COMMUNITY BANK DIRECTIVES
APPLIED IN INTERNAL LEGISLATION
Carmen Adriana GHEORGHE, Laura MURESAN
TransilvaniaUniversity, Braşov, Romania
Abstract: The European Union is characterized also by a financial-banking system, with a special structure, built by mutual consent and which is concerned with the harmonizing, growth and development of all states, in their struggle for a better life. The mechanism is working, built on a strong structure, which allows the members of the Union to ensure their freedom to move, including of capital and services.
Keywords: banking, directive, supervision, community
- HARMONIZING OF THE ROMANIAN LEGISLATION WITH THE COMMUNITY DIRECTIVES
The Romanian Government approved two Extraordinary Orders, one regarding the additional supervision of the credit institutions, of the insurance and/or reinsurance companies, of the companies of services regarding financial investments and of the companies of investment administration in a financial conglomerate, the other one regarding the credit institutions and the capital adjusting.
By the two normative acts, the European directives in the respective field, so that they should be valid starting with January 1st 2007.
We are speaking about the Extraordinary Order no. 98/2006 regarding the additional supervision of the credit institutions, of the insurance and/or reinsurance companies, of the companies of services regarding financial investments and of the companies of investment administration in a financial conglomerate, which transposes, into the national legislation, the provisions of the Directive 2002/87/CE regarding the additional supervision of the entities settled from a financial conglomerate.
The promotion of the normative act contributes to the insurance of the financial stability and of the protection of the depositors, insured persons and investors. The additional supervision is performed by a coordinating authority, designated from among the competent authorities with sector supervision, based on criteria established by the directive.
The other normative act - O.U.G. no. 99/2006, refers to the credit institutions ad adjusting of capital and settles the access terms to the bank activity and its performance in Romania, the prudential supervision of the credit institutions and of the services of financial investments and supervision of the payment systems and systems for the discount of operations with financial instruments.
The normative act transposes, into the national legislation, the latest legislative evolutions registered at the level of the European Union in the sector of financial services, respectively the Directive no. 2006/48/CE of the European Parliament and the Council of 14th of June 2006 regarding the access to the activity and performance of activity of the credit institutions and Directive no. 2006/49/CE of the European Parliament and the Council of 14th of June 2006 regarding the adjusting of the capital of the investment companies and credit institutions.
- B.N.R. AND SUPERVISION OF THE CREDIT INSTITUTIONS
The new community provisions change, in a certain extent, the supervising responsibilities, paying an increased attention to the role of the consolidating supervisor, especially in the process of approval for the use of advanced approach within a bank group, in order to calculate the capital needs. They also introduce publicity requirements for the supervising authority. Therefore, the Romanian commercial banks will open business in the European Union after a notification sent to the Central Bank, according to the provisions of the European financial market, but the National Bank draws the attention that it may oppose itself to the expansion. B.N.R. may oppose itself to the setting up of a branch belonging to a Romanian bank in other member state of the European Union, because it is competent authority for the bank supervision in Romania.
B.N.R. considers that the supervision of the credit institutions, authorized in other member state, is the responsibility of the supervising authority (central bank) in that member state, for the activities performed in Romania. “Accordingly, if a credit institution, Romanian legal person, intends to have an activity directly on the territory of other member state, The Romanian National Bank is the first to call in order to decide upon the necessity of the notification.
The Romanian National Bank may oppose to the setting up of a branch in other member state, according to art. 81 paragraph (2) of O.U.G. no. 99/2006.
Nevertheless, in case a bank from Romania has transactions or operations with clients from other member state of the European Union, “with occasional character, without any intention for the orientation of the activity of the respective credit institution towards the foreign bank market, B.N.R. considers that the notification is not necessary”. This does not exclude the fact that the Romanian National Bank may take any specific analysis, as it considers necessary, and it may take any necessary measures or sanctions, depending on each case”.
A bank incorporated and authorized in a MemberState of the European union – considered an “origin MemberState” – may fulfill any activity for which it has been authorized in the origin country and which receives mutual acknowledgement in any other MemberState.
The respective activity may take place either directly, or by means of a subsidiary, being necessary only the notification of the supervisory authority in the origin state concerning the intention to fulfill the activity on the territory of another Member State – named “host Member State”.
The competent authority in the origin country communicates this intention to the competent authority in the host state. In the case of the Romanian legal entities, the notification of the intention to set up a subsidiary or to provide services directly in another country is made by means of the Romanian National Bank, acting as the supervisory authority in the origin state which sends the necessary information to the authority responsible with the supervision in the host state.
The Romanian National Bank should assess if it is necessary to notify the intention of a Romanian bank to fulfill activities on the territory of another EU Member State, analyzing if the fulfillment of the banking activity represents an expression of the right of establishment or a direct service providing, which is notified according to other provisions. Moreover, the Romanian National Bank should analyze if the carried out activity may be qualified as direct service providing.
As a result of Romania’s joining the European Union, the Romanian legislation (clauses of art. 45, art. 49, art. 80 and art. 83 in the Government’s Emergency Order no. 99/2006 concerning the right of establishment and freedom to provide banking services by the credit institutions within the European Community) establishes, for the first time, “a particular system for the fulfillment of the banking activity by a credit institution authorized in a Member State (origin Member State) on the territory of another Member State (host Member State), by exercising the right of establishment or by direct service providing, on the territory of the later state”.
The regulation of the system concerning the credit institutions in the Member States of the European Union mirrors that it has been assumed the principle of the “unique passport” in order to fulfill activities by means of a subsidiary or directly, as well as the principle of performing the prudential supervision by means of the competent authority in the origin Member State.
As for the system of the financial institutions in the Member States of the European Union, the principle of the “unique passport” may be enforced upon them for the activities of the credit institutions, except for the deposit drawing, if they meet the conditions stipulated by law. Moreover, there are also regulated the conditions of fulfilling the activity of the credit institutions, Romanian legal entities outside the Romanian territory.
- CONCLUSIONS
In conclusion, the main new elements introduced by the Government’s Emergency Order no. 99/2006 make reference to:
a. the enforcement of the order upon the financial holding companies (unitary and coherent supervision of the financial groups in Romania and in the EU Member States)
b. the financial-leasing activity could be fulfilled directly by the credit institutions
c. the establishment of an institutional and regulatory framework specific to the credit institutions in the other Member States that wish to carry out their activity in Romania (by means of a subsidiary or directly, the so-called “Romanian passport”)
d. the implementation of the Basel II requirements on risk (classified, according to Basel II Agreement, into crediting, market and operational risk)
e. the modification of the solvency criteria applied to the credit institutions, the banks being obliged to maintain their solvency at a minimum level of only 8%, corresponding to that in Europe, therefore four percents less than the previous one.
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“B.N.R. warns that it may block the extension of some Romanian banks to other EU Member States”, 4th June 2007