Opinion of the European Central Bank of 18 November 2008 at the request of Българска народна банка (Bulgarian National Bank) on a draft law amending the Law on credit institutions (CON/2008/71)

OPINION OF THE EUROPEAN CENTRAL BANK of 18 November 2008 at the request of Българска народна банка (Bulgarian National Bank) on a draft law amending the Law on credit institutions (CON/2008/71) Introduction and legal basis

On 22 October 2008 the European Central Bank (ECB) received a request from the Governor of Българска народна банка (Bulgarian National Bank) (BNB) for an opinion on a draft law amending the Law on credit institutions (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the European Community and the third and sixth indents of Article 2(1) of Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions , as the draft law relates to BNB and to rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

1. Purpose of the draft law

The draft law is primarily aimed at transposing Directive 2007/44/EC into national law and adopting other related provisions . The ECB has not been consulted on the transposition measures. Accordingly, this opinion only relates to: (i) the draft law provisions on the establishment of a register of financial institutions managed by BNB ; and (ii) the introduction of a European dimension to BNB’s supervisory powers.

2. Specific comments

2.1. The draft law will empower BNB to carry out new tasks related to setting up and maintaining a register of financial institutions at BNB . In particular, financial institutions not subject to license or registration under another law will be entered into the BNB register in order to be able to carry out their activities. The ECB welcomes the creation of the public register for financial institutions at BNB and recommends that BNB be provided with sufficient financial and personnel resources to carry out its register-related tasks . 2.2 Furthermore, it is important to ensure that the draft law complies with Community legislation, and in particular with the definition of financial institutions. In this regard, the list of activities financial institutions may engage in should also include the issuance and administration of means of payment as provided for in Article 4(5) of Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) . However, the ECB understands that the draft law on payment services and payment systems (LPSPS), on which the ECB has recently been consulted , provides for the amendment of Articles 2(2) and 3(1) of the Law on credit institutions according to which the provision of payment services within the meaning of the LPSPS and the issuing and administering of other means of payment (e.g. traveller cheques and letters of credit) will be included within the list of activities that financial institutions may engage in. It appears that both draft laws will enter into force at different points in time. In this respect, the two draft laws should be properly aligned in order to remove this inconsistency with Community legislation. 2.3. Moreover, draft Article 3a(3) should also be aligned with Community legislation so that the application of this provision is explicitly restricted to financial institutions established in Bulgaria, and thus does not apply to financial institutions of other Member States. 2.4. Finally, the draft law provides that, in exercising its supervisory functions, BNB must recognise the possible impact of its actions on the financial stability of other Member States . The ECB notes that this provision is aimed at reflecting the conclusions of the Ecofin meeting of 14 May 2008,

namely that the mandates of national supervisory authorities should allow them to take the EU dimension into account in exercising their duties . This opinion will be published on the ECB’s website. Done at Frankfurt am Main, 18 November 2008. [signed]

The President of the ECB

Jean-Claude TRICHET