This content is from: Local Insights

Credit institutions

The National Bank of Romania (NBR) has recently published on its website a draft amendment to the procedure for authorisation of banks and other credit institutions. This will comply with its public consultation obligations. The period within which suggestions could be transmitted ended on October 5 2007.

The project of enactment does not alter the two steps of the authorisation procedure. The first step is approval for the establishment and the second is authorisation for the functioning of the credit institution. Significant amendments are proposed regarding the evaluation process of a credit institution's future shareholders. Management and other entities have influence over the credit institution. The proposed enactment removes the current restriction, under which state-owned companies, risk funds, foundations, and trade unions, are not allowed to participate as significant shareholders in a credit institution.

In an effort to bring clarity to some of the current provisions, the draft eliminates the requirement that the shareholders prove they had registered positive share capital over the last three years by means of financial statements. The rationale behind this amendment is probably linked to the confusion that the current provision raises. Rather than regarding it as a minimum requirement, the applicants might see it as a condition which the shareholders must meet if they are to access the credit institution.

Other provisions that the bank proposes to eliminate are the requirement that the significant shareholders present an income-tax declaration and a fiscal record. In addition, it will eliminate the threshold of years of experience in the banking field that a manager must have. The NBR will still verify a potential manager's level of experience. But there is greater freedom in the criteria for assessing a particular candidate's professional credentials.

The draft amendment also outlines the legal framework for the authorisation of credit cooperatives and credit cooperatives associations. This follows the new banking law's requirement that such institutions undergo the NBR procedure. There are two situations that need to be distinguished. First is when a credit cooperative is affiliated to an already existing credit cooperatives association. The respective credit cooperatives association approves the establishment of the credit cooperative, after examining the documentation that its founders have provided. After issuing the approval, they complete the application. They submit more documents to the NBR, with the aim of issuing the functioning authorisation. Second is the situation where a credit cooperatives association applies for authorisation, at the same time as the credit cooperatives with which it is affiliated. The authorisation procedure will unfold under the direction of the NBR in both of its steps.

Regarding the authorisation of branches that credit institutions from non-EU states established in Romania, further simplifying actions are intended. The applicant will no longer have to submit a presentation of the legal framework from its origin state. Instead, a declaration of non-opposition or of approval from the supervision authority of the origin country is required. From this, the NBR obtains the necessary assurances that the eventual authorisation of the branch in Romania will not breach the mandatory legal provisions of the origin state.

The draft amendment that the NBR published, aims at aligning secondary legislation to the present financial legal framework. The recent banking law has redesigned that framework.

Adina Cojoc

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