July – August 2009

Domestic 4

Legislative changes 4

Regulatory updates 5

International 8

Financial Services Industry Monthly Bulletin 3

Legislative changes

Amendments to the Banking Law

I. Qualified participations

Interdiction to purchase new shares

issued by the credit institution

(Romanian legal person) for the

holders of qualified participations in a

credit institution who had their voting

rights suspended and which no longer

meet the requirements of the law

regarding the quality of the

shareholding of a credit institution or

exercise on it an influence that may

jeopardize the prudent administration

of the credit institution;

The shareholders meetings of the

credit institution may be held by the

shareholders whose voting rights are

not suspended; the majority

requirements for validly taking

shareholders resolutions shall apply to

the total share capital held by those

shareholders;

Obligation to sell the shares acquired

without taking into account the

objection raised by National Bank of

Romania (“NBR”) within 3 months as

of communication of the objection.

II. Remedy in case of prudential indicators’

deterioration

In order to remedy the deterioration of

the prudential and performance

indicators of a credit institution

(Romanian legal person) or in order to

prevent the occurrence of a

predictable significant deterioration of

nature to jeopardize the ability of the

credit institution to meet the

prudential requirements, NBR may:

o request the persons owning

qualified participations to

financially support the credit

institution by increasing the share

capital or by granting eligible

loans to be included in the

calculation of the own funds,

according to the specific

regulations issued by NBR and/or

by swapping such loans into

shares;

o forbid the total or partial

distribution of profits through

other destinations than those

provided by law as being

mandatory, until NBR attests the

remediation of the credits

institution’s financial standing

III. Employment agreements concluded with

directors/members of the directorate

The employment agreements of the

persons designated to exercise the

mandate of director/member of the

directorate must be terminated within

6 months after the entry into force of

this law. Otherwise, the employment

agreements shall be terminated by law

at the end of the 6-month period.

Law no. 270 of 7 July 2009 (for the approval of

the Government Emergency Ordinance no.

25/2009 for amending and completing the

Banking Law - Government Emergency

Ordinance no. 99/2006 on credit institutions and

capital adequacy) was published in Official

Gazette Part I, no. 483 of 13 July 2009.

For a consolidated version of the Government

Emergency Ordinance no. 99/2006 on credit

institutions and capital adequacy, please click

here

4

Regulatory updates

Banking

Issuer: National Bank of Romania (“NBR”)

Banks’ liquidity

NBR Norm no. 7/2009 amended NBR Norm no.

1/2001 on banks’ liquidity. Norm no. 7/2009

was published in the Official Gazette no.

468/7.07.2009.

For the full contents of Norm no. 7/2009 please

click here

Interest rates for mandatory reserves

4.90 % per year for the minimum

mandatory reserves established in lei;

2.47 % per year for the minimum

mandatory reserves established in

Euro;

0.89 % per year for the minimum

mandatory reserves established in US

Dollars.

The said rates apply for the application period

24.06.2009 ‟ 23.07.2009 and were approved by

NBR’s Circular no. 25/2009 published in the

Official Gazette no. 489/14.07.2009.

For the full contents of Circular no. 25/2009

please click here

Classification of loans and investments and the

establishment, adjustment and use of specific

credit risk provisions

NBR Regulation no. 13/2009 amends

NBR Regulation no. 3/2009 regarding

classification of credits and placements

as well as the set up, regulation and

use of specific credit risk provisions.

Regulation no. 13/2009 was published

in the Official Gazette no.

537/3.08.2009.

For the full contents of Regulation no.

14/2009, please click here

NBR Regulation no. 14/2009 amends

the Methodological Norm no. 12/2002

for the application of NBR Regulation

no. 5/2002 regarding the classification

of credits and placements and the set

up, regulation and use of specific

credit risk provisions. Regulation no.

14/2009 was published in the Official

Gazette no. 537/3.08.2009.

For the full contents of Regulation no.

14/2009, please click here

The interest reference rate for August 2009 is

9.00% per year

The above interest reference rate is provided as

per NBR Circular no. 27/2009, published in the

Official Gazette no. 537/3.08.2009.

For the full contents of Circular no. 27/2009,

please click here

Financial Services Industry Monthly Bulletin 5

Issuer: NBR and the National Securities

Commission (“NSC”)

Credit risk treatment for credit institutions and

investment companies based on internal rating

models approach

Joint Order no. 6/43/2009 issued by NBR and

NSC approves the joint Regulation 12/5/2009,

amending NBR and NSC Regulation no.

15/20/2006 on credit risk treatment for credit

institutions and investment firms based on

internal rating models approach. Order no.

6/43/2009 was published in the Official Gazette

no. 602/31.08.2009.

For the full contents of Order no. 6/43/2009,

please click here

Issuer: Fund for Guaranteeing Banking Deposits

(“FGBD”)

Transmission of status of the guaranteed

depositors to FGBD

FGBD issued Regulation no. 3/2009 on the

transmission to the FGBD of the status of the

guaranteed depositors. FGBD issued Regulation

no. 3/2009 was published in the Official Gazette

no. 599/31.08.2009.

For the full contents of Regulation no. 3/2009,

please click here

Participation of Romanian branches of EU credit

institutions to the FGBD

FGBD (or “Fund”) issued Regulation no.

4/31.08.2009 regarding the participation to the

Fund of the Romanian branches of credit

institutions authorized in other member states

(the “Regulation”).

Applicability: the Regulation is applicable to

Romanian branches of credit institutions

authorized in other EU member states if the

officially recognized guarantee scheme in the

home member state to which the credit

institution participates provides for a guarantee

threshold lower than the one provided by the

applicable Romanian legal provisions (Ordinance

no. 39/1996), respectively EUR 50,000 and/or a

narrower scope for deposit guarantees.

Such branches shall participate for the difference

between the guarantee thresholds and/or for the

deposits not guaranteed by the guarantee

scheme in the home member state.

Procedure: Romanian branches of credit

institutions authorized in other EU member

states may request to become party to the

banking deposit guarantee scheme by filing a

request with the Fund, accompanied by a

Romanian authorized translation of the

regulations for deposit guarantees in the home

member state, applicable to the scheme to

which the respective credit institution

participates.

The Fund shall obtain an agreement in principle

for the mutual cooperation from the deposit

guarantee scheme to which the credit institution

participates in the home member state and shall

communicate to the branch the requirements to

be observed as a participant to the Fund, within

90 days as of the date of filing the request.

Value of the contribution: For the computation

of the initial contribution, the Fund shall request

to the National Bank of Romania the

classification of the branch in one of the

categories of credit institutions provided by

Government’s Emergency Ordinance no.

99/2006. The amount of the initial contribution

shall be the equivalent of 0.5 % of the initial

capital required under Romanian law for the

category of credit institution the branch has

been categorized in.

Effects of the renouncing to/withdrawal of the

quality of participant to the Fund: The deposits

attracted by such branches continue to be

guaranteed by the Fund until the maturity date

of the deposits. The initial contribution shall not

be reimbursed.

Entry into force: The Regulation entered into

force after 5 days as of publication in the Official

Gazette. The Regulation has been published in

the Official Gazette no. 599/31.08.2009.

For the full contents of Regulation no.

4/31.08.2009 please click here

6

Calculation of the solvency margin of the

insurer/reinsurer, minimum solvency margin and

value of the safety fund

Change of the minimum value of the

safety fund

General insurances: The minimum value of the

safety fund shall be RON equivalent of EUR 2.3

million and RON equivalent of EUR 3.5 million if

the insurer subscribes one or more risks set forth

under each of the classes 10 to 15 mentioned

under title B «General Insurances» of Appendix

1 of Law no. 32/2000.

Life insurances: The minimum value of the safety

fund shall be RON equivalent of EUR 3.5 million;

Reinsurance activity: The minimum value of the

safety fund shall be RON equivalent of EUR 3.2

million.

Regulation of the obligation to proceed

with a share capital increase if the

available solvency margin drops below

the value of the safety fund, namely

General insurances/life insurances/ reinsurances:

If the available solvency margin drops below the

value of safety fund, the Board of Directors and /

or the Managing Council are / is immediately

required, to convene the extraordinary general

meeting of shareholders in view of increasing

the company’s share capital. The duration of this

operation (including contribution of the

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

Insurance

Issuer: Insurance Supervisory Commission

(“ISC”)

Amendments regarding the amount and the

payment term of the functioning tax owed by

insurance companies and insurance brokers

Starting with July 2009, the amount of the

functioning tax for insurance companies and

insurance brokers is 0.3 %, applied for the

period for which the tax is owed to the gross

insurance premiums cashed in for insurance

companies, respectively applied to the income

realized from the brokerage activity, for

insurance brokers. The functioning tax is payable

monthly by the insurance companies and

quarterly by the insurance brokers.

The said amendments are brought by ISC’s

Order no. 11/2009 published in the Official

Gazette no. 512/27.07.2009.

For the full contents of Order no. 11/2009 please

click here

Norms regarding the Guarantee Fund

ISC issued Order no. 10/2009 approving the

norms concerning the guarantee fund. Order

no. 10/2009 was published in the Official

Gazette no. 516/28.07.2009.

For the full contents of Order no. 10/2009,

please click here

Financial Services Industry Monthly Bulletin 7

Procedure for supervision of the application of

international sanctions in the insurance field

ISC issued Order no. 13/2009 approving the

norms setting out the procedure for supervizing

the application of international sanctions in the

field of insurances

Order no. 13/2009 was published in the Official

Gazette no. 555/10.08.2009.

For the full contents of Order no. 13/2009 please

click here

The right of establishment and freedom to

provide services in Romania in the insurance field

ISC issued Order no. 14/2009 approving the

norms regarding the insurance/reinsurance

activity in Romania based on the right of

establishment and freedom to provide services.

Order no. 14/2009 was published in the Official

Gazette no. 569/14.08.2009.

For the full content of Order no. 14/2009, please

click here

ISC issued Order no. 15/2009 approving the

norms regarding the right of establishment and

freedom to provide services on the Romanian

territory by insurance/reinsurance agents,

authorized and/or registered by a competent

authority from a member state of the European

Union. Order no. 15/2009 was published in the

Official Gazette no. 569/14.08.2009.

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

Capital markets

National Securities Commission (“NSC”)

Regulation on the exercise of shareholders’

rights within shareholders meetings

The regulation is applicable as regards entities,

having their head-office located in Romania and

listed on a regulated market and transposes the

provisions of EU Directive no. 2007/36/CE

regarding the exercising of certain rights of the

shareholders within the shareholders meetings.

Main provisions of the Regulation pertain to:

„ Summoning procedure of the

shareholders meeting;

„ Rights of minority shareholders

(representing at least 5% of the share

capital) to request supplementing the

agenda

„ Reference date

„ Provisions related to the participation

of the shareholders within the

shareholders meeting and voting

through electronic means

„ Appointment of representatives

Order of the Romanian Securities Commission

no. 44/2009 for the approval of Regulation no.

6/2009 regarding the exercise of the

shareholders’ rights within shareholders

meetings was published in the Official Gazette

no. 588/25.08.2009. For the full contents of

Regulation no. 6/2009 please click here.

8

Technical provisions on risk management

Directive no. 2009/83/EC of 27 July 2009

(“Directive”) amends certain Annexes of

Directive 2006/48/EC of the European Parliament

and of the Council as regards technical

provisions concerning risk management.

The Directive provides for the Member States’

obligation to adopt and publish, by 31 October

2010 the latest, legislative measures and other

administrative provisions necessary to comply

with the Directive. These national measures and

provisions must apply from 31 December 2010.

For the full contents of Directive no. 2009/83/EC,

please click here

New rules on credit rating agencies, bank capital

requirements, cross-border payments and e-

money as well as a programme to support the

effectiveness of EU policies

The Council of the European Union announced

on 27th of July 2009 that it has adopted new

rules on credit rating agencies, bank capital

requirements, cross-border payments and e-

money as well as a program to support the

effectiveness of EU policies.

Please click here for the full contents of the press

release issued by the Council.

EU Council’s decision regarding the existence of

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

Financial Services Industry Monthly Bulletin 9

Notification of setting up branches

Contents of notification for the set up of a

branch in another member state:

name, head office address and branch

address of the credit institution and the

address in the host member state from

which documents may be obtained (if

different from the branch address);

details of the accredited compensation

scheme of which the institution is a

member;

activities to be provided in the host

member state (as listed in Annex I of the

Banking Directive);

investment services and/or activities as well

as ancillary services to be provided in the

host member state (as listed in Annex 1 of

the MiFI Directive, if applicable);

identification of management of the

branch;

'programme of operations' including at

least the following information: business

plan, organizational structure, systems and

controls, financial information and

investment activities (if applicable) (as set

out in detail in the Schedule attached to

Annex 2 of the Guidelines).

Timing: the notification must be transmitted by

the competent authority of the home member

state to the competent authority of the host

member state within three months of its receipt.

The competent authority of the host member

state should acknowledge receipt of the

notification in a timely manner, but no later

within than two months from its receipt.

Guidelines for notifications of free provision of

services and setting up branches by credit

institutions within another member state of the

EU/EEA adopted by the Committee of European

Banking Supervisors

The Committee of European Banking Supervisors

(“CEBS”) adopted on August 27th, 2009 the

Guidelines for passport notifications (“the

Guidelines”) aimed to provide a framework for

the co-operation between competent authorities

with regard to the notification of free provision

of services and setting up branches by credit

institutions within another member state of the

EU/EEA.

Applicability - the Guidelines apply to banking

supervisory authorities in the EU and EEA states

(i.e. authorities qualifying as “competent

authorities” for the purposes of Directive

2006/48/EC (the Banking Directive) and Directive

2004/39/EC (the MiFI Directive) (together, “the

Directives”).

Concept - the Guidelines provide for:

cooperation between competent

authorities;

harmonized passport notifications based

on common templates;

mutual assistance between competent

authorities;

confidentiality in the exchange of

information between competent

authorities.

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.

10

Timing: the competent authority of the home

member state shall communicate the above

information to the competent authority in the

host member state as soon as is practicable, but

no later than one month from its receipt from

the credit institution. The competent authority of

the host member state should acknowledge

receipt of the notification in a timely manner.

Notification of changes to existing notifications:

although not specifically required under the

Directives, any changes to an existing services

notification should also be communicated as

above between home and host competent

authorities.

For the full contents of the Guidelines, please

click here

Notification of changes to existing notifications:

the credit institutions shall give written notice of

any change in respect of the establishment of a

branch to the competent authority of the home

and host member state at least one month

before implementing the change. The

competent authority in the home member state,

once its accepts the change, shall notify the

change to the competent authority in the host

member state no later than within one month as

of receipt of the notification from the credit

institution.

Notification of free provision of services

Contents of notification for the free provision of

services:

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).

Financial Services Industry Monthly Bulletin 9

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In the financial services sector, Reff & Associates provides the full range of services

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