Jul - Aug 2009 Financial Services Industry monthly bulletin
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Jul - Aug 2009 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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    Jul - Aug 2009 Financial Services Industry monthly bulletin Jul - Aug 2009 Financial Services Industry monthly bulletin Document Transcript

    • July – August 2009
    • Domestic 4 Legislative changes 4 Regulatory updates 5 International 8
    • Legislative changes o request the persons owning qualified participations to Amendments to the Banking Law financially support the credit institution by increasing the share I. Qualified participations capital or by granting eligible loans to be included in the  Interdiction to purchase new shares calculation of the own funds, issued by the credit institution according to the specific (Romanian legal person) for the regulations issued by NBR and/or holders of qualified participations in a by swapping such loans into credit institution who had their voting shares; rights suspended and which no longer meet the requirements of the law o forbid the total or partial regarding the quality of the distribution of profits through shareholding of a credit institution or other destinations than those exercise on it an influence that may provided by law as being jeopardize the prudent administration mandatory, until NBR attests the of the credit institution; remediation of the credits institution’s financial standing  The shareholders meetings of the credit institution may be held by the III. Employment agreements concluded with shareholders whose voting rights are directors/members of the directorate not suspended; the majority requirements for validly taking  The employment agreements of the shareholders resolutions shall apply to persons designated to exercise the the total share capital held by those mandate of director/member of the shareholders; directorate must be terminated within 6 months after the entry into force of  Obligation to sell the shares acquired this law. Otherwise, the employment without taking into account the agreements shall be terminated by law objection raised by National Bank of at the end of the 6-month period. Romania (“NBR”) within 3 months as of communication of the objection. Law no. 270 of 7 July 2009 (for the approval of the Government Emergency Ordinance no. II. Remedy in case of prudential indicators’ 25/2009 for amending and completing the deterioration Banking Law - Government Emergency Ordinance no. 99/2006 on credit institutions and  In order to remedy the deterioration of capital adequacy) was published in Official the prudential and performance Gazette Part I, no. 483 of 13 July 2009. indicators of a credit institution (Romanian legal person) or in order to For a consolidated version of the Government prevent the occurrence of a Emergency Ordinance no. 99/2006 on credit predictable significant deterioration of institutions and capital adequacy, please click nature to jeopardize the ability of the here credit institution to meet the prudential requirements, NBR may: Financial Services Industry Monthly Bulletin 3
    • Regulatory updates Classification of loans and investments and the establishment, adjustment and use of specific Banking credit risk provisions Issuer: National Bank of Romania (“NBR”)  NBR Regulation no. 13/2009 amends NBR Regulation no. 3/2009 regarding Banks’ liquidity classification of credits and placements as well as the set up, regulation and NBR Norm no. 7/2009 amended NBR Norm no. use of specific credit risk provisions. 1/2001 on banks’ liquidity. Norm no. 7/2009 Regulation no. 13/2009 was published was published in the Official Gazette no. in the Official Gazette no. 468/7.07.2009. 537/3.08.2009. For the full contents of Norm no. 7/2009 please For the full contents of Regulation no. click here 14/2009, please click here Interest rates for mandatory reserves  NBR Regulation no. 14/2009 amends the Methodological Norm no. 12/2002  4.90 % per year for the minimum for the application of NBR Regulation mandatory reserves established in lei; no. 5/2002 regarding the classification of credits and placements and the set  2.47 % per year for the minimum up, regulation and use of specific mandatory reserves established in credit risk provisions. Regulation no. Euro; 14/2009 was published in the Official Gazette no. 537/3.08.2009.  0.89 % per year for the minimum mandatory reserves established in US For the full contents of Regulation no. Dollars. 14/2009, please click here The said rates apply for the application period The interest reference rate for August 2009 is 24.06.2009 ‟ 23.07.2009 and were approved by 9.00% per year NBR’s Circular no. 25/2009 published in the Official Gazette no. 489/14.07.2009. The above interest reference rate is provided as per NBR Circular no. 27/2009, published in the For the full contents of Circular no. 25/2009 Official Gazette no. 537/3.08.2009. please click here For the full contents of Circular no. 27/2009, please click here 4
    • Issuer: NBR and the National Securities Such branches shall participate for the difference Commission (“NSC”) between the guarantee thresholds and/or for the deposits not guaranteed by the guarantee Credit risk treatment for credit institutions and scheme in the home member state. investment companies based on internal rating models approach Procedure: Romanian branches of credit institutions authorized in other EU member Joint Order no. 6/43/2009 issued by NBR and states may request to become party to the NSC approves the joint Regulation 12/5/2009, banking deposit guarantee scheme by filing a amending NBR and NSC Regulation no. request with the Fund, accompanied by a 15/20/2006 on credit risk treatment for credit Romanian authorized translation of the institutions and investment firms based on regulations for deposit guarantees in the home internal rating models approach. Order no. member state, applicable to the scheme to 6/43/2009 was published in the Official Gazette which the respective credit institution no. 602/31.08.2009. participates. For the full contents of Order no. 6/43/2009, The Fund shall obtain an agreement in principle please click here for the mutual cooperation from the deposit guarantee scheme to which the credit institution Issuer: Fund for Guaranteeing Banking Deposits participates in the home member state and shall (“FGBD”) communicate to the branch the requirements to be observed as a participant to the Fund, within Transmission of status of the guaranteed 90 days as of the date of filing the request. depositors to FGBD Value of the contribution: For the computation FGBD issued Regulation no. 3/2009 on the of the initial contribution, the Fund shall request transmission to the FGBD of the status of the to the National Bank of Romania the guaranteed depositors. FGBD issued Regulation classification of the branch in one of the no. 3/2009 was published in the Official Gazette categories of credit institutions provided by no. 599/31.08.2009. Government’s Emergency Ordinance no. 99/2006. The amount of the initial contribution For the full contents of Regulation no. 3/2009, shall be the equivalent of 0.5 % of the initial please click here capital required under Romanian law for the category of credit institution the branch has Participation of Romanian branches of EU credit been categorized in. institutions to the FGBD Effects of the renouncing to/withdrawal of the FGBD (or “Fund”) issued Regulation no. quality of participant to the Fund: The deposits 4/31.08.2009 regarding the participation to the attracted by such branches continue to be Fund of the Romanian branches of credit guaranteed by the Fund until the maturity date institutions authorized in other member states of the deposits. The initial contribution shall not (the “Regulation”). be reimbursed. Applicability: the Regulation is applicable to Entry into force: The Regulation entered into Romanian branches of credit institutions force after 5 days as of publication in the Official authorized in other EU member states if the Gazette. The Regulation has been published in officially recognized guarantee scheme in the the Official Gazette no. 599/31.08.2009. home member state to which the credit institution participates provides for a guarantee For the full contents of Regulation no. threshold lower than the one provided by the 4/31.08.2009 please click here applicable Romanian legal provisions (Ordinance no. 39/1996), respectively EUR 50,000 and/or a narrower scope for deposit guarantees. Financial Services Industry Monthly Bulletin 5
    • Insurance Calculation of the solvency margin of the insurer/reinsurer, minimum solvency margin and Issuer: Insurance Supervisory Commission value of the safety fund (“ISC”)  Change of the minimum value of the Amendments regarding the amount and the safety fund payment term of the functioning tax owed by insurance companies and insurance brokers General insurances: The minimum value of the safety fund shall be RON equivalent of EUR 2.3 Starting with July 2009, the amount of the million and RON equivalent of EUR 3.5 million if functioning tax for insurance companies and the insurer subscribes one or more risks set forth insurance brokers is 0.3 %, applied for the under each of the classes 10 to 15 mentioned period for which the tax is owed to the gross under title B «General Insurances» of Appendix insurance premiums cashed in for insurance 1 of Law no. 32/2000. companies, respectively applied to the income realized from the brokerage activity, for Life insurances: The minimum value of the safety insurance brokers. The functioning tax is payable fund shall be RON equivalent of EUR 3.5 million; monthly by the insurance companies and quarterly by the insurance brokers. Reinsurance activity: The minimum value of the safety fund shall be RON equivalent of EUR 3.2 The said amendments are brought by ISC’s million. Order no. 11/2009 published in the Official Gazette no. 512/27.07.2009.  Regulation of the obligation to proceed with a share capital increase if the For the full contents of Order no. 11/2009 please available solvency margin drops below click here the value of the safety fund, namely Norms regarding the Guarantee Fund General insurances/life insurances/ reinsurances: If the available solvency margin drops below the ISC issued Order no. 10/2009 approving the value of safety fund, the Board of Directors and / norms concerning the guarantee fund. Order or the Managing Council are / is immediately no. 10/2009 was published in the Official required, to convene the extraordinary general Gazette no. 516/28.07.2009. meeting of shareholders in view of increasing the company’s share capital. The duration of this For the full contents of Order no. 10/2009, operation (including contribution of the please click here subscribed share capital), shall not exceed 60 calendar days as of the date the shareholders meeting was convened. The above amendments were approved through ISC’s Order no. 12/2009. Order no. 12/2009 was published in the Official Gazette no. 543/5.08.2009 and will become effective as of November 1, 2009. For the full contents of Order no. 12/2009, please click here 6
    • Procedure for supervision of the application of Capital markets international sanctions in the insurance field National Securities Commission (“NSC”) ISC issued Order no. 13/2009 approving the norms setting out the procedure for supervizing Regulation on the exercise of shareholders’ the application of international sanctions in the rights within shareholders meetings field of insurances The regulation is applicable as regards entities, Order no. 13/2009 was published in the Official having their head-office located in Romania and Gazette no. 555/10.08.2009. listed on a regulated market and transposes the provisions of EU Directive no. 2007/36/CE For the full contents of Order no. 13/2009 please regarding the exercising of certain rights of the click here shareholders within the shareholders meetings. The right of establishment and freedom to Main provisions of the Regulation pertain to: provide services in Romania in the insurance field „ Summoning procedure of the ISC issued Order no. 14/2009 approving the shareholders meeting; norms regarding the insurance/reinsurance „ Rights of minority shareholders activity in Romania based on the right of (representing at least 5% of the share establishment and freedom to provide services. capital) to request supplementing the agenda Order no. 14/2009 was published in the Official „ Reference date Gazette no. 569/14.08.2009. „ Provisions related to the participation of the shareholders within the For the full content of Order no. 14/2009, please shareholders meeting and voting click here through electronic means „ Appointment of representatives ISC issued Order no. 15/2009 approving the norms regarding the right of establishment and Order of the Romanian Securities Commission freedom to provide services on the Romanian no. 44/2009 for the approval of Regulation no. territory by insurance/reinsurance agents, 6/2009 regarding the exercise of the authorized and/or registered by a competent shareholders’ rights within shareholders authority from a member state of the European meetings was published in the Official Gazette Union. Order no. 15/2009 was published in the no. 588/25.08.2009. For the full contents of Official Gazette no. 569/14.08.2009. Regulation no. 6/2009 please click here. For the full contents of Order no. 15/2009, please click here Insurers authorization ISC issued Order no. 16/2009 approving the norms for insurers’ authorization. Order no. 16/2009 was published in the Official Gazette no. 569/14.08.2009. For the full contents of Order no. 16/2009, please click here Financial Services Industry Monthly Bulletin 7
    • Technical provisions on risk management New rules on credit rating agencies, bank capital requirements, cross-border payments and e- Directive no. 2009/83/EC of 27 July 2009 money as well as a programme to support the (“Directive”) amends certain Annexes of effectiveness of EU policies Directive 2006/48/EC of the European Parliament and of the Council as regards technical The Council of the European Union announced provisions concerning risk management. on 27th of July 2009 that it has adopted new rules on credit rating agencies, bank capital The Directive provides for the Member States’ requirements, cross-border payments and e- obligation to adopt and publish, by 31 October money as well as a program to support the 2010 the latest, legislative measures and other effectiveness of EU policies. administrative provisions necessary to comply with the Directive. These national measures and Please click here for the full contents of the press provisions must apply from 31 December 2010. release issued by the Council. For the full contents of Directive no. 2009/83/EC, EU Council’s decision regarding the existence of please click here an excessive deficit in Romania EU Council issued on 7 of July 2009 decision no. 2009/590/EC regarding the existence of an excessive deficit in Romania. The said decision was published in the Official Journal of the European Union no. 202/4.08.2009. For the full content of the said decision, please click here 8
    • Guidelines for notifications of free provision of Notification of setting up branches services and setting up branches by credit institutions within another member state of the Contents of notification for the set up of a EU/EEA adopted by the Committee of European branch in another member state: Banking Supervisors  name, head office address and branch The Committee of European Banking Supervisors address of the credit institution and the (“CEBS”) adopted on August 27th, 2009 the address in the host member state from Guidelines for passport notifications (“the which documents may be obtained (if Guidelines”) aimed to provide a framework for different from the branch address); the co-operation between competent authorities  details of the accredited compensation with regard to the notification of free provision scheme of which the institution is a of services and setting up branches by credit member; institutions within another member state of the  activities to be provided in the host EU/EEA. member state (as listed in Annex I of the Banking Directive); Applicability - the Guidelines apply to banking  investment services and/or activities as well supervisory authorities in the EU and EEA states as ancillary services to be provided in the (i.e. authorities qualifying as “competent host member state (as listed in Annex 1 of authorities” for the purposes of Directive the MiFI Directive, if applicable); 2006/48/EC (the Banking Directive) and Directive  identification of management of the 2004/39/EC (the MiFI Directive) (together, “the branch; Directives”).  'programme of operations' including at least the following information: business Concept - the Guidelines provide for: plan, organizational structure, systems and controls, financial information and  cooperation between competent investment activities (if applicable) (as set authorities; out in detail in the Schedule attached to  harmonized passport notifications based Annex 2 of the Guidelines). on common templates; Timing: the notification must be transmitted by  mutual assistance between competent the competent authority of the home member authorities; state to the competent authority of the host member state within three months of its receipt.  confidentiality in the exchange of The competent authority of the host member information between competent state should acknowledge receipt of the authorities. notification in a timely manner, but no later within than two months from its receipt. Contents - the Guidelines include the contents of the notifications for both setting up branches and free provision of services into another member state and the circulation of such notifications between the competent authorities. Template notifications are included in the appendixes to the Guidelines. Financial Services Industry Monthly Bulletin 9
    • Notification of changes to existing notifications: Timing: the competent authority of the home the credit institutions shall give written notice of member state shall communicate the above any change in respect of the establishment of a information to the competent authority in the branch to the competent authority of the home host member state as soon as is practicable, but and host member state at least one month no later than one month from its receipt from before implementing the change. The the credit institution. The competent authority of competent authority in the home member state, the host member state should acknowledge once its accepts the change, shall notify the receipt of the notification in a timely manner. change to the competent authority in the host member state no later than within one month as Notification of changes to existing notifications: of receipt of the notification from the credit although not specifically required under the institution. Directives, any changes to an existing services notification should also be communicated as Notification of free provision of services above between home and host competent authorities. Contents of notification for the free provision of services: For the full contents of the Guidelines, please click here  name and head office address of the credit institution;  activities to be provided into the host member state (as listed in Annex 1 of the Banking Directive);  investment services and/or activities as well as ancillary services to be provided into the host member state (as listed in Annex 1 of MiFI Directive). 10
    • 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 9
    • 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
    • “Deloitte” is the brand under which tens of thousands of dedicated professionals in independent firms throughout the world collaborate to provide audit, consulting, financial advisory, risk management, and tax services to selected clients. These firms are members of Deloitte Touche Tohmatsu, a Swiss Verein (“DTT”). Each member firm provides services in a particular geographic area and is subject to the laws and professional regulations of the particular country or countries in which it operates. DTT helps coordinate the activities of the member firms but does not itself provide services to clients. DTT and the member firms are separate and distinct legal entities, which cannot obligate the other entities. DTT and each DTT member firm are only liable for their own acts or omissions, and not those of each other. Each DTT member firm is structured differently in accordance with national laws, regulations, customary practice, and other factors, and may secure the provision of professional services in their territories through subsidiaries, affiliates, and/or other entities. Deloitte Central Europe is a regional organization of entities organized under the umbrella of Deloitte Central Europe Holdings Limited, the member firm in Central Europe of Deloitte Touche Tohmatsu. Services are provided by the subsidiaries and affiliates of Deloitte Central Europe Holdings Limited, which are separate and independent legal entities. The subsidiaries and affiliates of Deloitte Central Europe Holdings Limited are among the region’s leading professional services firms, providing services through more than 4,000 people in more than 30 offices in 17 countries. In Romania, the services are provided by Deloitte Audit S.R.L., Deloitte Tax S.R.L., Deloitte Consultanta S.R.L. and Reff & Associates SCA (jointly referred to as “Deloitte Romania”) which are affiliates of Deloitte Central Europe Holdings Limited. Deloitte Romania is one of the leading professional services organizations in the country providing services in five professional areas-audit, tax, consulting, financial advisory and risk services through more than 400 national and specialized expatriate professionals. 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. A member firm of Deloitte Touche Tohmatsu. © 2009 Deloitte Romania. All rights reserved