S.I. No. 730/2004 - European Communities (Consolidated Supervision of Credit Institutions) (Amendment) Regulations 2004

S.I. 730 of 2004

European Communities (Consolidated Supervision of Credit Institutions) (Amendment) Regulations 2004

I, Brian Cowen, Minister for Finance, in exercise of the powers conferred on me by the European Communities Act 1972 (No. 27 of 1972), as amended by the European Communities (Amendment) Act 1993 (No. 25 of 1993), and for the purpose of giving effect to Directive 2002/87/EC, dated 16 December 2002, of the European Parliament and of the Council, hereby make the following Regulations:

Citation and commencement

1. (1) These Regulations may be cited as the European Communities (Consolidated Supervision of Credit Institutions) (Amendment) Regulations 2004.

(2) These Regulations come into operation on 1 January 2005.

Interpretation

2. In these Regulations, “Principal Regulations” means the European Communities (Consolidated Supervision of Credit Institutions) Regulations 1992 (S.I. No. 396/1992).

Amendment of Regulation 2 of the Principal Regulations

3. Regulation 2(1) of the Principal Regulations is amended as follows:

(a) by inserting the following definitions after the definition of “the Act”:

“‘asset management company’ means—

(a) a management company within the meaning of Article 1a (2) of Council Directive 85/611/EEC on the co-ordination of laws, regulations and administrative provisions relating to UCITS, or

(b) an undertaking the registered office of which is not located within a Member State and which would require authorisation in accordance with Article 5(1) of that Directive if it had its registered office within such a State;

‘banking sector enactments and regulations’ mean the enactments and regulations specified in Schedule 1;”;

(b) by adding the following to the definition of “the Directive”:

“and, if the Directive is amended by a later Directive of the European Parliament and the Council, means the Directive as amended by the later Directive”;

“‘financial holding company’ means a financial institution (other than a mixed financial holding company) whose subsidiaries are exclusively or mainly credit institutions or financial institutions with at least one of those subsidiaries being a credit institution;

‘group’ means—

(a) a group that comprises a parent undertaking and subsidiaries of the undertaking and entities in which the parent undertaking or any of its subsidiaries participate, or

(b) a group of undertakings linked to each other by a relationship as defined by Article 12(1) of Directive 83/349/EEC;”;

(d) by inserting the following definitions after the definition of “holding company”:

“‘insurance undertaking’ has the meaning given by Article 6 of Directive 73/239/EEC, Article 6 of Directive 79/267/EEC or Article 1(b) of Directive 98/78/EC;

‘investment firm’ has the meaning given by Article 1(2) of Directive 93/22/EEC, and includes undertakings referred to in Article 2(4) of Directive 93/6/EEC;

‘mixed-activity holding company’ means a parent undertaking (other than a financial holding company, a credit institution or a mixed financial holding company) that has one or more subsidiaries, where—

(a) if there is only one subsidiary, it is a credit institution, or

(b) if there are two or more subsidiaries, at least one of them is a credit institution;

‘mixed financial holding company’ has the same meaning as in Regulation 3 of the European Communities (Financial Conglomerates) Regulations 2004 ( S.I. No. 727 of 2004 );

‘regulated entity’ means a credit institution, insurance undertaking or investment firm;”;

(e) by inserting the following definition after the definition of “subsidiary”:

“‘third country’ means a country other than a Member State, and includes a state, province, region or dependent territory of such a country.”.

Substitution of Regulation 9 of the Principal Regulations

4. The Principal Regulations are amended by substituting the following Regulation for Regulation 9:

“Bank not required to license, authorise or supervise a person who is not a credit institution

9. Except as provided by Regulation 11A, nothing in these Regulations of itself requires the Bank to license, authorise or supervise a person who is not a credit institution.”.

Insertion into the Principal Regulations of Regulations 11A to 11E

5. The Principal Regulations are amended by inserting the following Regulations after Regulation 11:

“Management of financial holding companies

11A. (1) This Regulation applies only to a financial holding company that has its head office in the State.

(2) A financial holding company is required to take all reasonably practicable steps to ensure that the persons who are concerned in the direction or management of the company—

(a) are suitably qualified, and

(b) are of sufficiently good repute, and

to be able to perform their duties in that capacity.

(3) The Bank may, by notice in writing, direct a financial holding company to provide it with such information concerning the qualifications, reputation and experience of the persons who are concerned in the direction or management of the company as is specified in the notice.

(4) If the Bank is satisfied on reasonable grounds that a person who is concerned in the direction or management of a financial holding company—

(a) is not suitably qualified, or

(b) is not of sufficiently good repute, or

to be concerned in the direction or management of the company, it may, by notice in writing, direct the company to take such action (including terminating the person's appointment with the company) as is specified in the notice.

(5) A financial holding company shall not appoint a person to a position by virtue of which the person will be concerned in the direction or management of the company unless it has previously notified the Bank of the proposal to make the appointment. An appointment made in contravention of this paragraph is void.

(6) A financial holding company shall provide the Bank with such information as it requires concerning the qualifications, reputation and experience of a person referred to in paragraph (5).

(7) A financial holding company to which a direction has been notified under this Regulation shall comply with the direction within the period specified in the notice.

(8) A financial holding company that—

(a) contravenes paragraph (5), or

(b) fails to comply with paragraph (6) or (7),

commits an offence.

(9) A person who is found guilty of an offence under this Regulation is liable on summary conviction—

(a) if a natural person, to a fine not exceeding €3,000 or to imprisonment for a term of not more than 12 months, or to both, or

(b) if not a natural person, to a fine not exceeding €5,000.

(10) The Bank is not liable in damages for any loss of office arising directly or indirectly because the Bank has given a direction under paragraph (4).

(11) The Bank may, by further notice in writing, vary or revoke a direction notified to a financial holding company under this Regulation.

(12) A direction, and a variation or revocation of the direction, notified under this Regulation take effect from the date of the notice or, if a later date is specified in the notice, from that later date.

(13) A direction notified to a financial holding company under this Regulation and a variation of the direction are appealable decisions for the purposes of Part VIIA of the Central Bank Act 1942 .

(14) A person is concerned in the direction or management of a financial holding company for the purposes of this Regulation if the person—

(a) is a director of the company, or

(b) not being a director of the company, has, in the opinion of the Bank, power to direct or control the affairs of the company, or

(d) holds any other management position with the company of a kind publicly notified by the Bank.

Enforcement of Bank directions

11B. (1) If the Bank is of the opinion that a financial holding company has not complied with a direction notified under Regulation 11A of these Regulations, it may apply to the High Court in a summary manner for an order under paragraph (4).

(2) On making an application under paragraph (1), the Bank shall serve a copy of the application on the financial holding company concerned. On being served with the copy, the company becomes the respondent to the application and as such is entitled to appear before and be heard at the hearing of the application.

(3) Pending the hearing of the application, the High Court may make such interim or interlocutory orders as it considers appropriate.

(4) On the hearing of the application, the High Court may, if satisfied that the respondent has not complied with the direction, make an order requiring the respondent to comply.

(5) If the High Court makes an order under paragraph (4), it may also make such ancillary orders as thinks appropriate in the circumstances.

Authorised credit institutions whose parent undertakings are located in a third country

11C. (1) This Regulation applies to an authorised credit institution that is part of a group that is not subject to consolidated supervision under these Regulations, and whose parent is another credit institution or a mixed financial holding company whose head office is located outside the European Community.

(2) If the Bank thinks it appropriate to do so, or receives a request to do so from the parent undertaking concerned or from a regulated entity authorised in a member State, the Bank shall verify—

(a) whether a credit institution to which this Regulation applies is subject to consolidated supervision by a competent authority of a third country, and

(b) if it is, whether that supervision is equivalent to the consolidated supervision prescribed by these Regulations.

(3) When undertaking the verification of a credit institution to which this Regulation applies, the Bank shall—

(a) consult the competent authorities of the other Member States concerned, and

(b) take into account any guidance the Banking Advisory Committee may give as to whether the consolidated supervision arrangements of competent authorities in third countries are likely to achieve the objectives of consolidated supervision as set out in Directive 2000/12.

(4) The Bank shall consult the Banking Advisory Committee before taking a decision on the equivalence of the consolidated supervision by a competent authority of a third country.

(5) If there is no such equivalent supervision, the Bank shall apply these Regulations to the credit institution so far as they are capable of being applied to it.

(6) As an alternative to the application of paragraphs (1) to (5), the Bank may, in respect of a credit institution to which this Regulation applies, apply such other appropriate supervisory measures as will achieve the objectives of the supervision of credit institutions on a consolidated basis. However, the measures may be applied only after consultation with the competent authorities of the other Member States concerned.

(7) The Bank may, in performing its functions under this Regulation, or in co-operating with the competent authorities of the other Member States concerned, require the establishment of a financial holding company that has its head office in a Member State.

(8) If a company established in accordance with such a requirement has its head office in the State, the Bank shall apply the provisions on consolidated supervision to the company.

(9) As soon as practicable after acting under this Regulation, the Bank shall notify the action taken to the competent authorities of the other Member States concerned and to the European Commission.

Bank to co-operate with other competent authorities in relation to credit institutions authorised in other Member States

11D. The Bank shall co-operate with the competent authorities of the other Member States concerned in relation to credit institutions authorised in those other States—

(a) if those institutions are part of a group that is not subject to consolidated supervision under these Regulations, and

(b) if the parent of those institutions is another credit institution or a mixed financial holding company whose head office is located in a third country.

Application of these Regulations to certain asset management companies

11E. If an asset management company is an associated enterprise or an associated body of a credit institution, the regulations that apply to and in respect of a financial institution under the banking sector enactments and regulations also apply, with necessary modifications, to and in respect of the company.”.

Insertion into the Principal Regulations of Schedule 1

6. The Principal Regulations are amended by inserting the following Schedule after Regulation 12:

“SCHEDULE 1

BANKING SECTOR ENACTMENTS AND REGULATIONS

PART 1—ENACTMENTS

Central Bank Act 1989 (No. 16 of 1989)

Trustee Savings Bank Act 1989 (No. 21 of 1989)

Building Societies Act 1989 (No. 17 of 1989)

Central Bank Act 1987 (No. 8 of 1987)

Central Bank and Financial Services Authority of Ireland Act 2003 ( No. 12 of 2003 )

Central Bank and Financial Services Authority of Ireland Act 2004 ( No. 21 of 2004 )

PART 2—REGULATIONS

European Communities (Credit Institutions Accounts) Regulations 1992 ( S.I. No. 294 of 1992 )

European Communities (Licensing and Supervision of Credit Institutions) Regulations 1992 ( S.I. No. 395 of 1992 )

European Communities (Consolidated Supervision of Credit Institutions) Regulations 1992( S.I. No. 396 of 1992 )”.

	GIVEN under my Official Seal, This 19^th day of November 2004.

	BRIAN COWEN
	Minister for Finance

Explanatory Note

These Regulations give effect to those provisions of Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council, which apply specifically to the consolidated supervision of credit institutions.