WINDING UP OF CREDIT INSTITUTIONS
Amended draft Directive on the winding up of credit institutions.
||Article 47(2) EC; co-decision; qualified majority voting
|Basis of consideration:
||EM of 5 March 2001
|Previous Committee Report:
||None; but see (21209) : HC 23-xviii (1999-2000), paragraph 16 (17 May 2000)
|To be discussed in Council:
||12 March 2001 |
||Cleared; but further information requested on progress
28.1 When an EU credit institution is subject
to winding up proceedings a conflict of jurisdiction may arise
between the home country (where the business is registered) and
the host country (where a subsidiary operates). In 1985, the Commission
proposed a draft Directive to deal with this overlap of jurisdictions.
Our predecessors reported on this in 1986
and on an amended version in 1988. Progress on the proposal was,
however, blocked for some years by the dispute between Spain and
the UK over designating competent authorities for Gibraltar.
28.2 The key principle of the Directive
is that winding up proceedings should be governed, as with other
EU banking Directives, on a home State basis; that is, the administrative
and judicial authorities of the home country, as opposed to the
host country, would have sole jurisdiction in winding up an institution
and its branches across the EU. The Directive is identified as
a priority area in the Commission's Financial Services Action
Plan designed to complete the single market in financial services.
The purpose of the Directive is to simplify procedures and to
allow faster, more efficient action across the EU to protect depositors,
policy holders and other creditors. The opportunities for cross-border
trade in financial services are expected to be enhanced when creditors
are provided with a clearly established procedure throughout the
28.3 We reported on and cleared the Directive
in May 2000. The Government subsequently signed up to political
agreement on the Directive's text and the Council duly adopted
a common position in July 2000.
The Government's view
28.4 We have now received from the Economic
Secretary to the Treasury (Miss Melanie Johnson) an Explanatory
Memorandum of 6 March 2001 informing us of the latest developments.
The Minister reports that during second reading in the European
Parliament a number of amendments were proposed, which were subsequently
accepted by the Commission and a majority of Member States. The
Minister adds that the amendments, which are largely technical
in nature, are broadly acceptable to the Government.
28.5 Although the Directive has been under
consideration for 15 years, it has made very little progress.
The Minister points out that:
"Its slow passage is
often cited as evidence of lack of will amongst Member States
that prevents the rapid completion of the single financial services
market. As you know, the Government is especially committed to
achieving this goal in the interests of fundamental economic reform
and prosperity across Europe. In establishing clearer, more certain
procedures for winding up credit institutions (on the rare occasions
when that is necessary) the adoption of this Directive will mark
a small but significant step towards attaining a single market.
It is therefore important that the Government is seen to give
the Directive its full support."
28.6 We cleared the draft Directive in
May 2000 and, given that the amendments are largely technical,
see no reason not to clear the revised text.
67 (8283) 4177/88; see HC 21-xxix (1985-86), paragraph
5 (5 November 1986). Back
8329/99; see HC 34-xxiii (1998-99), paragraph 1 (23 June 1999). Back