         tation of monetory policy; whereas supervision of market
                                                                   risk should be the subject of close cooperation between the
Whereas this Directive is to constitute an instrument which        competent authorities of the home and host countries;
is essential for achieving the internal market, a course
determined by the Single European Act and set out in
                                                                   Whereas this Directive will join the body of Community
timetable form in the Commission's White Paper, from the
                                                                   legislation already enacted in particular Council Directive
point of view of both the freedom of establishment and the
                                                                   77/780/EEC on the coordination of banking legislation (*),
freedom to provide financial services, in the field of credit
                                                                   as last amended by Directive 86/524/EEC (2), Council
institutions;
                                                                   Directive 83/350/EEC on supervision on a consolidated
                                                                   basis (3), and Council Directive 86/635/EEC on the annual
Whereas the approach which has been adopted is to achieve
                                                                   and consolidated accounts of banks and other financial
only the essential harmonization necessary and sufficient to
                                                                   institutions ( 4 ); whereas, moreover, the harmonization of
secure mutual recognition of authorization and of
                                                                   certain financial and investment services is undertaken,
supervisory systems, thus enabling the application of the
                                                                   where the need exists, in specific Community instruments,
principle of home country control and the granting of a
                                                                   notably with the intention of protecting consumers and
single licence recognized throughout the Community;
                                                                   investors;
Whereas, in this context, this Directive can be implemented
only simultaneously with specific Community legislation            Whereas the Commission has adopted recommendations
dealing with the harmonization of technical matters                on large exposures [87/62/EEC (5)] and on deposit
relating to own funds, and a solvency ratio;                       guarantee schemes [87/63/EEC ( 6 )];
Whereas, moreover, work to harmonize the conditions
relating to the reorganization and winding-up of credit            (!) OJ No L 322, 17. 12. 1977, p. 30.
institutions is also being undertaken;                             (2) OJ  No  L 309, 4. 11. 1986, p. 15.
                                                                   (3) OJ  No  L 193, 18. 7. 1983, p. 18.
Whereas harmonization will also have to be undertaken for          (4) OJ  No  L 372, 31. 12. 1986, p. 1.
the treatment of liquidity, market, interest rate and foreign      (5) OJ  No  L 33, 4. 2. 1987, p. 10.
exchange rate risks run by credit institutions;                    (6) OJ  No  L 33, 4. 2. 1987, p. 16.
 ---pagebreak--- No C 84/2                                 Official Journal of the European Communities                                   31. 3. 88
Whereas the chosen approach permits, by virtue of mutual             in the event that the Member States may invoke by virtue of
recognition, credit institutions authorized in their home            Council Directive .../.../EEC safeguard clauses in respect of
Member States freely to undertake, throughout the                    the movement of capital, they may suspend the provision of
Community, all the activities shown in the annexed list              banking services to the extent necessary to comply with
either by the establishment of branches or by supplying              abovementioned safeguard clauses;
services;
                                                                     Whereas the procedures established in Directive 77/780/
Whereas, as a result, the host Member State can, in relation
                                                                     EEC, notably in relation to the authorization of branches of
to the exercise of the right of establishment and the freedom
                                                                     credit institutions authorized in third countries, should
to provide services, require adherence to specific provisions
                                                                     continue to apply to such institutions; whereas those
of its own laws or national regulations on the part of
                                                                     branches will not benefit from the freedom to supply
institutions not authorized as credit institutions in their
                                                                     services under the second paragraph of Article 59 of the
home Member State and with regard to activities not
                                                                     Treaty; whereas 'however' requests for authorization or
mentioned in the list, provided that, on the one hand, such
                                                                     for the acquisition of a participation from institutions
provisions are compatible with Community law and seek to
                                                                     governed by the laws of a third country are subject to a
protect the public good and that, on the other, such
                                                                     procedure intended to ensure that Community institutions
institutions or such activities are not subject to equivalent
                                                                     are granted reciprocal treatment in the third countries in
legislation or regulation in their home Member State;
                                                                     question;
Whereas it is appropriate to extend the benefits of mutual
recognition to the activities mentioned in the annexed list          Whereas the smooth running of the internal market in
when they are undertaken by financial institutions which             banking will require, in addition to common legislative
are subsidiaries of credit institutions, provided that such          standards, close and regular cooperation between the
subsidiaries are included in the consolidated supervision of         competent authorities of the Member States; whereas in
their parent undertakings and meet certain strict con-               the case of problems concerning credit institutions the
ditions;                                                             Contact Committee of bank supervisors of the Member
                                                                     States, referred to in the final recital of Directive
                                                                     77/780/EEC, remains the appropriate forum for discussion
                                                                     and consultation; whereas that Committee is also the body
Whereas the undertaking of activities which do not appear            best suited to deal with the reciprocal flows of information
in the list shall continue to benefit from the rights of             covered in Articles 6 and 7;
establishment and freedom to supply services under the
general provisions of the Treaty;
                                                                     Whereas, at all events, that procedure does not replace the
                                                                     bilateral collaboration and cooperation established by
Whereas the Member States should ensure that there are no            Article 7 of Directive 77/780/EEC; whereas, in that
obstacles to the activities benefiting from mutual recog-            context, the competent host country authorities can
nition being undertaken using the financial techniques of            continue, either on their own initiative or following the
the home Member State, as long as the latter are not in              initiative of the competent home country authorities, to
violation of the legal provisions governing the public good          verify that the activities of a credit institution established
in the host Member State;                                            on their territory are in conformity with the relevant laws,
                                                                     with the principles of sound administrative and accounting
                                                                     procedures and adequate internal control;
Whereas the abolition of the authorization requirement
with respect to branches of Community credit institutions,
once the harmonization in progress has been completed,
necessitates the abolition of endowment capital; whereas             Whereas it is necessary, in order to facilitate the
Article 5(2) constitutes a first transitional step in this           achievement of the objectives of this Directive and to take
direction;                                                           account of the rapid development of national and
                                                                     international financial markets, to introduce a procedure
                                                                     for adaptation of certain technical features; whereas,
                                                                     because of the important and sensitive nature of that
                                                                     adaptation, procedure III, type (a), as defined in Article 2 of
Whereas there is an intimate link between the objective of
                                                                     Council Decision 87/373/EEC (*), is the most appropriate,
this Directive and the liberalisation of capital movements
being achieved by other Community legislation; whereas in
any case the measures regarding the liberalisation of
banking activities should be in harmony with the measures
regarding the liberalisation of capital movements; whereas            (!) OJ No L 197, 18. 7. 1987, p. 33.
 ---pagebreak--- 31. 3. 88                                Official Journal of the European Communities                                  No C 84/3
HAS ADOPTED THIS DIRECTIVE:                                         3. The credit institutions which, as defined in Article 2(4)
                                                                    (a) of Directive 77/780/EEC, are affiliated to a central body
                                                                    in the same Member State may be exempted from the
                                                                    provisions of Articles 3,8, and 10 of this Directive provided
                             TITLE I
                                                                    that, without prejudice to the application of those
                                                                    provisions to the central body, the whole — constituted by
                     Definitions and scope                          the central body and its affiliated institutions — must be
                                                                    the subject of consolidated supervision with regard to the
                                                                    abovementioned provisions.
                            Article 1
                                                                    In cases of exemption, Articles 5 and 16 to 19 shall apply to
For the purposes of this Directive:                                 the whole, as constituted by the central body and its
                                                                    affiliated institutions.
— 'credit institution' is defined in accordance with the first
    indent of Article 1 of Directive 77/780/EEC,
— 'authorization' is defined in accordance with the second                                     TITLE II
    indent of Article 1 of Directive 77/780/EEC,
                                                                             Harmonization of authorization conditions
— 'branch' is defined in accordance with the third indent
    of Article 1 of Directive 77/780/EEC,
— 'own funds' is defined in accordance with Council                                            Article 3
    Directive .../.../EEC,
                                                                    1. The competent authorities shall not grant author-
— 'competent authorities' is defined in accordance with
                                                                   ization in cases where initial capital is less than five million
    Article 1 of Directive 83/350/EEC,
                                                                   ECU.
— 'financial institution' is defined in accordance with
    Article 1 of Directive 83/350/EEC,                              2. Member States may propose that initial capital be
                                                                   fixed at an amount lower than that provided for in
— 'home Member State' means the Member State where a               paragraph 1 in the case of institutions whose scope of
    credit institution is authorized in accordance with            authorized business is restricted by law or statute. They
    Article 3 of Directive 77/780/EEC,                             shall notify the Commission of the institutions concerned
                                                                    and the amounts proposed within six months of the
— 'host Member State' means the Member State where a               adoption of this Directive. The Commission shall adopt the
    credit institution has a branch or into which it supplies      list of categories of institutions concerned and the relevant
    services,                                                      initial capital requirements, according to the procedure laid
                                                                   down in Article 20.
— 'qualified participation' means a holding, direct or
    indirect, in an undertaking which represents 10 % or
    more of the capital or of the voting rights or which                                       Article 4
    enables the exercise of a significant influence within the
    meaning of Article 33 of Council Directive 83/349/             Competent authorities shall not grant authorization
    EEC (i),                                                       permitting the taking-up of the business of a credit
                                                                   institution before they have been informed of the identity of
— 'initial capital' means paid-up capital or items of a            shareholders or members, whether direct of indirect, be
    similar nature according to the national legislation of        they physical or legal persons, holding a qualified
    the home Member State,                                         participation and of the amount of such participations. The
                                                                   competent authorities shall appraise the suitability of the
— 'parent undertaking' is defined in accordance with
                                                                   abovementioned shareholders or members.
    Article 1 of Directive 83/349/EEC,
— 'subsidiary' means a subsidiary undertaking in accord-
                                                                                               Article 5
    ance with Article 1 of Directive 83/349/EEC.
                                                                    1. Host Member States may no longer require, as
                           Article 2                               provided for in Article 4 of Directive 77/780/EEC,
                                                                   authorization for branches of credit institutions authorized
1.   This Directive shall apply to all credit institutions.        in other Member States. The establishment and supervision
                                                                   of such branches shall be subject to the provisions laid
2. It shall not apply to the institutions exempted under           down in Articles 17 and 19 of this Directive.
Directive 77/780/EEC and listed in Article 2(2) thereof.
                                                                    2. Until the entry into force of the provisions in
                                                                    implementation of paragraph 1, host Member States may
(!) OJ No L 193, 18. 7. 1983, p. 1.                                not require, as a condition for authorization to be granted
 ---pagebreak---  No C 84/4                                Official Journal of the European Communities                                   31. 3. 88
 to branches of credit institutions authorized in other              6. If the Commission finds that reciprocity is not ensured
 Member States, an initial endowment capital greater than            it may extend suspension of the decision referred to in
 50 % of the initial capital required by national rules for          paragraph 4, using the procedure provided for in Article 20.
 authorization to be granted to a credit institution of the
 same nature.                                                        7. The Commission shall present suitable proposals to
                                                                     the Council with a view to achieving reciprocity with the
 3. Credit institutions shall recover the free use of the            third country in question.
 funds no longer required as a consequence of the provisions
 of paragraphs 1 and 2.
                                                                                               TITLE III
                           Article 6
 In the following cases there must be prior consultation with          Harmonization of conditions relating to the pursuit of
 the competent authorities of the other Member State                              the business of credit institutions
 involved:
— the authorization of a subsidiary of a credit institution
                                                                                               Article 8
     authorized in another Member State,
— the authorization of a subsidiary of the parent                    1. The own funds of credit institutions must not fall
     undertaking of a credit institution authorized in another       below the initial capital required when they were
     Member State,                                                   authorized. In appropriate circumstances, the competent
                                                                    authorities may allow an institution a certain limited
— the authorization of an undertaking controlled by                 period in which to restore its own funds to the agreed
     persons, whether physical or legal, who control a credit       minimum.
     institution authorized in another Member State.
                                                                    2. The own funds of credit institutions in existence at the
                                                                    time of the date of implementation of this Directive must by
                           Article 7                                31 December 1996 at the latest be at least equal to the level
                                                                    of initial capital stipulated in Article 3.
1. Requests for authorization of a subsidiary whose
parent undertaking is governed by the laws of a third
country or the acquisition of a participation therein as                                       Article 9
provided for in paragraph 3 shall be subject to the
procedure laid down in this Article.
                                                                     1. Member States shall require any physical or legal
2. The competent authorities of the relevant Member                 person, who is considering the direct or indirect acquisition
State shall inform the competent authorities of the other           of a qualified participation in a credit institution, to first
Member States and the Commission of the request for                 inform the competent authorities, telling them of the size of
authorization.                                                      the intended participation. The abovementioned persons
                                                                    must similarly inform the competent authorities if they
3. In the same manner, when informed, according to the              propose to increase their qualified participation such that
provisions of Article 9, that an undertaking governed by the        the credit institution would become a subsidiary. The
laws of a third country is considering the acquisition of a         competent authorities shall assess the suitability of the
participation in a credit institution such that the latter          abovementioned persons.
would become its subsidiary, the competent authorities of
the relevant Member State shall inform the competent                2. Credit institutions shall each year furnish the com-
authorities of the other Member States and the Commis-              petent authorities with the names of major shareholders
sion.                                                               and members as referred to in paragraph 1 and the size of
                                                                    their qualified participations, in accordance with the names
4. The competent authorities of the Member State                    registered at the annual general meeting of shareholders
concerned must suspend their decision regarding requests            and members or in accordance with information received
as referred to in paragraphs 2 and 3 until the procedure            as a result of compliance with the regulations relating to
provided for in paragraphs 5 and 6 is completed.                    companies quoted on stock exchanges.
5. The Commission shall, within three months of                     3. Member States shall require that in cases where the
receiving the information provided for in paragraphs 2 and          persons referred to in paragraph 1 exercise their influence
3, examine whether all credit institutions of the Com-              in a way which is likely to be to the detriment of the prudent
munity enjoy reciprocal treatment, in particular regarding          and sound management of the banking activities of the
the establishment of subsidiaries or the acquisition of             institution, the competent authorities shall take ap-
participations in credit institutions in the third country in       propriate measures to bring such a situation to an end. Such
question.                                                           measures may consist in particular in injunctions, sanctions
 ---pagebreak--- 31. 3. 88                                Official Journal of the European Communities                                  No C 84/5
against directors and managers, or the suspension of voting                                   'Article 12
rights in respect of the shares held by the shareholders or
members in question.
                                                                    1. In Article 7(1) of Directive 77/780/EEC, the end of the
                                                                    second sentence is hereby replaced by the following: 'and
                            Article 10
                                                                    all information likely to facilitate the monitoring of such
                                                                    institutions, in particular with regard to liquidity, solvency,
                                                                    control of large exposures, administrative and accounting
1. A credit institution shall not hold a qualified                  procedures and mechanisms of internal control'.
participation of an amount greater than 10 % of its own
funds in an undertaking which is neither a credit
institution, nor a financial institution, nor an undertaking
pursuing an activity as defined in Article 43 (2) (f) of            2. Host Member States shall retain primary responsibility
Directive 86/635/EEC.                                               for the supervision of the liquidity of credit institutions
                                                                    until further coordination. Without prejudice to the
                                                                    measures necessary for the reinforcement of the European
2. The total amount of qualified participations in                  Monetary System, host Member States shall retain
undertakings other than credit institutions, financial              complete responsibility for the measures resulting from the
institutions or undertakings pursuing an activity as defined        implementation of monetary policy. These measures shall
in Article 43(2) (f) of Directive 86/635/EEC shall not exceed       not embody discriminatory or restrictive treatment based
50 % of the own funds of the credit institution.                    on the fact that the credit institution is authorized in
                                                                    another Member State.
3. Shares held temporarily during a financial rescue or
restructuring operation or during the normal course of the
underwriting process or in an institution's own name on             3. Until further coordination of the risks arising out of
behalf of others shall not be included among qualified              open positions, the competent authorities of host Member
participations for the purposes of calculating the limits laid      States may take the necessary measures to require credit
down in paragraphs 1 and 2. Shares not having the                   institutions authorized in other Member States to make
character of financial fixed assets as defined in Article 35(2)     sufficient provision against market risk in respect of
of Directive 86/635/EEC shall never be included.                    operations on securities markets in their territory. They
                                                                    shall cooperate for this purpose with the competent
                                                                    authorities of home Member States.
4. The limits laid down in paragraphs 1 and 2 may be
exceeded in exceptional circumstances. However, in such
cases, the competent authorities shall require the credit
institution either to increase the volume of own funds or
take other remedial measures.
                                                                                               Article 13
5. Compliance with the limits laid down in paragraphs 1
and 2 shall be ensured by means of supervision on a
consolidated basis in accordance with the provisions of
Directive 83/350/EEC.
                                                                    1. Host Member States shall ensure that, where a credit
                                                                    institution authorized in another Member State conducts
6. Member States need not apply the limits laid down in             its business there through a branch, the competent
paragraphs 1 and 2 if they provide that the qualified               authorities of the home Member State are able, after having
participations in question are to be deducted when                  first informed the competent authorities of the host
calculating the own funds of a credit institution.                  Member State, to carry out themselves on-the-spot
                                                                    verification of the information referred to in Article 7(1) of
                                                                    Directive 77/780/EEC.
                            Article 11
                                                                    2. The competent authorities of the home Member State
                                                                    may equally have recourse to one of the verification
1. The competent authorities of the home Member State               procedures for branches laid down in Article 5(4) of
shall ensure the existence within each credit institution of        Directive 83/350/EEC, other than that referred to in
sound administrative and accounting procedures and                  paragraph 1.
adequate internal control mechanisms.
2. The competent authorities shall also ensure that such            3. This Article shall not affect the right of the competent
procedures and mechanisms exist in credit institutions              authorities of the host Member State to carry out on-the-
included in the scope of consolidated supervision provided          spot verification of branches established in their territory in
for in Directive 83/350/EEC.                                        the discharge of their responsibilities under this Directive.
 ---pagebreak--- No C 84/6                                Official Journal of the European Communities                                   31. 3. 88
                          Article 14                                   — the disclosure of information necessary to enable
                                                                           institutions which manage deposit guarantee
                                                                            schemes to exercise their functions,
Article 12 of Directive 77/780/EEC is hereby replaced by
the following text, paragraph 2 of which also applies to
exchanges of information between competent authorities                     the exchange of information between the competent
provided for in this Directive:                                            authorities and public authorities responsible for the
                                                                           supervision of other financial institutions and
                                                                           insurance companies,
   'Article 12
    1. Member States shall ensure that all persons now or                  the exchange of information between the competent
   in the past employed by the competent authorities, as                   authorities and persons responsible for carrying out
   well as auditors or experts acting on behalf of the                     statutory audits of the accounts of credit institutions.
   competent authorities, are bound by the obligation of
   professional secrecy. This means that any confidential
   information which they may receive in the course of                 The authorities and institutions to which such inform-
   their duties may not be divulged to any person or                   ation is sent shall use it only in the discharge of their
   authority, without prejudice to cases covered by                    supervisory functions. The information received shall
   criminal law.                                                       fall within the professional secrecy rules by which those
                                                                       authorities and institutions are bound.
   2. Notwithstanding paragraph 1, the competent
   authorities of the various Member States shall exchange
   information in accordance with provisions of this                   6. Notwithstanding paragraph 1, Member States may
   Directive and Council Directive 83/350/EEC (l) as well              authorize, by virtue of provisions laid down by law, the
   as of the Annex to Commission recommendation 87/                    disclosure, when it is necessary for reasons of prudential
   62/EEC (2). This information shall be subject to the                control, of certain information to other departments of
   same conditions of professional secrecy as those                    their central government administration. Member
   indicated in paragraph 1.                                           States shall ensure that information received in
                                                                       accordance with paragraph 2 is not disclosed in such
                                                                       cases, except where there is the explicit consent of the
   3. Member States may conclude cooperation agree-                    authorities which have communicated the information.
   ments, providing for exchanges of information, with the
   competent authorities of third countries only if the
   information communicated is subject to guarantees of
   professional secrecy equivalent to those referred to in            7. Member States shall ensure that the professional
   this Article.                                                      secrecy provisions laid down by this Article shall apply
                                                                      to information given by the competent authorities to
                                                                      persons responsible for carrying out statutory audits of
   4. Competent authorities receiving information under               the accounts of credit institutions.
   paragraph 1 or 2 shall use it only:
   — to examine the conditions for the taking-up of the
       business of credit institutions and to facilitate               (!) OJ No L 193, 18. 7. 1983, p. 18.
       monitoring, on a non-consolidated or consolidated               (2) OJ No L 33, 4. 2. 1987, p. 10.'
       basis, of the pursuit of such business, especially with
       regard to the monitoring of liquidity, solvency, large
       exposures, and the administrative and accounting
       procedures and mechanisms of internal control, or
                                                                                              Article 15
   — when the decisions of the competent authority are
       the subject of an administrative appeal, or
                                                                   Without prejudice to the procedures for withdrawal of
   — in court proceedings initiated pursuant to Article 13.        authorizations and cases covered by criminal law, Member
                                                                   States shall ensure «that their respective competent
   5. Paragraphs 1 and 4 shall not preclude within a               authorities may adopt, as against credit institutions, or
   Member State or between Member States:                          those who effectively control the business of those credit
                                                                   institutions, which breach legislative, regulatory or
                                                                   administrative provisions concerning the control of their
       where there are several competent authorities in the        businesses or the pursuit of their activities, penalties or
       same Member State, the exchange of information              measures aimed specifically at ending observed breaches or
       between them,                                               the causes of such breaches.
 ---pagebreak--- 31. 3. 88                                 Official Journal of the European Communities                                No C 84/7
                            TITLE IV                                 'financial institution conforming to the conditions laid
                                                                     down in Article 16(2)', and 'authorization' as 'articles of
                                                                     association'. In Article 17(2), point (c) should read 'the
   Provisions relating to freedom of establishment and
                                                                     amount of own funds of the subsidiary financial institution
                  freedom to provide services
                                                                     and the consolidated solvency ratio of the credit institution
                                                                     which is the parent undertaking'.
                           Article 16
                                                                     If the financial institutions benefiting from the provisions
                                                                     of this paragraph should cease to meet any of the requisite
1. Member States shall ensure that at least the activities           conditions, the host Member State may bring an end to the
set out on the list in the Annex may be pursued in any               pursuit, under the provisions of this Directive, of the
Member State, in accordance with the provisions of                   activities in question on its territory.
Articles 17 to 19, either by the establishment of a branch or
by way of the provision of services, by any credit institution
authorized and supervised by the competent authorities of
the home Member State, in accordance with the provisions                                        Article 17
of this Directive, whose authorization permits the pursuit
of such activities.
                                                                     1. A credit institution wishing to establish a branch in the
2. Member States shall also provide that at least the                territory of another Member State shall give notification
activities set out on the list in the Annex may be pursued in        thereof to the competent authority of its home Member
any Member State in accordance with the provisions of                State.
Articles 17 to 19, either by the establishment of a branch or
by way of the provision of services by any financial                 2. Member States shall require the notification men-
institution being a subsidiary of a credit institution, or such      tioned in paragraph 1 to be accompanied by the following
a subsidiary belonging to several credit institutions, whose         information from the credit institution wishing to establish
articles of association do not prevent the pursuit of those          a branch in another Member State:
activities and which meets each of the following con-
ditions :
                                                                     (a) the Member State in whose territory it intends to
                                                                         establish a branch;
— the parent undertaking or undertakings are authorized
    as credit institutions in the Member State by whose law
    the subsidiary is governed,                                      (b) a programme of operations setting out inter alia the
                                                                         types of business envisaged and the structural organiza-
— the parent undertaking or undertakings hold 90 % or                    tion of the establishment;
    more of the shares in the subsidiary,
                                                                     (c) the amount of own funds and the solvency ratio of the
— the parent undertaking or undertakings have declared                   credit institution;
    that they jointly and severally guarantee the commit-
    ments entered into by the subsidiary,
                                                                     (d) the address in the host Member State from which
                                                                         documents may be obtained;
— the subsidiary is effectively included, in particular for
    the activities in question, in the consolidated super-
    vision of its parent undertaking, or of each of its parent       (e) the names of those responsible for controlling the
    undertakings, in accordance with Directive 83/350/                   activities of the branch.
    EEC, notably for the calculation of the solvency ratio,
    for the control of large exposures and for the purposes          3. Unless the competent authority of the home Member
    of limiting participations in accordance with Article 10         State has reason to doubt the adequacy of the organiza-
    of this Directive.                                               tional structure of the credit institution, taking into
                                                                     account the envisaged operations, it shall, within three
Conformity with these conditions must be verified by the             months of the notification referred to in paragraph 1,
competent authority of the home Member State and the                 communicate the information mentioned in paragraph 2 to
latter must supply the subsidiary with a certificate of              the competent authority of the host Member State.
compliance which must form part of the notification
envisaged in Articles 17 and 18.
                                                                     Where the competent authority of the home Member State
                                                                     refuses to send the information mentioned in paragraph 2
The competent authority of the home Member State must
                                                                     to the competent authority of the host Member State it shall
ensure the supervision of the subsidiary in accordance with
                                                                     give reasons to the institution concerned within three
the provisions of Articles 8(1), 9,11,12(2), 13,14 and 15 of
                                                                     months of receipt of the notification. This refusal shall be
this Directive, as well as those of Article 7(1) of Directive
                                                                     subject to a right of appeal to the courts in the home
77/780/EEC.
                                                                     Member State.
The provisions mentioned in this paragraph shall be
applicable to subsidiaries subject to the necessary modifi-          4. Before the branch of the credit institution commences
cations. In particular, 'credit institution' should read             its activities the competent authority of the host Member
 ---pagebreak--- No C 84/8                                 Official Journal of the European Communities                                    31. 3. 88
State shall, within a period of three months following               branches of credit institutions from other Member States
receipt of the information mentioned in paragraph 3,                 provide the same information as they require from their
prepare for the supervision of the institution pursuant to           national credit institutions for that purpose.
Article 19 and if necessary may decide, in the interest of the
public good, to prohibit the credit institution from
engaging in some of the activities envisaged, where the
conditions of authorization in its home country do not               3. If the competent authority of the host Member State
preclude such activities, but those activities are not               ascertains that an institution having a branch or providing
contained on the list in the Annex.                                  services in its territory is not complying with the legal
                                                                     provisions in force in that Member State which are justified
5. On receipt of notice from the competent authority of              on the grounds of the public good, or pursuant to the
the host Member State, or in the event of the expiry of the          provisions of this Directive on the powers of the host
three-month period referred to in paragraph 4 without                Member State, that authority shall request the institution
receipt of any communication from the latter, the branch             concerned to put an end to the irregular situation.
may be established and commence business.
6. A credit institution wishing to change any of the
                                                                     4. If the institution concerned fails to take the necessary
matters notified pursuant to paragraph 2 shall give written
                                                                     steps, the competent authority of the host Member State
notice of the proposed change to the competent authorities
                                                                     shall inform the home Member State accordingly. The
in the relevant home and host Member States at least one
                                                                     authority of the home Member State shall take, in the
month before making the change. If necessary, those
                                                                     shortest time possible, all appropriate measures to ensure
authorities may decide whether it will not be possible, in
                                                                     that the institution concerned puts an end to the irregular
the interest of the public good, for the credit institution to
                                                                     situation. The nature of those measures shall be com-
engage in any additional activities which it may envisage
                                                                     municated to the competent authority of the host Member
which are not precluded under the conditions of author-
                                                                     State.
ization in its home country and which are not contained on
the list in the Annex.
                                                                     5. If, despite the measures taken by the home Member
                           Article 18                                State pursuant to paragraph 4, or because such measures
                                                                     prove inadequate or are not taken by the Member State in
                                                                     question, the institution persists in violating the legal rules
                                                                     referred to in paragraph 3 in force in the host Member
1. Any credit institution wishing to exercise the freedom            State, the latter State may, after informing the competent
to supply services in the territory of another Member State          authority of the home Member State, take appropriate
for the first time shall notify the competent authorities of         measures to prevent further irregularities including, insofar
the home Member State of the activities included on the list         as is necessary, the prevention of the initiation of further
in the Annex which it intends to undertake.                          transactions by that institution within its territory. The
                                                                     Member States shall ensure that within their territory it is
2. The competent authorities of the home Member State                possible to serve the legal documents necessary for these
shall, within one month of receipt of the notification               measures on credit institutions.
mentioned in paragraph 1, send that notification to the
competent authorities of the host Member State.
                                                                     6. Any measure adopted pursuant to paragraphs 3, 4 and
                                                                     5 involving penalties or restrictions on the provision of
                           Article 19                                services must be properly justified and communicated to
                                                                     the institution concerned. Every such measure shall be
                                                                     subject to a right of appeal to the courts in the Member
1. Responsibility for the supervision of a credit insti-             State whose authorities adopted it.
tution, including supervision of activities undertaken
according to the provisions of Article 16, shall rest with the
competent authorities of the home Member State.
                                                                     7. Before following the procedure set out in paragraphs 3,
                                                                     4 and 5, the competent authorities of the host Member State
2. Host Member States may require, for statistical
                                                                     may, in exceptional circumstances, take measures neces-
purposes, that all credit institutions having branches in
                                                                     sary to protect the interests of depositors, investors and
their territories shall report quarterly on their operations in
                                                                     others to whom services are provided. The Commission
the host Member State to the competent authority of that
                                                                     and the other Member States shall be informed of such
host Member State.
                                                                     measures in the shortest possible time. In this event the
                                                                     Commission may, after consulting the Member States
In order to conform with the responsibilities laid down in           concerned, decide that the Member State in question shall
Article 12 (2) and (3), host Member States may require that          amend or abolish the measures.
 ---pagebreak--- 31. 3. 88                               Official Journal of the European Communities                                  No C 84/9
8. In the event of withdrawal of authorization the                 The Commission shall adopt the measures envisaged if they
competent authority of the host Member State shall be              are in accordance with the opinion of the committee.
informed and shall take appropriate measures to prevent
the institution concerned from undertaking further                 If the measures envisaged are not in accordance with the
transactions in its territory.                                     opinion of the committee, or if no opinion is delivered, the
                                                                   Commission shall, without delay, submit to the Council a
9. Member States shall inform the Commission of the                proposal relating to the measures to be taken. The Council
number and type of cases in each Member State in which             shall act by a qualified majority.
there has been a refusal pursuant to Article 17 or in which
measures have been taken in accordance with the                    If, on the expiry of a period to be laid down in each act to be
provisions of paragraph 5 of this Article. Every two years,        adopted by the Council under this paragraph but which
the Commission shall submit a report summarizing such              may in no case exceed three months from the day of referral
cases to the Advisory Committee set up under Article 11 of         to the Council, the Council has not acted, the proposed
Directive 77/780/EEC.                                              measures shall be adopted by the Commission.
                                                                                              Article 21
                           TITLE V
                                                                   1. Branches which have commenced their activities, in
                       Final provisions                            accordance with the provisions in force in the host Member
                                                                   State, before the entry into force of the provisions adopted
                                                                   in implementation of this Directive are presumed to have
                          Article 20                               been subject to the procedures envisaged in Article 17(1) to
                                                                   (5). They shall be governed, from the date of entry into
1. Technical amendments to this Directive in the
                                                                   force of the provisions adopted in implementation of this
following areas:
                                                                   Directive, by the provisions of Articles 16, 17(6) and 19.
— extension of the activities on the list mentioned in             They shall benefit from the provisions of Article 5(3).
    Article 16 and set out in the Annex,
                                                                   2. Article 18 shall not adversely affect rights acquired
— the amount of initial capital laid down in Article 3(1),         before the entry into force of the provisions adopted in
                                                                   implementation of this Directive by credit institutions
— the list of categories of institution referred to in Article     operating through the supply of services.
    3(2),
— the thresholds set in Article 10,                                                           Article 22
— the fields in which the competent authorities must               1. Subject to paragraph 2, Member States shall bring into
    exchange information, as enumerated in Article 7(1) of         force the laws, regulations and administrative provisions
    Directive 77/780/EEC,                                          necessary to comply with this Directive on the later of the
shall be made according to the procedure set out in                two dates laid down for the adoption of measures to
paragraph 2.                                                       comply with the Council Directives on the harmonization
                                                                   of own funds and solvency ratios of credit institutions and
2. The Commission shall be assisted by a committee                 at the latest by 1 January 1993. They shall forthwith inform
composed of representatives of the Member States and               the Commission thereof.
chaired by a representative of the Commission.
                                                                   2. Member States shall adopt the measures necessary to
The representative of the Commission shall submit to the           comply with the provisions laid down in Article 5(2) of this
committee a draft of the measures to be taken. The                 Directive by 1 January 1990.
committee shall deliver its opinion on the draft within a
time limit which the chairman may lay down according to            3. Member States shall communicate to the Commission
the urgency of the matter. The opinion shall be delivered by       the texts of the main laws, regulations and administrative
the majority laid down in Article 148(2) of the Treaty in the      provisions which they adopt in the field covered by this
case of decisions which the Council is required to adopt on        Directive.
 a proposal from the Commission. The votes of the
 representatives of the Member States in the committee shall                                  Article 23
 be weighted in the manner set out in that Article. The
 chairman shall not vote.                                          This Directive is addressed to the Member States.
 ---pagebreak---  No C 84/10                                 Official Journal of the European Communities                                     31. 3. 88
                                                                  ANNEX
                   Business which is integral to banking and shall be included within the scope of mutual recognition
               1. Deposit-taking and other forms of borrowing
               2. Lending (*)
               3. Financial leasing
               4. Money transmission services
               5. Issuing and administering means of payment (credit cards, travellers cheques and bankers drafts)
               6. Guarantees and commitments
               7. Trading for own account or for account of the customers in:
                  (a) money market instruments (cheques, bills, CDs, etc.)
                  (b) foreign exchange
                  (c) financial futures and options
                  (d) exchange and interest rate instruments
                  (e) securities
               8. Participation in securities issues and the provision of services related to such issues
               9. Money broking
             10. Portfolio management and advice
             11. Safekeeping of securities
             12. Credit reference services
             13. Safe custody services
             (!) Including in particular:
                  — consumer credit,
                  — mortgage lending,
                  — factoring and invoice discounting,
                  — trade finance (including forfeiting).
                       Proposal for a Council Regulation (EEC) amending Regulation No 136/66/EEC
                         on the establishment of a common organization of the market in oils and fats
                                                            COM(88) 80 final
                              (Submitted by the Commission to the Council on 23 February 1988)
                                                               (88/C 84/02)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                                  Having regard to the opinion of the Economic and Social
                                                                          Committee,
Having regard to the Treaty establishing the European
                                                                          Whereas, for rape seed on the one hand and for sunflower
Economic Community, and in particular Article 43 thereof,                 seed on the other, it is advisable to set the same maximum
                                                                          guaranteed quantity for 1988/1989, 1989/1990 and 1990/
Having regard to the proposal from the Commission,                        1991; whereas, for the purposes of the system of maximum
                                                                          guaranteed quantities, it is advisable to estimate produc-
                                                                          tion after the beginning of the marketing year in order to
In cooperation with the European Parliament,                              make the estimates concerned more accurate; whereas