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CREDIT INSTITUTIONS
in the EU Single Financial
Market
dr hab.
Anna Jurkowska-Zeidler,
Prof. UG
The new legal framework of
european banking
• The new framework divides the current
Directive 2006/48/EU (Capital
Requirements Directive) into two
legislative instruments: a directive
2013/36/EU governing the access to
deposit-taking activities and a
Regulation (EU) No 575/2013
establishing the prudential requirements
institutions need to respect.
• While Member States will have to
transpose the directive into national law,
the regulation is directly applicable,
which means that it creates law that
takes immediate effect in all Member
States in the same way as a national
instrument, without any further action
on the part of the national authorities.
The new legal framework of
european banking
• Directive 2013/36/EU constitute the
essential instrument for the achievement
of the internal market from the point of
view of both the freedom of
establishment and the freedom to provide
financial services in the field of credit
institutions.
• Regulation is a “Single Rule Book”: For
the first time a single set of harmonised
prudential rules is created which banks
throughout the EU must respect.
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The new legal framework of
european banking
• Together, Directive 2013/36/EU and
Regulation (EU) No 575/2013 are the
legal framework governing the access to
the activity, the supervisory framework
and the prudential rules for credit
institutions and investment firms
(referred to collectively as
"institutions"). The Regulation should
therefore be read together with that
Directive
Directive
(Strong links with national law,
less prescriptive)
Regulation
(Detailed and highly prescriptive
provisions establishing a single
rule book)
Access to taking up/pursuit of
business
Capital
Exercise of freedom of
establishment and free movement
of services
Liquidity
Prudential supervision Leverage
Capital buffers Counterparty credit risk
Corporate governance Large exposures
Sanctions Disclosure requirements
Harmonisation
• It is appropriate to effect harmonisation
which is necessary and sufficient to
secure the mutual recognition of
authorisation and of prudential
supervision systems, making possible
the granting of a single licence
recognised throughout the Union and
the application of the principle of home
Member State prudential supervision.
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The legal definition of Credit
Institution. Regulation (EU) No 575/2013
"credit institution" means:
• an undertaking the business of which is
to take deposits or other repayable
funds from the public and to grant
credits for its own account;
• The EU Law does not directly define the
concept of bank
• EU Law impose on the Member States
an obligation to introduce restictions
against natural and legal persons
lacking the status of credit institutions to
provide deposit services
Polish Banking Law act
Article 2
• A bank shall constitute a legal person,
• established pursuant to the provisions of statute,
• operating on the basis of authorisations
• to perform banking operations
• that expose to risk funds which have been entrusted to
the bank and which are in any way repayable
Regulation No 575/2013.
Definitions
• "authorisation" an instrument issued in
any form by the authorities by which the
right to carry out the business is
granted;
• "competent authorities„ means a public
authority or body officially recognised by
national law, which is empowered by
national law to supervise institutions as
part of the supervisory system in
operation in the Member State
concerned;
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Regulation No 575/2013.
Definitions
• "branch„ means a place of business
which forms a legally dependent part of
an institution and which carries out
directly all or some of the transactions
inherent in the business of institutions;
• Host Member States shall not require
authorisation or endowment capital for
branches of credit institutions authorised
in other Member States. The
establishment and supervision of such
branches shall be effected in accordance
with the single licence rule.
Regulation No 575/2013.
Definitions
"subsidiary" means:
• a subsidiary undertaking is any
undertaking over which a parent
undertaking effectively exercises a
dominant influence.
Regulation No 575/2013
Definitions
• "home Member State"means the
Member State in which an institution
has been granted authorisation;
• "host Member State„ means the Member
State in which an institution has a
branch or in which it provides services;
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Name of credit institution
(art. 19 Directive)
• For the purposes of exercising their
activities, credit institutions may,
notwithstanding any provisions in the
host Member State concerning the use
of the words "bank", "savings bank" or
other banking names, use throughout
the territory of the Union the same
name that they use in the Member State
in which their head office is situated. In
the event of there being any danger of
confusion, the host Member State may,
for the purposes of clarification, require
that the name be accompanied by
certain explanatory particulars.
Institutional forms of the credit
institutions activity in host
Member States
The EU Law allows credit
institutions to open:
• Subsidiaries
• Branches
• Representative offices
in host Member States as well as
outside the European Union.
Any of those situations is
associated with different rights and
obligations of credit institution.
Single Licence (passport) rule
• Credit institutions authorised in their
home Member States should be
allowed to carry out throughout the
Union any or all of the activities
referred to in the list of activities
subject to mutual recognition by or
by providing services:
• by establishing branches or
• by providing services (directly from
the home Member State across the
borders)
without the need to grant another
authorisation in the host Member
State.
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Requirements for access to the
taking up and pursuit of the
business of credit institutions
• The EU law (Articles 8-20 of the
Directive 2013/36/EC) comprises
reqiurements in the procedure of
granting authorisations for credit
institutions.
• As those requirements are
obligatory, they have to be
included in national legislation
concering this subject (conditions
for establishment of domestic
banks).
Case Study
The French Bank wants to establish
in the territory of the other
Mamber State its branch:
1.Is it governed by the host or home
Member State’s Law?
2.Does the branch require
authorisation from the host
Member State?
3.Is there a need to equip the
branch with separate initial capital?
Case study
The Spanish Bank wants to establish
in the territory of the other
Mamber State its subsidiary:
1.Is it governed by the host or home
Member State’s Law?
2.Does the subsidiary require
authorisation from the host
Member State?
3.Is there a need to equip the
subsidiary with separate initial
capital?