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Reorganisation and winding-up of credit institutions in the EU

Reorganisation and winding-up of credit institutions in the EU. Dr Marek Porzycki Jagiellonian University. General information. Harmonisation by means of a directive – implementation by national provisions necessary

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Reorganisation and winding-up of credit institutions in the EU

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  1. Reorganisation and winding-up of credit institutions in the EU Dr Marek Porzycki JagiellonianUniversity

  2. General information • Harmonisation by means of a directive – implementation by national provisions necessary • Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions (attention to low quality of the official Polish translation!) • lex specialis in relation to the European Insolvency Regulation (see exclusion in Article 1(2) of the EIR)

  3. Background • Background – cross-border issues: • activities of credit institutions in other (host) Member States than the home Member State (on the basis of a single authorisation granted by the home Member State)  cross-border provision of services, establishing branches • branches of credit institutions from outside the EU • credit institutions being subsidiaries of credit institutions from other Member States

  4. Purpose • to guarantee the recognition and effectiveness of reorganisation and winding-up measures on the entire territory of the EU (including Denmark) • some extent of harmonisation of those measures (divergence of national insolvency laws however persists) • maintainig unity between a credit institution and its branches in case of its difficulties ( no secondary proceedings)

  5. Scope of application • credit institutions and their branches in other Member States (as defined in Directive 2006/48/EC relating to the taking up and pursuit of the business of credit institutions (recast)) • branches of credit institutions having a head office outside the EU, only if that institution has branches in at least 2 Member States • ‘reorganisation measures’ and ‘winding-up proceedings’ as defined in Article 2 of Directive 2011/24/EC

  6. Reorganisation measures • Exclusive competence of the authorities of the home Member State, extended to branches established in other Member States (Article 3)  no secondary proceedings • Law of the home Member State is applicable (Article 3(2)) • Full effectiveness of reorganisation measures throughout the whole EU (Article 3(2)) • Exchange of information between authorities of Member States (Articles 4-5), publication rules (Article 6), informing creditors in other Member States (Article 7)

  7. Winding-upproceedings • Exclusive competence of the authorities of the home Member State, extended to branches established in other Member States (Article 9(1))  no secondary proceedings • Law of the home Member State is applicable (Article 10) • Automatic recognition and full effectiveness of reorganisation measures throughout the whole EU (Article 9(1)) • Informing the authorities of host Member States (Article 9(2), publication rules (Article 13), informing creditors in other Member States (Article 14)

  8. Harmonisation of winding-upproceedings • Duty to consult competent authorities before voluntary winding-up (Article 11) • Withdrawal of a credit institution’s authorisation in case of winding-up following the failure or in lack of reorganisation measures (Article 12)

  9. Protection of localinterestsinotherMemberStates • Informing creditors (Articles 14, 18) • Protection of third parties honouring obligations for the benefit of credit institutions subject to winding-up (Article 15) • Law applicable to contracts for employment and in respect to immovable property (Article 20) • Protection of third parties’ rights in rem (Article 21) • Provisions on netting (Article 25), transactions on regulated markets (Article 27), repurchase transactions (Article 26) • Provision on pending lawsuit (Article 32) • Disposal of immovable assets or assets subject to registration in a register, account or centralised deposit system (Article 31)

  10. Envisagedreforms – a new EU framework for bank recovery and resolution • Preparation and prevention – recovery plans to be prepared by banks, resolution plans to be prepared by authorities • Intra-group support agreements • Early supervisory intervention, including appointment of a „special manager” • Resolution tools: sale of business, „bridge bank”, asset separation („bad bank”), bail-in (recapitalisation by conversion of debt into equity) • Enhanced cooperation between national authorities and the European Banking Authority (EBA)

  11. Additionalreading • Summary of legislation on the EU website http://europa.eu/legislation_summaries/internal_market/single_market_services/financial_services_banking/l24008_en.htm • Information on envisaged regulatory reforms on the Commission website http://ec.europa.eu/internal_market/bank/crisis_management/index_en.htm • B.J. Attinger, Crisis management and bank resolution: Quo vadis, Europe?, ECB Legal Working Paper Series, no. 13, December 2011, http://www.ecb.int/pub/pdf/scplps/ecblwp13.pdf

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