1. The National Bank of Romania (NBR) and the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), hereinafter referred to as "the Authorities", express their mutual interest in establishing and promoting bilateral ties in banking supervision and wish to achieve a common understanding on issues related to banking regulation in order to facilitate co-operation in supervising the activities of credit organisations on the principles and procedures outlined in this Memorandum.
2. The NBR is responsible for the licensing and supervision of credit organisations in Romania.
3. As an independent Federal supervisory authority, in accordance with the German Banking Act (BA) and other laws, the BaFin is entrusted with the supervision of banks, insurance companies, investment firms and the securities market in Germany. The BaFin is a federal institute under public law and independent legal entity in the jurisdiction of the Federal Ministry of Finance. Exercising exclusively all sovereign functions and supervisory actions, the BaFin closely co-operates with the Deutsche Bundesbank which is involved in carrying out the on-going supervision of banks and investment firms. The BaFin and the Deutsche Bundesbank are considered "German banking supervisors".
   
   Definitions
4. For the purposes of this Memorandum:
   1. "countries" are Romania and Germany;
   2. a "credit organisation" (a bank) is an entity which carries out banking business (general or specialized) and whose activities are subject to licensing and banking supervision under the laws of the countries;
   3. "supervisory information" is the information received or obtained in the process of fulfilling their supervisory functions, as well as through the exchange of information or through the conduct of on-site inspections in accordance with this Memorandum, by either of the Authorities;
   4. a "branch" of a credit organisation (a branch) is an operating entity which does not have a separate legal status and is thus an integral part of a credit organisation incorporated in one of the countries;
   5. a "subsidiary credit organisation" (a subsidiary bank) is a legally independent institution, wholly-owned by, or otherwise under the control of a credit organisation which is incorporated in the country other than that of the subsidiary;
   6. a "representative office" is an office through which the interests of a credit organisation are promoted or assisted but at which no banking business are carried on; and
   7. "home country" is the country of incorporation of a credit organisation that has set up a branch or a subsidiary bank or a representative office in the other country ("host country").
5. To maintain reliability and efficiency of the national banking systems, the Authorities shall co-operate in the banking supervision of the activities of credit organisations on the basis of the provisions of this Memorandum, subject to the national legislation and the international obligations of each Authority.
   
   General exchange of information
6. The Authorities express their readiness to regularly exchange information on the state of each other's banking system and the development thereof.
7. The Authorities shall regularly provide, on the basis of mutual trust and understanding, information on the applicable national banking legislation, banking regulations, banking supervision standards and requirements, and any major changes in them.
   
   Meetings and exchange of staff
8. The NBR and the German banking supervisors agree to meet on a routine basis, subject to necessity, to discuss issues of mutual interest and ways to improve banking supervision over the activities of credit organisations within their respective jurisdictions. The NBR and the German banking supervisors also intend to promote their co-operation by short exchange of staff for practical internships.
   
   Requests for assistance
9. Co-operation within the framework of this Memorandum shall be implemented at the initiative of or on the basis of requests for assistance in banking supervision from either Authority.
10. A request for assistance shall be made in writing or by any contemporary means of telecommunication.
11. The Authorities shall take all necessary measures in order to reply as promptly and fully as possible. They shall also notify one another about the circumstances preventing or delaying the fulfillment of a request for assistance.
    
    Licensing
12. If a credit organisation incorporated in one of the countries applies to the Authority in the other country for a license (permission) to open a branch, a subsidiary bank, or a representative office, this Authority has, upon request, to assist the other Authority by verifying or supplementing any information submitted by the applicant organisation. The other Authority shall consider such application within the time-limits and in accordance with the procedures established by its national banking legislation or regulations.
13. The Authority receiving an application, as referred to in 12. above, shall notify the other Authority of the details of such an application and obtain the other Authority's prior consent as provided by the rules established by the Basle Committee on Banking Supervision.
14. The Authority receiving an application obtains from the other Authority such information as it deems necessary to act in the application, including, the amount of own funds and the solvency ratio of the parent bank, whether it is in compliance with the home country banking regulations (and those of any other jurisdiction in which it operates, to the knowledge of the home country supervisor) and the opinion of the home country supervisor about the quality of management, the adequacy of internal control systems and management processes and any information known to the home country supervisor about the prospective managers of the organisation proposed to be established in the host country.
15. The Authority receiving an application shall notify the other Authority in writing about its decision with regard to the granting of license (permission) to a credit organisation to open a branch, a subsidiary bank, or a representative office, which has applied to it, as provided in 12. above.
    
    On-going Supervision (off-site)
16. The Authority of the host country shall exercise prudential supervision over the activities of branches, subsidiary banks, or representative offices in accordance with the national banking legislation or regulations.
17. The Authority of the host country shall not prevent the entities mentioned in 16. above from submitting information and other reports to their Head Office or parent banks necessary to compile consolidated reports in accordance with the forms established in the home country.
18. The Authorities will inform each other without delay if they learn of an incipient crisis relating to any institution supervised by either which has cross-border establishments in the respective other country.
    
    On-site inspections and audits
19. The Authority of the home country or auditors commissioned by the authority are permitted to conduct on-site inspections and audits regarding branches and subsidiaries in the host country. Such on-site inspections shall be notified to the host country Authority giving details of the names of examiners, the purposes of the examination and its expected duration. The Authority of the host country shall express readiness to provide, at the request of the other Authority, any available supervisory information related to the conduct of on-site inspections.
20. The Authority of the host country shall not prevent the Authority of the home country from carrying out on-site inspections for supervisory purposes, as referred to in 19. above, and shall give the Authority of the home country access to supervisory information, as defined in article 4, which they may need to conduct the on-site inspection.
21. Representatives of the Authority of the host country have the right to be present during the on-site inspections conducted by the representatives of the Authority of the home country.
    
    Information regarding institutions
22. The Authorities agree to provide, on a timely basis, information about any events that have the potential to endanger the stability of the activities of a credit organisation having branches, subsidiary banks, or representative offices in the other country, as well as material changes pertaining to such credit organisations such as restrictions to the range of permitted banking operations, suspension or modification or revocation of a license, appointment of a provisional administrator, and re-organisation or liquidation of any such credit organisation. The BaFin will pass on information received by the NBR to the Deutsche Bundesbank, with regard of the domestic allocation of responsibility and in accordance with the provisions of this Memorandum.
23. The Authorities shall discuss with each other any significant information about credit organisations or their cross-border operations which might be relevant to their supervision of such organisations such as: material changes in ownership of the organisation (the increasing of the qualifying holding of voting rights or capital to reach or to exceed 20%, 33% or 50% or if the credit institution becomes a subsidiary) and concerns about: the financial soundness of the organisation (failure to meet capital adequacy or other financial requirements, significant losses, rapid decline in profits, or a general deterioration in financial condition); operational compliance or internal control procedures; other deficiencies identified in supervisory inspections; late or inaccurate financial reporting; and supervisory information received from third-Party countries.
    
    Customer complaints
24. Complaints made about any institution should be handled by the relevant authorizing authority. If as a result any information comes to the attention of either Authority, which is relevant to the other Authority, the NBR and the BaFin will ensure that this is properly communicated.
25. In Germany, the BaFin is not empowered to intervene as fact-finder, mediator or arbitrator in a civil case as the sole jurisdiction over those matters is allotted to the ordinary judicial authorities. Any complaint against institutions laid with the BaFin would only be examined in order to find out whether supervisory measures should be taken on the grounds that the queried activities of the institution showed deficiencies in the fit-and properness of the management or even amounted to harmful tendencies in the banking and financial services industry.
    
    Professional secrecy
26. Each Authority shall always ensure the confidentiality of supervisory information and documents received from the other Authority, if such information and documents are not to be made public or if the Authority that has provided them does not want them to be made public. The extent of the confidentiality of supervisory information and documents shall be determined by the Authority that provides the information and documents.
27. Supervisory information received shall not be used without the consent of the Authority that provided it for any purposes, other than those for which it was requested and provided.
28. No supervisory information received by either Authority in accordance with this Memorandum shall be passed to any other person or entity without the prior consent of the Authority that provided the information, except for the Deutsche Bundesbank which is entitled to all the information the BaFin receives.
29. If an Authority receives any legally enforceable demand for information received from the other Authority or acquired in the course of an inspection in the other Authority's jurisdiction, it shall notify the other Authority and cooperate with the other Authority in seeking to preserve the confidentiality of such information.
    
    Financial Crime
30. The Authorities will cooperate closely when they identify suspected financial crime activities in supervised institutions. For the purposes of this Memorandum, financial crimes are in particular: money laundering and all violations of law on financial markets. This also includes unauthorized banking or investment business by banks. The Authorities share information on financial crime concerning the respective institutions which carry out cross-border activities in the other state or which could affect the other state to the extent allowed under their laws. They may pass on this information with prior consent received from the other Authority for regulatory or law enforcement purposes to other such Parties in the national jurisdiction.
    
    Technical arrangements
31. The Authorities will send each other a list of credit organisations which they have authorized and which have operations in either of the Authorities jurisdictions.
32. The Memorandum shall be drawn up in English in two copies with the same validity, each Authority obtaining a copy.
33. The Memorandum becomes effective and valid the day of its signing by both Authorities.
34. Cooperation and assistance in accordance with this Memorandum of Understanding will continue until the expiration of 30 days after either Authority gives written notice to the other Authority of its intention to discontinue cooperation and assistance. If either Authority gives such notice, cooperation and assistance in accordance with this Memorandum will continue with respect to all requests for assistance that were made before the effective date of notification until the requesting Authority withdraws the matter for which assistance was requested. In the event of termination of this Memorandum, information obtained under this Memorandum will continue to be treated confidentially. The Memorandum shall be changed or amended only in writing, with the signatures of the Authorities.
35. The Memorandum will automatically remain in effect for each successive year, unless the other Authority gives notice, by the 1^st of December of the current year, to terminate the Memorandum.

Place and date of signing the Memorandum:

4 March 2003