Az Európai Unió Hivatalos Lapjában (2010. július) kihirdetett jogforrások listája, illetve a pénzügyi szolgáltatások szektorral kapcsolatban az Európai Bizottság honlapján közzétett hírek

Tartalomjegyzék: Az Európai Unió Hivatalos Lapja - L (Jogszabályok)

Sorszám Cím Oldalszám

1. A Bizottság 662/2010/EU rendelete (2010. július 23.) az

1606/2002/EK európai parlamenti és tanácsi rendelettel

összhangban egyes nemzetközi számviteli standardok

elfogadásáról szóló 1126/2008/EK rendeletnek a Nemzetközi

Pénzügyi Beszámolási Értelmezési Bizottság IFRIC19

értelmezése és az IFRS1 nemzetközi pénzügyi beszámolási

standard tekintetében történő módosításáról

2

2. A Bizottság 632/2010/EU rendelete (2010. július 19.) az

1606/2002/EK európai parlamenti és tanácsi rendelettel

összhangban egyes nemzetközi számviteli standardok

elfogadásáról szóló 1126/2008/EK rendeletnek az IAS24

nemzetközi számviteli standard és az IFRS8 nemzetközi

pénzügyi beszámolási standard tekintetében történő

módosításáról

3

3. A Bizottság 2010/42/EU irányelve (2010. július 1.) a

2009/65/EK európai parlamenti és tanácsi irányelvnek az alapok

egyesülésére, a master-feeder struktúrákra és a bejelentési

eljárásokra vonatkozó különös rendelkezései tekintetében

történő végrehajtásáról

3

4. A Bizottság 2010/43/EU irányelve (2010. július 1.) a

2009/65/EK európai parlamenti és tanácsi irányelvnek a

szervezeti követelmények, az összeférhetetlenség, az üzletvitel,

a kockázatkezelés, valamint a letétkezelő és az alapkezelő

társaság közötti megállapodás tartalma tekintetében történő

végrehajtásáról

4

5. A Bizottság 583/2010/EU rendelete (2010. július 1.) a

2009/65/EK európai parlamenti és tanácsi irányelvnek a kiemelt

befektetői információk tekintetében, valamint a papírtól eltérő

tartós adathordozón vagy weboldalon rendelkezésre bocsátott

kiemelt befektetői információk vagy tájékoztató esetében

teljesítendő különleges feltételek tekintetében történő

végrehajtásáról

5

6. A Bizottság 584/2010/EU rendelete (2010. július 1.) a

2009/65/EK európai parlamenti és tanácsi irányelvnek a

6

2

bejelentő levél és az ÁÉKBV-igazolás formája és tartalma, a

bejelentés céljára az illetékes hatóságok közötti elektronikus

kommunikáció használata, valamint a helyszíni ellenőrzésekre

és vizsgálatokra és az illetékes hatóságok közötti

információcserére vonatkozó eljárások tekintetében történő

végrehajtásáról

Sajtóbejelentések

Sorszám Cím Oldalszám

1. Joint press release - Publication of the results of the EU-wide

stress-testing exercise

7

2. Questions & Answers 2010 EU-wide stress testing exercise 8

3. Commission proposes package to boost consumer protection

and confidence in financial services

19

4. Insurance Guarantee Schemes (IGS) - Frequently Asked

Questions

22

5. Investor Compensation Schemes – Frequently asked Questions 27

6. Deposit Guarantee Schemes – Frequently Asked Questions 31

7. EU launches public debate on the future of pensions 36

8. Following today's vote in the European Parliament,

Commissioner Michel Barnier welcomes the agreement by

Council and Parliament on new capital requirements for banks

38

9. Financial services: Commission acts to improve investor

protection and efficiency in the EU investment fund market

40

Jogszabályok 1. Jogszabály:

A Bizottság 662/2010/EU rendelete (2010. július 23.) az 1606/2002/EK európai

parlamenti és tanácsi rendelettel összhangban egyes nemzetközi számviteli standardok

elfogadásáról szóló 1126/2008/EK rendeletnek a Nemzetközi Pénzügyi Beszámolási

Értelmezési Bizottság IFRIC19 értelmezése és az IFRS1 nemzetközi pénzügyi

beszámolási standard tekintetében történő módosításáról

Megjelent:

L 193 (07.24.)

Jogforrás tartalma:

A Nemzetközi Pénzügyi Beszámolási Értelmezési Bizottság (IFRIC) 2009 novemberében

közzétette az IFRIC 19 Pénzügyi kötelezettségek megszüntetése tőkeinstrumentumokkal

értelmezést (a továbbiakban: IFRIC 19 értelmezés).

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Az IFRIC 19 értelmezés arról ad útmutatást, hogy az adósnak miként kell elszámolnia, ha

egy pénzügyi kötelezettség feltételeinek újratárgyalása után tőkeinstrumentumok

kibocsátásával teljesíti annak egészét vagy egy részét.

Az IFRIC 19 értelmezés elfogadása a nemzetközi számviteli standardok közötti összhang

biztosítása érdekében maga után vonja az IFRS 1 nemzetközi pénzügyi beszámolási

standard módosítását.

A rendeletet legkésőbb a 2010. június 30. után kezdődő első pénzügyi év kezdőnapjától

alkalmaznia kell.

A rendelet 2010. július 27-én lép hatályba.

2. Jogszabály:

A Bizottság 632/2010/EU rendelete (2010. július 19.) az 1606/2002/EK európai

parlamenti és tanácsi rendelettel összhangban egyes nemzetközi számviteli standardok

elfogadásáról szóló 1126/2008/EK rendeletnek az IAS 24 nemzetközi számviteli

standard és az IFRS 8 nemzetközi pénzügyi beszámolási standard tekintetében

történő módosításáról

Megjelent:

L 186 (07.20.)

Jogforrás tartalma:

A Nemzetközi Számviteli Standard Testület (IASB) 2009 novemberében közzétette a

felülvizsgált IAS 24 Kapcsolt felekre vonatkozó közzétételek nemzetközi számviteli

standardot (a továbbiakban: felülvizsgált IAS 24).

A felülvizsgált IAS 24 standardba beemelt változtatások célja, hogy egyszerűsítsék a

kapcsolt fél fogalmát és egyúttal megszüntessenek bizonyos belső ellentmondásokat,

továbbá mentességeket adjanak a kormányzattal kapcsolt viszonyban álló gazdálkodó

egységeknek a kapcsolt felekkel folytatott ügyletek vonatkozásában szolgáltatandó adatok

mennyiségét illetően.

A felülvizsgált IAS 24 elfogadása a nemzetközi számviteli standardok közötti összhang

biztosítása érdekében maga után vonja az IFRS 8 nemzetközi pénzügyi beszámolási

standard módosítását.

Az IAS 24 standardot és az IFRS 8 standard módosítását legkésőbb a 2010. december 31.

után kezdődő első pénzügyi év kezdőnapjától kell alkalmaznia.

A rendelet 2010. július 23-án lép hatályba.

3. Jogszabály:

A Bizottság 2010/42/EU irányelve (2010. július 1.) a 2009/65/EK európai parlamenti és

tanácsi irányelvnek az alapok egyesülésére, a master-feeder struktúrákra és a

bejelentési eljárásokra vonatkozó különös rendelkezései tekintetében történő

végrehajtásáról

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Megjelent:

L 176 (07.10.)

Jogforrás tartalma:

Az irányelv részletes végrehajtási szabályokat állapít meg a 2009/65/EK irányelv

rendelkezéseinek megfelelően az ÁÉKBV-k egyesülése esetében a befektetési

jegytulajdonosoknak nyújtandó tájékoztatás tartalmára valamint a tájékoztatás módszerére

vonatkozóan.

Az irányelv előírásaival harmonizálja annak módját, hogy az ÁÉKBV-k egyesülése esetén

miként nyújtsanak tájékoztatást a befektetésijegy-tulajdonosoknak. Az irányelv ennek

megfelelően meghatározza az egyesülési tájékoztató általános és konkrét tartalmi

szabályaira valamint a befektetésijegy-tulajdonosoknak szóló tájékoztatás nyújtás

módszerét is.

Az irányelv előírja a master-feeder struktúrákon belül a master-ÁÉKBV és a feeder-

ÁÉKBV közötti megállapodások tartalmára vonatkozó követelményeket, melyek lefedik az

információhoz való hozzáférés szabályait a két szervezet között, a feeder ÁÉKBV általi

befektetés vagy elidegenítés alapjára vonatkozó előírásokat, a kereskedési

szabványmegállapodások és a könyvvizsgálói jelentésre vonatkozó

szabványmegállapodások kötelező tartalmi elemeit. Ezen túlmenően az irányelv előírásokat

tartalmaz az alkalmazandó jog megválasztásának módszerére is.

Az irányelvben az alapkezelő társaságokkal szemben azonos követelményeket állít a belső

üzletviteli szabályzat tartalmára vonatkozóan, mint a master-ÁÉKBV és a feeder-ÁÉKBV-

k közötti megállapodásokra.

Az irányelv a master ÁÉKBV felszámolása, egyesülése vagy szétválása esetére vonatkozó

eljárásokra is meghatározza a letétkezelőkre és könnyvvizsgálókra vonatkozó eljárási

szabályokat is.

A tagállamoknak 2011. június 30-ig kell hatályba léptetni azokat a törvényi, rendeleti és

közigazgatási rendelkezéseket, amelyek szükségesek ahhoz, hogy ennek az irányelvnek

megfeleljenek.

Az irányelv 2010. július 30-án lép hatályba.

4. Jogszabály:

A Bizottság 2010/43/EU irányelve (2010. július 1.) a 2009/65/EK európai parlamenti és

tanácsi irányelvnek a szervezeti követelmények, az összeférhetetlenség, az üzletvitel, a

kockázatkezelés, valamint a letétkezelő és az alapkezelő társaság közötti megállapodás

tartalma tekintetében történő végrehajtásáról

Megjelent:

L 176 (07.10.)

Jogforrás tartalma:

Ez az irányelv megállapítja a 2009/65/EK irányelv azon végrehajtási szabályait, amelyek

meghatározzák az alapkezelő táraságok által alkalmazott rendszerekkel és igazgatási

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eljárásokkal szemben támasztott elvárásokat valamint az összeférhetetlenségek

minimalizálását szolgáló szerkezeti és szervezeti követelményeket.

Az irányelv hatálya azokra az alapkezelő társaságokra terjed ki, amelyek átruházható

értékpapírokkal foglalkozó kollektív befektetési vállalkozás (ÁÉKBV) kezelésével

foglalkoznak. Az irányelv előírásait azokra a befektetési társaságokra is alkalmazni kell,

amelyek nem bíztak meg alapkezelő társaságot.

Az irányelv az alapkezelő táraságok által alkalmazott rendszerek, igazgatási eljárások és

kontrollmechanizmusok esetében meghatározza az alkalmazandó alapelveket, részletezi az

igazgatási és számviteli eljárásokkal valamint a belsőkontroll mechanizmusokkal szemben

támasztott követelményeket.

Az összeférhetetlenségre vonatkozó rendelkezések az alapkezelő társaságokkal szemben

határoznak meg az összeférhetetlenségek azonosítására, az összeférhetetlenségi politikára

valamint a felmerülő esetleges konfliktusok kezelésére eljárásokat.

Az irányelv részletes magatartási szabályokat ír elő az alapkezelő társaságok számára,

meghatározva a követendő alapelveket, a legjobb végrehajtás érdekében alkalmazandó

eljárásokat valamint a megbízások kezelésére vonatkozó előírásokat.

Az irányelv letétkezelő és az alapkezelő társaságok közötti szabványmegállapodásokra

vonatkozó eljárások részletszabályait is meghatározza.

Az alapkezelő társaságok kockázatkezelési eljárásaival szemben támasztott kritériumoknak

való megfelelés biztosításához az irányelv részletezi a kockázatkezelési politikával

valamint a kockázatkezelési eljárással szemben támasztott követelményeket.

A tagállamoknak 2011. június 30-ig kell hatályba léptetni azokat a törvényi, rendeleti és

közigazgatási rendelkezéseket, amelyek szükségesek ahhoz, hogy ennek az irányelvnek

megfeleljenek.

Az irányelv 2010. július 30-án lép hatályba.

5. Jogszabály:

A Bizottság 583/2010/EU rendelete (2010. július 1.) a 2009/65/EK európai parlamenti

és tanácsi irányelvnek a kiemelt befektetői információk tekintetében, valamint a

papírtól eltérő tartós adathordozón vagy weboldalon rendelkezésre bocsátott kiemelt

befektetői információk vagy tájékoztató esetében teljesítendő különleges feltételek

tekintetében történő végrehajtásáról

Megjelent:

L 176 (07.10.)

Jogforrás tartalma:

A rendelet a 2009/65/EK irányelvben meghatározott kiemelt befektetői információk

elkészítésekor és rendelkezésre bocsátásakor követendő fő elveket, beleértve a formájára és

megjelenítésére, a célkitűzéseire, a közzéteendő információ fő elemeire és az

információtovábbítás irányára és alanyaira, valamint módszereire vonatkozó

követelményeket alapján a tartalomra és a formára vonatkozó részletekre vonatkozó

végrehajtási intézkedéseket tartalmazza. Ezen végrehajtási intézkedésekkel szemben

alapkövetelmény, hogy elég részletesek legyenek, annak biztosítása érdekében, hogy a

befektetők megkapják az információt, amelyre a különböző struktúrájú alapok tekintetében

szükségük van.

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A rendelet biztosítja, hogy a kiemelt befektetői információk teljes tartalmára az összes

tagállamban azonos követelmények vonatkozzanak, a tájékoztatás formájának és

tartalmának szabályozása összehangolt legyen, azért hogy az ÁÉKBV-k piacán a

befektetési lehetőségekről szóló információk következetesek és összehasonlíthatók

legyenek.

A rendelet előírásai szerint elvárás, hogy a kiemelt befektetői információk tartalma

releváns, az elrendezésük logikus és a nyelvezet megfelelő legyen a lakossági befektetők

számára, és hogy ezen információkat tartalmazó dokumentum formája, megjelenítése és a

használt nyelvezet minősége és jellege révén képes legyen megnyerni a befektetőket és

segíteni az összehasonlítást.

A rendelet meghatározza a befektetési célkitűzésekre és az ÁÉKBV-k befektetési

politikájára vonatkozó információk tartalmi követelményeit, amely által a befektetők

könnyen eldönthetik egy alapról, hogy valószínűsíthetően megfelel-e igényeiknek.

A rendelet részletes szabályokat határoz meg a befektetés kockázat/nyereség profiljának

bemutatására vonatkozóan, valamint megköveteli egy szintetikus mutató használatát és

meghatározza a mutató, valamint a mutató által figyelmen kívül hagyott olyan kockázatok

magyarázó leírásának tartalmát, amelyek lényeges hatással lehetnek az ÁÉKBV

kockázat/nyereség profiljára.

A rendelet meghatározza a díjak bemutatásának és magyarázatának egységes formáját,

beleértve a vonatkozó figyelmeztetéseket, annak érdekében, hogy a befektetők megfelelően

tájékozottak legyenek az őket érintő díjakat és a díjaknak a ténylegesen az alapba fektetett

tőke összegéhez viszonyított arányát illetően.

A rendelet a 2004/39/EK irányelv szabályait is kiegészíti azáltal, hogy a különböző kiemelt

befektetői információkat tartalmazó dokumentumok összehasonlításának megkönnyítése

céljából az információk összehangolásához szükséges konkrét követelményeket vezet be.

A rendelet úgy alakítja ki a minden ÁÉKBV-ra alkalmazandó általános szabályokat, hogy

figyelembe veszi az ÁÉKBV-k bizonyos típusainak – nevezetesen a több befektetési

részalappal vagy befektetésijegy-osztállyal, alapok alapja szerkezettel, master-feeder

struktúrával rendelkező és a strukturált, például a tőkevédelmet élvező és egyéb hasonló

ÁÉKBV-k – különleges helyzetét.

A rendelet ezen felül meghatározza a papírtól eltérő tartós adathordozón vagy weboldalon

biztosított kiemelt befektetői információkat tartalmazó dokumentum vagy tájékoztató

esetén alkalmazandó feltételeket is.

A rendeletet 2011. július 1-jétől kell alkalmazni

A rendelet 2010. július 30-án lép hatályba.

6. Jogszabály:

A Bizottság 584/2010/EU rendelete (2010. július 1.) a 2009/65/EK európai parlamenti

és tanácsi irányelvnek a bejelentő levél és az ÁÉKBV-igazolás formája és tartalma, a

bejelentés céljára az illetékes hatóságok közötti elektronikus kommunikáció

használata, valamint a helyszíni ellenőrzésekre és vizsgálatokra és az illetékes

hatóságok közötti információcserére vonatkozó eljárások tekintetében történő

végrehajtásáról

Megjelent:

7

L 176 (07.10.)

Jogforrás tartalma:

A rendelet célja, hogy meghatározza és harmonizálja az ÁÉKBV befektetési jegyeinek a

fogadó tagállamban történő forgalmazásához kapcsolódó új bejelentési eljárás bizonyos

elemeit úgy, hogy útmutatást ad az illetékes hatóságok számára az új követelmények

működéséről és segíti őket az új eljárás zökkenőmentes működtetésében.

A bejelentési eljárás elősegítése érdekében a rendelet meghatározza az ÁÉKBV által használandó

bejelentő levél standard mintájának formáját és tartalmát, valamint a tagállamok illetékes hatóságai

által annak megerősítésére használandó igazolás formáját és tartalmát, lehetővé téve azt is, hogy a

tagállamok mind a bejelentő levelet, mind az igazolást elektronikus úton is továbbíthassák.

A rendelet meghatározza, a bejelentési ügyirat illetékes hatóságok közötti elektronikus

továbbítására vonatkozó részletes eljárást is, úgy hogy az illetékes hatóságok az európai értékpapír-

piaci szabályozók bizottságának keretein belül is összehangolják az elektronikus kommunikációra

vonatkozó megoldásokat.

A rendelet rendezi az illetékes hatóságok közötti együttműködés kérdéseit olyan ügyekben, amelyek

felügyeleti feladatainak hatókörébe tartoznak.

A rendeletet 2011. július 1-jétől kell alkalmazni.

A rendelet 2010. július 30-án lép hatályba.

Sajtóbejelentések

1. MEMO/10/356

Brussels, 23 July 2010

Joint press release - Publication of the results of the EU-wide stress-testing exercise

The Committee of European Banking Supervisors (CEBS), the European Central Bank

(ECB) and the European Commission welcome the publication of the results of the EU-

wide stress-testing exercise, which was prepared and conducted by the CEBS and national

supervisory authorities, in close cooperation with the ECB.

We support, in particular, the transparency of this exercise, given the specific market

circumstances under which banks currently operate. We therefore welcome the publication

of banks‟ individual results, particularly their respective capital positions and loss estimates

under an adverse scenario, as well as detailed information on banks‟ exposures to EU/EEA

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central and local government debt. Such disclosures ensure transparency regarding

conditions in the EU banking sector.

The adverse scenarios used in the stress test are designed as "what-if" scenarios reflecting

severe assumptions which are therefore not very likely to materialise in practice.

Accordingly, the results of the test confirm the overall resilience of the EU banking system

to negative macroeconomic and financial shocks, and are an important step forward in

restoring market confidence.

Where the results of the exercise indicate that individual banks require additional capital,

these banks should take the necessary steps to reinforce their capital positions through

private-sector means and by resorting, if necessary, to facilities set up by Member State

governments, in full compliance with EU state-aid rules.

More information can be obtained on the CEBS website: www.c-ebs.org

2. MEMO/10/355

Brussels, 23 July 2010

Questions & Answers 2010 EU-wide stress testing exercise

Q1: What does it mean to stress test a bank?

A: Stress tests are an important risk management tool that has been used for a number of

years now, both by banks as part of their internal risk management practices and by

supervisors to assess the resilience of banks and of financial systems in general to possible

shocks.

Stress tests assess adverse and unexpected outcomes related to a variety of risks, and

provide an indication of how much capital might be needed to absorb losses would the

shocks that have been assumed actually occur. Usually stress tests envisage a set of

hypothetical "what if" scenarios with different degrees of severity.

Stress tests do not provide forecasts of expected outcomes: the adverse scenarios are

designed as "what-if" scenarios reflecting severe assumptions which are therefore not very

likely to materialise.

Q2: What is the objective of the EU wide stress testing exercise? How does it differ

from the exercise conducted in 2009?

A: The overall objective of the stress testing exercise is to provide policy information for

assessing the resilience of the EU banking system to possible adverse economic

developments and to assess the ability of banks in the exercise to absorb possible shocks on

credit and market risks, including sovereign risks.

These tests have been done on a bank-by-bank basis, using banks‟ specific data and

supervisory information.

9

Compared to 2009, where the test was focused on 26 major European cross-border

operating banks, the focus in 2010 has been extended to 91 banks, covering at least 50% of

the national banking sector, as expressed in terms of total assets.

For the 2010 exercise it has been decided to disclose a detailed report about the assessment

of the resilience of the EU banking sector, the key results of the impact of the stress

scenarios on each individual bank in the exercise, as well as their sovereign exposures, with

a detailed breakdown between trading and banking book exposures.

Q3: Who is responsible for the stress testing results?

A: CEBS in close cooperation with the ECB, the European Commission and participating

national supervisory authorities, has developed the methodology and identified the common

assumptions for the exercise.

The macro-economic and sovereign shock scenarios and parameters have been developed

by the ECB. The ECB proposed the size of the haircuts to be used in the assessment of the

impact of the sovereign risk on banks holdings of sovereign debt instruments, and

probabilities of default and losses given default.

CEBS has subsequently been responsible for the EU-wide coordination of the exercise.

Amongst others, a network of national stress testing experts has peer reviewed the results

and CEBS has performed extensive cross-checks in order to ensure consistency and

comparability of the results.

And lastly, it is the responsibility of each national supervisor to undertake the exercise with

its banks and it is for the national supervisor to confirm the individual results of its

respective bank(s).

Scenario, methods and parameters

Q4: Which stress tests have been performed?

A: In essence, we have done the following tests: first, banks need to calculate their

estimated Tier 1 capital ratio under a benchmark scenario for 2010 and 2011, then the same

calculations are performed under an adverse scenario and finally, within this adverse

scenario, a shock on sovereign risk is considered.

Q5: What are the basic assumptions for the adverse scenario and the sovereign risk

shock?

A: A specific and detailed overview of the details of the macro-economic scenarios, key

common assumptions and haircuts to sovereign debt instruments used can be found in the

summary report.

On aggregate, the adverse scenario assumes a 3 percentage point deviation of GDP for the

EU compared to the European Commission‟s forecasts cumulated over the two-year time

horizon.

The sovereign risk shock in the EU represents a deterioration of market conditions of a

similar magnitude as observed at the peak of the Greek crisis in early May 2010.

Q6: What is the time horizon for the stress test?

A: The exercise has been carried out on the basis of the consolidated year-end 2009 figures

and the scenarios have been applied over a period of two years – 2010 and 2011. The time

horizon of two years is consistent with the majority of current stress testing practices of

institutions and national supervisors.

10

Q7: Which risks and exposures have been taken into account?

A: The stress test focuses mainly on credit and market risks, including the exposures to

European sovereign debt. The focus of the stress test is on capital adequacy, liquidity risks

were not directly stress tested.

With respect to exposures, the test covered banking and trading books, and addressed

specifically available-for-sale equity exposures in the banking book, sovereign exposures in

the trading book and securitisation exposures.

Q8: How did you stress sovereign risk?

A: The sovereign risk has been tested by applying a price-shock to the sovereign debt in the

bank‟s trading book by applying valuation haircuts on the trading book exposures to EU

sovereign debt and by taking into account additional impairment losses on the non-

sovereign exposures in the banking book - attributed to the interest rate component of the

macro-economic scenario affecting the risk parameters (the so-called Probabilities of

Default (PDs) and Loss Given Defaults (LGDs)).

In the design of the test we did not assume that an EU Member State would default.1

Q9: How did you stress the sovereign risk in the banking book?

A: The test assumes a rise in the yields of government bonds that will increase the private

sector‟s borrowing costs, in turn leading to more defaults as firms and households may face

additional difficulties in servicing their debt. This will increase the losses a bank will suffer

on its exposures to the private and financial sector.

Q10: How many banks have been tested?

A: In total 91 banks have been tested in the exercise.

For the EU banking sector as a whole, the banks tested represent 65% of the EU banking

sector in terms of total assets.

Q11: How were banks selected to take part?

A: The scope includes the major EU cross-border banking groups and a group of additional,

mostly large credit institutions in Europe. In each EU Member State, the sample has been

built by including banks, in descending order of size, so as to cover at least 50% of the

national banking sector, as expressed in term of total assets.

Q12: You announced that you cover more than 50% of each of the national banking

sectors in Europe, but from a number of countries no banks are on the list? How is

that possible?

A: The EU banks have been tested on a group-wide basis. This means that subsidiaries and

branches of a cross-border operating bank are included in the exercise as part of its

consolidated group. As such, all EU Member States are covered in the exercise and the

results of an EU subsidiary of a foreign EU banking group are tested as part of a

consolidated group. As a result, we have participating national supervisors from 20 EU

Member States. For the remaining 7 EU Member States, where more than 50% of the local

market was already covered, no further bank was added to the sample.

Some host national supervisory authorities of such subsidiaries of banks which were tested

on the consolidated level may wish to separately publish the results of stress tests for the

part of the banking group that they supervise. Such stress tests form a part of routine

supervisory activities and do not form a part of the CEBS co-ordinated EU-wide exercise.

11

In order not to mix the different exercises, national supervisors who wish to publish results

of stress tests for the part of the banking group they supervise will disclose this information

from 6th August 2010.

Q13: How did you determine whether a bank has passed the stress test or not?

A: For the purposes of this stress test, a threshold value for a Tier 1 capital ratio of 6% was

used as a benchmark to determine a potential need for recapitalisation, whereby the

regulatory minimum set by the Capital Requirement Directive (CRD) is 4%. The 6%

benchmark is in line with the benchmark used in the US SCAP. 2

NB: this threshold should by no means be interpreted as a regulatory minimum, or as a

capital target reflecting the risk profile of the institutions determined as a result of the

supervisory review process in Pillar 2 of the CRD. It is only a benchmark for this specific

exercise.

Q14: How will supervisors assess the banks that are near to this benchmark?

A: On an ongoing basis, supervisors closely monitor the situation of the institutions under

their supervision. The outcome of this stress testing exercise is to be used by the

supervisors in their assessment of the vulnerabilities, risks and weaknesses of the

supervised entity in question. This outcome will be included as part of the supervisory

review and evaluation process, whereby the supervisor assesses all material risks of the

bank in question and identifies in as far sufficient capital is available to provide for future

losses.

Banks whose capital ratios decline and move towards the threshold value set up for this

stress, will as we always do in such situation, be subject to closer supervisory scrutiny and

more intrusive supervision. If deemed necessary, the national supervisor will ask the bank‟s

management to develop a plan to improve the situation, including potentially, a plan to

increase capital buffers, which will be subsequently assessed by the national supervisory

authority.

It should be emphasized that it is the responsibility of the national supervisory authority to

require and take supervisory actions towards a bank.

On outcomes for the EU banking sector as a whole

Q15: Is the EU banking sector a sound banking sector?

A: Based on the results of the calculations, the aggregate Tier 1 ratio, used as a common

measure of banks‟ resilience to shocks, under the adverse scenario would decrease from

10.3% in 2009 to 9.2% by the end of 2011 (compared to the regulatory minimum of 4% and

threshold of 6% set up for this exercise).

The aggregate results suggest a rather strong resilience for the EU banking system as a

whole and may appear reassuring for the banks in the exercise, but it should be emphasized

that this outcome is partly due to the continued reliance on government support for a

number of institutions. However, given the uncertainties over the actual path of the macro-

economic recovery, the result should not be seen as a reason for complacency.

Q16: Are all national banking sectors safe and sound?

A: The safety and soundness of the banks that comprise a national banking sector is the

direct responsibility of the competent authorities of the EU Member States, including the

Ministries of Finance, the National Central Banks, and the national supervisory authorities.

12

Since this question goes beyond the role and responsibilities of CEBS, we are not in a

position to give such an assessment, but kindly refer to them.

Q17: How much losses have yet to be taken by banks?

A: Given the “what if” nature of stress tests and the balance between the severity of the test

and the likelihood that the assumptions used will materialise, it is impossible to give a

precise answer how much losses have not been taken yet. The stress test does not present an

indication of the losses that have not been taken yet. It rather presents the losses which

would occur if the stress test scenario indeed materialised.

Based on the aggregate results of the stress test, the downward pressure on capital ratios

under the adverse scenario for the EU banking sector is mostly stemming from impairment

losses (473bn € over the two-year period). Losses associated with the additional sovereign

shock to the adverse scenario would reach 67bn € over the two-year period (among which

39bn € associated with valuation losses of sovereign exposures in the trading book). In

total, aggregate impairment and trading losses under the adverse scenario and additional

sovereign shock would amount to 566bn €.

Q18: What will happen to the government support that has already been provided to

some of the banks?

A: The aggregate results illustrate the continued reliance on government support for

currently 38 institutions participating in the exercise. Consequently, it seems too early to

speak about a generic “forced” withdrawal. Any considerations of possible exit strategies

should rather take into account detailed case-by-case analysis in order to ensure banks‟

long-term viability after an exit from government support has taken place.

On individual outcomes

Q19: How many banks did not pass the test?

A: In total 7 banks did not pass the test under the adverse scenario including the sovereign

risk shock, when compared to a 6% threshold Tier 1 capital ratio. Yet again, it should be

noted that the threshold does not represent the regulatory minimum but was agreed as a

benchmark for the purpose of this exercise.

Q20: What will happen to these banks?

A: First of all the respective national supervisors are in close contact with the banks in

question to assess the results of the test and their implications, in particular any potential

need for recapitalization.

These banks are invited to propose a plan to address the weaknesses that have been

revealed by the stress test, including a timeframe for their implementation, in agreement

with their respective national supervisor.

For further information, we suggest you refer to the national supervisor.

Q21: Why did you use a Tier 1 ratio and not a core Tier 1 ratio?

A: Across the EU, we have a harmonised and precise legal definition of the components of

Tier 1 capital, which is available to absorb losses and maintain a bank as a going concern.

In the context of the G20 reform agenda, the Commission is in the process of harmonising

the definition of the highest quality element of capital - core Tier 1. Use of such a measure

13

at this time would not have facilitated direct comparison of results across countries.

Accordingly we have used the Tier 1 ratio as a basis.

Q22: Should we keep our money at the banks that did not pass the test?

A: A bank that failed this test is by no means insolvent. All banks that are supervised in the

EU need to have at least a regulatory minimum of 4% Tier 1 capital.

The outcome of the stress testing exercise should not be seen as a precise forecast of the

expected future outcomes of a bank. Rather, the scenarios are designed as „what-if‟

scenarios including plausible but extreme assumptions, which are therefore not likely to

materialise. So, the results of the stress test provide information as to whether a bank would

remain sufficiently capitalised in case the shock as described in the test would occur, not

necessarily that this will likely occur given the current macro-economic circumstances.

Q23: Some analysts have suggested more severe outcomes than stated in this report.

How is that possible?

A: The outcomes of the stress test presented by CEBS are based upon a certain „what if‟

scenario. In our view, this scenario which has been developed in close cooperation with the

ECB and with participation from the EU Commission, is a plausible but extreme one.

Various analysts may have different scenarios in mind, leading to different outcomes

depending on the severity of their assumptions. Also, they may adopt different capital

targets and use different methodologies. Moreover, the stress test results are based on

bank‟s own exposure data and supervisory information, whereas analysts are forced to rely

on publicly available data only.

On next steps

Q24: What will CEBS do as a next step?

A: Part of the mandate requested of CEBS is to undertake these EU-wide stress testing

exercises on a periodic basis. CEBS will continue with testing the resilience of the EU

banking sector by means of periodic EU wide and thematic risk assessments and stress

testing exercises.

On comparison with the US test

Q25: How does this exercise compare with the US stress testing exercise which was

performed nearly two years ago?

A: Any direct comparison between the CEBS EU-wide exercise and the US stress test

should be approached with caution, although there are many similarities in the two

exercises: focus on the credit risk through two sets of macro-economic scenarios, two year

time horizon, approximately the same coverage in terms of total assets of the system subject

to the stress test, disclosure of individual bank level results.

However, there are also fundamental differences, especially on the objectives, complexity

and the timing of the exercises. The objective of the CEBS exercise is to provide policy

information for the assessment by individual Member States of the resilience of the EU

banking sector as a whole and of the banks participating in the exercise, whereas the

objective of the US test was more directly linked to determining the individual capital

needs of banks. On complexity: the CEBS stress testing exercise involves more banks (91

instead of 19) and more supervisory authorities (27 instead of 3) and has been executed

across 27 jurisdictions instead of 1. In addition, the number of risk factors has been

different; for instance, the EU stress testing exercise also considers the effect of

14

securitization positions and a sharp increase in sovereign risk. Also the timing is quite

different. The US exercise was done in the context of a major government intervention and

in order to gauge the magnitude of the needs. On the contrary, the EU exercise was carried

out after some major government interventions already had taken place.

On the stress in the adverse scenario

Q26: Does the adverse scenario represent a substantial stress for the banks in the

sample?

A: The adverse macroeconomic scenario and the changes operated in the key micro

parameters represent a substantial stress for the European banks for the following three

reasons:

1. The adverse macroeconomic scenario incorporates prevailing tail risks, especially related

to the sovereign debt situation; in particular, it implies that real GDP growth in the EU

would be substantially lower than in currently available forecasts – on average by some 3

percentage points cumulated over 2010 and 2011 implying a recession both in 2010 and

2011. This scenario has a very low probability of occurring. Coinciding with a recession,

the adverse scenario implies significant increases in interest rates, which are unlikely and

are assumed only for the purpose of building a stressful scenario.

2. The severity of the adverse scenario regarding the key micro parameters arises from the

combination of the increase in the haircuts for government debt in the trading book and

especially in the PDs – the likelihood that a loan will not be repaid and that it will fall into

default – and LGDs – the amount of losses in case of a default of a borrower:

i. The haircuts on government debt in the trading book increase according to the

introduction of sovereign risk, which is modelled as an increase in government bond

spreads in line with market developments since the beginning of May 2010. For

instance, the weighted average euro area five-year bond yields increase to 4.60% under

the adverse scenario in 2011, compared to 2.69% at the end of 2009. Similarly, the

interest rate shocks results in yields of 3.5% and of 13.9% for a five-year German and

Greek government bond, respectively, at the end of 2011.

The reference haircuts were computed from changes in the prices of 5-year sovereign

bonds. The maturity of the sovereign portfolio, equal to five years at the start of the

exercise, will fall to four year by the end of 2010 and to three year by the end of 2011.

As sovereign default events are not envisaged, bond values converge to their par values

as the time to maturity approaches zero, with all other relevant parameters being equal.

Seen against this background, the haircuts are particularly significant. For instance,

although the haircut of a five-year bond between December 2009 and the end of May

was 12.4% for Greece, 3.1% for Portugal and 2.3% for Ireland, the test assumes

haircuts of 23.1%, 14% and 12.8% for 2011. It should be highlighted that the haircuts

are applied without considering any sort of hedging that the banks may have. For some

non-euro area countries, the higher haircuts are driven primarily by the expected

increase in long-tem interests rates, with the impact of the sovereign risk shock playing

a lesser role.

The haircuts are applied to the trading book portfolios only, as no default assumption

was considered, which would be required to apply haircuts to the held to maturity

sovereign debt in the banking book. It should be stressed, nevertheless, that the

disclosure of total exposures to sovereign debt by individual banks allows for a full

assessment of their respective capital positions.

15

5-year

yields

end-

2009

5-year

yields end

of May

2010

Valuation

changes between

December 2009

and

end of May 2010

5-year yields

under the

adverse

scenario (2011)

2011

haircut,

adverse

scenario

Austria 2.69 1.98 2.8% 4.04 -5.6%

Belgium 2.79 2.34 1.8% 4.47 -6.9%

Finland 2.62 1.76 4.4% 4.16 -6.1%

France 2.48 1.72 3.3% 3.92 -5.9%

Germany 2.42 1.56 3.6% 3.49 -4.7%

Greece 4.96 8.23 -12.4% 13.87 -23.1%

Ireland 2.91 3.10 -2.3% 5.62 -12.8%

Italy 2.80 2.98 -1.1% 4.80 -7.4%

Netherlands 2.46 1.69 3.2% 3.82 -5.2%

Portugal 3.08 3.76 -3.1% 7.40 -14.1%

Spain 2.96 3.34 -1.6% 5.78 -12.0%

UK 2.81 2.28 1.9% 5.07 -10.2%

Denmark 2.80 1.53 6.4% 3.93 -5.2%

Sweden 2.41 2.05 1.9% 3.97 -6.7%

Czech Rep. 3.29 2.81 1.6% 4.32 -11.4%

Poland 5.96 5.27 3.9% 8.23 -12.3%

ii. The increases in PDs and LGDs are substantial and affect all portfolios in the banking

book. For instance, comparing the end-2009 values with those under the adverse scenario in

2011, PDs of corporate assets double or even triple in some countries, while for the euro

area as a whole they increase by over 61%.

Changes in PDs in 2011 under the adverse scenario, compared to end-2009

Figures and graphics available in PDF and WORD PROCESSED

3. The impact of the stress-test is measured against individual banks‟ capital buffers. In this

respect, the EU banks (contrary to the US banks at the time of the SCAP) have already

benefited from previous official public support programmes that have increased capital

buffers in several national banking systems. From October 2008 to the end of May 2010,

EU governments injected 236 billion euro in the capital of EU banks. In addition, there has

been a substantial increase in the capital ratios by EU banks since last year as a result of

retained earnings, balance sheet repair, de-leveraging, and new issuances. Accordingly,

16

should any individual bank require additional capital as a result of the exercise, this reflects

the severity of the stress assumptions under the adverse scenario.

Application of state aid rules and backstop arrangements

Q27: Is a bank always subject to Commission scrutiny when it receives State support?

A: The Commission takes many decisions on various state supports to banks (schemes and

individual decisions providing guarantees on their funding or other support as well as

recapitalisations). However, it should not be forgotten that banks can strengthen their

capital base with the help of the State without being subject to Commission scrutiny under a

restructuring plan if the amount of the aid is below 2% of their risk weighted assets.

Q28: Why must measures granted by a Member State be compliant with State aid

rules?

A: Because State aid is under EU law in principle prohibited if it cannot be held compatible

with the Internal Market. In particular, according to Article 107 (1) of the Treaty on the

Functioning of the European Union (TFEU) State aid is essentially any advantage deriving

for a specific undertaking or sector from State resources. Since the founding of the EU

State aid rules play an important role in preserving a level playing field in the Internal

Market.

For this reason, before granting any public support (capital injection or similar measures)

the Commission needs to assess the compatibility of this intervention with the State aid

framework. This can be done in individual cases or in the form of a scheme.

Q29: What kind of measure (so called "backstop facilities") might a Member State

use to support a bank which fails the stress test exercise?

A: Each Member State may use all measures already approved by the European

Commission (recapitalisation schemes, guarantee schemes on liabilities, impaired asset

measures, etc.).

In case a Member State has not implemented any measures, or wants to introduce additional

facilities (for instance, contingent capital instruments, etc.) it needs, before applying these

instruments, to contact the competition services of the Commission in order to ensure that

these facilities will be implemented in full compliance with State aid rules. Further, as

shown since the start of the crisis, the Commission is able to take such decisions very

quickly if needed.

Q30: How many days does the Commission need to approve the measure?

The Commission can approve any State funding very rapidly, even overnight or at week-

ends. It has done so on a number of occasions since the start of the crisis in 2007. Such

approval is normally granted "temporarily", in order to safeguard financial stability.

Later, the Commission assesses more closely the nature of the aid based on the information

submitted by Member States, also in order to ensure that the aided bank takes the necessary

steps to restore its long-term viability without continuing State support.

Q31: What are the rules to assess the aid granted to a bank?

In principle, emergency recapitalisations are approved quickly on a temporary basis. In

order to determine the follow up, it is important to first establish whether the bank is

17

fundamentally sound, and only negatively affected by the turmoil on the markets, or has

deeper rooted problems which require a profound restructuring of the bank.

For this distinction, the Commission uses a set of criteria, which are mainly based on four

parameters: capital adequacy; size of the recapitalisation; current Credit Default Spread;

current rating of the bank and its outlook.

If the result of this assessment is positive and, consequently banks are considered as

"fundamentally sound" from a competition point of view, beneficiaries are required to

submit only a "viability plan" in order to confirm the banks' viability without reliance on

State support.

By contrast, if the bank is considered "non-fundamentally sound", it must submit a more

profound "restructuring plan" in order to demonstrate the restoration of long-term viability

without any State aid.

Q32: What is the "long-term viability" under the State aid framework?

A: Long term viability is achieved when a bank is able to cover all its cost including an

appropriate return on equity, taking into account the risk profile of the bank.

Q33: What happens if a bank fails the stress test exercise and has already received a

public support?

A: In this case, Member States are required to submit an individual notification in order to

clarify the rationale and the nature of this new measure. Consequently, the Commission

takes this additional measure into account in its assessment. Moreover, such second

recapitalisation measures can be approved very quickly on a temporary basis, if needed.

Q34: What happens if a bank –which has already received a State support - fails the

stress test exercise and the "final decision" has not been taken by the Commission?

A: In such a case of a second measure, Member States are required to submit an individual

notification in order to clarify the rationale and the nature of this new measure. Such second

measures can nevertheless be quickly authorised on a temporary basis. Consequently, the

Commission takes this additional measure into account in its assessment before coming to a

final decision on the overall aid package.

Q35: What can Member States do if they need to support their banks while they

experience themselves difficulty to raise money on the markets?

A: If the results of the stress test points to necessary actions by some banks, either by

injecting capital on a precautionary basis within a specified time period or by adopting the

most appropriate resolution path; the main principle of interventions should remain private

sector solution primacy. Such banks should ideally reinforce their capital ratio via private

sources (e.g. sale of assets, rights issue).

It should be made clear that any need for recapitalisation will arise only in the event that the

adverse scenario materialises so that that an unfavourable result from the stress tests does

not necessarily imply an immediate need for the recapitalisation of the bank concerned.

However, as in the case of the US SCAP exercise3, the banks needing to augment their

capital as a result of the assessment, would be required to design a detailed plan, subject to

supervisory approval and take steps for its implementation within a timeframe indicated by

the Member State.

Moreover, Member States are prepared for immediate actions if necessary. Overall, the

majority of the Member States have backstop measures already in place (either through

18

schemes or national decisions). Should there be a need for additional measures, Member

States should do so in full compliance with the State aid rules.

Financial-market analysts are already suggesting that substantial amounts of public funding

could be required, and raise issues about the capacity of some Member States to provide the

necessary funds in light of recent tensions in sovereign debt markets. Against this

background, the European Financial Stabilisation Mechanism (EFSM) and the European

Financial Stability Facility (EFSF) have been identified as potential sources of public

funding for bank support measures.

It should be noted that neither the EFSM nor the EFSF can be used directly for providing

financial support to the banking sector. Such a use would be incompatible with their legal

basis. On the other hand, loans provided to the government of a beneficiary Member State

via either the EFSM or the EFSF could be used indirectly to provide support to the banking

sector, i.e. as an element of the macroeconomic adjustment programme. There are

precedents for this approach in Latvia (where part of the external financial support to Latvia

- granted via the BoP facility - has been used to support Parex Bank) and in Greece (where

EUR10 billion of the pooled loan has been earmarked to create a Financial Stability Fund

for recapitalizing banks). Thus, EFSM and EFSF loans could be used to finance a

government backstop mechanism in the context of the upcoming CEBS stress test if the

concerned Member State was already subject to a broader macro-economic programme.

1 :

The setting up of the European Financial Stability Facility (EFSF) and the related

commitment of all participating member States provides reassurance that the default of a

member State will not occur, which implies that impairment losses on sovereign exposures

in the available for sale and held-to-maturity in the banking book cannot be factored into

the exercise.

2 :

The US authorities referred also to a core Tier 1 ratio of 4%, but in the EU this benchmark

could not be used, as there is no harmonised definition of core Tier 1 and the results

would have been less comparable across countries.

3 :

The US SCAP exercise was published in early May 2009. The banks needing to augment

their capital were given one month to design a detailed plan and until early November of

that year to implement it

19

3.

IP/10/918

Brussels, 12 July 2010

Commission proposes package to boost consumer protection and confidence in

financial services

As part of its work creating a safer and sounder financial system, preventing a future

crisis and restoring consumer confidence, the European Commission has today proposed

changes to existing European rules to further improve protection for bank account

holders and retail investors. Furthermore, the Commission has launched a public

consultation on options to improve protection for insurance policy holders, including the

possibility of setting up Insurance Guarantee Schemes in all Member States. For bank

account holders, the measures adopted today mean that in case their bank failed, they

would receive their money back faster (within 7 days), increased coverage (up to

€ 100 000) and better information on how and when they are protected. For investors

who use investment services, the Commission proposes faster compensation if an

investment firm fails to return the investor's assets due to fraud, administrative

malpractice or operational errors, while the level of compensation is to go up from

€ 20 000 to € 50 000. Investors will also receive better information on when the

compensation scheme would apply and get better protection against fraudulent

misappropriations where their assets are held by a third party - such as in the recent

Madoff affair. The proposals, fully in line with the EU's commitments under the G20,

are now passed to the European Parliament and the Council of Ministers for

consideration.

Internal Market and Services Commissioner Michel Barnier said: "The adoption of today's

package marks the Commission's latest endeavour to bring transparency and responsibility

to Europe's financial system in order to prevent and manage future crises. European

consumers deserve better. They need reassurance that their savings, investments or

insurance policies are protected no matter where in Europe they are based. To make this a

reality, I now call upon the European Parliament and the Council to make rapid progress in

approving today's package."

Protecting your savings

The recent financial crisis illustrated once more how banks are susceptible to the risk of

"bank runs" – i.e. when bank account holders believe that their savings are not safe and try

to withdraw them all at the same time. Since 1994, a Directive (94/19/EC) ensures that all

Member States have in place a safety net for bank account holders. If a bank is closed

down, national Deposit Guarantee Schemes are to reimburse account holders of the bank up

to a certain coverage level.

When the financial crisis hit in 2008, some quick-fix amendments were made, notably to

increase the coverage level to € 100 000 (in two steps) and to abandon the possibility to

have co-insurance in place (i.e. that bank account holders are not fully repaid, but are to

bear a certain percentage of their lost sum - even when the lost amount would be lower than

20

the coverage limit). However, as other shortcomings were detected in existing schemes, the

Commission now comes forward with a proposal to fully amend the 1994 Directive and

ensure that all lessons are learned from the crisis.

The key elements of the proposal are as follows:

Better Coverage: the upgrade to € 100 000 by the end of this year is now

confirmed. This means that 95% of all bank account holders in the EU will get all

their savings back if their bank fails. Coverage now includes small, medium and

large companies as well as all currencies. Excluded are all deposits of financial

institutions and public authorities, structured investment products and debt

certificates.

Faster payouts: bank account holders will be reimbursed within seven days.

This will be a major improvement as today many account holders wait weeks, even

months, before getting their money back. In order to facilitate such a short payout,

managers of Deposit Guarantee Schemes will have to be informed early about

problems at banks by supervisory authorities. Banks will have to specify in their

books whether deposits are protected or not.

Less red tape: for example, if you live in Portugal and have your account at a

failing bank whose headquarters are based in Sweden, the Portuguese scheme would

repay you on its own initiative and act as your contact point. The Swedish scheme

would then reimburse the Portuguese scheme. This would be a strong improvement

over the current situation, where all correspondence has to be done via the scheme

of the country where the bank's headquarters are located. The new approach will

mean less bureaucracy and faster payouts.

Better information: bank account holders will be better informed on the

coverage and functioning of their scheme by a new easy to understand standard

template and on their account statements.

Long-term and responsible financing: concerns have been expressed that

existing Deposit Guarantee Schemes are not well funded. Today's proposals will

ensure that they are now more soundly financed following a four-step approach.

First, solid ex-ante financing provides for a solid reserve. Second, if necessary, this

can be supplemented by additional ex-post contributions. Third, if this is still

insufficient, schemes can borrow a limited amount from other schemes ("mutual

borrowing"). Fourth, as the last resort, other funding arrangements would have to be

made as a contingency. Contributions will, as is currently the case, be borne by

banks. However, they will be calculated in a fairer way since they will be adjusted

to the risks posed by individual banks.

Not only will Europeans have better protection for their savings, but they can now also

choose the best savings product in any EU country without worrying about differences in

protection. Banks will benefit from the proposal since they could offer competitive products

throughout the EU without being hampered by such differences. Moreover, taxpayers

benefit from a better financing of schemes – rendering state intervention much less likely.

Most improvements could already come in effect by 2012 and 2013 and would apply in all

EU Member States as well as in Norway, Iceland and Liechtenstein, once incorporated in

the European Economic Area Agreement.

See also MEMO/10/318

Protecting your investments

21

Since 1997, the Investor Compensation Scheme Directive (97/9/EC) has protected investors

who use investment services in Europe by providing compensation in cases where an

investment firm is unable to return assets belonging to an investor. This might occur for

example where there is fraud or negligence at a firm or where there are errors or problems

in the firm's systems. It is not a protection against investment risks at such. There are now

39 investor compensation schemes in place in the EU's 27 Member States.

In recent years, the Commission has received numerous complaints about the Directive's

application in some Member States. These complaints have concerned issues such as

schemes having insufficient funding to pay out claims or lengthy delays in paying out

claims.

Today's proposal is intended to ensure that the rules on investor protection are more

efficient, that there is a level playing field concerning the type of financial instruments that

are protected and that there is appropriate funding and the necessary arrangements to make

sure that investors are compensated.

The key elements of the proposal are as follows:

Better coverage: the current minimum level of compensation for investors is

€ 20 000. Under the Commission's proposal, this will be increased to € 50 000 per

investor.

Faster payouts: under the current legislation, it can sometimes take up to

several years for investors to receive any compensation. This is to change under the

Commission's proposal, where investors will receive compensation at the latest 9

months after the investment firm's failure. Such a timeframe is however necessary

in order to allow competent authorities to investigate the case and determine the

positions of individual investors.

Improved information: investors are to receive clearer and more extensive

information about the extent to which their assets are covered. For example:

investment risk – an investment losing value due to a declining stock market or

bankruptcy of an issuer – is not covered under the Directive.

Long-term and responsible financing: since 1997, there have been a number

of cases in Member States where schemes have had inadequate funding to

compensate lost assets of investors. Under the Commission's proposal, a minimum

target fund level will be introduced which needs to be fully pre-funded. If necessary,

schemes can borrow a limited amount from other schemes and other funding

arrangements as a last resort ("mutual borrowing"). Contributions are to be borne by

investment firms.

Wider protection: currently, investors are not necessarily protected if the

investment firm uses a third party custodian to hold the client's assets and the third

party defaults without returning the invested assets. Similarly, unit holders in

investment funds can suffer loss if there is a failure of a depositary or a sub-

custodian of the fund. The Madoff investment fraud case in 2008 is a recent

example. The Commission now proposes to also cover such situations.

Most improvements could already come in effect by end 2012 and would apply to all EU

Member States as well as Norway, Iceland and Liechtenstein, once incorporated in the

European Economic Area Agreement.

See also MEMO/10/319

Improving protection for insurance policy holders

22

Insurance Guarantee Schemes (IGS) provide last-resort protection to consumers when

insurers are unable to fulfil their contract commitment, offering protection against the risk

that claims will not be met if an insurance company is closed down.

IGS can offer protection by paying compensation to consumers, or by securing the

continuation of their insurance contract through, for example, facilitating the transfer of

policies to a solvent insurer or the guarantee scheme itself. As opposed to the banking and

securities sectors, there is no European legislation on guarantee schemes in the insurance

sector today. Currently, 12 Member States operate one or more IGS which cover life and/or

non-life insurance policies. They not only vary in terms of protection and eligibility, but

also on when they are to intervene or how they are to be funded for example.

In the White Paper that was adopted today, the Commission sets out different options to

ensure a fair and comprehensive level of consumer protection in the EU as well as to guard

against the need for taxpayers to foot the bill in case an insurance company is to collapse.

In particular, it proposes introducing a directive to ensure insurance guarantee schemes

exist in all Member States and comply with a minimum set of requirements. The White

Paper on Insurance Guarantee Schemes is up for consultation and all interested parties are

invited to submit their comments and further input by 30 November 2010.

See also Memo/10/320

More information:

Deposit Guarantee Schemes:

http://ec.europa.eu/internal_market/bank/guarantee/index_en.htm

Investor Compensation Schemes:

http://ec.europa.eu/internal_market/securities/isd/investor_en.htm

Insurance Guarantee Schemes:

http://ec.europa.eu/internal_market/insurance/guarantee_en.htm

4.

MEMO/10/320

Brussels, 12 July 2010

Insurance Guarantee Schemes (IGS) - Frequently Asked Questions

1) What are Insurance Guarantee Schemes?

Insurance guarantee schemes (IGS) provide last-resort protection to consumers when

insurers are unable to fulfil their contract commitment, offering protection against the risk

that claims will not be met if an insurance company is closed down.

Insurance is crucial to our economy. If insurance policies are disrupted, for example as a

result of the offering insurance company going bankrupt, this can have serious

consequences for consumers as well as businesses An example could be when the claim for

your burnt-down house cannot be paid out at all. Companies could likewise be forced to

suspend or cease activity if the reimbursement from insurance companies is not paid in a

timely way.

23

IGS can offer protection by paying compensation to consumers, or by securing the

continuation of their insurance contract through for example facilitating the transfer of

policies to a solvent insurer or the guarantee scheme itself.

2) Do all EU Member States have Insurance Guarantee Schemes?

No, of the 30 EU-EEA countries, only 12 operate one or more general insurance guarantee

schemes. Countries where IGS are available are: Bulgaria, Denmark, France, Germany,

Ireland, Latvia, Malta, Norway, Poland, Romania, Spain and the United Kingdom. This

means that, measured in terms of gross written premiums (the revenues/premiums expected

to be received by the insurer over the life of a contract), one-third of the entire EU-EEA

insurance market lacks any kind of coverage by an IGS in the event an insurance company

has to close down. This means that 26% of all life insurance policies and 56% of all non-

life insurance policies are unprotected. (See table in the annex)

3) Why has the Commission adopted a White Paper on Insurance Guarantee

Schemes?

Guarantee schemes are available in other sectors of the financial services industry. In

particular, deposit guarantee and investor compensation arrangements are in place in all EU

Member States, and minimum protection standards have been harmonised at EU level with

the implementation of the 1994 Deposit Guarantee Scheme (DGS) Directive1 and the 1997

Investor Compensation Scheme (ICS) Directive2. However, there is no such common

European framework in the insurance sector.

Where Insurance Guarantee Schemes are in place, they differ frequently in coverage,

resulting in different levels of policyholder protection between Member States. There are

also significant differences in other aspects of IGS design that affect the scope of the

protection provided, and in operational procedures and funding arrangements.

The lack of harmonised IGS arrangements in the EU hinders effective and equal consumer

protection. It may also impede the functioning of the internal insurance market by distorting

cross-border competition. In light of the lessons drawn from the recent crisis, the

development of harmonised insurance guarantee schemes could contribute towards

remedying these existing deficiencies. In the White Paper on IGS, the Commission sets out

a coherent framework for EU action on IGS protection for policyholders and beneficiaries.

In particular, it proposes introducing a directive to ensure that all Member States have an

IGS that complies with certain basic criteria (such as insurance policies to be covered,

geographical scope, funding etc.).

4) Why does the Commission propose a European solution based on minimum

harmonisation and not on maximum harmonisation as compared to the amended

draft proposals on the Deposit Guarantees and Insurance Compensation?

Today's White Paper sets out the Commission's vision of a coherent and legally binding

framework on IGS protection based on minimum harmonisation. This would allow Member

States to provide for a higher level of protection if they believe this is necessary and

appropriate for their markets.

Compared to the banking and securities sectors, there is no legislation on IGS at EU level.

This also means that the current landscape on IGS protection is fragmented in the EU.

Twelve countries have one or more schemes in place, sometimes even differing in design in

the same country. It is the Commission's primary objective now to address the most

significant problems associated with the current situation. While full harmonisation of IGS

24

protection might be envisaged at a later stage, this is unlikely to be practical or feasible at

this stage.

5) When would an IGS be used?

A range of alternative mechanisms exist to reduce the likelihood that insurance companies

become insolvent and to limit the impact such an event would have. These include

prudential regulation, effective risk management and governance structures, rules on

additional information to be given to policyholders, preferential treatment of policyholders

in winding-up proceedings as well as public intervention on a case-by-case basis.

However, the collapse of insurance companies cannot be ruled out. In order to avoid

taxpayers' having to pay out in the event of insurance failure, an IGS should be established

as a last resort mechanism, which would come into effect when other protection

mechanisms had failed. Providing for an IGS as a last resort mechanism may not only

contribute to the objective of achieving comprehensive and even levels of policyholder

protection but may also enhance confidence in the financial sector and thus have a positive

impact on the rest of the economy.

6) How does this relate to the new solvency rules for the insurance sector?

In April 2009, the European Parliament and the Council of the EU agreed on a package of

measures that would introduce a modern, economic and risk-based regime for the

supervision of the insurance sector in Europe.

Once this package, known as Solvency II, becomes operational (it shall become applicable

by 31.12.2012), it is expected to further reduce the incidence of failures. However, neither

the current nor a future solvency regime will be able to create a zero-failure environment in

the insurance sector. In the event of the insolvency of an insurance company, the lack of

appropriate insurance guarantee protection for consumers may trigger a number of harmful

effects. These include financial hardship incurred by consumers, an unlevel playing field

for industry, and a loss of consumer confidence in the market. This is why the Commission

is now coming forward with a White Paper on Insurance Guarantee Schemes.

7) Should an IGS be European or national?

While establishing a single pan-EU guarantee scheme could present a number of

advantages, it would seem very difficult at this stage and pose complicated legal issues. At

present, the most realistic and useful approach is to establish relevant schemes at national

level, which ensure that all Member States are in a position to ensure comprehensive and

even levels of protection of policyholders and beneficiaries in the event of an insurer's

insolvency and to require appropriate levels of funding from the insurance sector.

8) Should policyholders and beneficiaries be protected to the same extent regardless of

where in the EU they buy an insurance policy?

Yes, the main objective of EU action in the field of IGS protection is to ensure that

policyholders and beneficiaries get comprehensive and even levels of protection throughout

the EU, regardless of whether they have bought their insurance policy in a domestic or in a

cross-border setting: for example when buying insurance for a second home in Italy while

living in Belgium, or buying life assurance in Belgium from a local branch of a firm whose

headquarters are located in Germany. The Commission has identified in an impact

assessment that a considerable proportion of cross-border insurance business lacks any kind

of IGS protection. This does not only affect policyholders and beneficiaries in the event of

25

insolvency of an insurer, but also creates an uneven playing field for insurance companies

established in the EU.

9) What does the home country principle mean as compared to the host country

principle?

Insurance Guarantee Schemes based on the „home country principle‟ cover not only those

policies issued by domestic insurers but also those sold via the free provision of services or

by branches of those domestic insurers which are established in other EU Member States.

By contrast, Insurance Guarantee Schemes based on the „host country principle‟ cover

policies issued by domestic insurers at national level (but not those sold in a cross-border

context) as well as those issued via the free provision of services or by branches of

incoming insurers from other Member States. In practice some Member States operate a

combination of home and host country arrangements when it comes to cross-border

business. This means that those IGS extent coverage to all policies sold by domestic

insurers at national level and in their cross-border business, as well to those policies issued

by incoming insurers on the domestic market.

10) Who should be covered by an IGS?

The Commission believes that both life and non-life insurance policies, except motor

insurance policies which are already sufficiently protected under EU and national

legislation, should be covered by a comprehensive framework on IGS protection in the

European Union and that this should be for the benefit of all natural persons. In order to

strike a balance between the objective of comprehensive consumer protection and cost-

effectiveness, coverage of legal persons should be restricted to those legal persons who

satisfy certain criteria, e.g. micro and small undertakings.

11) How should an IGS be financed?

At this stage the Commission believes that IGS established at national level should be

financed ex-ante by contributions from insurance undertakings. This ensures that the

insurer which becomes insolvent will have made prior contributions to the scheme.

Moreover, it would be in line with the approach on funding adopted in the banking and

securities sectors and has worked well. The determination of how much an individual

insurer will pay should take into account the risks each insurer is willing to take. Risk-

weighting contributions in this way will shift a larger proportion of the costs associated to

the scheme onto riskier insurance undertakings.

12) How big should an IGS be?

The size of funds depends on what IGS are expected to do. Based on preliminary

assessments of the Commission, it may be appropriate to set the target level of IGS at 1.2%

of gross written premiums per year, taking into account an appropriate transition period.

Building up IGS, particularly in those Member States where no IGS have been established

so far, will take a number of years and it will be important to balance the overall costs of

any new requirements on insurance undertakings against the expected benefits.

13) What will be the follow-up to the consultation on the White Paper?

All interested parties are invited to provide their views and comments on the White Paper

by 30 November 2010. The Commission will carefully evaluate the feedback received and

take it into account when coming forward with a legislative proposal. It is intended that

work on the proposal will start immediately after the end of the consultation period and it is

26

envisaged that a legislative proposal will be tabled in the course of 2011. This proposal will

be accompanied by another impact assessment.

Annex

Estimated funds available in existing Insurance Guarantee Schemes (in millions of euros)

Estimated funds available Sector

BG* 0,7 Life

DE 640 Life

DK 40,3 Non life

ES 1 331,00 Life +Non life

FR 569//250 Life//Non life

IE* 26,48 Non life

LV 0.8//2.8 Life//Non life

MT 2.33//2.33 Life//Non life

NO* 16,04 Non life

PL* 39,03 Life

RO 17.10//84.50 Life//Non life

UK* 1 766//316 Life//Non life

* – ex-post funded scheme

More information: IP/10/918

1 : See: http://ec.europa.eu/internal_market/bank/guarantee/index_en.htm

2 : See: http://ec.europa.eu/internal_market/securities/isd/investor_en.htm

27

5. MEMO/10/319

Brussels, 12 July 2010

Investor Compensation Schemes – Frequently asked Questions

1) What are Investor Compensation Schemes?

Investor Compensation Schemes protect investors using investment services by providing

compensation in cases where an investment firm is unable to return assets belonging to an

investor. This might occur for example where there is fraud or negligence at a firm or

where there are errors or problems in the firm's systems. It does not cover investment risk:

for example, when an investor has bought stocks which then fall in value. In the EU,

Investor Compensation Schemes are covered under a Directive dating back to 1997

(97/9/EC).

Investor compensation schemes are a last resort safety net.

2) Why is the Commission proposing a review of Investor Compensation Schemes?

This initiative is part of a broader package on compensation and guarantee schemes that

comprises the proposal for amendment of the Directive on Deposit Guarantee Schemes

(DGSD) and a White Paper on the insurance schemes. Overall, the package represents a

fundamental step towards restoring consumer confidence in financial markets.

The review is in line with the Commission Communication of 4 March 2009 "Driving

European recovery", the more recent Commission Communication of 2 June 2010 on

"Regulating Financial Services for Sustainable Growth" and G20 objectives which

underline the need to address any regulatory loopholes in the regulatory and supervisory

system, to reinforce the protection of consumers, investors and small businesses in order to

favour their access to capital markets and to restore their confidence in the financial system.

The Investor Compensation Schemes Directive (ICSD) was adopted in 1997 and provides

for clients receiving investment services from investment firms to be compensated in

specific circumstances where the firm is unable to return money or financial instruments

that it holds on the client's behalf.

Ten years after the ICSD entered into force, and in the context of the financial crisis, it is

necessary to revise the functioning of the ICSD in order to ensure that it continues

supporting its overarching objectives – to protect investors and to assist the proper

functioning of the single market for investment services.

A number of frauds in Member States have resulted in important losses to small investors

and the functioning of the schemes has shown several limits, as also emerged from

numerous complaints received by the Commission and relating to the lack of sufficient

compensation and delays in payments by the schemes.

Moreover, the Directive needs to reflect changes in the regulatory framework and market

developments since 1997. The ICSD was adopted to complement the Investment Services

Directive (93/22/EEC), which has subsequently been repealed by the Market in Financial

Instruments Directive (2004/39/EC), otherwise known as MiFID. The review of the ICSD

thus needs to take into account the new framework established under MiFID for the

provision of investment services across Europe.

The ICSD was also initially modelled on the Deposit Guarantee Schemes Directive

(94/19/EC), which was revised during the crisis in order to increase its level of coverage

28

and is being further modified in other areas. The modifications of the Deposit Guarantee

Schemes Directive (DGSD) need to be reflected, where appropriate, in the framework of

the ICSD.

3) What are the objectives of the proposal?

The revision aims at increasing the protection provided to investors under the Directive and

strengthening confidence in the use of investment services, updating and improving the

practical functioning of the schemes and keeping pace with regulatory evolution.

The main proposals, in line with the overarching objectives of the revision, are to:

increase the level of compensation payable to investors under the Directive

from a minimum of €20 000 to a fixed level of €50 000.

remove the option under which investors could bear a proportion of up to

10% of the loss within the compensation limit.

set out in more detail how investor compensation schemes should be funded

including requiring a sufficient level of pre-funding to ensure soundly funded

schemes.

provide for greater cooperation between schemes including the possibility of

a borrowing mechanism between national schemes that could operate as a last

resort tool.

reduce delays in the payout of claims to investors including provision for

partial payouts to be made if claims are not settled within a specified period.

clarify that all investment services and activities covered under MiFID

should be subject to the ICSD and that if firms de facto hold client assets

(irrespective of restrictions on their authorisation or the nature of their

investment service) then clients should be entitled to compensation under the

ICSD.

provide that investors have the right to be compensated by the scheme also

in the case of failure of a third party custodian resulting in the investment firm

not being able to return the client's assets.

extend coverage to provide for compensation to UCITS unit holders

(collective investment schemes) when there is a loss of assets due to the failure

of the depositary of a UCITS scheme or a sub-custodian.

provide for investors to receive more detailed information from firms about

what is covered and not covered under compensation schemes.

4) What are the protections that investors are entitled to under the existing Directive

and how is this different from the Deposit Guarantee Scheme Directive?

The Directive protects clients when they entrust money or financial instruments to an

investment firm. Clients must be compensated by schemes in two situations derived from

reasons directly related to the financial circumstances of the firm:

if a firm is unable to repay money owed or belonging to a client and held on

the client's behalf in connection with investment services; or

if a firm is unable to return to a client a financial instrument belonging to the

client and held, administered or managed on the client's behalf.

29

The Directive does not compensate investors for "investment risk" (the risk that an

investment will result in a loss) and operates only as a last resort safety net for clients of

investment firms if other important safeguards fail.

Claims under the Directive typically arise if there is fraud or other administrative

malpractice within a firm or due to inability to fulfil obligations towards clients' assets as a

result of a firm's errors, negligence or problems in the firm's systems and controls.

The Deposit Guarantee Schemes Directive provides for bank account holders to be

compensated up to a specified limit if the bank is not in a position to pay back the money.

5) Why is it necessary to increase the level of compensation?

When the Directive entered into force in 1997, it provided for a minimum level of

compensation of € 20 000. This amount has not been amended and there are concerns that it

might be too low. The compensation limit of € 20 000 was never adjusted to reflect

inflation or the increased exposure of European investors to financial instruments since

1997. There are also concerns that significant discrepancies have developed between

different Member States in compensation limits that could lead to investor arbitrage. So, in

addition to increasing the compensation limit to € 50 000 to more accurately reflect the

average value of assets held by firms for investors, the amendments will provide that this

should be a harmonised rather than a minimum level.

6) Why is it considered necessary to cover third party custodians?

The Directive does not cover a potential failure of a custodian with whom an investment

firm has deposited a client's assets. So, in a case where a third party custodian is not able to

return the financial instruments to the firm or the client, the client will not be able to benefit

from any compensation payment under the Directive.

This creates a potentially large gap in coverage under the Directive as whether an investor

is eligible for compensation may depend on whether the investor's investments are being

held by the firm or by a third party. Further, investors may not be aware of this difference

under the Directive.

7) Why is it considered necessary to cover collective investment scheme depositaries

and sub-custodians?

Unit holders in collective investment schemes, also known as UCITS, are currently not

entitled to compensation if a depositary or sub-custodian fails to return assets. In recent

cases, such as the recent Madoff case, unit holders in collective investment schemes have

suffered loss due to such failures. It is therefore considered appropriate to extend the scope

of coverage under the Directive to allow investors to claim in such situations.

8) Why is it necessary to set a common regulatory framework related to the funding of

the schemes?

The Directive currently provides very little detail about how schemes should be funded

apart from making it clear that the funding should come from market participants.

Since the Directive commenced there have been some high profile cases where, due to

problems of funding, the national investor compensation scheme has had insufficient funds

to pay out claims.

Sound funding arrangements are critical to the effectiveness of compensation schemes in

achieving the Directive's objectives. Funding can affect the ability of schemes to meet their

30

obligations under the Directive, how rapidly clients can be compensated and the

contributions required from firms in the event of losses.

The proposed revisions therefore provide further details about how schemes should be

funded. This includes calculating a target funding level (cf question 11) and having a

defined amount of pre-funding (i.e. funding in anticipation of future claims) (cf question

11).

9) Why is it considered necessary to introduce a borrowing mechanism across national

schemes?

Together with the establishment of consistent funding rules between Member States, the

introduction of cooperation arrangements among national schemes will provide greater

protection to investors and will promote investor confidence in investment services. It will

also favour the harmonisation of practices adopted by national schemes in fulfilling their

obligations, thus reducing the risk of regulatory arbitrage by Member States. A borrowing

mechanism among schemes is introduced as a last resort tool. The system is based on the

principle of cooperation between national schemes. These measures should provide

schemes with an alternative back up source of funding, under specific conditions and on a

temporary basis.

More details about the borrowing mechanism are set out below:

schemes should have the right to borrow from the other schemes if their

funds are insufficient to cover their immediate needs;

a portion of ex-ante funding in each compensation scheme will have to be

available for lending to other schemes;

the European Securities Market Authority (ESMA), one of the future

European supervisory authorities, should receive any borrowing request, assess

whether the relevant requirements are met and, if this is the case, transmit it to

the other schemes;

loans should be repaid to the lending schemes no later than five years after

the request. Interest should accrue on the loans; the interest rate shall be

equivalent to the marginal lending facility rate of the European Central Bank;

the borrowing mechanism should be limited to the claims covered under the

Directive. For instance, schemes will not be able to borrow for any needs

arising from the default of entities not included in the scope of the Directive;

to avoid the situation where the funds available for lending at EU level are

rapidly exhausted, a limit of 20% of the portion set aside for lending may be

used for each case.

10) Why are there proposals to introduce strict payout delays?

In the functioning of the Directive, there has been evidence of significant delays in certain

situations before claims have been paid out to investors. For example, in one case payouts

took almost four years. While the payment of claims under this Directive are not as urgent

as payment of claims for deposits under the DGSD, significant delays can undermine

investor protection and investor confidence in the use of investment services. For this

reason, the proposal provides that, if final payment has not been made within nine months

of the date when the firm is declared unable to meet its obligation, the investor should

receive a partial compensation based on the initial assessment of the claim.

11) How are the Investor Compensation Schemes to be funded?

31

The target fund level should represent at least 0.5% of the value of the assets covered by the

protection of the schemes. The target fund level should be financed with regular

contributions from members of the schemes (such as banks, investment firms, investment

funds). When funds collected in anticipation of future claims are not sufficient to meet their

obligations, the schemes should make additional calls for contribution to their members.

The additional contributions shall not exceed 0.5% of the assets covered by the protection

of the schemes.

More information: IP/10/918

6.

Memo/10/318

Brussels, 12 July 2010

Deposit Guarantee Schemes – Frequently Asked Questions

1) What is a Deposit Guarantee Scheme?

A Deposit Guarantee Scheme acts as a safety net for bank account holders in case of bank

failure. If a bank is closed down, the scheme is to reimburse account holders of the bank up

to a certain coverage level. A 1994 Directive ensures that all EU Member States have

Deposit Guarantee Schemes in place.

2) Why is the revision of the Directive on Deposit Guarantee Schemes necessary?

The Directive on Deposit Guarantee Schemes has not been changed substantially for about

16 years although financial markets have significantly changed since then.

The 1994 Directive introduced minimum harmonisation for Deposit Guarantee Schemes;

this meant that there were only a few basic requirements for Member states to follow up. As

a result, Deposit Guarantee Schemes between countries vary significantly on the level of

coverage, the scope of covered depositors and products and the payout delay. Also, the

financing of schemes has been left entirely to Member States. This has turned out to be

disruptive for financial stability and the proper functioning of the Internal Market. For

example, when the crisis deteriorated, many depositors shifted money in the UK from

British banks to branches of Irish banks in the UK, since Ireland had unilaterally introduced

unlimited deposit guarantees. This led to a severe and abrupt draining of liquidity from the

British banks, making them very vulnerable.

Therefore, the Commission aims at harmonising and simplifying the Directive in order to

confirm the required level of deposit protection, reimburse account holders more quickly

and ensure schemes are properly funded. These new funding requirements will improve the

confidence of savers and ensure long-term financial stability.

3) What is the current level of deposit protection in the EU? How is this going to

change in the future?

When the financial crisis hit in autumn 2008, Member States decided that the level of

deposit protection should be gradually but quickly increased in the EU. A Directive adopted

in March 2009 required coverage to be increased from a minimum of € 20 000 to at least

€ 50 000 by June 2010 and to a uniform level of € 100 000 by the end of 2010. Today's

proposal – following an impact assessment on the move to € 100 000 – confirm the € 100

000 figure.

32

On the basis of a coverage of € 100 000, 95% of eligible accounts will be fully covered, 7%

more than before the crisis.

4) Which deposits and depositors will be protected?

Deposits are covered per depositor per bank. This means that the limit of € 100 000

applies to all aggregated accounts of one account holder at the same bank. So this will

include his or her current account, savings account and other accounts he or she might have

in any one bank.

Deposit Guarantee Schemes will protect all deposits held by individuals and small,

medium-sized and large businesses. However, deposits of financial institutions and public

authorities will not be covered. The former do not need protection since they are

professional market actors and the latter would have easy access to other sources of

financing.

Deposits in non-EU currencies will also be covered, which is important for small and

medium-sized businesses acting globally. Some more complex products similar to bonds

will not be covered. Structured products whose principal is not repayable in full will not be

protected (e.g. products whose value is dependent on a share price index).

This simplification and harmonisation will contribute to more transparency for savers and

to quicker reimbursement in the event of a bank failure.

5) How quickly will bank account holders get their money back after a bank failure?

Currently, account holders must be paid within three months after a bank failure. By the

end of 2010, this delay has to be reduced to between four and six weeks. Today's proposal

shortens the pay out delay to one week. This is important as account holders can face

important financial difficulties within a few days – for example when they must pay bills.

6) Is a 7 day payout of deposits feasible?

Yes. This already happens in the United States and will happen soon in the UK.

To make this 7 day deadline work, managers of Deposit Guarantee Schemes will be

informed at an early stage by supervisory authorities if a bank failure looks likely. Banks

will be required to mark eligible deposits in their books and to maintain up-to-date records.

If a bank fails, no application from bank account holders will be needed; the scheme will

pay out automatically.

7) Will Deposit Guarantee Schemes have enough funds to pay out in case banks fail?

There have been shortcomings in some countries in the past. It is not feasible or necessary

to provide schemes with an amount of money equivalent to all deposits. But banks will

have to pay on a regular basis to the schemes, in advance, so a pot of money can be built

up, and not only after a bank failure. Such 'ex-ante funds' will make up 75% of the overall

funds in DGS.

If it becomes necessary, banks will have to pay additional contributions, which will

contribute a further 25% of the target funds. If this is still insufficient, Deposit Guarantee

Schemes could borrow from each other ("mutual borrowing facility") up to a certain limit

(again 25% of target funds) or use additional funding sources such as borrowing on the

financial market, e.g. by issuing bonds.

The new financing requirements will ensure that each scheme has enough funds in place to

deal with a medium-size bank failure. This level is comparable to the existing well-financed

33

schemes in the EU. These levels of funding will have to be achieved in all Member States

by 2020.

Banks having a riskier business model than others will pay higher contributions to Deposit

Guarantee Schemes - up to about 3 times more.

8) Will the improved funding of Deposit Guarantee Schemes make taxpayers'

involvement and bank resolution funds obsolete?

Deposit Guarantee Schemes are part of the measures being taken to create a stronger crisis

prevention and crisis management system so that taxpayers are no longer the first to pay

out. Soundly financed Deposit Guarantee Schemes will mean that in case of bank failure,

funds are there to pay out account holders without needing to have recourse to taxpayers.

Furthermore, a scheme's funds can be used for certain resolution purposes - those that

involve the transfer of deposits to another bank and are therefore equivalent to a payout.

Bank resolution funds, as the Commission‟s Communication of 26th May advocated

(IP/10/610), serve a different purpose to Deposit Guarantee Schemes. The latter ensures

that savers will be reimbursed up to the coverage level whilst resolution funds ensure that

the bank can be wound up and cover different costs (paying for continuity of certain key

services, covering administrative costs, fees, etc.), for the benefit of all creditors of a bank

and not only to the benefit of insured depositors.

Half of the target size of DGS funds can also be used for early intervention measures, i.e.

measures aimed at helping a bank when it faces difficulties and avoiding it needs to be

wound up, for example temporary liquidity support. The table below illustrates how the

funds of Deposit Guarantee Schemes could be used for early intervention measures. It

should be noted though that the necessary funds always remains ring-fenced for paying out

depositors.

Figures and graphics available in PDF and WORD PROCESSED

9) Should we have a pan-European Deposit Guarantee Scheme?

A single pan-European scheme would have two main advantages:

First, the impact assessment estimates that € 40 million administrative costs

per year could be saved.

Second, it could better deal with bank failures. The impact of a single bank

failure on a large scheme is lower than on a scheme only covering the banking

sector of one Member State.

However, there are complicated legal issues which would need to be examined. The idea of

a pan-EU Deposit Guarantee Scheme remains a potential longer-term project. A more

detailed report examining the options will be presented by 2014.

Under the new supervisory structure, the European Banking Authority will facilitate the

functioning of Deposit Guarantee Schemes. The authority will be involved in stress tests

and peer reviews of schemes, help settle any disagreements (for example in a cross-border

case when two schemes have to coordinate their actions) and will ensure the consistent

determination of contributions based on the risk of each bank.

10) Why set a maximum level for deposits protected? Why not leave Member States

choose their own levels?

Coverage can remain unlimited if it is linked to real estate transactions (for example selling

your house) or to specific life events such as marriage and divorce. So, if you sell your

34

house, the money from the sale is transferred to your account, and the bank fails the next

day, Member States can ensure that you are covered for more than € 100 000. In this

scenario, depositors enjoy such coverage for up to 12 months after such an event if their

Member State opts for such regime.

But an unlimited higher coverage in general would jeopardise financial stability. When the

crisis deteriorated, account holders shifted deposits to banks in Member States whose

coverage was higher. This led to banks being stripped of liquidity in times of stress and

made the crisis worse as it led to a near-liquidity crunch. Moreover, one scheme offering

general unlimited coverage needed state aid because of the demands made on it.

11) What are the benefits for consumers and business under the new rules?

Consumers will benefit from the Commission's proposal: interest will now be taken into

account when reimbursing deposits, credits and instalments can no longer be deducted from

the amount to be reimbursed and savers at branches of banks in other Member States will

not be referred to a scheme in a country they don‟t live in. Depositors will be informed

about the coverage on their statement of account.

Businesses will also benefit. First, as explained above, the new proposal will extend

coverage to all currencies, including, for example, US dollars, Swiss francs and yen, which

is beneficial for business operating globally. Second, all businesses, whatever their size,

will be now covered under the Deposit Guarantee Scheme. This is new as until now, some

EU Member States exempted medium-sized and large enterprises from the existing rules on

Deposit Guarantee Schemes.

12) How does the proposal cater for the needs of Mutual Guarantee Schemes? Will

their stabilising function not be reduced?

Mutual Guarantee Schemes are schemes where banks support each other so they do not fail.

By doing so, they contribute to financial stability in some Member States. On the contrary,

Deposit Guarantee Schemes pay if a bank fails.

The new proposals do not ask Mutual Guarantees Schemes to close down. On the contrary,

the new proposal acknowledges the stabilising function of Mutual Guarantee Schemes and

offers a lot of flexibility to them.

Nevertheless, Mutual Guarantee Schemes are intended in the first place to save a bank as

such and not the bank account holders. The Commission believes that it is important that all

banks participate in a Deposit Guarantee Scheme so as to give bank account holders the

same level of protection - no matter where they are based in Europe. This would be an

improvement for bank account holders, as under the current system account holders cannot

make a claim if a Mutual Guarantee Scheme fails.

Under the Commission's new proposal, Mutual Guarantee Schemes can continue to exist.

However, participating banks would be required to participate in a Deposit Guarantee

Scheme or to establish a separate deposit scheme for themselves. Their lower risk factor

can be taken into account when determining contributions.

13) More burdensome rules on banks – will these proposals not choke the recovery?

The crisis has made clear that banks must take more responsibility and measures to

strengthen financial stability are essential.

But the Commission is also very aware of the cumulative effects of new rules on banks

which is why each proposal is accompanied by in-depth impact assessments.

35

The calibration of measures is essential which is why banks will have 10 years to reach the

target funding levels set out in the proposal.

14) Will these new rules not lead to higher banking fees for clients?

This is unlikely. Since the market on financial products is quite competitive, banks are

unlikely to transmit their costs completely to their customers. But even if they did so, it

would not exceed a 0.1% reduction in interest rates on saving accounts or an increase of

bank fees on current accounts by about € 7-12 per account per year.

15) How will the mutual borrowing facility work?

This is illustrated by the graph below. The amount of funds being lent is equal to the ex-

post funds at the scheme borrowing from the others. The borrowing scheme has to pay back

to the lending schemes within 5 years (see also question 7).

16) When will all the changes come into effect?

Due by

General implementation deadline 31.12.2012

Simplification and harmonisation of scope and eligibility 31.12.2012

One-week payout delay 31.12.2013

36

Report on pan-EU schemes 31.12.2014

Reaching the target funding level 31.12.2020

Mutual borrowing facility functioning 31.12.2020

More information: IP/10/918

7.

IP/10/905

Brussels, 7 July 2010

EU launches public debate on the future of pensions

The European Commission has today launched a Europe-wide public debate on how to

ensure adequate, sustainable and safe pensions and how the EU can best support the

national efforts. Ageing populations in all Member States have put existing retirement

systems under massive strain and the financial and economic crisis has only increased

this pressure. The consultation document, a Green paper, poses a series of questions

inviting all interested parties to contribute views, opinions and ideas on confronting the

pension challenge - one of the biggest facing Europe and most parts of the world today –

and how the EU can contribute to the solutions.

Presenting the consultation paper, and with the full backing of Commissioners Olli Rehn

(Economic and Monetary affairs) and Michel Barnier (Internal Market and Services),

László Andor, EU Commissioner for Employment, Social Affairs and Inclusion said:

"The number of retired people in Europe compared to those financing their pensions is

forecast to double by 2060 - the current situation is simply not sustainable. In addressing

this challenge the balance between time spent in work and in retirement needs to be looked

at carefully.”

Mr Andor added: “The choice we face is poorer pensioners, higher pension contributions

or more people working more and longer. One of the great successes of Europe’s social

model is to ensure that old age is not synonymous with poverty. This is a promise on which

we have to continue to deliver and the dialogue we are launching today should help

Member States take the right decisions to ensure pension systems are fit for purpose".

The Green Paper reviews the European pension framework in a holistic and integrated

manner, benefiting from synergies across economic and social policy and financial market

regulation which is why so many different topics are covered, such as: longer working

lives, the internal market for pensions, mobility of pensions across the EU, gaps in EU

37

regulation, the future solvency regime for pension funds, the risk of employer insolvency,

informed decision-making and governance at EU level.

In particular, it aims to address the following issues:

Ensuring adequate incomes in retirement and making sure pension systems are

sustainable in the long term

Achieving the right balance between work and retirement and facilitating a longer

active life

Removing obstacles to people who work in different EU countries and to the

internal market for retirement products

Making pensions safer in the wake of the recent economic crisis, both now and in

the longer term

Making sure pensions are more transparent so that people can take informed

decisions about their own retirement income

The consultation is a joint initiative from Commissioners Andor, Barnier (Internal market

and services) and Rehn (Economic and monetary affairs), covering economic and social

policies as well as financial market regulation. It does not make specific policy proposals

but seeks views on possible future actions at European level.

The consultation period will run for four months (ending 15 November 2010) during which

anyone with an interest in the subject can submit their views via a dedicated website:

http://ec.europa.eu/yourvoice/ipm/forms/dispatch?form=pensions.The European

Commission will then analyse all responses and consider the best course for future actions

to address these issues at EU level.

Background

Ensuring an adequate and sustainable retirement income for EU citizens now and in the

future is a priority for the EU. Achieving these objectives in an ageing Europe is a major

challenge. Most countries in the EU have sought to prepare for this by reforming their

pension systems.

In 2008 there were four people of working age (15-64 years old) for every EU citizen aged

65 years or over. By 2060, that ratio will drop to two to one. The recent financial and

economic crisis has aggravated and amplified the impact of these demographic trends.

Setbacks in economic growth, public budgets, financial stability and employment have

made it more urgent to adjust retirement practices and the way people build up entitlements

to pensions. The crisis has revealed that more must be done to improve the efficiency and

safety of pension schemes.

A recent Eurobarometer survey found that 73% of EU citizens either explicitly anticipate

lower pension benefits or think they will have to postpone their retirement or save more

money for old age (see IP/10/773). Meanwhile, 54% are worried that their income in old

age would be insufficient for them to live a decent life, including a majority in 17 of the

EU's 27 member countries.

Further information

MEMO/10/302

Green Paper and Commission Staff Working Document :

http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=839&furtherNews=yes

38

The EU and pensions

http://ec.europa.eu/social/main.jsp?catId=752&langId=en

8.

MEMO/10/304

Brussels, 7 July 2010

Following today's vote in the European Parliament, Commissioner Michel Barnier

welcomes the agreement by Council and Parliament on new capital requirements for

banks

"The amendments to the Capital Requirements Directive voted today by the European

Parliament target the investments and practices that lie at the root of the recent crisis.

The requirements on pay and bonuses send a strong political message: there will be no

return to business as usual. The EU is leading the way in curbing unsound remuneration

practices in banks. Banks will need to change radically their practices and the mentality that

have led in many cases to excessive risk-taking and contributed to the financial crisis.

The tougher capital requirements for banks' trading books and their investments in

securitisations - the kind of highly complex products that have caused huge losses for banks

- will ensure that banks hold significantly more capital to cover their risks. This will make

the sector as whole better able to resist stress."

En français:

"Les amendements à la directive sur les exigences de fonds propres que le Parlement

européen a votés aujourd'hui, visent des comportements et des activités financières qui sont

au nombre des causes de la crise.

Les nouvelles exigences en termes de rémunération et de bonus envoient, tout d'abord, un

message politique fort : on ne renouera pas avec les pratiques d'avant la crise. L'UE fait le

choix d'être pionnière dans l'assainissement des modes de rémunération dans les

banques. Elle met en œuvre pleinement et de façon très précise les recommandations

internationales. Nous en faisons des règles pour notre secteur bancaire.

Ces règles ont pour objet de changer les mentalités et les pratiques en vigueur avant la crise

et qui dans bien des cas, celles-ci ont conduit à des prises de risque excessives.

En matière de fonds propres, là aussi nous tirons les leçons de la crise. Lorsqu'elles

s'engagent dans des activités comportant plus de risques, les banques doivent disposer de

fonds propres plus importants. La directive prévoit ainsi de plus grandes exigences de fonds

propres pour les carnets d'ordres des banques et leurs investissements dans la titrisation - le

type de produits qui est à l'origine de perte massives pour les banques. Cela augmentera la

capacité du secteur tout entier à résister à d'éventuelles tensions."

Background

Remuneration

With regard to remuneration, the Capital Requirements Directive (CRD) primarily aims at

giving effect at EU level to the Financial Stability Board (FSB) principles and standards on

compensation agreed by G20 leaders. The Directive will require credit institutions and

39

investment firms to have remuneration policies that are consistent with effective risk

management.

The Directive pursues three objectives:

To impose a binding obligation on credit institutions and investment firms to

have remuneration policies and practices that are consistent with and promote

sound and effective risk management, accompanied by high level principles on

sound remuneration;

To bring remuneration policies within the scope of the supervisory review

under the CRD, so that supervisors would be able to require the firm to take

measures to rectify any problems that they might identify;

To ensure that supervisors may also impose financial or non-financial

penalties (including fines) against firms that fail to comply with the obligation.

The new rules on remuneration can apply as early as 1 January 2011 with principles on

remuneration applying to all variable remuneration payable on or after this date, including

when it was awarded in 2010.

Capital Requirements for trading book and securitisations

The Capital Requirements Directive will strengthen banks' capital position and increase

market confidence through reform of the capital rules for the trading book and for

securitisations:

Capital requirements for the trading book: The trading book consists of

financial instruments that a bank holds with the intention of re-selling them in

the short term, or in order to hedge other instruments in the trading book. The

new rules reform the way that banks assess the risks connected with their

trading books to ensure that the assessment takes full account of the potential

losses in the kind of stressed conditions experienced during the recent crisis.

These revised rules will substantially increase levels of capital held against the

trading book.

Capital requirements for complex securitisations: Complex securitisations

played a role in the development of the financial crisis, when banks incurred

unexpectedly high losses in such instruments. The new rules impose higher

capital requirements for re-securitisations, to reflect properly the very

considerable losses that banks holding complex securitisations can be exposed

to in certain circumstances.

Disclosure of securitisation exposures: The new rules will reinforce

disclosure requirements to ensure adequate disclosure of the risks to which

banks are exposed through their securitisation positions. Proper disclosure of

the level of risks to which banks are exposed is necessary for market

confidence.

The new rules on trading book and securitisations can apply as early as 31 December 2011.

More information: MEMO/09/335

Commissioner Barnier's web site:

http://ec.europa.eu/commission_2010-2014/barnier/index_en.htm

40

9.

IP/10/869

Brussels, 1 July 2010

Financial services: Commission acts to improve investor protection and efficiency in

the EU investment fund market

The European Commission has today completed a programme of improvements to the

EU framework for investment funds. These funds known as UCITS (Undertakings for

Collective Investment in Transferable Securities) accounted for over € 5 trillion of assets

in 2009, which is equivalent to half of EU GDP. The new rules better empower investors

by requiring a new standardised fund document, while also setting out in detail the high

standards of conduct of business that UCITS fund managers must comply with. In

addition, the new rules improve the efficiency of the UCITS market in the EU by

introducing and facilitating new possibilities for the pooling of assets from different

funds, by simplifying the cross-border distribution of UCITS and by better coordinating

the work of national supervisors. The new rules are to take effect from 1 July 2011.

Internal Market and Services Commissioner Michel Barnier said: "Today's package will

improve investor protection, cut red tape and further strengthen the global competitiveness

of Europe's investment funds. Furthermore, the steps we have taken to enhance

transparency and the effectiveness of our rules show that Europe has learned its lessons

from the crisis. I hope the hard-won trust we have earned from investors will deepen in the

future. With the framework now in place, the hard work of implementation for both

supervisors and market participants begins."

The Commission has adopted detailed requirements in the form of four acts (two Directives

and two Regulations). Member States now have 12 months to implement the directives,

while the regulations will apply from 1 July 2011. These acts cover the following areas:

Key investor information – a new standardised and harmonised disclosure

document designed to empower investors to take effective investment decisions. An

implementing Regulation covers the content and form of the document, including

the use of plain language and a much more investor-friendly presentation of

information about risk. The implementing regulation is supported by detailed

methodologies on calculating a fund's level of risk and charges, which have been

published today by the Committee of European Securities Regulators (CESR).

Rules for the conduct of UCITS management companies – an implementing

Directive aligns organisational requirements and rules of conduct for investment

firms with the standards already applied across much of the financial services

through the Markets in Financial Instruments Directive, otherwise known as MIFiD

(see IP/07/1625). These rules also cover the prevention, management and disclosure

of conflicts of interest. The Directive further obliges UCITS managers to employ

sufficiently robust and effective procedures and techniques so that they are able to

adequately manage the different types of risk the UCITS might face.

UCITS mergers and master-feeder structures – an implementing Directive

details certain investor protection measures in relation to these asset pooling

techniques, and establishes a common approach to the sharing of information

41

between master and feeder UCITS. It also covers detailed rules on the liquidation,

merger or division of a master UCITS.

Notification procedure and supervisory co-operation – an implementing

Regulation sets out the details of standard documents and procedures to be used for

electronic transmission in the notification procedure (used by a UCITS when it

wishes to gain access to the market in another Member State). It also contains

common procedures for enhancing supervisory cooperation in their oversight of

fund managers' cross-border activity of fund managers.

Now that the new European legal framework for UCITS is complete, the focus switches to

Member State competent authorities and market participants to implement the changes and

deliver the vital improvements to transparency, efficiency and effectiveness.

Background

Investment funds are investment products created with the sole purpose of gathering

investors' capital, and investing that capital collectively through a portfolio of financial

instruments such as stocks, bonds and other securities.

Directive 2009/65/EC, which replaces the previous UCITS Directive 85/611/EEC, provides

for common rules for setting up and operating investment funds in the EU. Fund managers

that comply with these rules may benefit from the right to offer their services cross-border.

Investment funds authorised in accordance with the provisions of this Directive may be

distributed to investors across the EU after following a defined procedure for notifying the

relevant competent authorities.

These implementing measures are split across four separate instruments, which, together

with the recast of the UCITS Directive and supporting CESR guidelines, form a package

that lays the basis for an efficient and competitive UCITS market for the future which

enshrines class-leading investor protection measures. They have been prepared on the basis

of advice from CESR. They were approved by Member States and subsequently the

European Parliament and the Council. .

More information is available at:

http://ec.europa.eu/internal_market/investment/ucits_directive_en.htm

For CESR's guidelines on the methodology for the calculation of the synthetic risk and

reward indicator in the Key Investor Information Document (Ref. CESR/10-673) see:

http://www.cesr.eu/index.php?docid=6961

For CESR's guidelines on the methodology for calculation of the ongoing charges figure in

the Key Investor Information Document (Ref. CESR/10-674) see:

http://www.cesr.eu/index.php?docid=6962

A sajtóbejentések elérhetőek:

http://europa.eu.int/rapid/searchResultAction.do?search=OK&query=markt&use

rname=PROF&advanced=0&guiLanguage=en