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Banking Act (Cap. 371) European Passport Rights For Credit Institutions Regulations, 2004 (L.N. 88 Of 2004 )

BANKING ACT (CAP. 371)
European Passport Rights for Credit Institutions
Regulations, 2004
IN exercise of the powers conferred by subarticle (6) of article
5 of the Banking Act, the Minister of Finance and Economic Affairs acting on the advice of the Malta Financial Services Authority, as the competent authority appointed for the purposes of the Act, has made the following regulations >-

Citation and commencement.

1. (1) The title of these regulations is the European Passport
Rights for Credit Institutions Regulations, 2004.
2004.
(2) These regulations shall come into force on the 1st May,

Interpretation.

2. In these regulations, unless the context otherwise requires - “the Act” means the Banking Act<
“banking directives” means the banking directives within the meaning of subarticle (2) of article 4 of the Act<
“branch” shall mean a place of business which forms a legally dependant part of a credit institution and which carries out directly all or some of the transactions inherent in the business of credit institutions< any number of places of business
set up in the same Member State or EEA State by a credit institution with headquarters in another Member State or EEA State shall be regarded as a single branch<
“Commission” means the Commission of the European
Communities<
“competent authority” means the Malta Financial Services
Authority appointed under subarticle (1) of article 2 of the Act<
“credit institution” shall mean an undertaking whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account<
“Directive” means Council Directive 2000#12#EC of 20
March 2000 relating to the taking up and pursuit of the business of credit institutions as amended from time to time<
“EEA State” means a State which is a contracting party to the agreement on the European Economic Area signed at Oporto on the 2nd May, 1992 as amended by the protocol signed at Brussels on 17th March 1993 and as amended from time to
time<
“European credit institution” means a credit institution as defined in Article 1 of the Directive authorised by its foreign authority within the meaning of Article 4 of the Directive or authorised by a foreign authority in an EEA State<
“European right” means the entitlement of a person to establish a branch, or provide services, in a Member State or EEA State other than that in which it has its head office –
(a) in accordance with the Treaty as applied in the
Member States or EEA States< and
(b) subject to the requirements of the Directive and subject to any rules, regulations or banking directives made under the Act implementing such requirements<
“foreign authority” means the body or bodies designated by a Member State or EEA State>
(a) to act as a supervisory authority in relation to the European credit institution concerned in that Member State or EEA State within the meaning of the Directive, or
(b) to carry out the duties provided for in the Directive in relation to a Maltese credit institution exercising or proposing to exercise a European right<
“home Member State or EEA State” means the Member State or EEA State in which the registered office of a credit institution is situated or, if under its national law it has no registered office, the Member State or EEA State in which its head office is situated<
“host Member State or EEA State” means the Member State or EEA State where a Maltese credit institution exercises or proposes to exercise European rights<
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Exercise of passport rights by European credit institutions - establishment.

“Maltese credit institution” means a person licensed in terms of the Act, whose head office is in Malta and who is entitled to carry on an activity in a Member State or EEA State other than Malta in exercise of a European right<
“Maltese rules” means rules -
(a) made in accordance with the Directive< and
(b) which are the responsibility of the competent authority (as to implementation, supervision and compliance) in accordance with the Directive and subject to the provisions of the Act and any rules, regulations and
banking directives made thereunder<
“Member State” means a Member State of the European
Communities<
“supervisory authority” means the foreign authority in a
Member State or EEA State<
“Treaty” means Treaty of Rome signed in 1957, establishing the European Economic Community as subsequently amended<
“Tribunal” means the Financial Services Tribunal established under the Malta Financial Services Authority Act.
Part I – Exercise of Passport Rights by European credit institutions
3. (1) A European credit institution which is seeking to establish a branch in Malta in exercise of a European right, shall satisfy the establishment conditions specified in subregulation (2) of this regulation and shall be exempt from the provisions of subarticle (1) of article 5 of the Act.
(2) The establishment conditions for the purposes of this regulation are that -
(a) the European credit institution has given the supervisory authority in its home Member State or EEA State a notice containing the requisite details of that State in terms of Article 20 of the Directive<
(b) the competent authority has received a consent notice in accordance with paragraph (c), from the supervisory authority of such European credit institution stating that it has given its consent to the credit institution to establish a branch in Malta< and
(c) the consent notice shall –
(i) be given in accordance with the Directive<
(ii) certify that the European credit institution is authorised to act as a credit institution by the foreign authority<
(iii) identify the activities to which the consent relates, which activities are included in the Schedule to these regulations<
(iv) contain the information stated in the notice of the European credit institution referred to in paragraph (a) above<
(v) indicate the amount of own funds and solvency ratio or capital adequacy ratio, as the case may be, of the European credit institution< and
(vi) contain details of any deposit guarantee scheme which is intended to protect the branch’s clients.
(3) The supervisory authority of the European credit
institution shall inform the competent authority of any change in the details of a deposit guarantee scheme referred to in subregulation (2) of this regulation.
(4) A branch of a European credit institution shall not commence business unless -
(a) it has been informed by the competent authority of any applicable provisions and that it may establish the branch< or
(b) two months have elapsed from the date when the competent authority received the consent notice.
(5) In the event of a change in any of the particulars communicated in accordance with subregulation (2) of this
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Exercise of passport rights by European credit institutions - services.

regulation, the European credit institution shall give written notice of that change to the competent authority and its supervisory authority at least one month before implementing the change.
(6) For the purposes of this regulation “applicable provisions” means the Maltese rules with which the European credit institution is required to comply when carrying on an activity identified in the consent notice through a branch in Malta.
4. (1) A European credit institution which is seeking to provide services in Malta in exercise of a European right shall satisfy the service conditions specified in subregulation (2) of this regulation and shall accordingly be exempt from the provisions of subarticle (1) of article 5 of the Act.
(2) The service conditions for the purposes of this regulation are that -
(a) the European credit institution has given its supervisory authority a notice of intention to provide services in Malta in terms of Article 21 of the Directive< and
(b) the competent authority has received a notice of such intention from the supervisory authority of the European credit institution.
(3) When the competent authority has received such a notice and has been informed of the intention of the European credit institution to provide services in Malta, it shall, where appropriate -
(a) prepare for the supervision of the European credit institution< and
(b) notify the European credit institution of the applicable provisions, if any.
(4) In the event of a change of any of the particulars provided by the European credit institution in the notice of intention, the European credit institution shall give written notice of that change to the competent authority and its supervisory authority before
implementing such change.
(5) For the purposes of this regulation “applicable provisions” means the Maltese rules which the European credit institution is required to comply when carrying on an activity
identified in the notice from the supervisory authority of the European credit institution by providing services in Malta.
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5. (1) The competent authority may, for statistical purposes,Reporting to the
require a European credit institution which has established a branchcompetent
in Malta in terms of these regulations, to report periodically on its activities in Malta.
(2) In discharging its responsibilities within the meaning of Article 27 of the Directive, the competent authority may require such a European credit institution to provide the same particulars as Maltese credit institutions for that purpose.
(3) The competent authority may require a European credit institution providing services in Malta, to provide the information necessary for the monitoring of its compliance with the standards set by the competent authority to the extent permitted by the Directive.
6. A European credit institution shall not be prohibited fromAdvertising.
advertising its services through any available means of communication in Malta provided that it complies with any applicable laws and with any relevant banking directives.
7. (1) Where a European credit institution carries on businessOn-site
in Malta through a branch in exercise of a European right, itsverifications.
supervisory authority may, after informing the competent authority, either directly or through an intermediary it appoints for the purpose, carry out on-site verification of the information within the meaning of Article 28 as referred to in subarticle (1) of Article 29 of the Directive.
(2) The foreign authority may also ask the competent authority to have such on-site verification carried out. The competent authority shall, within the framework of its powers under the law,
act upon the request by carrying out the verification itself or by
allowing the foreign authority to carry it out or by allowing auditors or experts to do so.
(3) This regulation shall not affect the right of the competent authority, in discharging its responsibilities under the Directive, to carry out on-site verifications of branches established in Malta.
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Exercise of passport rights by Maltese credit institutions - Establishment.

PART II – Exercise of Passport Rights by Maltese credit institutions
8. (1) A Maltese credit institution may exercise a European right to establish a branch if it satisfies the requirements set out in the following provisions of this regulation.
(2) The Maltese credit institution shall give the competent authority a notice of intention to establish a branch which shall contain -
(a) the Member State or EEA State within the territory of which the credit institution plans to establish a branch<
(b) a programme of operations identifying the activities which it seeks to carry on through the branch<
(c) the address of the proposed branch from where documents may be obtained<
(d) the proposed organizational structure of the branch and the names of the proposed managers< and
(e) such other information as may be specified by means of banking directives.
(3) Without prejudice to subregulations (6) and (8) of
this regulation the competent authority shall give a consent notice within the terms of subregulation (4) of this regulation to the foreign authority within three months of receiving a complete notice of
intention.
(4) The consent notice shall –
(a) be given in accordance with the Directive<
(b) certify that the Maltese credit institution is authorised to act as such a credit institution by the competent authority<
(c) identify the activities to which consent relates, which activities are included in the Schedule to these regulations<
(d) contain the information stated in the notice of intention given by the Maltese credit institution<
(e) indicate the amount of own funds and solvency ratio or capital adequacy ratio, as the case may be, of the Maltese credit institution<
(f) contain details of any deposit guarantee scheme which is intended to protect the branch’s clients< and
(g) include such other information as may be established by means of banking directives.
(5) The foreign authority shall be informed by the competent authority of any change in the details of a deposit guarantee scheme referred to in paragraph (f) of subregulation (4) of this regulation.
(6) If the European right of the Maltese credit institution derives from the Directive and the requirements specified in subregulation (2) of this regulation are satisfied, the competent authority shall issue a consent notice to the foreign authority unless it has reason to doubt the adequacy of the administrative structure or the financial situation of the Maltese credit institution, taking into account the activities envisaged>
Provided that in the event of change in any of the particulars referred to in this subregulation the competent authority shall inform the foreign authority accordingly.
(7) If the competent authority decides to refuse to give a consent notice -
(a) it shall, within three months from the date when it received a complete notice of intention, give the person who gave that notice the reasons for its decision in writing< and
(b) that person may appeal to the Tribunal and the provisions of article 10 of the Act shall applymutatis mutandis.
(8) A branch of the Maltese credit institution shall not commence business unless -
(a) the foreign authority notifies the Maltese credit institution of the applicable provisions< or
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Exercise of passport rights by Maltese credit institutions - services.

(b) two months have elapsed from the date on which the competent authority has given the consent notice without receipt of any communication from the foreign authority.
(9) In the event of change in any of the particulars communicated in accordance with subregulation (2) of this regulation, the Maltese credit institution shall give written notice of that change to the competent authority and the foreign authority at least one month before implementing the change.
(10) The prudential supervision of a Maltese credit
institution shall be the responsibility of the competent authority whether the credit institution establishes a branch or provides services in another Member State or EEA State or not, without prejudice to
those provisions of the Directive which give responsibility to the foreign authority.
(11) In this regulation, “applicable provisions” means the host state rules with which the Maltese credit institution will be required to comply when conducting business through the proposed branch in the Member State or EEA State concerned.
(12) In this regulation, “host state rules” means rules - (a) made in accordance with the Directive< and
(b) which are the responsibility of the foreign authority of the Member State or EEA State concerned (as to
implementation, supervision and compliance) in accordance
with the Directive.
(13) The competent authority shall inform the Commission of the number and type of cases in which there have been refusals in terms of subregulation (7) of this regulation.
9. (1) A Maltese credit institution may not exercise a European right to provide services unless the Maltese credit institution has given the competent authority, a notice of its intention to provide services as specified in subregulation (2) of this regulation.
(2) For the purposes of this regulation, a notice of intention shall -
(a) identify the services which it intends to provide together with a programme of operations<
(b) sets out the Member State or EEA State in which it intends to operate< and
(c) includes such other information as may be specified in banking directives.
(3) If the European right of the Maltese credit institution derives from the Directive, the competent authority shall, within one month of receiving a notice of intention, send a copy of it to the foreign authority. It shall also communicate details of any applicable deposit guarantee scheme intended to protect depositors.
(4) When the competent authority sends the copy under subregulation (3) or gives a consent notice, it shall give written notice to the Maltese credit institution concerned. The Maltese credit institution may then start to provide the services in question in the host Member State or EEA State>
Provided that where appropriate, the foreign authority shall, on receipt of the information from the competent authority, indicate to the Maltese credit institution the conditions, with which in the interest of the general good, the provider of the services in question shall comply in the host Member State or EEA State.
(5) In the event of change of any of the particulars provided by the Maltese credit institution in the notice of intention, the Maltese credit institution shall give written notice of that change to the competent authority and the foreign authority before
implementing such change.
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10. A European right shall entitle a Maltese credit institutionRight of Maltese
to provide one or more services.
Part III – Contraventions by European credit institutions

credit institutions.

11. (1) Where the competent authority ascertains that aContraventions by
European credit institution which has a branch or provides servicesEuropean credit
in Malta>
(a) has contravened or is likely to contravene the Maltese rules or any provisions of the Act or any rules or regulations made thereunder< or
(b) in purported compliance with any such provision, has furnished it with false, inaccurate or misleading information<
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the competent authority shall in writing require the credit institution concerned to remedy and rectify its position.
(2) If the European credit institution concerned fails to take the necessary steps to remedy and rectify its position, the competent authority shall inform the foreign authority of such failure.
(3) If despite the actions taken by the foreign authority or because such actions prove inadequate or are not available in Malta, the European credit institution persists in violating the legal or regulatory provisions referred to in subregulation (1) of this
regulation in force in Malta, the competent authority may, after informing the foreign authority, take appropriate measures to prevent or to penalize further irregularities and, in so far as necessary, to prevent that European credit institution from initiating any further transactions in Malta.
(4) Any measure adopted pursuant to this regulation shall
be communicated to the European credit institution concerned in writing, together with reasons justifying such measures and shall be
subject to a right of appeal to the Tribunal and the provisions of article 10 of the Act shall applymutatis mutandis.
(5) Notwithstanding the provisions of this regulation, the
competent authority may, in exceptional circumstances, take any precautionary measures necessary to protect the interests of depositors and others for whom services are provided. The competent
authority shall inform the Commission and the foreign authority concerned of such measures at the earliest opportunity.
(6) In the event of withdrawal of authorisation by the foreign authority, the competent authority shall be informed by the said foreign authority and shall take appropriate measures to prevent the European credit institution concerned from initiating any further transactions in Malta and to safeguard the depositor’s interests.
(7) A prohibition under this regulation may be - (a) absolute< or
(b) limited, that is, imposed for a specified event or until specified conditions are complied with<
and any period, event or conditions specified in the case of a limited prohibition may be varied by the competent authority and any such notice shall take effect on such date as is specified in the notice.
PART IV – Companies other than credit institutions
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12. (1) A company, other than a credit institution, theCompanies other than
principal activity of which is to acquire holdings or to carry on onecredit institutions.
or more of the activities listed in points 2 to 12 of Annex I to the
Directive, incorporated in the Schedule to these regulations, shall enjoy a European right in terms of these regulations provided the following conditions are fulfilled>
(a) the company is a subsidiary of a credit institution or the jointly-owned subsidiary of two or more credit institutions<
(b) the memorandum and articles of association of the company permit the carrying on of those activities<
(c) the parent undertaking or undertakings of the subsidiary are authorised as credit institutions in the Member State or EEA State by the law of which the subsidiary is governed<
(d) the activities in question are actually carried on within the territory of the same Member State or EEA State<
(e) the parent undertaking or undertakings of the subsidiary hold 90 per cent or more of the voting rights attaching to shares in the capital of the subsidiary<
(f) the parent undertaking or undertakings of the subsidiary satisfy the competent authority or the foreign authority as the case may be, regarding the prudent management of the subsidiary and have declared, with the consent of the
relevant foreign authority, that they jointly and severally guarantee the commitments entered into by the subsidiary<
(g) the subsidiary is effectively included, for the activities in question in particular, in the consolidated supervision of the parent undertaking, or of each of the parent undertakings, in accordance with Articles 52 to 56 of the Directive, in particular for the calculation of the solvency ratio, for the control of large exposures and for purposes of the limitation of holdings provided for in Article 51 of the Directive.
(2) Compliance with the conditions referred to in the foregoing subregulation shall be verified by the foreign authority or by the competent authority if it is the home Member State or EEA State, as the case may be, and the latter must supply the subsidiary
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Applicability provisions.

with a certificate of compliance which must form part of the consent notice and notification referred to in paragraph (b) of subregulation (2) of regulation 3, paragraph (b) of subregulation (2) of regulation
4, subregulation (3) of regulation 8 and subregulation (3) of regulation 9 of these regulations.
(3) The competent authority or the foreign authority as the case may be in accordance with the foregoing subregulation, shall ensure the supervision of the subsidiary in accordance with subarticle (3) of Article 5 and Articles16, 17, 26, 28, 29, 30 and 32 of the Directive>
Provided that the Articles of the Directive mentioned in this subregulation shall apply mutatis mutandis to subsidiaries and the words “credit institution” therein shall be read as if they were a
reference to “financial institution fulfilling the conditions laid down in Article 19” and references to the word “authorisation” were
references to “memorandum and articles of association”.
(4) The competent authority or the foreign authority as the case may be in accordance with subregulation (2) of this regulation shall also communicate the amount of own funds of the subsidiary financial institution and the consolidated solvency ratio of the credit institution which is its parent undertaking.
(5) If a company eligible under this regulation should cease to fulfil any of the conditions imposed, the competent authority or the foreign authority as the case may be, shall notify the other authority and the activities carried on by that institution in the host Member State or EEA State become subject to the legislation of the host Member State or EEA State.
PART V – Applicability Provisions
13. (1) A person who, on the date of the coming into force of these regulations was in possession of a licence issued by the competent authority which covers the provision of point 1 of Annex
I to the Directive, incorporated in the Schedule to these regulations
and any other additional activities included in such Annex shall be deemed to be a Maltese credit institution for the purposes of these regulations>
Provided that such person conforms with all applicable banking directives issued by the said competent authority.
(2) Every licence issued after the coming into force of these regulations shall indicate whether the licence holder is a credit institution in terms of these regulations.
PART VI – Interpretation
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14. These regulations shall apply mutatis mutandis to Interpretation.
companies fulfilling the conditions laid down in regulation 12 of these regulations, being companies authorised either by the foreign authority or by the competent authority< and accordingly the words “European credit institution” shall be read as if it were a reference to a company or other body corporate authorised by the foreign
authority and the words “Maltese credit institution” be read as if they were a reference to companies authorised by the competent authority.
15. (1) The objective of these regulations is to implementObjective.
the relevant provisions of the Directive as amended and shall be interpreted and applied accordingly.
(2) In the event that any of these regulations conflict with the provisions of the Directive, the latter shall prevail.
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SCHEDULE
Annex I to the Directive
“LIST OF ACTIVITIES SUBJECT TO MUTUAL RECOGNITION
1. Acceptance of deposits and other repayable funds
2. Lending
3. Financial Leasing
4. Money transmission services
5. Issuing and administering means of payment (e.g. credit card, travellers’
cheques and bankers’ drafts)
6. Guarantees and commitments
7. Trading for own account or for account of customers in>
(a) money market instruments (cheques, bills, certificates of deposit, etc.) (b) foreign exchange<
(c) financial futures and options<
(d) exchange and interest-rate instruments< (e) transferable securities
8. Participation in securities issues and the provision of services related to such issues
9. Advice to undertakings on capital structure, industrial strategy and related questions and advice as well as services relating to mergers and the purchase of undertakings
10. Money broking
11. Portfolio management and advice
12. Safekeeping and administration of securities
13. Credit reference services
14. Safe custody services”

Ippubblikat mid-Dipartiment ta’ l-Informazzjoni (doi.gov.mt) — Valletta — Published by the Department of Information (doi.gov.mt) — Valletta

Mitbug[ fl-Istamperija tal-Gvern — Printed at the Government Printing Press

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