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First Council Directive
77/780/EEC of 12 December 1977 on the coordination of the laws, regulations and
administrative provisions relating to the taking up and pursuit of the business
of credit institutions
Official Journal L 322 , 17/12/1977 p. 0030 -
Greek special edition ....: Chapter 6 Volume 2 p. 3
special edition...: Chapter 6 Volume 2 p. 21
Portuguese special edition
Chapter 6 Volume 2 p. 21
Finnish special edition....: Chapter 6 Volume 1
Swedish special edition...: Chapter 6 Volume 1 p. 210
- 77L0780 - 30/12/1989 - 24 p.
Completed by 185I
385L0345 (OJ L 183 16.07.85 p.19)
Amended by 389L0646 (OJ L 386
Amended by 194N
294A0103(59) (OJ L 001 03.01.94 p.403)
Amended by 395L0026 (OJ L 168
Amended by 396L0013 (OJ L 066 16.03.96 p.15)
Amended by 398L0033 (OJ L 204 21.07.98
FIRST COUNCIL DIRECTIVE of 12 December 1977 on the coordination of
laws, regulations and administrative provisions relating to the taking up and
pursuit of the business of credit institutions (77/780/EEC)
THE COUNCIL OF
THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the
European Economic Community, and in particular Article 57 thereof,
regard to the proposal from the Commission,
Having regard to the opinion
of the European Parliament (1),
Having regard to the opinion of the
Economic and Social Committee (2),
Whereas, pursuant to the Treaty, any
discriminatory treatment with regard to establishment and to the provision of
services, based either on nationality or on the fact that an undertaking is not
established in the Member States where the services are provided, is prohibited
from the end of the transitional period;
Whereas, in order to make it
easier to take up and pursue the business of credit institutions, it is
necessary to eliminate the most obstructive differences between the laws of the
Member States as regards the rules to which these institutions are subject;
Whereas, however, given the extent of these differences, the conditions
required for a common market for credit institutions cannot be created by means
of a single Directive ; whereas it is therefore necessary to proceed by
successive stages ; whereas the result of this process should be to provide for
overall supervision of a credit institution operating in several Member States
by the competent authorities in the Member State where it has its head office,
in consultation, as appropriate, with the competent authorities of the other
Member States concerned;
Whereas measures to coordinate credit
institutions must, both in order to protect savings and to create equal
conditions of competition between these institutions, apply to all of them ;
whereas due regard must be had, where applicable, to the objective differences
in their statutes and their proper aims as laid down by national laws;
Whereas the scope of those measures should therefore be as broad as possible,
covering all institutions whose business is to receive repayable funds from the
public whether in the form of deposits or in other forms such as the continuing
issue of bonds and other comparable securities and to grant credits for their
own account ; whereas exceptions must be provided for in the case of certain
credit institutions to which this Directive cannot apply;
provisions of this Directive shall not prejudice the application of national
laws which provide for special supplementary authorizations permitting credit
institutions to carry on specific activities or undertake specific kinds of
Whereas the same system of supervision cannot always be
applied to all types of credit institution ; whereas provision should therefore
be made for application of this Directive to be deferred in the case of certain
groups or types of credit institutions to which its immediate application might
cause technical problems ; whereas more specific provisions for such
institutions may prove necessary in the future ; whereas these specific
provisions should nonetheless be based on a number of common principles;
Whereas the eventual aim is to introduce uniform authorization requirements
throughout the Community for comparable types of credit institution ; whereas
at the initial stage it is necessary, however, to specify only certain minimum
requirements to be imposed by all Member States;
Whereas this aim can be
achieved only if the particularly wide discretionary powers which certain
supervisory authorities have for authorizing credit establishments are
progressively reduced ; whereas the requirement that a programme of operations
must be produced should therefore be seen merely as a factor enabling the
competent authorities to decide on the basis of more precise information using
objective criteria; (1)OJ No C 128, 9.6.1975, p. 25. (2)OJ No C 263,
17.11.1975, p. 25.
Whereas the purpose of coordination is to achieve a
system whereby credit institutions having their head office in one of the
Member States are exempt from any national authorization requirement when
setting up branches in other Member States;
Whereas a measure of
flexibility may nonetheless be possible in the initial stage as regards the
requirements on the legal form of credit institutions and the protection of
Whereas equivalent financial requirements for credit
institutions will be necessary to ensure similar safeguards for savers and fair
conditions of competition between comparable groups of credit institutions ;
whereas, pending further coordination, appropriate structural ratios should be
formulated that will make it possible within the framework of cooperation
between national authorities to observe, in accordance with standard methods,
the position of comparable types of credit institutions ; whereas this
procedure should help to bring about the gradual approximation of the systems
of coefficients established and applied by the Member States ; whereas it is
necessary, however, to make a distinction between coefficients intended to
ensure the sound management of credit institutions and those established for
the purposes of economic and monetary policy ; whereas, for the purpose of
formulating structural ratios and of more general cooperation between
supervisory authorities, standardization of the layout of credit institutions'
accounts will have to begin as soon as possible;
Whereas the rules
governing branches of credit institutions having their head office outside the
Community should be analogous in all Member States ; whereas it is important at
the present time to provide that such rules may not be more favourable than
those for branches of institutions from another Member State ; whereas it
should be specified that the Community may conclude agreements with third
countries providing for the application of rules which accord such branches the
same treatment throughout its territory, account being taken of the principle
Whereas the examination of problems connected with matters
covered by Council Directives on the business of credit institutions requires
cooperation between the competent authorities and the Commission within an
Advisory Committee, particularly when conducted with a view to closer
Whereas the establishment of an Advisory Committee of the
competent authorities of the Member States does not rule out other forms of
cooperation between authorities which supervise the taking up and pursuit of
the business of credit institutions and, in particular, cooperation within the
Contact Committee set up between the banking supervisory authorities,
ADOPTED THIS DIRECTIVE:
TITLE I Definitions and scope
For the purposes of this Directive: - "credit institution" means an
undertaking whose business is to receive deposits or other repayable funds from
the public and to grant credits for its own account,
means an instrument issued in any form by the authorities by which the right to
carry on the business of a credit institution is granted,
- "branch" means
a place of business which forms a legally dependent part of a credit
institution and which conducts directly all or some of the operations inherent
in the business of credit institutions ; any number of branches set up in the
same Member State by a credit institution having its head office in another
Member State shall be regarded as a single branch, without prejudice to Article
- "own funds" means the credit institution's own capital, including
items which may be treated as capital under national rules.
1. This Directive shall apply to the taking up and pursuit of the
business of credit institutions.
2. It shall not apply to: - the central
banks of Member States,
- post office giro institutions,
Belgium, the communal savings banks ("caisses d'épargne communales -
gemeentelijke spaarkassen"), the "Institut de Réescompte et de Garantie
- Herdiscontering- en Waarborginstituut", the "Société nationale
d'Investissement - Nationale Investeringsmaatschappij", the regional
development companies ("sociétés de développement
régional - gewestelijke ontwikkelingsmaatschappijen"), the
"Société nationale du Logement - Nationale Maatschappij voor de
Huisvesting" and its authorized companies and the "Société
nationale terrienne - Nationale Landmaatschappij" and its authorized companies,
- in Denmark, the "Dansk Eksportfinansieringsfond" and "Danmarks
- in Germany, the "Kreditanstalt für Wiederaufbau",
undertakings which are recognized under the
"Wohnungsgemeinnützigkeitsgesetz" (non-profit housing law) as bodies of
state housing policy and are not mainly engaged in banking transactions and
undertakings recognized under that law as non-profit housing undertakings,
- in France, the "Caisse des Dépôts et Consignations", the
"Crédit Foncier" and the "Crédit National",
- in Ireland,
- in Italy, the "Cassa Depositi e Prestiti",
- in the
Netherlands, the "NV Export-Financieringsmaatschappij", the "Netherlandse
Financieringsmaatschappij voor Ontwikkelingslanden NV", the "Nederlandse
Investeringsbank voor Ontwikkelingslanden NV", the "Nationale Investeringsbank
NV", the "NV Bank van Nederlandse Gemeenten", the "Nederlandse Waterschapsbank
NV", the "Financieringsmaatschappij Industrieel Garantiefonds Amsterdam NV",
the "Financieringsmaatschappij Industrieel Garantiefonds' s-Gravenhage NV", the
"NV Noordelijke Ontwikkelings Maatschappij", the "NV Industriebank Limburgs
Instituut voor ontwikkeling en financiering" and the "Overijsselse
- in the United Kingdom, the National
Savings Bank, the Commonwealth Development Finance Company Ltd, the
Agricultural Mortgage Corporation Ltd, the Scottish Agricultural Securities
Corporation Ltd, the Crown Agents for overseas governments and administrations,
credit unions, and municipal banks.
3. The Council, acting on a
proposal from the Commission, which, for this purpose, shall consult the
Committee referred to in Article 11 (hereinafter referred to as "the Advisory
Committee") shall decide on any amendments to the list in paragraph 2.
(a) Credit institutions existing in the same Member State at the time of the
notification of this Directive and permanently affiliated at that time to a
central body which supervises them and which is established in that same Member
State, may be exempted from the requirements listed in the first, second and
third indents of the first subparagraph of Article 3 (2), the second
subparagraph of Article 3 (2), Article 3 (4) and Article 6, if, no later than
the date when the national authorities take the measures necessary to translate
this Directive into national law, that law provides that: - the commitments of
the central body and affiliated institutions are joint and several liabilities
or the commitments of its affiliated institutions are entirely guaranteed by
the central body,
- the solvency and liquidity of the central body and of
all the affiliated institutions are monitored as a whole on the basis of
- the management of the central body is empowered
to issue instructions to the management of the affiliated institutions.
(b) Credit institutions operating locally which are affiliated,
subsequent to notification of this Directive, to a central body within the
meaning of subparagraph (a) may benefit from the conditions laid down in
subparagraph (a) if they constitute normal additions to the network belonging
to that central body.
(c) In the case of credit institutions other than
those which are set up in areas newly reclaimed from the sea or have resulted
from scission or mergers of existing institutions dependent or answerable to
the central body, the Council, acting on a proposal from the Commission, which
shall, for this purpose, consult the Advisory Committee, may lay down
additional rules for the application of subparagraph (b) including the repeal
of exemptions provided for in subparagraph (a), where it is of the opinion that
the affiliation of new institutions benefiting from the arrangements laid down
in subparagraph (b) might have an adverse effect on competition. The Council
shall decide by a qualified majority.
5. Member States may defer in
whole or in part the application of this Directive to certain types or groups
of credit institutions where such immediate application would cause technical
problems which cannot be overcome in the short-term. The problems may result
either from the fact that these institutions are subject to supervision by an
authority different from that normally responsible for the supervision of
banks, or from the fact that they are subject to a special system of
supervision. In any event, such deferment cannot be justified by the public law
statutes, by the smallness of size or by the limited scope of activity of the
particular institutions concerned.
Deferment can apply only to groups or
types of institutions already existing at the time of notification of this
6. Pursuant to paragraph 5, a Member State may decide to defer
application of this Directive for a maximum period of five years from the
notification thereof and, after consulting the Advisory Committee may extend
deferment once only for a maximum period of three years.
The Member State
shall inform the Commission of its decision and the reasons therefor not later
than six months following the notification of this Directive. It shall also
notify the Commission of any extension or repeal of this decision. The
Commission shall publish any decision regarding deferment in the Official
Journal of the European Communities.
Not later than seven years following
the notification of this Directive, the Commission shall, after consulting the
Advisory Committee, submit a report to the Council on the situation regarding
deferment. Where appropriate, the Commission shall submit to the Council, not
later than six months following the submission of its report, proposals for
either the inclusion of the institutions in question in the list in paragraph 2
or for the authorization of a further extension of deferment. The Council shall
act on these proposals not later than six months after their submission.
TITLE II Credit institutions having their head office in a Member State
and their branches in other Member States
1. Member States
shall require credit institutions subject to this Directive to obtain
authorization before commencing their activities. They shall lay down the
requirements for such authorization subject to paragraphs 2, 3 and 4 and notify
them to both the Commission and the Advisory Committee.
prejudice to other conditions of general application laid down by national
laws, the competent authorities shall grant authorization only when the
following conditions are complied with: - the credit institution must possess
separate own funds,
- the credit institution must possess adequate minimum
- there shall be at least two persons who effectively direct
the business of the credit institution.
authorities concerned shall not grant authorization if the persons referred to
in the third indent of the first subparagraph are not of sufficiently good
repute or lack sufficient experience to perform such duties.
3. (a) The
provisions referred to in paragraphs 1 and 2 may not require the application
for authorization to be examined in terms of the economic needs of the market.
(b) Where the laws, regulations or administrative provisions of a Member
State provide, at the time of notification of the present Directive, that the
economic needs of the market shall be a condition of authorization and where
technical or structural difficulties in its banking system do not allow it to
give up the criterion within the period laid down in Article 14 (1), the State
in question may continue to apply the criterion for a period of seven years
It shall notify its decision and the reasons therefor
to the Commission within six months of notification.
(c) Within six years
of the notification of this Directive the Commission shall submit to the
Council, after consulting the Advisory Committee, a report on the application
of the criterion of economic need. If appropriate, the Commission shall submit
to the Council proposals to terminate the application of that criterion. The
period referred to in subparagraph (b) shall be extended for one further period
of five years, unless, in the meantime, the Council, acting unanimously on
proposals from the Commission, adopts a Decision to terminate the application
of that criterion.
(d) The criterion of economic need shall be applied
only on the basis of general predetermined criteria, published and notified to
both the Commission and the Advisory Committee and aimed at promoting: -
security of savings,
- higher productivity in the banking system
greater uniformity of competition between the various banking networks,
a broader range of banking services in relation to population and economic
Specification of the above objectives shall be
determined within the Advisory Committee, which shall begin its work as from
its initial meetings.
4. Member States shall also require
applications for authorization to be accompanied by a programme of operations
setting out inter alia the types of business envisaged and the structural
organization of the institution.
5. The Advisory Committee shall examine
the content given by the competent authorities to requirements listed in
paragraph 2, any other requirements which the Member States apply and the
information which must be included in the programme of operations, and shall,
where appropriate, make suggestions to the Commission with a view to a more
6. Reasons shall be given whenever an authorization
is refused and the applicant shall be notified thereof within six months of
receipt of the application or, should the latter be incomplete, within six
months of the applicant's sending the information required for the decision. A
decision shall, in any case, be taken within 12 months of the receipt of the
7. Every authorization shall be notified to the Commission.
Each credit institution shall be entered in a list which the Commission shall
publish in the Official Journal of the European Communities and shall keep up
1. Member States may make the commencement of
business in their territory by branches of credit institutions covered by this
Directive which have their head office in another Member State subject to
authorization according to the law and procedure applicable to credit
institutions established on their territory.
2. However, authorization may
not be refused to a branch of a credit institution on the sole ground that it
is established in another Member State in a legal form which is not allowed in
the case of a credit institution carrying out similar activities in the host
country. This provision shall not apply, however, to credit institutions which
possess no separate own funds.
3. The competent authorities shall inform
the Commission of any authorizations which they grant to the branches referred
to in paragraph 1.
4. This Article shall not affect the rules applied by
Member States to branches set up on their territory by credit institutions
which have their head office there. Notwithstanding the second part of the
third indent of Article 1, the laws of Member States requiring a separate
authorization for each branch of a credit institution having its head office in
their territory shall apply equally to the branches of credit institutions the
head offices of which are in other Member States.
the purpose of exercising their activities, credit institutions to which this
Directive applies may, notwithstanding any provisions concerning the use of the
words "bank", "saving bank" or other banking names which may exist in the host
Member State, use throughout the territory of the Community the same name as
they use in the Member States in which their head office is situated. In the
event of there being any danger of confusion, the host Member State may, for
the purposes of clarification, require that the name be accompanied by certain
1. Pending subsequent
coordination, the competent authorities shall, for the purposes of observation
and, if necessary, in addition to such coefficients as may be applied by them,
establish ratios between the various assets and/or liabilities of credit
institutions with a view to monitoring their solvency and liquidity and the
other measures which may serve to ensure that savings are protected.
this end, the Advisory Committee shall decide on the content of the various
factors of the observation ratios referred to in the first subparagraph and lay
down the method to be applied in calculating them.
Where appropriate, the
Advisory Committee shall be guided by technical consultations between the
supervisory authorities of the categories of institutions concerned.
The observation ratios established in pursuance of paragraph 1 shall be
calculated at least every six months.
3. The Advisory Committee shall
examine the results of analyses carried out by the supervisory authorities
referred to in the third subparagraph of paragraph 1 on the basis of the
calculations referred to in paragraph 2.
4. The Advisory Committee may
make suggestions to the Commission with a view to coordinating the coefficients
applicable in the Member States.
1. The competent
authorities of the Member States concerned shall collaborate closely in order
to supervise the activities of credit institutions operating, in particular by
having established branches there, in one or more Member States other than that
in which their head offices are situated. They shall supply one another with
all information concerning the management and ownership of such credit
institutions that is likely to facilitate their supervision and the examination
of the conditions for their authorization and all information likely to
facilitate the monitoring of their liquidity and solvency.
competent authorities may also, for the purposes and within the meaning of
Article 6, lay down ratios applicable to the branches referred to in this
Article by reference to the factors laid down in Article 6.
Advisory Committee shall take account of the adjustments necessitated by the
specific situation of the branches in relation to national regulations.
1. The competent authorities may withdraw the authorization
issued to a credit institution subject to this Directive or to a branch
authorized under Article 4 only where such an institution or branch: (a) does
not make use of the authorization within 12 months, expressly renounces the
authorization or has ceased to engage in business for more than six months, if
the Member State concerned has made no provision for the authorization to lapse
in such cases;
(b) has obtained the authorization through false statements
or any other irregular means;
(c) no longer fulfils the conditions under
which authorization was granted, with the exception of those in respect of own
(d) no longer possesses sufficient own funds or can no longer be
relied upon to fulfil its obligations towards its creditors, and in particular
no longer provides security for the assets entrusted to it;
within one of the other cases where national law provides for withdrawal of
2. In addition, the authorization issued to a
branch under Article 4 shall be withdrawn if the competent authority of the
country in which the credit institution which established the branch has its
head office has withdrawn authorization from that institution.
States which grant the authorizations referred to in Articles 3 (1) and 4 (1)
only if, economically, the market situation requires it may not invoke the
disappearance of such a need as grounds for withdrawing such authorizations.
4. Before withdrawal from a branch of an authorization granted under
Article 4, the competent authority of the Member State in which its head office
is situated shall be consulted. Where immediate action is called for,
notification may take the place of such consultation. The same procedure shall
be followed, by analogy, in cases of withdrawal of authorization from a credit
institution which has branches in other Member States.
5. Reasons must be
given for any withdrawal of authorization and those concerned informed thereof
; such withdrawal shall be notified to the Commission.
Branches of credit institutions having their head offices outside the Community
1. Member States shall not apply to branches of credit
institutions having their head office outside the Community, when commencing or
carrying on their business, provisions which result in more favourable
treatment than that accorded to branches of credit institutions having their
head office in the Community.
2. The competent authorities shall notify
the Commission and the Advisory Committee of all authorizations for branches
granted to credit institutions having their head office outside the Community.
3. Without prejudice to paragraph 1, the Community may, through agreements
concluded in accordance with the Treaty with one or more third countries, agree
to apply provisions which, on the basis of the principle of reciprocity, accord
to branches of a credit institution having its head office outside the
Community identical treatment throughout the territory of the Community.
TITLE IV General and transitional provisions
institutions subject to this Directive, which took up their business in
accordance with the provisions of the Member States in which they have their
head offices before the entry into force of the provisions implementing this
Directive shall be deemed to be authorized. They shall be subject to the
provisions of this Directive concerning the carrying on of the business of
credit institutions and to the requirements set out in the first and third
indents of the first subparagraph and in the second subparagraph of Article 3
Member States may allow credit institutions which at the time of
notification of this Directive do not comply with the requirement laid down in
the third indent of the first subparagraph of Article 3 (2), no more than five
years in which to do so.
Member States may decide that undertakings which
do not fulfil the requirements set out in the first indent of the first
subparagraph of Article 3 (2) and which are in existence at the time this
Directive enters into force may continue to carry on their business. They may
exempt such undertakings from complying with the requirement contained in the
third indent of the first subparagraph of Article 3 (2).
2. All the credit
institutions referred to in paragraph 1 shall be given in the list referred to
in Article 3 (7).
3. If a credit institution deemed to be authorized under
paragraph 1 has not undergone any authorization procedure prior to commencing
business, a prohibition on the carrying on of its business shall take the place
of withdrawal of authorization.
Subject to the first subparagraph, Article
8 shall apply by analogy.
4. By way of derogation from paragraph 1, credit
institutions established in a Member State without having undergone an
authorization procedure in that Member State prior to commencing business may
be required to obtain authorization from the competent authorities of the
Member State concerned in accordance with the provisions implementing this
Directive. Such institutions may be required to comply with the requirement in
the second indent of Article 3 (2) and with such other conditions of general
application as may be laid down by the Member State concerned.
1. An "Advisory Committee of the Competent Authorities of the
Member States of the European Economic Community" shall be set up alongside the
2. The tasks of the Advisory Committee shall be to assist the
Commission in ensuring the proper implementation of both this Directive and
Council Directive 73/183/EEC of 28 June 1973
on the abolition of restrictions on freedom of establishment and freedom to
provide services in respect of self-employed activities of banks and other
financial institutions (1) in so far as it relates to credit institutions.
Further it shall carry out the other tasks prescribed by this Directive and
shall assist the Commission in the preparation of new proposals to the Council
concerning further coordination in the sphere of credit institutions.
The Advisory Committee shall not concern itself with concrete problems relating
to individual credit institutions.
4. The Advisory Committee shall be
composed of not more than three representatives from each Member State and from
the Commission. These representatives may be accompanied by advisers from time
and subject to the prior agreement of the Committee. The Committee may also
invite qualified persons and experts to participate in its meetings. The
secretariat shall be provided by the Commission.
5. The first meeting of
the Advisory Committee shall be convened by the Commission under the
chairmanship of one of its representatives. The Advisory Committee shall then
adopt its rules of procedure and shall elect a chairman from among the
representatives of Member States. Thereafter it shall meet at regular intervals
and whenever the situation demands. The Commission may ask the Committee to
hold an emergency meeting if it considers that the situation so requires.
6. The Advisory Committee's discussions and the outcome thereof shall be
confidential except when the Committee decides otherwise.
1. Member States shall ensure that all persons now or in the past
employed by the competent authorities are bound by the obligation of
professional secrecy. This means that any confidential information which they
may receive in the course of their duties may not be divulged to any person or
authority except by virtue of provisions laid down by law.
2. Paragraph 1
shall not, however, preclude communications between the competent authorities
of the various Member States, as provided for in this Directive. Information
thus exchanged shall be covered by the obligation of professional secrecy
applying to the persons now or in the past employed by the competent
authorities receiving the information.
3. Without prejudice to cases
covered by criminal law, the authorities receiving such information shall use
it only to examine the conditions for the taking up and pursuit of the business
of credit institutions, to facilitate monitoring of the liquidity and solvency
of these institutions or when the decisions of the competent authority are the
subject of an administrative appeal or in court proceedings initiated pursuant
to Article 13.
Member States shall ensure that
decisions taken in respect of a credit institution in pursuance of laws,
regulations and administrative provisions adopted in accordance with this
Directive may be subject to the right to apply to the courts. The same shall
apply (1)OJ No L 194, 16.7.1973, p. 1.
where no decision is taken within
six months of its submission in respect of an application for authorization
which contains all the information required under the provisions in force.
TITLE V Final provisions
1. Member States shall bring
into force the measures necessary to comply with this Directive within 24
months of its notification and shall forthwith inform the Commission thereof.
2. As from the notification of this Directive, Member States shall
communicate to the Commission the texts of the main laws, regulations and
administrative provisions which they adopt in the field covered by this
This Directive is addressed to the Member
Done at Brussels, 12 December 1977.
For the Council
End of the document