text: Ο περί Μεταβιβάσεως και Υποθηκεύσεως Ακινήτων Νόμος του 1965 (Ν. 9/1965).

text: Ο περί Μεταβιβάσεως και Υποθηκεύσεως Ακινήτων (Τροποποιητικός) (Αρ. 2) Νόμος του 2026.

text: Ο περί Μεταβιβάσεως και Υποθηκεύσεως Ακινήτων (Τροποποιητικός) (Αρ. 6) Νόμος του 2026.

text: Ο περί Μεταβιβάσεως και Υποθηκεύσεως Ακινήτων (Τροποποιητικός) (Αρ. 3) Νόμος του 2026.

text: O περί Ελευθεροποίησης του Επιτοκίου και Συναφών Θεμάτων Νόμος του 1999 (Ν.160(Ι)/1999).

text: Ο περί Ελευθεροποίησης του Επιτοκίου και Συναφών Θεμάτων (Τροποποιητικός) Νόμος του 2026.

text: Ο περί Μεταβιβάσεως και Υποθηκεύσεως Ακινήτων (Τροποποιητικός) (Αρ. 4) Νόμος του 2026, και ο περί Μεταβιβάσεως και Υποθηκεύσεως Ακινήτων (Τροποποιητικός) (Αρ. 7) Νόμος του 2026.

text: The key policy priorities identified in the IMF staff concluding statement of the 2026 Article IV mission to Cyprus include the following: ‘avoid loosening the foreclosure framework and step up efforts to reduce non-performing loans outside of the banking sector’. The IMF staff concluding statement also notes that ‘Changes to the foreclosure framework that slow the resolution process should be resisted. After years of compromise, the existing framework broadly strikes the right balance between debtors and creditors to support debt resolution. In contrast, some recently proposed legislative changes would significantly slow resolution and increase administrative costs. This could undermine borrower incentives, increase credit risk, and reduce access to finance. Future borrowing—for example, for first-time homebuyers or small-businesses—would become harder.’ The statement is prefaced by the following caveat: ‘The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF Executive Board for discussion and decision.’ See IMF, Cyprus: Staff Concluding Statement of the 2026 Article IV Mission, May 4, 2026, available on the IMF’s website at www.imf.org.

text: See Article 140 of the Constitution of the Republic of Cyprus. 10 The relevant obligation was set out in a letter addressed by the Governor of the Central Bank of Cyprus to the House of Representatives dated 4 March 2026. 11 See, for example, section 2 of Opinion

text: , paragraph 2.1 of Opinion

text: , paragraph 2.1 of Opinion

text: , paragraph 3 of Opinion

text: and paragraph 2.1 of Opinion

text: . All ECB opinions are available on EUR-Lex. 12 See also Guide to consultation of the European Central Bank by national authorities regarding draft legislative provisions, p. 18, available on the ECB’s website at www.ecb.europa.eu. 13 See paragraph 2.2 of Opinion

text: See paragraph 3.2.1 of Opinion

text: . 15 Under the scheme, where a homeowner is at risk of losing their property due to mortgage arrears, KEDIPES assumes ownership of the property by paying the participant bank 65 % of the market value of the property. The participating bank must then write off the respective loan after deducting the acquisition price. The Government will cover rent payments for 14 years, with renters having a repurchase option after five years at a preferential rate. In order to be eligible, the property must be the applicant’s primary residence since 1 January 2021, for at least six months per year, and its market value cannot exceed EUR 250 000. In addition, the Law for the Establishment and Operation of the Financial Ombudsman for Out-of-Court Resolution of Financial Disputes (Amending) Law of 2026 and the Insolvency of Natural Persons (Personal Repayment Plans and Debt Relief Order) (Amending) Law of 2026 reinforce the protective framework by enhancing borrowers’ access to structured dispute resolution processes and formal debt restructuring mechanisms. 16 The Estia Scheme (Scheme for the Protection of the Primary Residence) is a targeted State support programme which was established by the Cypriot Council of Ministers in 2019, covering non-performing loans secured by a primary residence valued at up to € 350 000, subject to specified income and net asset thresholds. Eligible borrowers receive a State subsidy equivalent to one-third of their monthly instalment under the restructured loan facility for the duration of the loan. 17 See paragraph 3.4 of Opinion

text: According to the Q4 2025 Risk Dashboard of the European Banking Authority, available on the EBA’s website at www.eba.europa.eu. 19 Based on audited financial statements as at 31 December 2024.

text: See paragraph 3.3 of Opinion

text: and paragraph 3.1.3 of Opinion

text: . 21 See paragraph 2.2 of Opinion

text: , paragraph 2.2.3 of Opinion

text: and paragraph 3.1.4 of Opinion

text: . 22 See paragraphs 3.6.1 and 3.6.7 of Opinion

text: See paragraphs 2.3, 2.4 and 3.4 of Opinion

text: , paragraph 2.3 of

text: and paragraph 3.4 of Opinion

text: . 24 See paragraphs 3.6.7 of Opinion

text: See paragraph 3.2.1 of Opinion

text: and paragraph 3.3 of Opinion

text: . 26 See ECB, ‘The euro area bank lending survey – First quarter of 2026’, available on the ECB’s website at www.ecb.europa.eu. 27 See paragraph 1.12 above on a similar assessment by the IMF in the context of Article IV on Cyprus.

text: See paragraph 3.3 of Opinion

text: . 29 See paragraph 2.3 of Opinion

text: and paragraph 3.2.1 of Opinion

text: . 30 See paragraph 3.1.2 of Opinion

text: and paragraph 3.2.2 of Opinion

title: Opinion of the European Central Bank of 12 June 2026 on the stay of foreclosures and the restructuring of loans and guarantees (CON/2026/18)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 12 June 2026 on the stay of foreclosures and the restructuring of loans and guarantees (

text: ) Introduction and legal basis

text: On 18 May 2026, the European Central Bank (ECB) received a request from the Cypriot Minister for Finance for an opinion on a law amending the Law on transfer and mortgage of immovable property of 1965 (N. 9/1965) (the ‘Law’) , (the law amending the Law hereinafter referred to as the ‘first amending law’) . The first amending law was approved by the Cypriot House of Representatives on 6 April 2026 but has not yet entered into force as it was referred by the President of the Republic of Cyprus to the Supreme Constitutional Court. The first amending law is part of a broader package of legislative proposals which have been considered by the House of Representatives; some have since been promulgated by the President and have entered into force, and others have been referred by the President to the Supreme Constitutional Court. The latter category includes (1) a law amending the Law which concerns the suspension of the foreclosure framework (the ‘second amending law’ , and together with the first amending law, the ‘foreclosure amending laws’), (2) a law amending the Law related to the writing-off of residual mortgage debt following a property sale or auction (the ‘third amending law’) ; (3) a law amending the Liberalisation of Interest Rate and Related 5 6 Matters Law of 1999 (the ‘fourth amending law’ , and together with the third amending law, the ‘debt restructuring amending laws’); and (4) two laws amending the Law which are related to the liability of guarantors (the ‘fifth and sixth amending laws’ , together the ‘guarantee restructuring amending laws’, together with the debt restructuring amending laws, the ‘restructuring amending laws’, and together with the foreclosure amending laws and the debt restructuring amending laws, the ‘amending laws’). The ECB has decided to deliver an own-initiative opinion on the amending laws. The ECB’s competence to deliver an opinion is based on Article 127(4), second paragraph, of the Treaty on the Functioning of the European Union, as the amending laws concern (1) the task of the European System of Central Banks (ESCB) to contribute to the smooth conduct of policies pursued by the competent authorities relating to the stability of the financial system pursuant to Article 127(5) of the Treaty, and (2) the ECB’s tasks concerning the prudential supervision of credit institutions pursuant to Article 127(6) of the Treaty. In accordance with

text: Article 17.5, first sentence, of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the amending laws

text: Purpose of the foreclosure amending laws

text: 1.1 The Law contains a framework which must be followed when a borrower has defaulted on payments in respect of the mortgaged property for at least 120 days. In such a case, the creditor must first issue a formal default notice, inviting the borrower to settle the outstanding debt and to contact them to examine if the conditions for a debt restructuring are met. Thirty (30) days after the first notice is served, the creditor may serve another notice on the borrower, inviting the latter to repay the total debt within a deadline of not less than 45 days and informing them that if they fail to do so, the creditor may exercise the right to sell the mortgaged property through auction. In the event that the borrower fails to comply with the set deadline, the creditor has the right to serve notice on the borrower that the mortgaged property will be auctioned, providing relevant information. At this stage, the Law allows the borrower to file an application at the District Court to set aside the notice of intended sale on a number of grounds, including in relation to the content or serving of the prescribed notices or where the borrower has secured an injunction from the Court. 1.2 The first amending law revises the grounds upon which a borrower may have the notice of intended sale issued by the creditor set aside. In particular, it replaces the right to have the notice of intended sale set aside upon the issuance of an injunction by the District Court with the right to have the notice set aside in cases where the borrower, or any other interested party, has filed any legal action or appeal of a ruling in favour of a credit institution, a credit acquiring company or a credit servicer (1) disputing the original or remaining amount of the debt, (2) claiming the existence of unfair contractual terms in the loan or mortgage agreements, or (3) invoking any other illegality and/or grounds of invalidity of such agreements. In such an event, the notice of auction cannot be served until there is a final and irrevocable Court ruling. 1.3 The rationale behind the first amending law, as explained in its recitals, is to protect borrowers from unfair contractual terms and other ʻcontrolled banking practicesʼ, especially given the sharp increase in lending rates and high inflationary trends, which have resulted from what is referred to as the protracted economic crisis. 1.4 The second amending law amends the Law by introducing a suspension of the foreclosure procedure in respect of primary residences with a value of below EUR 350 000 until 31 December 2026.

text: Explanatory note accompanying the first amending law

text: 1.5 The consultation request to the ECB is accompanied by an explanatory note from the Ministry of Finance and a letter from the Governor of the Central Bank of Cyprus to the Minister of Finance, dated 6 May 2026, which express a number of concerns regarding the first amending law. 1.6 In particular, the Ministry considers that the first amending law will increase the number of cases before the Cypriot courts, leading to multi-year delays in the issuance of judgments, which will consequently deprive creditors of the ability to recover debts within a predictable timeframe, thereby

text: undermining the repayment culture, financial discipline and the overall functionality of the foreclosure framework. 1.7 According to the Ministry, there is a strong conviction that the first amending law is expected to materially influence the stability of financial institutions. Considerations regarding the valuation of collateral and the capacity for its timely liquidation constitute fundamental elements in determining both the capital requirements of credit institutions and the provisioning levels for non-performing loans (NPLs). When it comes into force, the first amending law will impact the reliability and effectiveness of collateral as a credit risk mitigant, which may cause credit institutions to apply more conservative valuations to collateral, leading to an increase in risk-weighted assets and, consequently, higher regulatory capital requirements. At the same time, longer recovery horizons will result in elevated loss given default (LGD) estimates, necessitating higher provisions under applicable accounting standards. According to the Ministry, the impact on credit risk will also be reflected in the pricing of new lending, which, in turn, will lead to higher interest rates, raising borrowing costs and prompting a further tightening on lending criteria, thus restricting lending to the private non-financial sector. This development is expected to adversely affect the business models and income-generating capacity of credit institutions. More broadly, this may exert pressure on economic activity and economic growth, with secondary effects on financial stability and the Government’s fiscal planning. 1.8 The Ministry considers that the first amending law is expected to have direct implications for the generation of new NPLs given that a significant proportion of lending is secured by immovable property and the ability to recover the value of collateral in a timely and effective manner becomes critically important. 1.9 The Ministry expresses the view that the first amending law could materially affect the key indicators assessed by international credit rating agencies, such as public finances, the trajectory of public debt and the level of non-performing exposures (NPEs). According to the Ministry, an unstable framework leads to an increase in NPEs and burdens public debt, thus intensifying the risk of a downgrade of the country’s creditworthiness. These developments have broader implications for the country’s borrowing costs and its access to international markets. According to the Ministry, any weakening or delay in the foreclosure process is therefore expected to deteriorate asset quality, interrupt further NPL reduction and be viewed negatively by credit rating agencies. 1.10 The Ministry also considers that the first amending law may have implications for public finances in relation to the operation of KEDIPES, a State-owned entity established following approval by the European Commission in 2018 for the granting of State aid amounting to EUR 3,541 billion plus interest. With the possibility of suspending foreclosure procedures, KEDIPES’ ability to recover the remaining amount of the State aid will be impaired, thus impacting State budget revenues. 1.11 The Ministry is of the view that the first amending law could lead to general regulatory uncertainty, negatively affecting investor confidence and disrupting financial stability, with broader long-term consequences for the economy of the country. 1.12 Finally, the Ministry draws attention to recent warnings issued by the International Monetary Fund (IMF) in the context of the Article IV consultation process for the Republic of Cyprus that any

text: interventions in the existing foreclosure framework that slow down or weaken the process for resolving NPEs would seriously undermine repayment incentives, increase credit risk and further restrict access to financing . Furthermore, the Ministry considers that such a development does not merely constitute a financial risk but is transformed directly into a potential fiscal risk for the State through lower credit intermediation, weaker economic activity, reduced tax revenues and, under stressed conditions, an increased likelihood of indirect State involvement to support financial stability. The Ministry also notes that any legislative amendment deviating from the balance between the protection of vulnerable borrowers and the need for effective debt recovery, without a comprehensive impact assessment, would not only impair banking operations, but also expose the country to systemic and fiscal risks ultimately borne by taxpayers and affecting long-term fiscal sustainability. 1.13 Many of these concerns are reflected in the accompanying letter from the Governor of the Central Bank of Cyprus to the Minister for Finance.

text: Purpose of the restructuring amending laws

text: 1.14 The third amending law amends the Law to provide that any amount of debt remaining after the sale or auction of the property is automatically written off. In essence, the third amending law deems the debt to be fully repaid out of the proceeds of the sale and discharges the debtor from any further obligations in connection therewith. 1.15 The fourth amending law amends the Liberalisation of Interest Rate and Related Matters Law of 1999 by imposing a requirement on credit institutions to stop charging interest once the total outstanding amount of a credit facility, including charges, reaches twice the amount of the original debt. 1.16 Last, the guarantee restructuring amending laws primarily aim at limiting the liability of guarantors. In particular, the fifth amending law provides that where a creditor proceeds to auction or recovery of the mortgaged property, the liability of the guarantors must be limited to the amount of the original loan. This limitation does not apply if the guarantor is also a primary debtor, or in the case of a dispute on the amount of the debt, in which case the creditor must await a court ruling before pursuing the guarantors. In the same vein, the sixth amending law prohibits creditors from taking action against guarantors until a court ruling has been delivered against both the principal debtor and the guarantor. Moreover, it limits the liability of the guarantor to the initial amount of the guarantee, without any subsequent interest and charges, from which the proceeds of the sale of the mortgaged property and the instalments already paid by the principal debtor must be deducted. In the case of a mortgage securing multiple facilities, the proceeds of the sale must be credited as a priority to the credit facility with guarantors and, in the case of multiple credit facilities with guarantors, the proceeds must be credited in a chronological order. The provisions of the sixth amending law apply retroactively.

text: 2. General observations

text: 2.1 The appropriate time to consult the ECB The amending laws were approved by the Cypriot House of Representatives on 6 April 2026, but the legislative procedure is not yet complete pending the ruling of the Supreme Constitutional Court following the referral by the President and the potential eventual promulgation by the President . The ECB must be consulted at an appropriate stage in the legislative process . The ECB has emphasised on several occasions in its opinions that even in cases of particular urgency, or where the proposed legislation has reached an advanced stage, the national authorities are not relieved of their duty under Article 127(4) of the Treaty to consult the ECB regarding any draft legislative provision in its fields of competence such to allow sufficient time for (1) the ECB to examine the draft legislative provisions and (2) the relevant national authorities to take the ECB’s opinion into consideration before the provisions are adopted . Based on this, the ECB should have been consulted on the amending laws when these were in draft form prior to their approval by the Parliament . 2.2 Need for impact assessment It is primarily for the national legal order to balance the interests of the parties in a default or foreclosure situation as fundamental property rights and other socio-economic interests will be at stake . At the same time, the amending laws are being introduced without the benefit of any financial and economic impact assessment. The ECB stresses the critical importance of thoroughly assessing beforehand the impact of the amending laws on the capital adequacy and financial position of credit institutions in the short and medium term, as well as the effects of the amending laws on the functioning of the financial system and the economy, also taking into account moral hazard risks, as further described in paragraphs 3.1.3 and 5.1.1 below. This is reinforced by the fact that, as a result of the first amending law, the foreclosure framework will revert to where it stood prior to 2018 when amendments were introduced by the Cypriot authorities which aimed at addressing the financial crisis and resolving the significant volumes of NPLs in the Cypriot economy.

text: 3. Observations on the foreclosure amending laws

text: 3.1 Effects on financial stability 3.1.1 The first amending law introduces a wider scope of grounds for suspending the foreclosure procedure over an extended period of time upon the filing of a court application. In addition, the first amending law does not prescribe any specific eligibility criteria to limit the scope of borrowers, or

text: other parties entitled to initiate legal proceedings, which thereby significantly widens the range of parties able to trigger a suspension. This may result in a high number of foreclosure procedures being suspended for prolonged periods of time. The negative financial impact would lead to an undue reduction in bank profitability and increase uncertainty. A slower resolution of existing NPLs and potentially higher inflows of NPLs will limit banks’ ability to retain earnings, erode existing capital buffers and negatively affect their resilience to negative economic shocks. Against this background, and considering the importance of portfolios collateralised by residential real estate in total bank assets, the first amending law may have a potentially significant negative impact on the credit institutions affected, as well as implications for financial stability . 3.1.2 The suspension of foreclosure proceedings for primary residences valued at up to EUR 350 000, as envisaged by the second amending law, does not contribute to resolution of the underlying structural issues. Rather, it prolongs them without substantiated justification, disregarding the established borrower protection mechanisms already operative within the Cypriot legal framework. Specifically, the Mortgage-to-Rent scheme provides a structured and targeted avenue through which vulnerable borrowers facing the loss of their primary residence may obtain debt relief. The availability of this instrument, alongside complementary schemes such as the Estia scheme , demonstrates that the Cypriot legal order already possesses proportionate tools capable of addressing the hardship of financially distressed borrowers without necessitating a blanket suspension of creditor enforcement rights. 3.1.3 Furthermore, the second amending law extends the suspension of foreclosures to all borrowers with a primary residence falling below the EUR 350 000 property value threshold, without prescribing any eligibility criteria linked to actual financial vulnerability. The absence of such criteria may incentivise mortgaged borrowers falling within its scope to strategically delay their repayments regardless of their actual repayment capacity, thereby giving rise to moral hazard and eroding the overall credit discipline of borrowers. A risk of contamination for currently performing loans and a broader undermining of the overall payment culture cannot therefore be excluded . 3.1.4 The foreclosure amending laws may give rise to material adverse consequences for credit servicers active in Cyprus, which hold a significant volume of NPLs secured by immovable property. As foreclosure proceedings constitute one of the main enforcement mechanisms available to creditacquiring companies for the resolution of NPLs, any material elongation of recovery timelines risks

text: impairing the cash flow assumptions underpinning their business models, with material consequences for LGD estimates, performance and investor confidence in Cyprus-originated NPL portfolios. Consequently, a deterioration in the performance of such structures risks undermining the broader NPL resolution framework in Cyprus, with attendant implications for financial stability. 3.2 Effects on banking sector 3.2.1 In the context of its direct responsibility for the supervision of significant credit institutions in the euro area, the ECB directly supervises four significant credit institutions in Cyprus. The level of NPLs remains one of the key areas of focus and is being closely monitored from a supervisory perspective. As at end-2025, Cyprus had reduced NPLs within the banking system to approximately EUR 0,83 billion, corresponding to 3.2 % of gross bank loans (excluding central bank loans and loans to credit institutions), and to 1.6 % under the broader EBA Risk Dashboard methodology — which for the first time since 2014 fell below the EU average of 1.8% . However, a much larger legacy stock remained outside bank balance sheets. Credit acquiring companies held approximately EUR 18,2 billion of NPLs on a contractual-value basis, out of a total loan portfolio of EUR 19,35 billion, with a net book value of EUR 3,4 billion , together with approximately EUR 0,95 billion of real estate assets across 8 603 properties, while major banking groups continued to hold foreclosed properties on their own balance sheets. On this broader systemic basis — encompassing both bank NPLs and distressed assets transferred outside the banking sector — the level of identified problematic exposures and foreclosed properties remains significant. 3.2.2 The first amending law could have adverse effects on credit institutions, particularly in areas such as capital adequacy, provisioning requirements and asset quality. These institutions may need to reassess the valuation of their loan portfolios, particularly in cases where exposures are secured by collateral whose realisation may be subject to delay, which could result in significant changes to their provisioning levels and capital reserves. Where foreclosure processes become less effective or more prolonged due to legal or procedural constraints, the expected value to be recovered from such collateral is likely to diminish and become more uncertain. This, in turn, would typically require credit institutions to recognise higher levels of provisioning to adequately reflect the heightened risk of loss. A key factor influencing this impact is the estimation of the LGD parameter, which is heavily dependent on the valuation of real estate collateral. Specifically, banks determine the appropriate ‘haircuts’ on these assets by factoring in variables such as the time required for sale, associated transaction costs, and constraints stemming from legal and market illiquidity. These adjustments may pose considerable challenges and financial pressures for credit institutions. 3.2.3 From a capital perspective, higher provisioning has a direct impact on banks’ capital position, as it reduces profits and, consequently, their capital base. At the same time, loans that remain unresolved for longer periods continue to weigh on balance sheets and may require more capital to be held against them, particularly if the value or enforceability of collateral is weakened. This combination of higher provisioning requirements and increased capital demands may adversely affect capital adequacy ratios and constrain banks’ capacity to extend new lending to the economy.

text: 3.2.4 The first amending law may also have an adverse effect on loan sales and securitisations as it affords legal protection to a wide range of debt, including business debt . It may act as a disincentive to future NPL sales and securitisation transactions. In this respect, the first amending law may constrain credit institutions’ ability to access securitisation markets and execute asset disposals as tools for risk transfer and balance sheet deleveraging. This could, in turn, limit their capacity to generate liquidity, manage NPLs effectively and support the extension of credit to the real economy. 3.2.5 The ability of credit institutions to effectively manage credit risk depends on a reliable, predictable and stable legal framework that adequately balances the interests of both creditors and debtors. However, the foreclosure amending laws introduce changes that may adversely affect the ability of lenders to give effect to the agreed terms of secured credit in Cyprus, which could undermine legal certainty and the adequate management of credit risk in credit institutions. In this respect, it is important to carefully consider the impact of the foreclosure amending laws, especially of the first amending law, on credit agreements in order to ensure legal certainty and avoid undue interference with the contractual and property rights of credit institutions, and to prevent moral hazard from arising in the relationship between creditor and debtor .

text: 4. Observations on the restructuring amending laws

text: 4.1 Effects on financial stability 4.1.1 The third amending law, by providing for the automatic writing-off of any residual debt following the sale or auction of the mortgaged property, gives rise to material concerns from a financial stability perspective. It may constitute a material obstacle to the effective resolution of NPLs and disincentivise credit servicers from acquiring NPL portfolios from credit institutions. Well-functioning secondary markets support the timely resolution of NPLs and facilitate the transfer of the risks of NPLs off credit institutions' balance sheets, thus supporting new lending. Where secondary market activity is curtailed as a result, the presence of significant volumes of NPLs on credit institutions' balance sheets adversely affects their capital adequacy, provisioning levels and capacity to extend credit to the real economy. Consequently, it is essential that the legislative framework preserves the conditions necessary for the efficient transfer of NPL portfolios off the balance sheets of credit institutions . 4.1.2 Additional potential concerns about the impact on credit institutions, which should be assessed, are related to: (1) the retroactive effects of the fourth and sixth amending laws, to the extent that the scope of the fourth amending law extends to existing commercial agreements; (2) reduced interest income stemming from credit facilities as a result of the cap on interest accruals under the fourth amending law; (3) the implications for prudential requirements for credit institutions in relation to mortgages on residential property in order to appropriately reflect the riskiness of related portfolios; and (4) the negative consequences on new lending, with implications for residential real estate market transactions and valuations.

text: 4.2 Effects on the banking sector 4.2.1 The exact impact on the banking sector is unknown since the amending laws did not undergo any impact assessment. However, the restructuring amending laws may potentially have negative implications for credit institutions, with a potential impact on profitability, capitalisation, future lending capacity, and the functioning of the financial system, as well as on the overall cost and conditions of credit . 4.2.2 Moreover, the fourth amending law may affect credit institutions insofar as it affects existing commercial agreements. In such a case, it could have a negative impact on the profitability, capitalisation and future lending capacity of the banking sector. The third amending law could also interfere with commercial agreements between credit institutions and the purchasers of loans and limit the interest that can be accrued.

text: 5. Economic aspects

text: 5.1 Effects on the transmission of monetary policy 5.1.1 From the perspective of borrowers, the amending laws risk reducing the incentives for prudent borrowing and repayment. In particular, the foreclosure amending laws extend the means by which borrowers unable to honour their mortgages can challenge their creditors in foreclosure processes, fostering moral hazard risks, including possible strategic defaults. The third amending law and the guarantee restructuring amending laws, which are not targeted exclusively at debtors or guarantors in need of social protection, but rather grant general rights, may also lead to widespread moral hazard. Existing borrowers will be better off in the short term, as the amending laws, which also include retroactive clauses, reduce the likelihood of entering a foreclosure procedure. However, by reducing the consequences of default, the amending laws may encourage new borrowers to take on more risks. 5.1.2 From the perspective of the lenders and the financial actors involved in residential real estate, the amending laws, by themselves and through the implied changes in the behaviour and incentives of borrowers, increase the credit risk related to real estate lending – both in terms of the severity of actual and potential losses, and in terms of the breadth of affected cases. First, the potential LGD attached to a mortgage increases, especially for the most financially fragile borrowers, as the time to recovery is delayed and the eventual recovery value is subject to greater uncertainty. Indeed, the amending laws provide an incentive for borrowers, or any interested party, to file a legal action against a foreclosure or appeal a ruling in favour of the lender. Second, the number of mortgages at risk may also increase among existing mortgages and, absent any commensurate supply side response of the banks to the changes in behaviour on the demand side, also among new mortgages. 5.1.3 Moreover, lenders face an increase in uncertainty surrounding such credit risk, which is difficult to measure and arises from the uncertain scope, duration and outcome of legal processes. Unstable legislation increases uncertainty, which can lead to negative outcomes, especially in the area of

text: financial contracts such as mortgages. Thus, the severity and breadth of the potential losses are themselves uncertain, adding to the need for lenders to compensate the incurred increase in credit risk, both for sound risk management and for regulatory reasons. 5.1.4 To account for the increased credit risk and the uncertainty surrounding its measurement, creditors would be likely to tighten their lending conditions – including by increasing the required downpayment to mitigate negative effects on LGD –, raise mortgage rates for new borrowers, and reduce their credit supply . The effects even overcompensate for the actual ex post increase in credit risk, given the need to account for increased legal uncertainty surrounding the enforcement of foreclosures. In this respect, the ECB’s bank lending survey shows that banks tend to tighten their credit standards when uncertainty rises. 5.1.5 As a further consequence of the increased borrowing costs and tightened lending conditions, mortgagees would be more financially constrained in general, creating potentially new fragile mortgagees or barring access to the housing market for potential buyers who would have been able to obtain a mortgage at the conditions absent the amending laws. 5.1.6 Through those channels, the amending laws would adversely affect the transmission of monetary policy. Financial systems with weaker creditor rights tend to be associated with less pronounced monetary transmission, especially through the bank lending channel. Moreover, monetary transmission could be affected in an asymmetric way. The amending laws would affect the price and quantity of credit akin to a monetary policy tightening, possibly exacerbated by the increase in uncertainty. While monetary policy could still ease borrowing costs, lenders may be reluctant to extend credit to riskier borrowers under the amending laws, thereby risking an asymmetric effect on monetary transmission. 5.1.7 Overall, while the amending laws probably aim to protect vulnerable households struggling to repay their mortgages, they could have unintended effects and possibly achieve the opposite to their stated purpose of protecting borrowers in their access to housing. Banks would compensate the implied increase in credit risk by tightening financing conditions and reducing credit supply, thereby ultimately making it harder and more costly for households to access residential property. This would adversely affect the transmission of monetary policy to the Cypriot economy. 5.2 Effects on public finances 5.2.1 There may be direct effects for public finances, most notably in relation to the operation of KEDIPES, the Cyprus asset management company, whose aim is to recover, for the benefit of the Cypriot taxpayer, the State support received by the ex-Cyprus Cooperative Bank. The foreclosure amending laws risk impairing KEDIPES’ ability to recover the remaining amount of the State aid, thus impacting State budget revenues. 5.2.2 Potential fiscal risks can also arise as any weakening of the financial system can adversely affect economic activity, which in turn translates into weaker public finances. A fragile financial system can raise contingent liabilities for the State, increasing the possibility of the need for State support to

text: financial institutions, especially during times of crisis. A perception of an increased risk of adverse feedback loops between the banking system and the sovereign can also impinge on the sovereign credit rating. 5.3 Other economic aspects The potential for interference with lenders’ ability to give effect to the agreed terms of secured credit in Cyprus, by suspending the foreclosure procedure, limiting the liability of guarantors and writing off residual debt, might render the secured lending market less attractive, discouraging new entrants. This could stifle competition in financial services in Cyprus due to a perceived increase in legal and regulatory uncertainty, which is also reinforced by frequent and multiple amendments to the legal framework, especially the foreclosure framework . Moreover, if risks to the proper functioning of the credit channel were to materialise, potential negative effects on the economy would be likely . Consequently, as noted in paragraph 2.2 above, the ECB suggests that the Cypriot authorities carry out a thorough analysis of the possible effects of the amending laws on the Cypriot economy .

text: This opinion will be published on EUR-Lex.

text: Done at Frankfurt am Main, 12 June 2026.

text: [signed]

text: The President of the ECB

text: Christine LAGARDE


text: Ν. 3867/2010 «Εποπτεία Ιδιωτικής Ασφάλισης, Σύσταση εγγυητικού κεφαλαίου ιδιωτικής ασφάλισης ζωής, οργανισμοί αξιολόγησης πιστοληπτικής ικανότητας και άλλες διατάξεις αρμοδιότητας του Υπουργείου Οικονομικών», ΦΕΚ Α 128/03.08.2010.

text: Council Decision 98/415/EC of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42, ELI: http://data.europa.eu/eli/dec/1998/415/oj).

text: See paragraph 1.3 and paragraph 5 of Opinion

text: . All ECB opinions are published on EUR-Lex.

text: According to Law 4261/2014 on access to the activity of credit institutions and prudential supervision of credit institutions and investment firms (transposing Directive

text: ), repeal of Law 3601/2007, and other provisions (Government Gazette A, 107/05.05.2014) (N. 4261/2014 «Πρόσβαση στη δραστηριότητα των πιστωτικών ιδρυμάτων και προληπτική εποπτεία πιστωτικών ιδρυμάτων (ενσωμάτωση της Οδηγίας 2013/36/ΕΕ), κατάργηση του νόμου 3601/2007 και άλλες διατάξεις», ΦΕΚ Α, 107/05.05.2014; and articles

text: Α και 55C of the Statute of the Bank of Greece ratified by Law 3424/1927 (Government Gazette A, 298/7.12.1927) (Ν. 3424/1927 «Περί κυρώσεως του από 10 Νοεμβρίου 1927 ΝΔ/τος ''Περί κυρώσεως της από 27 Οκτωβρίου 1927 συμβάσεως περί παραιτήσεως της Εθνικής Τραπέζης της Ελλάδος από του προνομίου εκδόσεως τραπεζικών γραμματίων και περί συστάσεως νέας Τραπέζης υπό την επωνυμίαν «ΤΡΑΠΕΖΑ ΤΗΣ ΕΛΛΑΔΟΣ» και του προσαρτωμένου τη συμβάσει Καταστατικού της Τραπέζης της Ελλάδος''», ΦΕΚ Α, 298/7.12.1927). 5 See, for example, paragraphs 9 and 10 of Opinion

text: , paragraph 2.1 of Opinion

text: and paragraph 2.1 of Opinion

text: ; see also International Monetary Fund’s Staff Concluding Statement of the 2026 Article IV Consultation Mission of 24 March 2026, available at www.imf.org. 6 See paragraph 2.1 of Opinion

text: , paragraph 2.2.2 of Opinion

text: , paragraph 2.11 of Opinion

text: , paragraphs 5.1 and 5.2 of Opinion

text: and paragraph 4 of Opinion

text: See, for example, paragraph 11 of Opinion

text: , paragraph 4 of Opinion

text: , paragraph 3.1 of Opinion

text: , paragraph 2.2.4 of Opinion

text: , paragraph 2.9 of Opinion

text: , paragraph 3.2 of Opinion

text: , paragraph 2.3 of Opinion

text: , paragraph 2.2 of Opinion

text: , paragraph 2.3 of Opinion

text: , paragraph 2.2 of Opinion

text: and paragraph 3.1.2 of Opinion

text: . 8 See also paragraph 5.2 of Opinion

publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 17 June 2026 on the functioning of a Systemic Stability Council (CON/2026/19)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 17 June 2026 on the functioning of a Systemic Stability Council (

text: ) Introduction and legal basis

type: rubrik

text: On 11 May 2026 the European Central Bank (ECB) received a request from the Greek Ministry of National Economy and Finance for an opinion on draft amendments (hereinafter the ‘draft amendments’) to Article 20 (hereinafter the ‘original provision’) of Law No 3867 of 2010 on private insurance supervision, the establishment of a private life insurance guarantee fund, credit rating agencies and other provisions falling within the competence of the Ministry of Finance (hereinafter the ‘draft amendments’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and Article 2(1), third indent, of Council Decision 98/415 , as the draft amendments relate to (1) the Bank of Greece and (2) the European System of Central Banks’ task to contribute to the smooth conduct of policies by the competent authorities relating to the stability of the financial system pursuant to Article 127(5) of the Treaty. In accordance with Article 17.5, first sentence, of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

type: stycke

text: 1. Purpose of the draft amendments

text: 1.1 The draft amendments restate and amend the original provision, which sets out the institutional framework, mandate, composition and powers of the Systemic Stability Council (hereinafter the ‘Council’). 1.2 According to the explanatory memorandum, the draft amendments have been proposed with a view to (1) ensuring the proper functioning of the Council and compliance with the principles of sound administration and effectiveness, and (2) strengthening the institutional framework for supervision and the management of systemic risks in the financial sector by facilitating faster and more informed assessments of information, continuous monitoring of market developments and the prompt submission of recommendations to the Council by two new subcommittees. 1.3 The draft amendments restate that the Council is established within the Ministry of National Economy and Finance and that its mandate comprises the responsibility to analyse the interaction and dynamics among the various systems of the financial sector and to continuously explore precautionary measures for addressing emergency or extreme situations and crises. In particular,

text: the Council: (1) monitors the relationship and dynamics among the systems of the economy, with particular emphasis on capital markets, the banking and insurance systems, liquidity, public debt and government guarantees, as well as on precautionary actions against extreme situations, instability and crises; (2) monitors the financial policy of the Ministry of National Economy and Finance and the needs related to financial stability, submits relevant recommendations, and examines issues arising within the framework of the functioning of the European supervisory institutions; and (3) monitors and ensures the exchange of information between the Ministry of National Economy and Finance and the national independent supervisory authorities of the financial sector, in order to coordinate the financial policy of the Ministry of National Economy and Finance. 1.4 The draft amendments also restate the composition of the Council, which consists of the following eight members: (1) the Minister for National Economy and Finance, (2) the Deputy Minister for National Economy and Finance or, where no Deputy Minister has been appointed, the Undersecretary of State for Fiscal Policy, (3) the Secretary-General for the Financial Sector and Private Debt of the Ministry of National Economy and Finance, (4) the Secretary-General for Economic Policy and Strategy of the Ministry of National Economy and Finance, (5) the Governor of the Bank of Greece, (6) the Deputy Governor of the Bank of Greece responsible for the relevant subject matter, (7) the Chair of the Hellenic Capital Market Commission, and (8) the Chair of the Public Debt Management Agency. The Chair of the Council is the Minister for National Economy and Finance, and is replaced by the Deputy Minister for National Economy and Finance, or, if no Deputy Minister has been appointed, by the Secretary-General for the Financial Sector and Private Debt of the Ministry of National Economy and Finance. In the event of a tie, the Chair is to have the casting vote. 1.5 The draft amendments require the Council to be convened at least once per year. 1.6 The draft amendments establish two subcommittees within the Council, namely a Crisis Management Committee and a Systemic Stability Committee, whose members each consist of the Director of the Financial Policy Directorate of the General Secretariat for the Financial Sector and Private Debt of the Ministry of National Economy and Finance, as well as designated representatives of the Bank of Greece, the Hellenic Capital Market Commission and the Hellenic Deposit and Investment Guarantee Fund. The draft amendments provide that these subcommittees assume, on a proportional basis, the responsibilities of the Council and its monitoring tasks. They meet every six months and, following each meeting, submit an informational memorandum to the Chair of the Council. 1.7 The draft amendments give the right to the Chair of the Hellenic Deposit and Investment Guarantee Fund to attend, upon invitation of the Chair of the Council, and without voting rights, the Council’s meetings. This is in addition to the same possibility currently given by the original provision to other officials such as governors, chairs or chief executive officers of credit institutions, specialised experts, and any other third party whose opinion the Chair of the Council considers would assist the Council’s work. 1.8 The draft amendments restate that the Chair and the Chief Executive Officer of the Hellenic Corporation of Assets and Participations (HCAP) is to be mandatorily invited to meetings of the Council where the discussion concerns credit institutions’ share capital in which the HCAP holds a

text: participation. The resolution authority is to be mandatorily invited for matters relating to resolution and is to participate in meetings without voting rights, represented by a person other than those designated to represent the relevant supervisory authority. 1.9 The draft amendments also replace the wording of the title as well as that which relates to the capacity of certain members of the Council to reflect organisational and institutional updates that have occurred within the respective bodies to whom these members belong.

text: 2. General observations

text: 2.1 The ECB was consulted and adopted an opinion on a draft version of the original provision establishing the Council in 2010 . The ECB understands that the Council has largely been inactive since its establishment, and that the draft amendments are essentially intended to operationalise the Council. 2.2 The ECB notes that, since 2014, the Bank of Greece is the macroprudential authority responsible in Greece for the adoption of the combined buffer requirement, the adoption of borrower-based measures and other macroprudential instruments . 2.3 The ECB in principle welcomes that all the relevant authorities and institutions involved in matters related to financial stability in Greece are represented in the Council , to the extent that this increases effective policy coordination. 2.4 As pointed out in previous opinions, the establishment of national financial stability committees may enhance the ability of national central banks (NCBs) and supervisory authorities to provide analytical support to the European Systemic Risk Board (ESRB) . However, it is necessary to avoid such national committees being entrusted with tasks and powers that potentially conflict with those of the ESRB and which may undermine its effectiveness. Moreover, the legal frameworks of these committees should appropriately reflect the NCBs’ roles, should not constrain the independence of their governors or unduly affect the quality and impartiality of their contributions as members of the ESRB, and should take account of the ECB’s macroprudential supervisory powers in the context of the Single Supervisory Mechanism. Lastly, in view of the importance of ensuring the effectiveness of macroprudential supervisory arrangements at Union level, it is essential to safeguard the ESRB’s ability to perform its tasks independently and to guarantee an authoritative and effective channel for transmitting its warnings and recommendations. Against this background, it is important that the draft

text: amendments ensure that the Council will function in a way that is fully consistent with the abovementioned principles. 2.5 In line with previous opinions , it is equally important that the tasks attributed to the Council do not undermine (1) the Bank of Greece’s institutional independence, or (2) the performance by the Bank of Greece of its ESCB-related tasks under the Treaty and the Statute of the European System of Central Banks and of the European Central Bank. The draft amendments should ensure that these aspects are clearly dealt with. 2.6 In that context, the draft amendments should also clearly set out that the Council’s recommendations for issues related to financial stability are only to be made to the Ministry of National Economy and Finance, so that the Bank of Greece’s independence as macroprudential authority is ensured. 2.7 Moreover, the draft amendments should ensure that the exercise by the Council of its task of monitoring and ensuring the exchange of information between the Ministry of National Economy and Finance and the national independent supervisory authorities of the financial sector is without prejudice to professional secrecy requirements and provisions ensuring the confidentiality of information received by the Bank of Greece in the course of its duties, which the Bank of Greece must adhere to itself .

text: Done at Frankfurt am Main, 17 June 2026.

text: [signed]

text: The President of the ECB

text: Christine LAGARDE

type: vagledning

utgivare: ecb


text: 25 the Single Code and Guideline

text: (EU) 2021/2256

text: contain more granular provisions regarding independence, in particular highlighting that members of staff and members of their bodies should act honestly, independently and impartially. The CRD contains similar wording as inserted by the CRD6 . The ECB highlights that the draft law should be without prejudice to the Single Code and Guideline 2021/2256 in this respect. 2.2.4 Guideline

text: (EU) 2021/2256

text: requires national competent authorities to have mechanisms in place to assess and avoid possible conflicts of interest arising from post-employment occupational activities undertaken by their members of staff and the members of their bodies, including appropriate coolingoff periods . In addition, the Single Code provides for cooling-off periods for members of the ECB’s Supervisory Board of one year (for gainful occupational activity with a significant or less significant credit institution) or six months (for gainful occupational activity with any other financial institution or with any entity engaged in lobbying in relation to the ECB, or consultancy and/or advocacy for the ECB or for any financial institution). With regard to gainful occupational activity with a significant or less significant credit institution, an extension of the cooling-off period up to a maximum of two years is possible where the possibility of conflicts of interest resulting from such gainful occupational activities so requires . The ECB notes that the draft law provides the legal basis for cooling-off periods for the FMA’s Executive Board members and members of staff. This includes a cooling-off period in the event of being hired or performing professional services for credit institutions with which the member of staff or the member of the FMA’s Executive Board have been directly involved for the purposes of supervision or decision-making, including direct or indirect parent undertakings, subsidiaries or affiliates of those institutions, and entities providing services to such institutions . This cooling-off period should be no less than six months for members of FMA staff directly involved in the supervision of credit institutions and no less than 12 months for members of the FMA’s Executive Board. The cooling-off period for members of FMA staff and members of the FMA’s Executive Board in respect of recruitment or professional services for entities conducting lobbying or advocacy activities directed at the FMA is at least three months . The ECB understands that coolingoff decisions are taken by the FMA, and that the draft law establishes no explicit maximum duration. The ECB highlights that the draft law should be without prejudice to the Single Code, as it may be amended from time to time, and must not prevent the possibility of imposing and extending a coolingoff period of a maximum of two years to members of the FMA’s Executive Board that serve as members of the ECB’s Supervisory Board when such an extended period is applied based on the Single Code .

title: Opinion of the European Central Bank of 19 June 2026 on supervisory independence, prevention of conflicts of interest, notifications of material holdings and mergers and divisions, ESG risks, suitability assessments of management bodies and key function holders, and administrative penalties and periodic penalty payments (CON/2026/20)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 19 June 2026 on supervisory independence, prevention of conflicts of interest, notifications of material holdings and mergers and divisions, ESG risks, suitability assessments of management bodies and key function holders, and administrative penalties and periodic penalty payments (

text: ) Introduction and legal basis

text: On 19 May 2026 the European Central Bank (ECB) received a request from the Austrian Ministry of Finance for an opinion on a draft law transposing, inter alia, the amendments to Directive

text: of the European Parliament and of the Council (hereinafter the ‘CRD’) introduced by

text: Directive (EU) 2024/1619

text: of the European Parliament and of the Council (hereinafter the ‘CRD6’) as well as

text: Directive (EU) 2024/2994

text: of the European Parliament and of the Council into Austrian law (hereinafter the ‘draft law’). The draft law amends the Law on banking, the Law on the Financial Market Authority, the Law on savings banks, the Law on investment firms and the Law on credit service providers and credit purchasers. The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and

text: Article 2(1) of Council Decision 98/415/EC

text: , as the draft law relates to specific tasks conferred upon the ECB concerning the prudential supervision of credit institutions pursuant to Article 127(6) of the Treaty. In addition, pursuant to Article 25.1 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’), the ECB may offer advice to, and be consulted by, the competent authorities of the Member States on the implementation of Union legislation relating to the prudential supervision of credit institutions, among other matters. In accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1 Directive

text: of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions, amending Directive

text: and repealing Directives

text: and

text: (OJ L 176, 27.6.2013, p. 338, ELI: http://data.europa.eu/eli/dir/2013/36/oj).

text: Directive (EU) 2024/1619

text: of the European Parliament and of the Council of 31 May 2024 amending Directive

text: as regards supervisory powers, sanctions, third-country branches, and environmental, social and governance risks (OJ L, 2024/1619, 19.6.2024, http://data.europa.eu/eli/dir/2024/1619/oj).

text: Directive (EU) 2024/2994

text: of the European Parliament and of the Council of 27 November 2024 amending Directives

text: and

text: (EU) 2019/2034

text: as regards the treatment of concentration risk arising from exposures towards central counterparties and of counterparty risk in centrally cleared derivative transactions (OJ L, 2024/2994, 4.12.2024, ELI: http://data.europa.eu/eli/dir/2024/2994/oj).

text: Council Decision 98/415/EC of 29 June 1998

text: 1. Purpose of the draft law

text: 1.1 The main purpose of the draft law is to transpose into Austrian law the amendments to the CRD introduced by the CRD6. In addition, the draft law includes, inter alia, provisions that transpose

text: Directive (EU) 2024/2994

text: into Austrian law. The draft law also contains a number of amendments not related to the implementation of Union directives. 1.2 In particular, the draft law transposes the CRD6 provisions regarding (a) the prudential framework for the internal governance of credit institutions and certain investment firms, including the assessment of the suitability of members of the management body and holders of key functions and the role of the Financial Market Authority (FMA) in this respect; (b) a regulatory framework applicable to branches established in the Union by undertakings established in a third country for the purpose of providing banking services there; (c) rules on material transactions planned by credit institutions or (mixed) financial holding companies, namely the acquisition or disposal of qualifying holdings, material transfers of assets and liabilities, and mergers or divisions involving such entities; (d) environmental, social and governance (ESG) risks; (e) administrative penalties, periodic penalty payments and other administrative measures; (f) systemic risk buffers; and (g) supervisory tasks related to risks arising from crypto-asset exposures and the provision of crypto-asset services by amending the Law on banking . The amendments to the Law on banking further implement the provisions of

text: Directive (EU) 2024/2994

text: . 1.3 To transpose

text: Article 4

text: a of the CRD as inserted by the CRD6, regarding the supervisory independence of competent authorities, the draft law amends the Law on the Financial Market Authority . Further changes to the Law on the Financial Market Authority concern the exchange of information between authorities . 1.4 The draft law amends certain provisions of the Law on savings banks, mainly introducing changes regarding the role and renumeration of the Savings Bank Council and for the purposes of alignment with the Law on companies . 1.5 The draft law amends the Law on investment firms in order to transpose

text: Article 110

text: a of the CRD as inserted by the CRD6 on the scope of application to investment firm groups . 1.6 Finally, the draft law amends the Law on credit service providers and credit purchasers by including clarifications regarding the provision of information as well as amendments further aligning the text with Union law, in particular with

text: Directive (EU) 2021/2167

text: of the European Parliament and of the 10, 11 Council .

text: 5 See Article 1 of the draft law.

text: 8 Article 3 of the draft law.

text: 9 Article 4 of the draft law.

text: Directive (EU) 2021/2167

text: of the European Parliament and of the Council of 24 November 2021 on credit servicers and credit purchasers and amending Directives

text: and

text: (OJ L 438, 8.12.201, p. 1, ELI: https://eurlex.europa.eu/eli/dir/2021/2167/oj).

text: 11 Article 5 of the draft law.

text: 2. Supervisory independence and prevention of conflicts of interest

text: 2.1 General observations 2.1.1

text: Article 19 of Council Regulation (EU) No 1024/2013

text: (hereinafter the ‘SSM Regulation’) stipulates that when carrying out the tasks conferred on it by the SSM Regulation, the ECB and the national competent authorities acting within the Single Supervisory Mechanism (SSM) must act independently. Article 31(3) of the SSM Regulation furthermore requires the ECB, in cooperation with the national competent authorities, to: (a) establish and maintain comprehensive and formal procedures including ethics procedures and proportionate periods to assess in advance and prevent possible conflicts of interest resulting from subsequent employment within two years of members of the Supervisory Board; and (b) provide for appropriate disclosures. Those procedures are without prejudice to the application of stricter national rules . The legal basis for those provisions of the SSM Regulation is Article 127(6) of the Treaty. 2.1.2 In view of this independence and these requirements of the SSM Regulation, the ECB has established an ethics framework to ensure the independence of national competent authorities, such as the FMA, when assisting the ECB in carrying out the tasks conferred on it by the SSM Regulation. This ethics framework includes the ECB’s Code of Conduct for high-level ECB officials (hereinafter the ‘Single Code’), which applies, among others, to the members of the Supervisory Board of the ECB when exercising their functions as members of a high-level ECB body, and Guideline

text: (EU) 2021/2256

text: of the European Central Bank (ECB/2021/50) , which is addressed to the national competent authorities of the SSM and establishes ethics requirements applicable to the members of their bodies and the members of staff of the national competent authorities. In view of the responsibility of the ECB for the effective and consistent functioning of the SSM , the national competent authorities must comply with Guideline

text: (EU) 2021/2256

text: (ECB/2021/50) . 2.1.3 In contrast to the ethics framework, which is ultimately based on Article 127(6) of the Treaty, the CRD6, including its provision on the supervisory independence of competent authorities , is based on Article 53(1) of the Treaty. A legal act based on this provision cannot alter the rights and obligations of the ECB and the national competent authorities when carrying out the tasks conferred on them by the SSM Regulation based on Article 127(6) of the Treaty. It follows from settled case-

text: Council Regulation (EU) No 1024/2013 of 15 October 2013

text: conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63, ELI: http://data.europa.eu/eli/reg/2013/1024/oj).

text: 13 See paragraph 2.4 of Opinion

text: , paragraph 2.4 of Opinion

text: , paragraph 2.4 of Opinion

text: , paragraph 2.4 of Opinion

text: , paragraph 2.4 of Opinion

text: , paragraph 2.4 of Opinion

text: and paragraph 2.4 of Opinion

text: 14 Code of Conduct for high-level ECB officials (OJ C 478, 16.12.2022, p. 3).

text: 15 Guideline

text: (EU) 2021/2256

text: of the European Central Bank of 2 November 2021 laying down the principles of the Ethics Framework for the Single Supervisory Mechanism (ECB/2021/50) (OJ L 454, 17.12.2021, p. 21, ELI: http://data.europa.eu/eli/guideline/2021/2256/oj).

text: 17 See paragraph 2.5 of Opinion

text: , paragraph 2.5 of Opinion

text: , paragraph 2.5 of Opinion

text: , paragraph 2.5 of Opinion

text: , paragraph 2.5 of Opinion

text: , paragraph 2.5 of Opinion

text: and paragraph 2.5 of Opinion

text: 18 See

text: Article 4

text: a of the CRD, as inserted by

text: Article 1

text: , point (4), of the CRD6. law of the Court of Justice of the European Union that the different legal bases, namely

text: Article 53(1)

text: and Article 127(6) of the Treaty, cannot be combined as the legal basis for a legal act, in view of the different procedures involved. In particular, measures under Article 53(1) of the Treaty are adopted by the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, and after consulting the Economic and Social Committee (and, if relevant, the ECB in accordance with Articles 127(4) and 282(5) of the Treaty). By contrast, regulations under Article 127(6) of the Treaty are adopted by the Council alone, by way of a special legislative procedure, in which the Council acts unanimously, after consulting the European Parliament and the ECB . 2.1.4 Hence, the amendments made by the CRD6 are without prejudice to the ethics framework, which the ECB has established to ensure the independence of the national competent authorities in the context of the SSM, as both frameworks have their own scope and legal basis. The Union legislator acknowledged this through the CRD6’s amendments to the CRD, which provide that

text: Article 4

text: a(2) of the CRD is without prejudice to the rights and obligations of the national competent authorities pursuant to the SSM established by the SSM Regulation . For the avoidance of doubt, the national legislator may wish to clarify this within the text of the draft law. From an ECB perspective, the CRD6 provisions may nevertheless serve as guidance for establishing safeguards for the independence of the ECB and the national competent authorities when carrying out the tasks conferred on them by the SSM Regulation . 2.2 Specific observations 2.2.1 The Single Code applies, inter alia, to the members of the Supervisory Board of the ECB, including the FMA representative, when exercising their functions as members of the Supervisory Board of the ECB. It also applies to persons replacing the members in meetings of the Supervisory Board in the performance of their duties and responsibilities relating to that high-level body where explicitly provided for in the Single Code. 2.2.2 National competent authorities, including the FMA, are required to take the necessary measures to implement and comply with Guideline

text: (EU) 2021/2256

text: and must inform the ECB of any obstacles that national law poses to their implementation. 2.2.3 Regarding independence, the draft law highlights that the existing legal framework already provides that the FMA is not bound by any instructions in the performance of its duties . The ECB notes that

text: 19 See judgment of the Court of Justice of 29 April 2004, Commission v Council,

text: , ECLI:EU:C:2004:253, paragraphs 57 and 58; and judgment of the Court of Justice of 10 January 2006, Commission v Parliament and Council,

text: , ECLI:EU:C:2006:4, paragraphs 43 to 60.

text: 20 See also paragraph 2.6.2 of Opinion

text: of the European Central Bank of 21 June 2024 on a proposal for a regulation of the European Parliament and of the Council as regards certain reporting requirements in the fields of financial services and investment support (OJ C, C/2024/5048, 16.8.2024, ELI: http://data.europa.eu/eli/C/2024/5048/oj).

text: 21 See

text: Article 4

text: a(2), fourth subparagraph, of Directive

text: , as inserted by the CRD6. This acknowledgement refers directly to the dismissal requirements included in

text: Article 4(2)

text: , second subparagraph, of the CRD6.

text: 22 See paragraph 2.7 of Opinion

text: , paragraph 2.7 of Opinion

text: , paragraph 2.7 of Opinion

text: , paragraph 2.7 of Opinion

text: , paragraph 2.7 of Opinion

text: and paragraph 2.7 of Opinion

text: 24 See Article 3.2 of the Single Code.

text: 25 See Article 4 of Guideline

text: (EU) 2021/2256

text: 28 See

text: Article 17.3

text: , point (b), of the Single Code.

text: 29 The FMA’s Executive Board consists of two members (see Section 5(1) of the Law on the Financial Market Authority), one of whom is a member of the ECB’s Supervisory Board.

text: 30 See Article 2 of the draft law, adding Section 15a(5) to the Law on the Financial Market Authority.

text: 31 See Article 2 of the draft law, adding Section 15a(7) to the Law on the Financial Market Authority.

text: 32 See also paragraph 2.2.3 of Opinion

text: . 2.2.5 In addition, the Single Code sets limits on the establishment of post-employment relationships not only directly with significant or less significant credit institutions, but also with other financial institutions and with ‘any entity engaged in lobbying in relation to the ECB, or consultancy and/or advocacy for the ECB or for any [supervised] institution’ . The ECB notes that, under the draft law, the cooling-off period only applies in respect of employment or the provision of professional services with (a) credit institutions with which the member of staff or the member of the FMA’s Executive Board has been directly involved for the purposes of supervision or decision-making, including the direct or indirect parent undertakings, subsidiaries or affiliates of those institutions; (b) entities providing services to entities referred in (a); and (c) entities conducting lobbying or advocacy activities directed at the FMA on matters for which the member of the FMA’s Executive Board or the member of staff of the FMA was responsible during their employment or term of office. The broader category of ‘other financial institutions’ is not included . Furthermore, the draft law does not cover lobbying and advocacy activities for supervised institutions. The ECB therefore considers that the requirements of the draft law are less restrictive than those of the Single Code. The ECB highlights that the draft law should be without prejudice to the Single Code, as it may be amended from time to time, and must allow the application of the cooling-off period also with respect to other financial institutions and entities conducting lobbying and advocacy activities for supervised institutions with regard to members of the FMA’s Executive Board that serve as members of the ECB’s Supervisory Board. 2.2.6 The prohibition on trading by members of the FMA’s Executive Board and members of staff of the FMA set out in the draft law is less restrictive as regards the relevant entities than the requirements 35 36 set out in the Single Code and Guideline

text: (EU) 2021/2256

text: . The draft law limits the prohibition to financial instruments issued by credit institutions subject to the supervision of the FMA, their direct or indirect parent companies, their subsidiaries or affiliated companies, save for some exceptions, and does not extend to instruments issued by other regulated entities . The ECB highlights that the draft law should be without prejudice to the Single Code, as it may be amended from time to time, and to Guideline

text: (EU) 2021/2256

text: , and must not prevent the possibility of extending such prohibition to financial instruments issued by other regulated institutions. 2.2.7 The Single Code also contains rules, inter alia, on declarations of interests , which are more restrictive than the provisions of the draft law . The ECB notes that the application of the draft law’s less restrictive provisions would be without prejudice to the application of the stricter rules of the Single Code to those individuals who are subject to the Single Code. 2.2.8 The ECB notes that the FMA has the power to adopt regulations if there is a specific statutory delegation . The FMA’s Executive Board must also prepare a compliance code that sets out

text: 33 See Article 17.1 and 17.2 of the Single Code.

text: 34 See Article 2 of the draft law, inserting Section 15a(5) into the Law on the Financial Market Authority.

text: 35 See Article 16 of the Single Code.

text: 36 See Article 11 of Guideline

text: (EU) 2021/2256

text: 37 See Article 2 of the draft law, inserting Section 15a(3) into the Law on the Financial Market Authority.

text: 38 See

text: Article 10

text: 39 See Article 2 of the draft law, inserting Section 15a(10) into the Law on the Financial Market Authority.

text: 40 See Section 22 of the Law on the Financial Market Authority. procedural guidelines on how to conclude private legal transactions between, on the one hand, members of the FMA’s Executive Board and members of its staff and, on the other hand, supervised institutions . The FMA has implemented the Compliance Code as well as an internal code of conduct. The ECB notes the draft law could be amended to empower the FMA to adopt further provisions on conflicts of interest and incompatibilities following termination of office by means of internal regulatory acts (such as the Code of Conduct) to fulfil its obligations arising from its membership in the SSM . 2.2.9 The CRD, as amended by the CRD6, provides that Member States must ensure that members of a competent authority’s governance body can be dismissed if they no longer meet the criteria of appointment or have been convicted of a serious criminal offence . Under the current version of the Law on the Financial Market Authority, the members of the FMA’s Executive Board can be dismissed if an important reason exists, such as in particular: (a) if a condition for appointment is no longer being fulfilled; (b) if it subsequently emerges that a condition for appointment had not been fulfilled; (c) if a gross breach of duty has occurred; (d) in the event of permanent incapacity or if the member concerned is absent from work for a period of longer than half a year as a result of illness, an accident or an infirmity; or (e) if despite supervisory measures having been taken breaches of duty have not been rectified or have not been rectified in a lasting manner . In addition, only persons who are not excluded from the right to be elected to the Austrian National Assembly may be appointed as members of the FMA’s Executive Board . This provision excludes persons who have been convicted of an intentional criminal offence and sentenced to a prison sentence of more than six months without probation, a suspended prison sentence exceeding one year, or a prison sentence exceeding six months for certain corruption offences . The ECB understands that these provisions – which are to be interpreted in conformity with the requirements of

text: Article 4

text: a(2), second subparagraph, of the CRD, as inserted by the CRD6 – enable, in line with the CRD, the dismissal of members of the FMA’s Executive Board if they no longer meet the criteria for appointment or have been convicted of a serious criminal offence, even though the latter point is not explicitly covered by the wording of the draft law.

text: 3. Other provisions transposing the CRD6

text: 3.1 Third-country branches With regard to third-country branches, the ECB notes that certain provisions of the CRD relating to authorisation requirements and minimum regulatory requirements for third-country branches, the supervisory review and evaluation process, supervisory measures and powers and notifications to EBA have not been transposed into Austrian law, nor is the reason for their non-transposition mentioned in the explanatory memorandum accompanying the draft law. The ECB understands that

text: 42 See also paragraph 1.4 of Opinion

text: and paragraph 1.11 of Opinion

text: 43 See

text: Article 4

text: a(2), second subparagraph, of the CRD, as inserted by the CRD6. third-country branches are already required to obtain a licence under Austrian law , which amounts to a more stringent requirement than that imposed by the CRD6. 3.2 Notification of material holdings and mergers and divisions With regard to the notification of material holdings and mergers and divisions, the CRD6 provides that, if the national competent authority does not oppose the relevant operation for which the CRD6 prescribes an assessment period within that assessment period in writing, the relevant operation is to be deemed approved for acquisitions of material holdings or the opinion of the competent authority is to be deemed positive for intragroup mergers and divisions . According to the draft law, the FMA must issue a decision even if it does not impose a prohibition at the request of the prospective purchaser (in the case of acquisitions of material holdings) or at the request of the notifying party (in the case of intragroup mergers and divisions) . The ECB understands these provisions as implying that the FMA must, in contrast to the CRD6, always issue a decision if requested to do so by the respective credit institution. The ECB understands that this obligation on the FMA is of a procedural nature and would not have to be applied by the ECB in cases where the ECB is responsible for the direct supervision of significant credit institutions incorporated in Austria . In addition, it should be noted that the obligation could be interpreted as constraining the discretion of the competent authorities to determine on a case-by-case basis whether to conduct assessments of mergers and divisions or acquisitions of material holdings, as specified by the CRD6 . For the purposes of clarity and transparency, the ECB suggests that the Austrian legislator should consider formulating the obligation to issue a decision on request in a way that makes it clear that this obligation applies only in relation to the FMA, and not to the ECB, and that it does not apply to situations where the competent authority has decided to exercise the CRD6 discretion not to assess the operation. 3.3 ESG risks 3.3.1 According to the CRD6, Member States must ensure that the management body approves and at least every two years reviews the strategies and policies for taking up, managing, monitoring and mitigating the risks the institution is or might be exposed to, including those resulting from the current and short-, medium- and long-term impacts of ESG factors . Pursuant to the CRD6, Member States must ensure that the management body develops and monitors the implementation of specific plans that include quantifiable targets and processes to monitor and address the financial risks arising in the short, medium and long term from ESG factors . The draft law contains no specific reference to

text: 48 See

text: Articles 27

text: a(6) and 27i(4) of the CRD as inserted by the CRD6.

text: 49 See

text: Article 27

text: a(14) of the CRD as inserted by the CRD6.

text: 50 See

text: Article 27

text: i(9) of the CRD as inserted by the CRD6.

text: 51 See Article 1 of the draft law, inserting Section 20d(2) into the Law on banking.

text: 52 See Article 1 of the draft law, inserting Section 20m(8) into the Law on banking.

text: 53 See also paragraph 2.4 of Opinion

text: in which the ECB opined that introducing a deadline in national law is a procedural burden that could jeopardise the ECB’s ability to fully use its supervisory discretion for the (non) assessment of intra-group mergers involving significant institutions.

text: 54 See

text: Articles 27

text: a(7) and 27i(2) of the CRD as inserted by the CRD6. See also paragraphs 3.2.1 to 3.2.3 of Opinion

text: . the responsibility of the management body to approve and review strategies and polices for ESGrisk management and to develop and monitor the implementation of plans that address these risks . 3.3.2 The CRD6 contains further provisions on ESG risks. For example, it requires that institutions need to consider a long-term time horizon of at least 10 years . Moreover, competent authorities must ensure that institutions test their resilience to long-term negative impacts of ESG factors, both under baseline and adverse scenarios within a given timeframe, starting with climate-related factors. For such resilience testing, competent authorities must ensure that institutions include a number of ESG scenarios . The draft law only partially implements these provisions. The draft law requires that the FMA must establish, by regulation, minimum requirements for the proper identification, management, monitoring, and mitigation of ESG risks . The ECB understands that the minimum requirements on resilience testing, scenarios and the minimum time horizon of 10 years will therefore be implemented by the FMA via the delegated regulation provided for under Section 39(4) of the Law on banking. 3.4 Suitability assessment for management bodies and key function holders The ECB understands that the draft law permits credit institutions to designate further persons as key function holders in addition to the heads of internal control functions and, where applicable, the chief financial officer . Such further key function holders would be subject to the suitability requirements currently laid down in the Law on banking and to the internal assessment obligations under the draft law. In the interest of legal certainty and supervisory consistency, the draft law should clarify that the appointment of persons to those additional key function holder positions does not give rise to a notification obligation vis-à-vis the competent authority, unless such persons otherwise fall within a category for which a notification obligation is expressly provided under the Law on banking. In addition, under an amendment to the CRD made by the CRD6, heads of the internal control functions are not to be removed without the prior approval of the management body in its supervisory function . By contrast, the draft law only requires prior notification of the management body in its supervisory function . 3.5 Administrative penalties, periodic penalty payments and other administrative measures 3.5.1 The ECB welcomes that the draft law extends the availability of administrative penalties to additional breaches of law. The ECB takes the view that the dissuasiveness of the sanctioning regime could be further improved by granting the national supervisory authority powers to impose penalties for all breaches mentioned in Articles 66 and 67 of the CRD on an institution and on the individuals that are liable for such breaches. In this respect, the ECB observes that the scope of the persons subject to administrative penalties, periodic penalty payments and other administrative measures has been extended to include senior management, key function holders and other members of staff whose professional activities have a material impact on an institution's risk profile.

text: 58 See

text: Article 87

text: a(2) of the CRD as inserted by the CRD6.

text: 59 See

text: Article 87

text: a(3) of the CRD as inserted by the CRD6.

text: 61 See Article 1 of the draft law, inserting Section 39f(1) into the Law on banking.

text: 64 See Article 1 of the draft law, inserting Section 39(5a) into the Law on banking. 3.5.2 The ECB further notes that, in respect of failure to comply with decisions or to obtain a necessary licence, the draft law refers exclusively to decisions and licences of the FMA . This would not cover the situation where the ECB imposes a requirement or a required ECB permission was not obtained when the institution is a significant institution and then becomes a less significant institution under the direct supervision of the FMA . The ECB also takes the view that it would be desirable for the draft law to clarify whether decisions imposing periodic penalty payments are to be published by the national competent authority and whether the national competent authority enjoys a margin of discretion regarding the imposition of absorption interest in line with the judgment of the General Court in BAWAG PSK v ECB . This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 19 June 2026. [signed] The President of the ECB Christine LAGARDE

text: 67 See judgment of the General Court of 28 February 2024, BAWAG PSK v ECB,

text: , ECLI:EU:T:2024:131.


text: 3 1 Draft law on Lietuvos bankas: Lietuvos Respublikos Lietuvos banko įstatymo Nr. I-678 8, 11, 21 , 43, 43 straipsnių, 2 ir 3 priedų pakeitimo įstatymas, TAR, 26-2357, 2026-02-17.

text: Draft resolution insurance law: Lietuvos Respublikos draudimo ir perdraudimo įmonių gaivinimo ir pertvarkymo sistemos įstatymas, TAR, 26-2356, 2026-02-17.

text: Council Decision 98/415/EC of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42, ELI: http://data.europa.eu/eli/dec/1998/415/oj).

text: Directive (EU) 2025/1

text: of the European Parliament and of the Council of 27 November 2024 establishing a framework for the recovery and resolution of insurance and reinsurance undertakings and amending Directives

text: and

text: (EU) 2017/1132

text: and Regulations

text: (EU) No 1094/2010

text: (EU) No 648/2012

text: (EU) No 806/2014

text: and

text: (EU) 2017/1129

text: (OJ L, 2025/1, 8.1.2025, ELI: http://data.europa.eu/eli/dir/2025/1/oj).

text: See

text: Article 3 of Directive (EU) 2025/1

text: See Article 45(1) of the Law on Lietuvos bankas: Lietuvos Respublikos Lietuvos banko įstatymas. Valstybės žinios, 1994, Nr. 99-1957. 8 See Article 67(8) of the draft law on insurance resolution. 9 See Article 45(1) of the Law on Lietuvos bankas. 10 See Article 21 (7) of the draft law on Lietuvos bankas. 11 See Article 21 (1) of the Law on Lietuvos bankas. 1 12 See

text: Article 21 (7)

text: , and Annex 2, of the draft law on Lietuvos bankas. 1 13 See Article 21 (2) of the Law on Lietuvos bankas. 1 14 See

text: Article 21 (7)

text: and Annex 2, paragraph 6, of the draft law on Lietuvos bankas.

text: See Article 6.271 of the Civil Code, Lietuvos Respublikos civilinis kodeksas. Valstybės žinios, 2000, Nr. 74-2262. 19 See

text: Article 6.271

text: (1) of the Civil Code, Lietuvos Respublikos civilinis kodeksas. Valstybės žinios, 2000, Nr. 74-2262. 20 See Article 45(1) of the Law on Lietuvos bankas. 21 See Article 6.271 of the Civil Code. 22 See Decision of Vilnius Regional Administrative Court, of 2 September 2013, proc. No. I-2737-624/2013. 23 See Decision of Supreme Administrative Court of Lithuania, of 8 November 2016, proc. No. A-1690-492/2016; Decision of Supreme Administrative Court of Lithuania, of 6 April 2021, proc. No. eA-425-822/2021. 24 See Article 45(1) of the Law on Lietuvos bankas. 25 See Decision of Supreme Administrative Court of Lithuania, of 17 September 2025, proc. No. eA-111-520/2025. 26 See judgment of 13 September 2022, Banka Slovenije,

text: , ECLI:EU:C:2022:670, paragraphs 53, 54, 57 and 97. See also paragraph 2.2.1 of Opinion

text: , paragraph 3.1 of Opinion

text: and paragraph 3.2.2 of Opinion

text: . All ECB opinions are published on EUR-Lex. 27

text: Council Regulation (EC) No 3603/93 of 13 December 1993

text: specifying definitions for the application of the prohibitions referred to in Articles

text: and

text: b (1) of the Treaty (OJ L 332, 31.12.1993, p. 1, ELI: http://data.europa.eu/eli/reg/1993/3603/oj).

text: , ECLI:EU:C:2022:670, paragraphs 67 to 75 and 84. See also paragraph 2.2.2 of Opinion

text: , paragraph 3.2.1 of Opinion

text: and paragraph 3.2.3 of Opinion

text: . 29 See judgment of 13 September 2022, Banka Slovenije,

text: , ECLI:EU:C:2022:670, paragraph 75. See also paragraph 2.2.3 of Opinion

text: , paragraph 3.2.2 of Opinion

text: and paragraph 3.2.4 of Opinion

text: . 30 See paragraph 2.2.3 of Opinion

text: , paragraph 3.2.3 of Opinion

text: and paragraph 3.2.5 of Opinion

title: Opinion of the European Central Bank of 02 July 2026 on the designation of Lietuvos bankas as resolution authority for insurance and reinsurance undertakings (CON/2026/21)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 02 July 2026 on the designation of Lietuvos bankas as resolution authority for insurance and reinsurance undertakings (

text: ) Introduction and legal basis

text: On 3 June 2026 the European Central Bank (ECB) received a request from the Lithuanian Ministry of Finance for an opinion on a draft law amending Articles 8, 11, 21¹, 43 and 43³ and Annexes 2 and 3 of Republic of Lithuania Law No I-678 on Lietuvos bankas (hereinafter the ‘draft law on Lietuvos bankas’) and on a draft law on the recovery and resolution framework for insurance and reinsurance undertakings of the Republic of Lithuania (hereinafter the ‘draft law on insurance resolution’, together with the draft law on Lietuvos bankas, the ‘draft laws’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and Article 2(1), third and sixth indents, of

text: Council Decision 98/415/EC

text: , as the draft laws relate to Lietuvos bankas and rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets. In accordance with

text: Article 17.5

text: , first sentence, of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft laws

text: 1.1 The draft laws form part of a package of draft legislation whose main purpose is to transpose

text: Directive (EU) 2025/1

text: of the European Parliament and of the Council into Lithuanian law. 1.2 The draft laws implement the requirement under

text: Directive (EU) 2025/1

text: that each Member State must designate, for insurance and reinsurance undertakings, one or more resolution authorities that are empowered to apply resolution tools and exercise resolution powers. The draft laws designate Lietuvos bankas for this purpose . 1.3 The draft laws set out the rules relating, inter alia, to: (a) the liability regime applicable to Lietuvos bankas in the exercise of its functions as the resolution authority for insurance sector undertakings; (b) the

text: financing of the activities of Lietuvos bankas in its capacity as the resolution authority for insurance sector undertakings; and (c) the financing of resolution actions and the resolution fund. 1.4 The draft law on insurance resolution provides that the relevant provisions of the Law on Lietuvos bankas apply mutatis mutandis both to compensation for damage resulting from unlawful actions of the resolution authority or its employees in connection with the implementation of resolution actions or the performance of other functions assigned under that law, and to the reimbursement of costs incurred in connection with proceedings or claims brought against employees of the resolution authority . Pursuant to the Law on Lietuvos bankas, damage resulting from unlawful actions of Lietuvos bankas or its staff members in connection with the performance of financial market supervision is compensated only where the person that has suffered damage proves that the damage was caused intentionally or by gross negligence on the part of Lietuvos bankas or its staff members . 1.5 The draft law on Lietuvos bankas provides that the provisions governing the financing of the activities of the resolution authority for financial sector entities apply mutatis mutandis to the resolution authority for insurance sector entities . Consequently, the model under which the activities of the resolution authority for financial sector entities are financed through contributions paid by financial market participants would also apply in respect of insurance sector entities. The basis for calculating the contribution, together with the maximum contribution rate, of each market participant is set out in the draft law on Lietuvos bankas . The annual contribution level is to be established by Lietuvos bankas . For insurance sector entities, contributions are to be calculated by reference to insurance and reinsurance premiums under contracts concluded in Lithuania and are subject to a maximum rate of 0,065 % . 1.6 Under the draft law on insurance resolution, resolution actions are to be financed from the cash and/or other liquid assets of the entity subject to resolution . The resolution fund that is to be established for the purpose of financing resolution actions will be financed through contributions by insurance and reinsurance undertakings, in addition to loans and default interest paid by insurance and reinsurance undertakings .

text: 2. Liability of Lietuvos bankas as a resolution authority for insurance and reinsurance undertakings

text: 2.1 The ECB understands that, by applying the relevant provisions of the Law on Lietuvos bankas mutatis mutandis to the performance of resolution functions under the draft law on insurance resolution, the draft laws establish a limited liability regime for Lietuvos bankas when acting as resolution authority for insurance and reinsurance undertakings. Accordingly, Lietuvos bankas is liable for damage resulting from unlawful actions only in cases of intent or gross negligence.

text: 2.2 The ECB understands that this limited liability regime differs from the general rule on public liability under Lithuanian civil law. Under the Civil Code, damage caused by unlawful acts of public authorities must be compensated by the State from the State budget irrespective of fault . Under this general rule, public liability arises where three conditions are met: there is an unlawful act of a public authority, damage occurs, and there is a causal link between the unlawful act and the damage . By contrast, under the limited liability regime established by the draft law on insurance resolution, a person that has suffered damage would be required to prove not only unlawfulness, damage and causation, but also intent or gross negligence. 2.3 The ECB understands that Lithuanian case-law has not always been entirely consistent as regards the relationship between the limited liability regime under the relevant provisions of the Law on Lietuvos 20 21 bankas and the general public liability regime under the Civil Code . In certain cases, the courts have taken the view that the general no-fault public liability regime under the Civil Code should prevail in respect of Lietuvos bankas . However, the most recent case-law has taken a different approach, recognising the limited liability applicable to Lietuvos bankas as a lex specialis in relation to the no-fault public liability regime where damage is alleged to have been caused by Lietuvos bankas or its staff 23 24 members . Also, in 2025, the constitutionality of the relevant provisions of the Law on Lietuvos bankas was again raised before the Court, but this issue was not addressed in its judgment . Against this background, the ECB understands that the current case-law supports the application of the limited liability regime laid down in the relevant provisions of the Law on Lietuvos bankas in the context of the draft law on insurance resolution.

text: 3. Specific observations

text: 3.1 In accordance with Article 14.4 of the Statute of the European System of Central Banks and of the European Central Bank, the national central banks (NCBs) may perform functions other than those specified in that Statute, unless the Governing Council finds that those functions interfere with the objectives and tasks of the European System of Central Banks. Where a Member State assigns such a function to its NCB, that NCB is responsible and liable for its performance. Nevertheless, when defining the responsibility and liability of an NCB in relation to that function, Member States are required to comply with their obligations deriving from Union law and, in particular, Article 123(1) of the Treaty . 3.2 Article 123(1) of the Treaty prohibits the NCBs from granting overdraft facilities or any other type of credit facility to public authorities and bodies of the Member States.

text: Article 1(1)

text: , point (b), of Council Regulation No 3603/93 defines the term ‘other type of credit facility’ for the purposes of Article 123 of the Treaty

text: as, inter alia, any financing of the public sector’s obligations vis-à-vis third parties. Accordingly, the NCB concerned must not assume obligations vis-à-vis third parties that could potentially be incumbent on the public sector. Consequently, the NCB concerned must not finance pre-existing obligations vis-à-vis third parties that are incumbent on other public authorities or bodies and the effective financing of the obligations vis-à-vis third parties by the NCB concerned must not result directly from the measures adopted by, or from the policy choices made by, other public authorities or bodies . 3.3 The ECB notes that while the draft laws do not impose any financing obligations on Lietuvos bankas, the designation of Lietuvos bankas as resolution authority for insurance and reinsurance undertakings requires that the conditions under which Lietuvos bankas is to exercise this function are in line with the above limitations deriving from Article 123(1) of the Treaty. In particular, the liability of Lietuvos bankas when exercising the function of resolution authority for insurance and reinsurance undertakings must be limited to infringements of a serious nature of the rules imposed on Lietuvos bankas in that context . The ECB understands that the specific liability regime under the Law on Lietuvos bankas applies in this regard. That regime provides for liability resulting from unlawful actions of Lietuvos bankas or its staff members only where the person that has suffered damage proves that the damage was caused intentionally or by gross negligence on the part of Lietuvos bankas or its staff members. The ECB notes that the existence of gross negligence must be assessed taking into account the specific circumstances of resolution of insurance and reinsurance undertakings, including the urgency faced by Lietuvos bankas or its staff members and the complexity of the specific case at hand . These limitations address the requirement that the liability of Lietuvos bankas when exercising the function of resolution authority for insurance and reinsurance undertakings must be limited to infringements of a serious nature.

text: This opinion will be published on EUR-Lex.

text: Done at Frankfurt am Main, 2 July 2026.

text: [signed]

text: The President of the ECB

text: Christine LAGARDE