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).

text: Directive

text: of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives

text: and

text: and

text: Regulation (EU) No 1093/2010

text: (OJ L 60, 28.2.2014, p. 34).

text: See also paragraph 2.1 of Opinion

text: on mortgage amortisation requirements.

text: Recommendation of the European Systemic Risk Board of 4 April 2013 on intermediate objectives and instruments of macro-prudential policy (

text: ) (OJ C 170, 15.6.2013, p. 1).

text: See also “Governing Council statement on Macroprudential Policies” of 15 December 2016.

text: See paragraph 2 of Opinion

title: Opinion of the European Central Bank of 7 April 2017 on the amendment of Financial Supervisory Law (CON/2017/11)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 7 April 2017 on the amendment of Financial Supervisory Law (

text: ) Introduction and legal basis

text: On 15 February 2017 the European Central Bank (ECB) received a request from the German Federal Ministry of Finance for an opinion on an Act on the Amendment of Financial Supervisory Law in connection with establishing the legal foundations for being able to take measures in the future when deemed necessary in response to threats to the stability of the financial system and for amending the transposition of the Directive on credit agreements for consumers relating to residential immovable property (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the sixth indent of

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

text: , as the draft law relates to (1) rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets and (2) the specific tasks conferred upon the ECB concerning the prudential supervision of credit institutions under Article 127(6) of the Treaty. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 According to its explanatory memorandum, the draft law is intended to (1) implement recommendations of the German Financial Stability Council aiming to create the legal basis for macro-prudential tools for regulating the granting of new loans for the construction or purchase of residential immovable property, (2) increase legal certainty with respect to the assessment of the creditworthiness of mortgage borrowers in connection with the transposition of the

text: Directive (EU) 2014/17

text: of the European Parliament and of the Council , and (3) transpose certain information duties required by the Benchmark-

text: Regulation (EU) 2016/1011

text: . 1.2 In order to counteract potential risks to the stability of the national financial system, the draft law sets out the legal basis for instruments that would enable the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) to impose certain minimum

text: standards upon lenders in connection with the granting of new loans for the construction or acquisition of residential property, such as (1) an upper limit for the ratio between the sum of all debt resulting from a residential property financing transaction and the market value of the residential property (loan-to-value ratio – LTV), (2) a maximum time limit for the repayment of certain parts of a loan, or, in the case of loans due for repayment at the end of their term, a maximum maturity (amortisation requirement), (3) an upper limit upon the total servicing of all debts in proportion to the borrower’s income (debt-service-to-income – DSTI) or, where the borrower is not a natural person (e.g., a company), a lower limit upon the proportion of the borrower’s inflows of funds to the borrower’s debt servicing obligation within a specific time frame (debt-service coverage ratio – DSCR) and (4) an upper limit for the ratio of overall indebtedness to the borrower’s income (debt-to-income ratio – DTI). 1.3 In the event that these macroprudential instruments should be applied for financial stability purposes, BaFin shall also specify (1) which proportion of a credit institution’s new lending business for residential property within a specific period shall not be subject to the restrictions that have been established (free quota) and (2) the loan amount up to which one or more restrictions do not apply (de minimis threshold), with an upper limit for the share of the loan volume that may be issued under the de minims threshold in relation to the total amount of new residential immovable property lending business during a specific period. 1.4 Exemptions apply to the issuing of loans (1) for the expansion, modification or renovation of residential property already owned by the borrower, (2) for measures, for which social housing funding under the Housing Allowance Act (Wohnraumförderungsgesetz) or in accordance with the relevant provisions under the regional law of the Federal State concerned has been approved, (3) for projects, in respect of which loans have already been granted to the same borrower prior to the restrictions referred to in paragraph 1.1 being established, insofar as the total amounts of such new loans does not exceed the amount remaining after amortisations of the previous loan financing granted prior to the restrictions being established (follow-up financing). 1.5 In order to avoid regulatory arbitrage and distortions of competition, the scope of the draft law extends to all commercial lenders active in the residential property market, i.e. credit institutions, insurance undertakings and investment companies. 1.6 The Federal Ministry of Finance is empowered to issue a regulation for each of these commercial lenders’ sectors that specifies (including, but not limited to) (1) the definitions of loans and residential immovable property, including loans that will not be subject to the instruments, (2) the upper limits, time periods and the calculation of ratios and other relevant parameters, (3) the free quotas and the de minimis threshold, (4) the regular review of the measures, and (5) details regarding the collaboration between BaFin and Deutsche Bundesbank in connection with the application of this provision. 1.7 The Federal Ministries of Finance and Justice are also empowered to issue a regulation containing guidelines on the criteria and methods to assess the creditworthiness of residential immovable property loans which contains in particular (1) factors relevant for the assessment whether borrowers are likely to meet their obligations under a loan agreement and (2) applicable procedures for the collection and verification of information.

text: 2. Observations

text: 2.1 The ECB welcomes the intention to increase legal certainty with respect to the assessment of the creditworthiness of mortgage borrowers in order to avoid unjustified restrictions in the granting of mortgage loans in Germany. 2.2 The ECB also welcomes that recommendations made by the German Financial Stability Council aiming to create macro-prudential tools regarding the granting of new loans for the construction or purchase of residential property will be implemented by amending the relevant financial supervisory legislation. Imbalances in the residential immovable property sector that could result from overvaluation of residential property accompanied by excessive credit provision can have significant negative implications for financial stability and the real economy. Against this background, the core objectives of the draft law seem appropriate, namely to create instruments that enable the BaFin to impose certain minimum standards upon lenders in connection with the issuance of new residential mortgage loans, with a view to strengthening the resilience of the financial system and to counteracting the cyclical build-up of systemic risks, when deemed necessary. The objectives are also in line with the principles set out in the European Systemic Risk Board’s Recommendation on intermediate objectives and instruments of macro-prudential policy , in particular with regard to the objective to mitigate and prevent excessive credit growth and leverage. 2.3 From a financial stability perspective, the ECB welcomes the implementation of a legislative framework for borrower-based measures in all euro area countries. The measures contained in the draft law enabling BaFin to create macro-prudential tools to counteract potential risks to the stability of the national financial system seem appropriate to the extent that they aim at promoting responsible borrowing and lending, enforcing market discipline, reducing credit risk and increasing the transparency of credit institutions’ activities. The ECB understands that in line with recommendation of the German Financial Stability Council, the draft law establishes a legal basis for imposing certain minimum standards upon lenders in connection with the granting of new loans. The four different instruments envisaged by the draft law will allow the BaFin to either activate only one, a combination of or all instruments depending on the circumstances jeopardising financial stability. This enables the BaFin to respond in a flexible and proportionate way in relation to potential risks to financial stability. A thorough quantitative impact assessment is, however, important to verify the effect and appropriateness of the draft law, as well as a regular review of the DSTI, DSCR, DTI and LTV ratios to take into account the implications of changes in macroeconomic and financial conditions. The scale of exemptions from the scope or specific provisions should be proportionate to the overall objective to be achieved, which is to curb excessive lending for the construction and purchase of residential property and prevent overindebtedness

text: 2.4 The draft law requires the BaFin to inform the ECB of its intention to issue a decision of general application (Allgemeinverfügung), specifying the macroprudential instruments referred to in paragraph 1.1. In addition, the ECB expects the Ministry of Finance to consult the ECB in accordance with Article 127(4) of the Treaty on a draft regulation addressing the matters referred to in paragraph 1.6 above, and the Federal Ministries of Finance and Justice will inform the ECB of their intention to issue a regulation on the criteria and methods to assess the creditworthiness of residential immovable property loans, as referred to in paragraph 1.7 above. 2.5 In view of the existing framework on the collection of financial data relevant e.g. for consumer lending, and in the absence of a targeted legal provision, there is a need to fully ensure the availability of harmonised data on all types of relevant commercial lenders whose lending for the construction or purchase of residential property is subject to the instruments when activated, e.g. for impact assessment purposes. 2.6 In particular with regard to setting the ratios specified in paragraph 1.2 above, the decision of general application (Allgemeinverfügung) should be simple, easily applicable by both commercial lenders and borrowers and easy to understand. These criteria should also be ensured in relation to potential regional limitations.

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

text: Done at Frankfurt am Main, 7 April 2017.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI


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). 2 See paragraph 3 of the draft law. 3 See paragraph 3 of the draft law.

text: See paragraph 4 of the draft law. 5 See paragraph 8 of the draft law. 6 See paragraph 9 of the draft law. 7 See paragraph 10(3) of the draft law. 8 See paragraph 10(5) of the draft law. 9 Directive

text: of 25 November 2009 of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (OJ L 335, 17.12.2009, p. 1).

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). 11 Article 123 of the Treaty also serves the objective of maintaining price stability and reinforces central bank independence.

text: See for example, paragraph 3.1 of Opinion

text: , paragraph 2.2 of Opinion

text: , paragraph 2 of Opinion

text: , paragraph 2 of Opinion

text: , and paragraphs 6 to 8 of Opinion

text: . All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 13 See also paragraph 3.3.4.2 of Opinion

text: , paragraphs 4.3 and 4.4 of Opinion

text: , paragraphs 3.3 and 3.4 of Opinion

text: and paragraph 3.1 of Opinion

text: . 14 See, in particular, sections 5A(1)(f) and 6A(2)(b) of the Central Bank Act 1942 (as amended). 15 In addition to the Investment Intermediaries Act 1995 and the Consumer Credit Act 1995.

text: See sections 2 and 32D and Schedule 2, Part 1 of the Central Bank Act 1942.

text: See also paragraph 3.3.4.3.4 of Opinion

publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 7 April 2017 on the provision of flood insurance (CON/2017/12)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 7 April 2017 on the provision of flood insurance (

text: ) Introduction and legal basis

type: rubrik

text: On 28 February 2017 the European Central Bank (ECB) received a request from the Chairman of the Oireachtas (Irish National Parliament) Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach (Irish Prime Minister) for an opinion on a Flood Insurance Bill 2016 (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

text: , as the draft law relates to the Central Bank of Ireland (CBI). In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

type: stycke

text: 1. Purpose of the draft law

text: 1.1 The draft law contains provisions intended to achieve fairness in the market for property and flood insurance in Ireland. In order to achieve this purpose, the draft law places certain obligations on insurance undertakings carrying out business in Ireland (hereinafter ‘insurers’) and confers certain powers upon the CBI. 1.2 There are two aspects of property and flood insurance provision that are covered by the draft law. First, the draft law prohibits insurers from discriminating, when offering property insurance policies, between (a) persons living in areas designated as being at low to medium risk of flooding (hereinafter ‘affected persons’); and (b) persons living in areas which are neither at low to medium risk of flooding nor designated as being at high risk of flooding (hereinafter ‘unaffected persons’) . Insurers are prohibited from discriminating in their decision on whether to offer an insurance policy to an affected or an unaffected person, the price at which a policy is offered (unless the price is reasonably justified by the current risk profile of the property) and other terms on which it is offered . The prohibition on discrimination does not appear to prevent insurers from calculating a higher premium for affected persons than for unaffected persons, subject to reasonable justification

text: based on the current risk profile of the property. Second, the draft law prohibits insurers from unreasonably refusing to offer an insurance policy to affected persons, or offering a policy at an unreasonable price or on unreasonable terms to them . This prohibition also appears to be limited as insurers are permitted to offer a price which is reasonably justified by the current risk profile associated with a property. 1.3 The draft law confers upon the CBI the power to carry out an assessment of the manner in which an insurer deals with applications for insurance by affected persons . This assessment may consider the extent to which the insurer in question acts in compliance with the draft law’s prohibition on discrimination and the duty not to act unreasonably in its dealings with an affected person. The draft law does not set any further parameters for such an assessment or the circumstances in which the CBI might carry out such an assessment. 1.4 Where the CBI decides to perform such an assessment, the draft law confers upon the CBI the powers to issue directions to the insurer concerned to take steps or adopt or cease practices as it considers appropriate and necessary to ensure compliance by that insurer with its obligations under the draft law . 1.5 With regard to enforcement, the draft law confers powers on the CBI to enforce such directions on insurers that fail to comply with them, by applying to the High Court for an enforcement order . When granting the enforcement order, the High Court must also impose a fine on the insurer, unless the High Court determines that it would be unjust to impose such a fine. In such a case, it may impose a lesser fine or dispense with the requirement to impose a fine .

text: 2. General observation

text: This opinion does not address whether the draft law is compatible with Directive

text: of the European Parliament and of the Council . The ECB will only assess the provisions of the draft law that impact on the tasks of the CBI as a national central bank (NCB) and as a member of the Eurosystem and the European System of Central Banks (ESCB).

text: 3. Conferral of new tasks on the CBI

text: 3.1 The draft law extends the CBI’s current supervisory responsibilities in relation to insurance undertakings and expands its consumer protection-related mandate to include the tasks described in paragraphs 1.3 to 1.5. In the context of a proposed conferral of new tasks on an NCB in the ESCB, it is necessary to assess such a conferral against the prohibition on monetary financing

text: under Article 123 of the Treaty. For the purposes of that prohibition,

text: Article 1(1)

text: (b)(ii) of

text: Council Regulation (EC) No 3603/93

text: defines ‘other type of credit facility’, inter alia, as ‘any financing of the public sector’s obligations vis-à-vis third parties’. 3.2 As one of the objectives of the monetary financing prohibition, which may not be circumvented, is ensuring a sound budgetary policy of Member States , the task of financing measures, which are normally the responsibility of the Member States, and financed from their budgetary sources rather than from the NCBs’, must not be entrusted to NCBs by law. In order to decide what constitutes a form of financing of the public sector’s obligations vis-à-vis third parties, which can be translated as the provision of central bank financing outside the scope of central bank tasks, an assessment of whether the task to be undertaken by an NCB is a central bank task or a government task, i.e. a task within the responsibility of the Member States, needs to be carried out on a case-by-case basis. In other words, sufficient safeguards must be in place to ensure that circumventions of the objectives of the monetary financing prohibition do not take place. 3.3 As part of its discretion in the exercise of its duty, on the basis of

text: Article 271

text: (d) of the Treaty and Article 35.6 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’), to ensure that NCBs honour the obligations laid down by the Treaty, the Governing Council has endorsed safeguards of that kind in the form of criteria for determining what may be seen as falling within the scope of a public sector’s obligation within the meaning of

text: Article 1(1)

text: (b)(ii) of

text: Regulation (EC) No 3603/93

text: or, in other words, constitute a government task as follows: First, central bank tasks are in particular those tasks that are related to the tasks that have been conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB. These tasks are mainly defined in

text: Article 127(2)

text: , (5) and (6) and Article 128(1) of the Treaty, as well as

text: Article 22

text: and Article 25.1 of the Statute of the ESCB. Second, as Article 14.4 of the Statute of the ESCB allows NCBs to perform ‘other functions’, new tasks, i.e. tasks that are not related to tasks that have been conferred upon the ECB and the NCBs, are not precluded per se. However, new tasks that are undertaken by an NCB and which are atypical of NCB tasks or which are clearly discharged on behalf of and in the exclusive interest of the government or of other public sector entities should be considered government tasks. Third, an important criterion for qualifying a new task as atypical of an NCB task or as being clearly discharged on behalf of and in the exclusive interest of the government or other public sector entities is the impact of the task on the institutional, financial and personal independence of that NCB. In particular, the following aspects should be taken into account:

text: (a) whether the performance of the new task creates conflicts of interest with existing central bank tasks which are not adequately addressed and does not necessarily complement those existing central bank tasks. If a conflict of interest arises between existing and new tasks, sufficient safeguards to mitigate that conflict should be in place. The complementarity between a new task and the existing central bank tasks should not be interpreted broadly, so as to lead to the creation of an indefinite chain of ancillary tasks. Such complementarity should also be examined in relation to the financing of those tasks; (b) whether without new financial resources the performance of the new task is disproportionate to the NCB’s financial or organisational capacity and may have a negative impact on the capacity to perform properly the existing central bank tasks; (c) whether the performance of the new task fits into the institutional set-up of the NCB in the light of central bank independence and accountability considerations; (d) whether the performance of the new task harbours substantial financial risks; (e) whether the performance of the new task exposes the members of the NCB decision-making bodies to political risks which are disproportionate and may also have an impact on their personal independence and, in particular, on the guarantee of term of office set out in Article 14.2 of the Statute of the ESCB. 3.4 On the basis of the criteria set out above, the following paragraphs assess whether the CBI’s new tasks are in line with the monetary financing prohibition. 3.4.1 New tasks related to the tasks conferred upon the ECB and the NCBs by the Treaty and the

text: Statute of the ESCB

text: The prudential supervision of insurance undertakings, and the terms on which they provide insurance policies, and the protection of consumers of financial services are not expressly mentioned among any of the basic central banking tasks listed in

text: Article 127(2)

text: or (5) of the Treaty or otherwise conferred upon the NCBs by the Statute of the ESCB. Indeed, under Article 127(6) of the Treaty, the Council may confer specific tasks upon the ECB concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings. While Article 127(5) of the Treaty provides that the ESCB shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the stability of the financial system, the ESCB contribution in this respect does not imply the conferral of any original competences on the ECB. Against this backdrop, the new tasks conferred on the CBI under the draft law are not related to the tasks conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB. Consequently, as a next step, the conferral of these tasks by the draft law on the CBI must be closely scrutinised to assess whether they constitute government tasks and whether the related funding gives rise to monetary financing concerns.

text: 3.4.2 Tasks which are atypical of NCB tasks

text: The draft law’s conferral of tasks in relation to a specific area of insurers’ activity may not be atypical of NCB tasks based on the understanding that these tasks do not interfere with the NCB’s ESCB-related tasks and provided that those tasks are a complementary specification of:

text: (a) an NCB’s existing role as prudential and conduct of business supervisor of insurance undertakings, a role which is currently fulfilled by numerous ESCB NCBs ; and/or (b) existing consumer protection tasks in the area of financial services, a role which is currently also fulfilled by numerous ESCB NCBs . In this regard, it may be observed that a central bank’s pursuit of legislative mandates in several areas may lead to inherent tensions between the multiple objectives it is bound to pursue, and require the central bank to balance competing interests in a manner more appropriate for a government. The CBI is already responsible for the prudential supervision of insurance undertakings as well as supervision of their business conduct. It also has a broad consumer protection mandate in the field of financial services, including insurance . Its responsibilities in this regard include ensuring compliance with, inter alia, the Consumer Protection Act 2007, the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 and 2000, European Communities (Distance Marketing of Consumer Financial Services) Regulations 2004 and the Non- Life Insurance (Provision of Information) (Renewal of Policy of Insurance) Regulations 2007. The Consumer Protection Code 2012, which the CBI adopted pursuant to section 117 of the Central Bank Act 1989 and section 61 of the Insurance Act 1989 , imposes binding obligations on, inter alia, insurance undertakings with respect to the manner in which they deal with customers and consumers. The Central Bank Acts 1942 – 2015 provide the CBI with investigatory, supervisory and enforcement powers designed to ensure that it can carry out its prudential and consumer protection mandates. In the case of the draft law, it specifically confers powers upon the CBI to monitor and take action in relation to insurers’ conduct vis-à-vis consumers, i.e. potential discrimination or unreasonable actions, albeit in the particular sphere of property insurance. Therefore, it follows that, given the CBI’s mandate under national law for consumer protection in the field of financial services, and, more broadly, for financial stability, roles which are currently also fulfilled by numerous ESCB NCBs, the CBI’s new tasks under the draft law may be argued to be not atypical of a central bank. For the same reasons, the tasks conferred by the draft law appear to be so closely related to the CBI’s existing tasks and mandates that the overall objectives and interests to be pursued by the CBI remain largely unchanged. The new tasks would therefore not be regarded as being discharged in the exclusive interest of the government. The CBI is the sole supervisory authority for insurance undertakings and there is no indication that, in carrying out this function, the CBI would be acting exclusively in the interest of another public authority. Furthermore, the powers assigned to the CBI are in the

text: interest of consumers buying financial products, i.e. property insurance in relation to properties at a low-to-medium risk of flooding, which the CBI also has a statutory mandate under Irish law to protect.

text: 3.4.3 Impact of the tasks on the independence of the CBI

text: It must also be considered how the new tasks that the draft law confers upon the CBI may have an impact on the institutional, financial and personal independence of the CBI. 3.4.3.1 Extent to which the performance of the new task creates conflicts of interest with existing central

text: bank tasks

text: The core obligations created by the draft law apply to insurers. As noted in Sections 3.4.1 and 3.4.2, the CBI is the competent authority responsible for the authorisation and prudential supervision of insurance undertakings. In addition, the CBI has a consumer protection mandate with respect to insurance undertakings operating in Ireland. Therefore, the CBI’s new tasks under the draft law seem to complement its existing tasks. The CBI’s exercise of its powers under the draft law would therefore not appear to create a conflict of interest with its existing central bank tasks. 3.4.3.2 Extent to which the performance of the new tasks is disproportionate to the CBI’s financial or

text: organisational capacity

text: The principle of financial independence requires that the Member States may not put their NCBs in a position where they have insufficient financial resources to carry out not only their ESCB-related tasks, but also their national tasks, from both an operational and financial perspective. Furthermore, when allocating specific new tasks to NCBs, each NCB concerned should be able to avail itself of additional financial resources so that these tasks may be carried out in a manner that will not affect the NCB’s operational or financial capacity (including sufficient human resources) to perform its ESCB tasks. As such, it must be ensured that the CBI can avail itself of sufficient resources, including personnel, for the performance of assessments and the issuance of directions under the draft law, so that the CBI’s capacity to perform its ESCB-related tasks is not affected. In this regard, the draft law does not specifically address how to finance additional expenses resulting from the CBI being granted additional powers. However, the ECB understands that the additional resources required by the CBI to exercise its powers under the draft law would be financed by the existing framework that finances the supervision of regulated financial service providers, i.e. by way of industry levies and, if necessary, a subvention from the CBI. It is understood that in order to fall within the existing framework, and therefore provide for the CBI to be reimbursed for the costs incurred in relation to the performance of its new tasks, the draft law will need to be categorised as a ‘designated enactment’ for the purposes of the Central Bank Acts 1942 - 2015 .

text: 3.4.3.3 Extent to which performance of the new task fits into the CBI’s institutional set-up, in light of

text: The performance of the new tasks appears to be aligned with the CBI’s institutional set-up. As mentioned in paragraph 3.4.3.1, the CBI is responsible for the prudential supervision of insurance undertakings and has a consumer protection mandate with respect to insurance undertakings, in the context of which the new tasks under the draft law are conferred. 3.4.3.4 Extent to which the performance of tasks harbours substantial financial risks The draft law does not directly address the CBI’s potential liability in the event of any legal action, application or other legal proceeding for damages in relation to the exercise of its powers under the draft law. Nonetheless, section 33AJ(2) of the Central Bank Act 1942 provides that specified officers and employees of the CBI are not liable for damages for anything done or omitted in the performance or purported performance or exercise of any of its functions or powers, unless it is proved that the act or omission was in bad faith. Furthermore, no appeal shall lie to the Irish Financial Services Appeals Tribunal or the High Court in respect of assessments carried out by the CBI, directions issued by the CBI or decisions by the CBI to seek an enforcement order. In that respect the CBI appears not to be exposed to substantial financial risks. However, it is for the Irish authorities to assess whether the draft law complies with Irish legal and constitutional principles in this regard . 3.4.3.5 Extent to which the performance of the new task exposes members of the CBI’s decisionmaking bodies to disproportionate political risks and has an impact on their personal

text: independence

text: The performance of the tasks conferred under the draft law does not appear to expose the CBI’s decision-making bodies to any disproportionate political risk or have an impact on their personal independence. As mentioned in paragraph 3.4.3.1, the CBI is responsible for the prudential supervision of insurance undertakings and has a consumer protection mandate with respect to insurance undertakings in Ireland. 3.4.3.6 Conclusion in relation to the draft law’s effect on the CBI’s independence On the basis of the above, it may be concluded that the draft law does not adversely affect the CBI’s institutional, financial and personal independence. 3.4.4 Conclusion regarding the compatibility of the draft law with the prohibition on monetary financing The CBI’s new powers to carry out assessments of the manner in which an insurer deals with applications for insurance by affected persons can be regarded as central bank tasks, in the sense that they would complement the CBI’s existing mandate for consumer protection in the field of financial services. However, it should be noted that a central bank’s pursuit of legislative mandates in several areas may lead to inherent tensions between the multiple objectives it is bound to pursue, and require the central bank to balance competing interests in a manner more

text: appropriate for a government. It is understood that in order to ensure that the CBI is reimbursed for its costs incurred in relation to the performance of its new tasks, the draft law will need to be categorised as a ‘designated enactment’ for the purposes of the Central Bank Acts 1942 - 2015. This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 7 April 2017. [signed]

text: The President of the ECB

text: Mario DRAGHI

type: vagledning

utgivare: ecb


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).

text: Pursuant to Article 1(2) of the Law, participants include, inter alia, credit institutions registered in Latvia and branches of foreign credit institutions that have been opened in Latvia, economic operators having close links with such credit institutions or branches thereof, credit unions registered in Latvia, insurance and reinsurance undertakings registered in Latvia and branches of such undertakings that have been opened in Latvia.

text: See Article 2 of the Law.

text: The ECB was consulted on the Law and its amendments and issued Opinions

text: and

text: thereon. All ECB opinions are available on the ECB’s website at www.ecb.europa.eu.

text: Regulation (EU) 2016/867

text: of the European Central Bank of 18 May 2016 on the collection of granular credit and credit risk data (ECB/2016/13) (OJ L 144, 1.6.2016, p. 44).

text: See

text: recital 18

text: of

text: Regulation (EU) 2016/867

title: Opinion of the European Central Bank of 12 April 2017 on increasing the scope of data contained in the credit register (CON/2017/13)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 12 April 2017 on increasing the scope of data contained in the credit register (

text: ) Introduction and legal basis

text: On 3 March 2017, the European Central Bank (ECB) received a request from Latvijas Banka for an opinion on a draft law amending the Law on the credit register (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third and fourth indents of

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

text: , as the draft law relates to Latvijas Banka and to the collection, compilation and distribution of banking and financial statistics. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The Law on the credit register (hereinafter the ‘Law’) fulfils the following purposes: (a) to contribute to financial stability in Latvia by providing (i) all participants in the credit register with additional possibilities to assess the creditworthiness of their existing and potential customers, (ii) the Latvian Financial and Capital Market Committee with additional data necessary for the supervision of financial market participants, (iii) Latvijas Banka with additional data necessary for compiling financial statistics, and (iv) the Financial and Capital Market Committee and Latvijas Banka with additional data necessary for macroeconomic analysis; (b) to promote responsible lending to consumers as well as responsible and fair borrowing; (c) to promote the execution of public administration-related tasks; and (d) to contribute to promoting the fulfilment of the tasks of the European System of Central Banks (ESCB) . Latvijas Banka has operated the credit register since 2008 and collects data for various purposes, in line with the objectives of the Law currently in force as enumerated above .

text: 1.2 The draft law has two objectives: (a) to ensure that the requirements set by

text: Regulation (EU) 2016/867

text: of the European Central Bank (ECB/2016/13) are fulfilled, and (b) to enhance the credit register as a source of information in order to enable its participants to better assess the creditworthiness of their existing and potential customers. 1.3 While much of the data that needs to be reported under

text: Regulation (EU) 2016/867

text: (ECB/2016/13) is already available through the existing credit register, the draft law extends the geographic scope of data collected from the national to the Union level to ensure full compliance with the Regulation. More specifically, the definitions of ‘customer’ and ‘potential customer’ and of ‘customer’s guarantor’ and ‘potential customer’s guarantor’ are broadened to cover liabilities originating in other Member States. Furthermore, granular data will be collected in respect of foreign branches registered in Latvia of credit institutions resident in other reporting Member States. Finally, the range of entities that are treated as customers will no longer exclude credit unions, electronic money institutions, money market funds and legal persons governed by public law, thus aligning the scope with the definition of ‘debtor’ contained in

text: Regulation (EU) 2016/867

text: (ECB/2016/13). Credit institutions, however, remain excluded from the definition of customers of the credit registry under the Law and will need to be subjected to reporting requirements contained in

text: Regulation (EU) 2016/867

text: (ECB/2016/13) through other legal instruments. The draft law explicitly entitles Latvijas Banka to disclose the data contained in the credit register, including granular level data, to the ECB on the basis of requirements laid down in Union law. 1.4 The second objective of the proposed amendments does not relate to

text: Regulation (EU) 2016/867

text: (ECB/2016/13) but to the enhancement of the credit register as a source of information in order to enable its participants to better assess the creditworthiness of their existing and potential customers. In particular, the draft law makes the following amendments to the Law: (a) the credit register will be supplemented by data from the Treasury of the Republic of Latvia in view of the volume of outstanding transactions carrying credit risk provided by the Treasury; and (b) the definition of financial services carrying credit risk is broadened to include surety services such as the provision of letters of credit, guarantee insurance and guarantee services. In addition, the draft law envisages shortening the retention period in respect of data related to clients and their guarantors as well as general data stored in the credit register from 15 to 10 years.

text: 2. Observations

text: 2.1 The ECB welcomes the draft law as it amends the existing national reporting framework in order to fulfil new reporting requirements in the context of

text: Regulation (EU) 2016/867

text: (ECB/2016/13). Furthermore, in the spirit of

text: Regulation (EU) 2016/867

text: (ECB/2016/13), the draft law aims to draw on existing reporting arrangements to avoid imposing an undue reporting burden. 2.2 It is understood that Latvijas Banka intends to draw primarily on data available through the existing credit register in order to comply with reporting requirements established under

text: Regulation (EU) 2016/867

text: (ECB/2016/13). This is fully in line with

text: Regulation (EU) 2016/867

text: (ECB/2016/13), which

text: envisages that in order to contribute to the Eurosystem’s AnaCredit database, national central banks (NCBs) should be allowed to use their own databases, data received from reporting agents and any other sources, including relevant reference databases . It is also understood that other sources for data collection will be used, including the Latvian Company Register or other relevant sources. 2.3 The ECB notes that the draft law explicitly authorises Latvijas Banka to disclose to the ECB all data contained in the credit register, including granular level data, relevant for the purposes of fulfilling the tasks of the ESCB. It is understood that this explicit authorisation is necessary from a national law perspective to ensure that Latvijas Banka has a robust legal basis for disclosing credit register data to the ECB for the purposes of discharging its obligations under

text: Regulation (EU) 2016/867

text: (ECB/2016/13). Such a basis is required because the Law prohibits disclosure of information contained in the register, unless such disclosure is explicitly provided for. This provision is without prejudice to the requirements of

text: Article 10 of Regulation (EU) 2016/867

text: (ECB/2016/13), which regulates the use of credit data reported under the Regulation by the ECB and NCBs. 2.4 The ECB welcomes that the draft law strives to ensure that data provided to the credit register will facilitate the meeting of a number of requirements under

text: Regulation (EU) 2016/867

text: (ECB/2016/13), for example, by covering liabilities originating in other Member States and by broadening the definition of customer to cover credit unions, electronic money institutions, money market funds and legal entities governed by public law. The ECB notes, however, that full compliance with the objectives and requirements of

text: Regulation (EU) 2016/867

text: (ECB/2016/13) will require further legislative and organisational work as not all the data that needs to be reported under the Regulation will be available from the credit register. In particular, regard should be had to the legal requirements concerning feedback loops, given that it is envisaged that further provisions on the scope and implementation of feedback loops by the NCBs may be laid down in separate legal acts adopted by the ECB or that NCBs may enter into Memoranda of Understanding, based on the applicable legal frameworks, regarding their respective cooperation in the feedback loops . 2.5 It follows from the provisions of the Law that Latvijas Banka determines the scope and precise content of data to be entered in the credit register and the timing and procedures for inclusion of such data in the credit register. Latvijas Banka’s legislative acts and administrative instruments will need to be amended to reflect the changes introduced by the draft law and to fully comply with the requirements laid down in the annexes to

text: Regulation (EU) 2016/867

text: (ECB/2016/13). For this purpose, the ECB suggests that Latvijas Banka should ensure at each point in time that the data model defined in such implementing legislation corresponds to the data model valid at that point in time under

text: Regulation (EU) 2016/867

text: (ECB/2016/13), in order for reporting requirements and implementation practices across the Eurosystem to remain sufficiently harmonised.

text: This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 12 April 2017. [signed]

text: The President of the ECB

text: Mario DRAGHI


sprak: sv

title: Europeiska centralbankens yttrande av den 20 april 2017 om ytterligare verktyg för makrotillsyn (CON/2017/14)

text: EUROPEISKA CENTRALBANKENS YTTRANDE av den 20 april 2017 om ytterligare verktyg för makrotillsyn (

text: ) Inledning och rättslig grund

text: Den 22 februari 2017 mottog Europeiska centralbanken (ECB) en begäran från Finansdepartementet om ett yttrande över ett lagförslag om delegering av behörigheter från riksdagen och regeringen till Finansinspektionen för att genomföra ytterligare verktyg för makrotillsyn (nedan kallat förslaget). ECB:s behörighet att avge ett yttrande grundas på artiklarna

text: och

text: i fördraget om Europeiska unionens funktionssätt och artikel 2.1 sjätte strecksatsen i

text: rådets beslut 98/415/EG

text: , eftersom förslaget innehåller regler som gäller finansiella institut som har en påtaglig inverkan på de finansiella institutens och marknadernas stabilitet. I enlighet med

text: artikel 17.5

text: första meningen i arbetsordningen för Europeiska centralbanken har detta yttrande antagits av ECB-rådet.

text: 1. Syftet med förslaget

text: 1.1 Det övergripande syftet med förslaget är att motverka en alltför hög skuldsättning hos hushållen samt makroekonomiska och finansiella risker på de svenska kreditmarknaderna. I detta hänseende kompletterar och förstärker förslaget det existerande ramverket för makrotillsyn för vilket Finansinspektionen är den behöriga tillsynsmyndigheten . I förslaget stadgas att kreditinstitut som bedriver verksamhet enligt lagen om bank- och finansieringsrörelse och kreditgivare som bedriver verksamhet enligt lagen om verksamhet med bostadskrediter (bolånelagen) i sin verksamhet inte ska bidra till att det uppstår finansiella obalanser på kreditmarknaden. 1.2 För att följa bestämmelserna i

text: Europaparlamentets och rådets direktiv 2014/17/EU

text: , vilket i Sverige genomförts i bolånelagen, stadgar förslaget att sådana kreditgivare som driver verksamhet enligt bolånelagen måste tillämpa återbetalningsvillkor som är förenliga med en sund amorteringskultur och motverkar en alltför hög skuldsättning hos hushållen. Härigenom kommer de amorteringskrav som gäller för kreditgivare som driver verksamhet enligt bolånelagen att bli jämförbara med de

text: 1 Rådets beslut

text: av den 29 juni 1998 om nationella myndigheters samråd med Europeiska centralbanken rörande förslag till rättsregler (EGT L 189, 3.7.1998, s. 42).

text: 2 § 1 punkt 3 i förordning (2009:93) med instruktion för Finansinspektionen.

text: 3 SFS 2004:297.

text: 4 SFS 2016:1024.

text: 5 Europaparlamentets och rådets direktiv 2014/17/ЕU av den 4 februari 2014 om konsumentkreditavtal som avser bostadsfastighet och om ändring av direktiven

text: och

text: och förordning

text: (EU) nr 1093/2010

text: . amorteringskrav som gäller för kreditinstitut som driver verksamhet enligt lagen om bank- och finansieringsrörelse. 1.3 Enligt förslaget ges Finansinspektionen behörighet att införa ytterligare verktyg för makrotillsyn för att motverka makroekonomiska och finansiella stabilitetsrisker i Sverige. Denna behörighet för Finansinspektionen, att införa ytterligare verktyg för makrotillsyn, kombineras med kravet att Finansinspektionen måste inhämta regeringens medgivande innan föreskrifter om verktyg för makrotillsyn träder i kraft . 1.4 Dessutom stadgar lagförslaget att Finansinspektionen får erkänna krav som uppställs i offentlig reglering i en annan EU-medlemsstat som motsvarar det svenska amorteringskravet eller kravet på att inte bidra till finansiella obalanser på kreditmarknaden. Möjligheten att erkänna krav som uppställs i andra medlemsstater kommer att påverka svenska kreditinstitut och kreditgivare som bedriver verksamhet i dessa andra medlemsstater antingen genom en filial eller genom att från Sverige erbjuda och tillhandahålla tjänster utan att etablera en filial. Genom att erkänna sådana krav, som svenska kreditinstitut och kreditgivare kan bryta mot, får Finansinspektionen möjlighet att meddela varningar, förelägganden och i allvarliga fall dra in kreditinstitutets eller kreditgivarens tillstånd.

text: 2. Allmänna kommentarer

text: 2.1 ECB noterar att de svenska hushållens skuldsättning har stigit i snabb takt under de senaste åren. Mot bakgrund av detta välkomnar ECB förslagets huvudsyfte att motverka en alltför hög skuldsättning hos hushållen samt makroekonomiska och finansiella risker på de svenska kreditmarknaderna, och att detta görs genom lagen om bank- och finansieringsrörelsesamt bolånelagen. Detta tillvägagångssätt minskar risken för regelarbitrage mellan kreditinstitut som bedriver verksamhet enligt lagen om bank- och finansieringsrörelse och kreditgivare som bedriver sin verksamhet enligt bolånelagen. ECB välkomnar också att Finansinspektionen ges möjligheten att införa ytterligare verktyg för makrotillsyn, t.ex. att begränsa bolånens storlek i förhållande till hushållsinkomsten eller intjänandeförmågan, belåningsgraden, räntebindningstider samt storleken på lån i utländsk valuta . 2.2 ECB välkomnar möjligheten att erkänna krav som uppställs i offentlig reglering i andra medlemsstater som motsvarar det svenska amorteringskravet eller kravet på att inte bidra till finansiella obalanser på kreditmarknaden för att motverka alltför hög skuldsättning hos hushållen och finansiella obalanser utomlands, förorsakade av svenska kreditinstitut eller kreditgivare. 2.3 ECB avstår från att kommentera de möjliga institutionella konsekvenserna för Finansinspektionens operationella oberoende, i egenskap av behörig tillsynsmyndighet som hanterar frågor som rör

text: 6 Kravet att en behörig myndighet i förväg måste inhämta regeringens medgivande gäller vanligtvis när en förslag till förordning kan medföra i avsevärda kostnader för staten, en kommun eller ett län pga. av en allmänt tillämplig förordning (förordning (2014:570) om regeringens medgivande till beslut om vissa föreskrifter).

text: 7 Detta är i linje med ECB-rådets uttalande om makrotillsyn den 15 december 2016 där ECB efterlyser ett genomförande av regelverket avseende låntagarbaserade åtgärder, se https://www.ecb.europa.eu/press/pr/date/2016/html/pr161215_1.en.html. makrotillsyn, som kan uppstå utifrån kravet att Finansinspektionen kan behöva inhämta regeringens medgivande innan föreskrifter om verktyg för makrotillsyn träder i kraft . Detta yttrande kommer att offentliggöras på ECB:s webbplats. Utfärdat i Frankfurt am Main den 20 april 2017. [Namnteckning] Mario DRAGHI ECB:s ordförande

text: 8 Se punkt 2.2 i ECB:s yttrande


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).

text: Directive (EU) No 2015/2366

text: of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives

text: and

text: and

text: Regulation (EU) No 1093/2010

text: , and repealing Directive

text: (OJ L 337, 23.12.2015, p. 35).

text: Regulation of the European Central Bank

text: (EU) No 795/2014

text: of 3 July 2014 on oversight requirements for systemically important payment systems (ECB/2014/28) (OJ L 217, 23.7.2014, p.16).

text: Payment Services and Systems Act (Zakon o plačilnih storitvah in sistemih), published in the Official Gazette of the Republic of Slovenia, No. 58/09, 34/10, 9/11, 32/12, 81/15 and 47/16.

text: The requirements for the operation of the payment systems, including requirements related to risk management, are currently already set out in implementing regulation adopted by Banka Slovenije. See Banka Slovenije, Decision on payment systems (Sklep o plačilnih sistemih), Official Gazette of the Republic of Slovenia, No. 73/09 and 5/11.

text: See the ECB’s note on a Revised oversight framework for retail payment systems, February 2016, available on the ECB’s website at www.ecb.europa.eu.

text: See the Bank for International Settlements Committee on Payment and Settlement Systems’ (CPSS) and Technical Committee of the International Organization of Securities Commission’s (IOSCO) Principles for financial market infrastructures, April 2012, available at http://www.bis.org/cpmi/publ/d101a.pdf.

title: Opinion of the European Central Bank of 24 April 2017 on the Payment Services, Services of Issuing Electronic Money and Payment Systems Act (CON/2017/15)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 24 April 2017 on the Payment Services, Services of Issuing Electronic Money and Payment Systems Act (

text: ) Introduction and legal basis

text: On 13 February 2017 the European Central Bank (ECB) received a request from the Slovenian Ministry of Finance for an opinion on a draft Payment Services, Services for Issuing Electronic Money and Payment Systems Act (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the fifth indent of

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

text: , as the draft law relates to payment and settlement systems. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1 Purpose of the draft law

text: The main objective of the draft law is to transpose

text: Directive (EU) No 2015/2366

text: on payment services in the internal market (hereinafter the ‘Directive’) into Slovenian law. The draft law also amends some existing provisions relating to payment systems. The draft law does not apply to systemically important systems, which the draft law clarifies are covered by Regulation of the European Central Bank

text: (EU) No 795/2014

text: (ECB/2014/28) . 1.1 Under existing national law Banka Slovenije issues two types of authorisations for payment systems: (i) an authorisation for the establishment of a payment system, issued to the participants in the payment system, and (ii) an authorisation for the provision of payment system operation services, issued to payment system operators. The draft law provides that in the future Banka Slovenije will issue only one authorisation to operate a payment system. For this purpose, the operator of a payment system is defined as the entity responsible for operating the payment system in compliance with the law and for the comprehensive risk management of the payment

text: system. When applying for an authorisation to operate a payment system, the applicant must submit the rules that apply to the payment system. Any existing authorisations for the establishment of a payment system and for the provision of payment system operation services are to be regarded as authorisations to operate a payment system under the draft law. 1.2 The draft law sets out a number of new basic requirements for payment system operators, including some additional requirements to be fulfilled by the operators of important payment systems. The new requirements include provisions relating to the legal basis, governance, a framework for the comprehensive management of risks, settlement finality, money settlements (including a requirement that the operator of an important payment system must ensure that money settlements are made in central bank money), participant default rules and procedures, general business risk, operational risk, access and participation requirements, efficiency and effectiveness, communication procedures and standards, disclosure of rules, key procedures and market data. More detailed requirements will be subject to further regulation by Banka Slovenije in an implementing regulation . The draft law provides that entities authorised by Banka Slovenije to operate a payment system may open a special fiduciary account with Banka Slovenije that will be used for the benefit of system participants exclusively for clearing and/or securitising claims and/ or performing obligations under payment orders.

text: 2 General comments

text: 2.1 This opinion does not address the issue of the draft law’s effective implementation into Slovenian law of

text: Directive (EU) No 2015/2366

text: . The focus of this opinion is on the provisions of the draft law that amend existing provisions relating to payment systems. 2.2 The ECB understands that despite the change in the licensing procedure proposed by the draft law, the aim of which is to simplify the process of issuing authorisations to operate payment systems, the roles of Banka Slovenije with respect to the licensing of payment systems and of payment system operators will remain unchanged. 2.3 The ECB welcomes the fact that the provisions laying down the requirements for payment system operators follow the principles and general requirements set out in the Eurosystem oversight framework for retail payment systems , which is in turn derived from certain principles and key considerations applicable to systemically important systems under the

text: Regulation (EU) No 795/2014

text: (ECB/2014/28), pursuant to which the ECB has adopted the CPSS-IOSCO principles for financial market infrastructures (PFMIs) . The draft law will thus facilitate the consistent and harmonised application by Banka Slovenije of Eurosystem standards when conducting its oversight of payment systems in Slovenia.

text: 2.4 Although the draft law does not directly implement the entire set of PFMIs identified by the Eurosystem as fundamental for the operation of retail payment systems, the ECB understands that more detailed requirements may be specified in the implementing regulation to be adopted by Banka Slovenije. Banka Slovenije may consider including additional elements in the implementing regulation, such as an entity’s ability to implement default rules and procedures; ensuring the high quality of any assets held to cover business risks and maintaining a plan for raising capital; a requirement for periodic reviews of risk management frameworks and for clearly-defined operational reliability objectives and policies designed to achieve these objectives; and a requirement for comprehensive physical and information security policies that address all potential vulnerabilities and threats. In this respect, the draft law provides a sufficient legal basis for Banka Slovenije to further align the requirements for payment system operators with international standards. 2.5 The ECB welcomes the fact that the draft law’s provision enabling payment system operators to open a special fiduciary account with Banka Slovenije is designed to minimise the effects of the potential insolvency of a payment system operator on the settlement positions of participants in the payment system, thus improving the security of settlement. However, in line with the principle of central bank independence, the ECB suggests that this provision be reformulated so as to clarify that these entities do not have a right to open such an account with Banka Slovenije, but that the decision to open such an account should rest with the Banka Slovenije.

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

text: Done at Frankfurt am Main, 24 April 2017.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI


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).

text: Banking Act (Zakon o bančništvu), Official Gazette of the Republic of Slovenia no 131/06.

text: Such proceedings may be applied if the bank’s assets are sufficient to repay all its creditors.

text: According to the no creditor worse off (NCWO) principle no creditor or shareholder should incur greater losses than they would have incurred if the institution had been wound up under normal insolvency proceedings. The NCWO principle is defined under

text: Article 34

text: /1(g) of Directive

text: of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending

text: Council Directive 82/891/EEC

text: , and Directives

text: , 2007/36/.EC,

text: and

text: , and Regulations

text: (EU) No 1093/2010

text: and

text: (EU) No 648/2012

text: , of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190).

text: The draft law’s provisions on access to information are derived from

text: Article 5 of Directive 2014/104/EU

text: of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (OJ L 349, 5.12.2014, p.1).

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).

text: See Article 4 of the draft law.

text: See for example paragraph 3.2.3 of Opinion

text: and paragraph 4.2(d) of Opinion

text: , all ECB opinions are available on the ECB’s website at www.ecb.europa.eu .

text: Banking Act (Zakon o bančništvu), Official Gazette of the Republic of Slovenia, no. 25/15, 44/16 and 77/16.

text: 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 and investment firms, amending Directive

text: and repealing Directives

text: and

text: (OJ L 176, 27.6.2013, p. 338).

text: On the basis of

text: Articles 53 of Directive 2013/36/EU

text: and Article 14 of ZBan-2, Banka Slovenije is obliged to treat all information regarding supervised entities that was acquired in the course of its supervisory duties as confidential.

text: See footnote 11.

title: Opinion of the European Central Bank of 12 May 2017 on judicial relief granted to holders of qualified bank credit (CON/2017/16)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 12 May 2017 on judicial relief granted to holders of qualified bank credit (

text: ) Introduction and legal basis

text: On 15 March 2017 the European Central Bank (ECB) received a request from the Slovenian Ministry of Finance for an opinion on a draft Act on judicial relief granted to holders of qualified bank credit (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

text: as the draft law relates to a national central bank. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The main objective of the draft law is to remedy the unconstitutionality, as declared by the Slovenian Constitutional Court, of certain provisions of the Slovenian Banking Act (hereinafter the ‘ZBan-1’) governing Banka Slovenije’s liability for damages with respect to extraordinary measures imposed by Banka Slovenije. ZBan-1 authorised Banka Slovenije to adopt extraordinary measures to write-down or convert qualified liabilities during the reorganisation of banks that failed, or were likely to fail, to meet the minimum requirements for capital and liquidity to an extent that would justify the withdrawal of their banking authorisation. 1.2 While the Constitutional Court confirmed that the legal basis for the extraordinary measures imposed in 2013 and 2014 by Banka Slovenije in respect of the write-down of subordinated instruments was in accordance with the Constitution of the Republic of Slovenia, it nevertheless declared the provisions of

text: Article 350

text: .a of the ZBan-1 to be unconstitutional. This conclusion was based on the Constitutional Court’s finding that exercising judicial relief under

text: Article 350

text: .a of the ZBan-1 did not afford effective judicial protection to stakeholders affected by Banka Slovenije’s extraordinary measures. The Constitutional Court decided that the legislator must remedy the unconstitutionality within six months of the publication of the Constitutional Court’s decision, and

text: provided the legislator with further guidance on how best to ensure more effective judicial protection. 1.3 Shareholders and creditors affected by Banka Slovenije’s extraordinary measures are eligible to seek compensation under the draft law, provided that the measures resulted in a less favourable treatment of their qualified liabilities compared to insolvency or regular liquidation proceedings initiated on the day the extraordinary measures were imposed (the ‘no creditor worse off principle’) . 1.4 Compensation for damages incurred as a result of the extraordinary measures must be paid either by Banka Slovenije or the State. If no liability can be attributed to Banka Slovenije, compensation must be paid by the State. In particular, Banka Slovenije will be partially or wholly exempt from liability if it can demonstrate that it acted with due professional care when adopting the extraordinary measures and had, in the light of the facts and circumstances available at the time the extraordinary measures were adopted, reasonable grounds to believe that the statutory conditions for taking the extraordinary measures were fulfilled. If Banka Slovenije is only partially exempt from liability, then Banka Slovenije must pay damages to former holders of qualified liabilities, whereas financial resources for any compensation exceeding Banka Slovenije’s liability must be provided by the State within three months of the publication of the court’s decision in the Slovenian Official Journal. 1.5 Any claim for compensation must be filed against Banka Slovenije and the Republic of Slovenia within six months of the draft law entering into force. Such claims may be filed by applicants holding more than 10 % of the respective bank’s share capital or having a claim of more than EUR 100 000 against the respective bank. The draft law codifies special procedural rules of judicial redress for the holders of qualified liabilities, which deviate from the general rules of civil proceedings and, inter alia, enable legal proceedings affecting similarly-placed litigants to be joined together to achieve a joint and uniform assessment of claims regarding a specific bank that was subject to Banka Slovenije’s extraordinary measures. 1.6 When determining whether a claimant has a right to compensation, the court must establish whether extraordinary measures relating to qualified liabilities were adopted by Banka Slovenije in accordance with the conditions laid down in the ZBan-1. The court must, inter alia, verify whether the complex assessment of the conditions necessary for imposing extraordinary measures, as laid down in

text: Article 253

text: .a of the ZBan-1, including the respective bank’s asset quality review (AQR), was correctly carried out or not. The main aspects that the court will verify are whether: (1) the methods and the assumptions underlying the methods used in the complex assessment of the

text: conditions for imposing extraordinary measures and in the AQR were consistent with Union rules on State aid and the banking supervision standards adopted by the ECB, the European Commission and the European Banking Authority (EBA); (2) the method and the assumptions underlying such methods were applied improperly and whether this affected the outcome of the assessment; (3) there are reasonable grounds to suspect that either the original data was not used in the assessment or that the individual responsible for appraising the bank’s assets did not act independently; and (4) there is reasonable doubt concerning the professional skills of the entity that performed the valuation of the bank’s assets. 1.7 In the event of a dispute regarding the fulfilment of the conditions for the extraordinary measures, the burden of proof lies with Banka Slovenije. For complex questions requiring specialist knowledge the court may, either in addition to, or instead of, an expert appointed in accordance with the rules of civil proceedings, appoint a special committee of experts composed of three to five members selected through a public tender procedure, which will act as an advisory body to the court. The European Commission, the ECB and the EBA will be informed of the public tender procedure by the court. 1.8 The draft law lays down rules for a two-stage disclosure of documents and information in relation to any decision on extraordinary measures adopted by Banka Slovenije. These rules state that Banka Slovenije must publish on its website: (1) any decision imposing an extraordinary measure, (2) the valuation of assets for each bank in respect of which an extraordinary measure was taken, (3) the AQR report for each bank in respect of which an extraordinary measure was taken and (4) any documents revealing a contractual relationship between Banka Slovenije and the appraiser of the bank’s assets. All personal and confidential information must be redacted in advance of any publication on Banka Slovenije’s website. Furthermore, the applicants may file a motion to the court to oblige Banka Slovenije (and certain other entities, such the State, the Court of Audit, the Securities Market Agency and the bank affected by the extraordinary measure) to provide documents to the court without redacting personal or confidential information, whereby the court must limit any disclosure of evidence to that which is proportionate and must ensure the adoption of effective measures to protect such information , for example by excluding the public from the court’s proceedings, limiting the review to certain entities, and similar measures. 1.9 If the court determines that former holders of qualified liabilities have a right to be compensated, its decision will be published in the Official Journal and will have an erga omnes effect, meaning that the decision will impact all former stakeholders affected by Banka Slovenije’s extraordinary measures, regardless of whether they filed a claim to recover damages or not. The decision granting the right to compensation to former holders of qualified liabilities will be general in nature and will indicate how qualified liabilities should be treated and determine the extent of Banka

text: Slovenije’s liability. Thus, the court will not issue separate decisions awarding compensation to each individual stakeholder. Instead, the draft law provides a standardised formula for calculating compensation to be paid by Banka Slovenije based on a written request from former holders of qualified liabilities. The request may be submitted 15 days after the publication of the court’s decision in the Slovenian Official Journal. The same applies if the Republic of Slovenia is liable to pay the compensation, in which case the compensation will be paid by the Ministry of Finance. The right to seek payment on the basis of the court’s decision is limited in time and expires five years from the date of publication of the final court decision granting the right to compensation to former holders of qualified liabilities.

text: 2. Observations

text: 2.1 The draft law must comply with Article 123 of the Treaty, which prohibits overdraft facilities and any other type of credit facility with the national central banks of Member States in favour of the public sector, including central governments or other public authorities.

text: Article 1(1)

text: (b)(ii) of

text: Council Regulation (EC) No 3603/93

text: defines ‘other type of credit facility’, inter alia, as ‘any financing of the public sector’s obligations vis-à-vis third parties’. Consequently, a requirement that Banka Slovenije must pay the compensation for damages, to the extent that it results in Banka Slovenije assuming the liability of the State , would not be in line with the monetary financing prohibition laid down in Article 123 of the Treaty. Even if Banka Slovenije were to be reimbursed by the State within three months of the publication of the court’s decision for any amounts paid as compensation, the financing of the State’s obligation during this period would qualify as an ‘other type of credit facility’ granted by Banka Slovenije to the State, and as such would violate the monetary financing prohibition. Therefore, the draft law should be amended to ensure that Banka Slovenije does not assume any liability of the State, including, in particular, in cases where both Banka Slovenije and the State are severally liable. Banka Slovenije should only be liable in respect of its individual responsibility. 2.2 In order to provide effective judicial protection to the holders of qualified liabilities by allowing them to examine any relevant facts before bringing a claim to court, it is appreciated that there is a requirement to disclose documents that formed the basis for Banka Slovenije’s decision on extraordinary measures. 2.3

text: Article 14(4)

text: , point 5 of the ZBan-2 , stipulates that if it is specifically required by law, Banka Slovenije must disclose confidential information to the public. However, such national legislation should fully respect the provisions of Directive

text: of the European Parliament and of the

text: Council as regards professional secrecy. In this context the ECB notes that, notwithstanding the requirement under the draft law to redact personal and confidential information prior to any disclosure of information on Banka Slovenije’s website, the asset valuations and AQR reports relating to individual supervised entities (banks) are to be regarded as confidential information. In addition, these documents may contain confidential information pertaining to each bank’s customers or other counterparties, which have been obtained by Banka Slovenije from the banks and external service providers through the exercise of its supervisory powers . Public disclosure of such documents would thus inevitably contravene the principle set out in

text: Article 53 of Directive 2013/36/EU

text: , according to which all persons working for competent supervisory authorities must be bound by the obligation of professional secrecy. Confidential information which such persons receive in the course of their duties may be disclosed only in summary or aggregate form, thus individual credit institutions may not be identified, without prejudice to cases covered by criminal law. 2.4 In order to establish a framework which safeguards both confidential information and the legitimate interest of investors affected by Banka Slovenije’s extraordinary measures, the ECB recommends that an alternative approach should be considered, which would comply with the principles set out in

text: Article 53

text: and

text: Article 54 of Directive 2013/36/EU

text: . In order to ensure the adequate protection of confidential supervisory information and to safeguard the principles set out in

text: Article 53 of Directive 2013/36/EU

text: , the disclosure of the asset valuations and AQR reports should be limited only to the shareholders or creditors who were directly affected by the extraordinary measures taken by Banka Slovenije and therefore have a legitimate legal interest as defined by the Constitutional Court of the Republic of Slovenia. 2.5 Regarding the draft law’s requirement to verify that the methods and assumptions used to assess whether the extraordinary measures and the results of the AQR were consistent with the standards of banking supervision adopted by the ECB, the European Commission and the EBA, it is noted that in order to provide legal certainty the draft law should specify in more detail the relevant legal sources (e.g. legal acts and best supervisory practices) relevant in this context. 2.6 The ECB takes note that, pursuant to the draft law, the European Commission, the ECB and the EBA will be informed by the court of the public tender procedure for the appointment of a special committee of experts to act as an advisory body to the court for complex questions requiring specialist knowledge. On the understanding that the scope of the judicial review, and therefore the review by the special committee of experts, would be limited to explain facts, and taking account of the above-mentioned suggestion that the draft law should specify in more detail the relevant legal sources to be considered when assessing whether the extraordinary measures and the results of

text: the AQR were consistent with the banking supervision standards of the ECB, European Commission and EBA, the ECB stands ready, at its discretion, to cooperate with the court, taking account of the principle of sincere cooperation between the Union and the Member States pursuant to Article 4(3) of the Treaty on European Union and the co-operation between the institutions of the Union and the responsible authorities of the Member States pursuant to Article 18 of Protocol (No 7) on the privileges and immunities of the European Union.

text: Done at Frankfurt am Main, 12 May 2017.

text: [signed]

text: The President of the ECB

text: Mario DRAGHI