Jan 2010 Financial Services Industry Monthly Bulletin

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The Financial Services Industry Monthly Bulletin is a banking and finance law publication by Reff & Associates (correspondent law firm of Deloitte Romania) and Deloitte Tax. …

The Financial Services Industry Monthly Bulletin is a banking and finance law publication by Reff & Associates (correspondent law firm of Deloitte Romania) and Deloitte Tax.

Each month, our specialist team of finance lawyers and tax advisors will keep you updated with the latest legal, regulatory and tax developments in the financial services industry in Romania as well as with the recent changes and trends in the international financial regulations.

The areas covered by our bulletin include:

Banking and non-banking financial institutions
Capital markets
Insurance companies
Private pension funds

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  • 1. January 2010
  • 2. NBR amends the current regulatory framework regarding classification of credit risk by credit institutions NBR’s Circular no. 1/2010 regarding the level of the reference interest rate applicable for January NBR issued Regulation no. 1/2010 (“Regulation 2010, namely 8% per year 1/2010”) for the amendment of NBR’s Regulation no. 18/2009 regarding the The above mentioned Circular was published in administration of the activity of credit the Official Gazette no. 2/4.01.2010 and may be institutions, the internal process of evaluation of accessed here. the adequacy of capital to risks and the conditions of outsourcing of their activities. NBR’s Board of Directors decided the reduction of the monetary policy interest rate to 7.5 % per year Regulation 1/2010 amends the regulatory framework applicable to classification of credit NBR’s Board of Directors decided on the 5th of risk by credit institutions following debt January 2010 the following: restructuring operations as follows: the prohibition of upgrading the credit risk  to reduce, starting with the 6th of January classification in case of restructuring/refinancing 2010, the monetary policy interest rate to of credits was repealed. However, following such 7.5 % per year from 8.0 % per year; operations, credit institutions have the obligation  to ensure a firm management of liquidity in to evaluate the financial performance of the the banking system in order to consolidate debtor more strictly than prior to the the transmission of monetary policy signals; restructuring/refinancing, on the basis of updated information.  to maintain the current level of the minimum mandatory reserve rates on both Regulation 1/2010 was published in the Official RON and foreign currency liabilities of credit Gazette no. 39/18.01.2010 and may be accessed institutions. here. The above mentioned decision may be accessed here. Financial Services Industry Monthly Bulletin 3
  • 3. NBR amends the current regulatory framework applicable to classification of credit risk by non banking financial institutions NBR issued Regulation no. 2/2010 (“Regulation 2/2010”) for the amendment of NBR’s Regulation no. 20/2009 regarding non banking financial institutions. Regulation 2/2010 amends the regulatory framework applicable to classification of credit risk by non banking financial institutions following debt restructuring operations. The main amendments refer to the following exceptions from the prohibition of framing the restructured debts into a more favorable category of credit risk classification as follows:  the first restructuring of credits representing bad-debts can lead to framing these credits in a more favorable credit risk category, but with no more than 2 classification categories for credits classified at the moment of restructuring in the “loss” category, and with no more than one classification category for the other credits.  following the payment of due installments of restructured credits, these can be framed into a more favorable credit risk category. Regulation 2/2010 was published in the Official Gazette no. 39/18.01.2010 and may be accessed here. 4
  • 4. NSC amends the regulatory framework regarding the reporting of the evaluation of the application of the mechanism without pre- NSC amends the regulatory framework validation for financial instruments and global applicable to NSC’s income accounts system NSC adopted Regulation no. 1/2010 for the NSC enacted Decision no. 4 of 28.01.2010 for amendment of NSC’s Regulation no. 7/2006 the amendment of NSC’s Decision no. 1/2008 in regarding NSC’s income. Regulation no. 1/2010 the sense that the Central Depository SA and was approved through NSC’s Order no. 1 of Bucharest Stock Exchange SA must notify NSC of 21.01.2010, published in the Official Gazette no. the final evaluation of the application of the 54/25.01.2010 and may be accessed here. mechanism without pre-validation of financial instruments and global accounts system until the first business day of April 2010. The said Decision may be accessed here. Financial Services Industry Monthly Bulletin 5
  • 5. Financial Services Industry Monthly Bulletin 7
  • 6. European Central Bank amends the regulatory framework applicable to monetary, financial institutions and markets statistics European Central Bank issued Guideline ECB/2009/234 of December 4 2009 amending Guideline ECB/2007/9 on monetary, financial institutions and markets statistics. The said guideline is applicable to the central banks of the Euro-system as of 1 July 2010. The above mentioned Guideline was published in the Official Journal of the European Union no. L 16/21.01.2010 and may be accessed here. Financial Services Industry Monthly Bulletin 7
  • 7. Financial Services Industry Monthly Bulletin 7
  • 8. Proposal for Regulation regarding the organization and functioning within NBR of the Proposal of Norm for the amendment of Norm Payment Incidents Register. no. 2/2006 regarding the authorization of the administrators of voluntary pension funds issued The above mentioned proposal may be accessed by the PPSSC here. The deadline for submitting any comments to Proposal for Order for the amendment of NBR’s the said proposal is 10th of February 2010. The Order no. 12/2007 regarding the reporting of above mentioned proposal may be accessed the minimum capital requirements for credit here. institutions Proposal of Norm for the amendment of PPSSC’s The above mentioned proposal may be accessed Norm no. 2/2007 regarding the authorization of here. administrators within the privately managed pension system The deadline for submitting any comments on the said proposal is 10th of February 2010. The above mentioned proposal may be accessed NSC issued its investigation plan for 2010 which here. may be accessed here. Proposal of Norm for the amendment of PPSSC’s Proposal for Instruction for the amendment of Norm no. 7/2008 regarding the fees for NSC’s Instruction no. 2/2007 regarding the licensing, approval and functioning within the drafting and submission of the annual financial privately managed pension system statements by authorized entities regulated and supervised by NSC The above mentioned proposal may be accessed here. The above mentioned proposal may be accessed here. Proposal for Norm for the amendment of PPSSC’s Norm no. 8/2008 regarding the fees for licensing, approval and functioning within the voluntary pension system The above mentioned proposal may be accessed here. Proposal for Norm regarding the control procedure of the entities performing activities within the private pension system The above mentioned proposal may be accessed here. Financial Services Industry Monthly Bulletin 9
  • 9. Financial Services Industry Monthly Bulletin 7
  • 10. European Central Bank endorsed on 8 January 2010 the Proposals for Regulations of the European Parliament and of the Council establishing a European Banking Authority, a European Insurance and Occupational Pensions Authority and a European Securities and Markets Authority. The said endorsement was published in the Official Journal of the European Union no. C 13/20.01.2010 and may be accessed here. The Committee of European Banking Supervisors published on January 6 2010 the revised framework for common reporting of solvency ratios for credit institutions and investment firms (COREP), incorporating the changes brought by directives 2009/27/EC, 2009/83/EC si 2009/111/EC. For further details please access here. The Committee of European Banking Supervisors published on 28 January 2010 a revised version of its guidelines for implementing a common European framework on supervisory disclosure. For further details please access here. The Committee of European Securities Regulators opens for public consultation the guidance regarding the reporting of transactions on OTC derivative instruments. For further details please access here. Financial Services Industry Monthly Bulletin 11
  • 11. Speakers and Topics Antonis Ioannides, Partner Financial Advisory Introduction Alexander Flatz, Director Reorganization Date Services, Central Europe 17 February 2010 Patterns of corporate crisis Time  Stages of a crisis – theory vs. practice. 9.00 – 13.30  Behavioral patterns: Owners; Management; Banks; Advisors Venue  Challenges for the stakeholders Howard Johnson Hotel  Valuable characteristics of advisors and Platinum Grand Ballroom bankers in crises The workshop organised by Deloitte Romania Andrei Burz-Pinzaru, Partner Legal Services and Reff & Associates, the correspondent law Having a borrower in distress and how to deal firm of Deloitte Romania, will give you an with it. Know your legal rights, options and integrated perspective over the dynamics of deadlines dealing with both financial and legal facets of the loan restructuring process.  Things you should know about your borrowers prior to any insolvency related events In the current climate, distressed borrowers are  Preventing insolvency: voluntary not uncommon, to say the least. From breach of reorganisation versus insolvency financial covenants to non-payment defaults and reorganisation, inter-creditor agreements, insolvency threats, borrowers pose new types of the new moratorium law (“concordatul challenges and require new types of actions. preventiv”)  Being creditor to an insolvent borrower: a Restructuring existing loan agreements, requiring focus on observation periods and additional collateral, tightening contractual reorganization plans (control over the borrower, permitted payments, new loans, terms, stricter monitoring of the covenants, preservation of rights) grace periods, all useful actions that, however, in  Insolvency “hidden” threats many cases, might fail unless supported by thorough business reviews and restructuring Andrew Grimstone, Partner Reorganization implementation. Services, United Kingdom Restructuring best practices  Value of robust information  Debtors vs. creditors dynamics (do’s and don’ts)  Managing the lenders (syndicated/multiple bilateral loans)  UK -EU case studies  Top tips for achieving a consensual restructuring Participation to this event is by invitation only. You can register via e-mail at: mciobanu@deloittece.com. Please take into consideration that due to the limited number of seats, the first-come-first-served policy applies. For the event agenda and additional information on the speakers, please access the following link. 12
  • 12. Reff & Associates is the correspondent law firm of Deloitte Romania, fully integrated with the Deloitte multi-disciplinary advisory practice and affiliated to a network of law firms and legal departments working with Deloitte all over the world. Deloitte’s correspondent legal practice provides assistance to clients in Romania on various matters pertaining to mergers and acquisitions, corporate and commercial law, finance, banking and capital markets, real estate, project finance, employment, competition, fiscal and commercial litigation, and intellectual property. In the financial services sector, Reff & Associates provides the full range of services to banks and financial institutions, including: - Finance deals: transaction support in bilateral and syndicated loans, loan workouts, securitisation, loan transfers and assists in drafting and negotiating the transaction documentation (loan agreements, security and other ancillary documentation). - M&A transactions in the financial services sector: advice on the structure of the transaction, the pre-contractual documentation, due diligence, drafting/negotiating the purchase agreements and assisting the implementation of the transaction. - Regulatory assistance: ongoing assistance with respect to the specific legal and regulatory requirements applicable to banks / non banking financial institutions operating in Romania, development of new financial products, representation in front of the regulators (National Bank of Romania, Insurance Supervisory Commission, Securities Commission etc.). Andrei Burz Pinzaru Partner + 40 21 207 52 05 aburzpinzaru@deloittece.com Simina Mut Manager + 40 21 207 52 69 smut@deloittece.com Leontin Trifa Manager + 40 21 207 53 13 ltrifa@deloittece.com Financial Services Industry Monthly Bulletin 11
  • 13. George Mucibabici Chairman tel: + 40 21 207 52 55 e-mail: gmucibabici@deloittece.com Audit Santiago Pardo Partner tel: + 40 21 207 54 92 e-mail: sapardo@deloittece.com Enterprise Risk Services Gary Bauer Director tel: + 40 21 207 52 19 e-mail: gbauer@deloittece.com Financial Advisory Antonis Ioannides Partner tel: + 40 21 207 56 26 e-mail: anioannides@deloittece.com Tax Rodica Segarceanu Partner tel: + 40 21 207 52 31 e-mail: rsegarceanu@deloittece.com Legal Andrei Burz-Pinzaru Partner, Reff&Associates correspondent law firm of Deloitte Romania tel: + 40 21 207 52 05 e-mail: aburzpinzaru@deloittece.com Consulting Razvan Horobeanu Manager tel: + 40 21 207 53 57 e-mail: rhorobeanu@deloittece.com Actuarial & Insurance Solutions Slawomir Latusek Consultant tel: + 48 (22) 511 04 54 e-mail: slatusek@deloittece.com
  • 14. Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ro/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 140 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's more than 169 000 professionals are committed to becoming the standard of excellence. Deloitte's professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities. This publication contains general information only, and none of Deloitte Touche Tohmatsu, its member firms, or its and their affiliates are, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your finances or your business. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. None of Deloitte Touche Tohmatsu, its member firms, or its and their respective affiliates shall be responsible for any loss whatsoever sustained by any person who relies on this publication. © 2010 Deloitte Romania