1. Supervision
  2. Supervisory cooperation
  3. Memorandums of understanding
  4. Memorandum BANCA D'ITALIA

Memorandum of understanding

between THE BANCA D'ITALIA and THE NATIONAL BANK OF ROMANIA CONCERNING THEIR CO-OPERATION IN THE FIELD OF SUPERVISION OF BANKS


  1. The Banca d'ltalia ("Bl") and the National Bank of Romania ("NBR"), both hereinafter referred to jointly as ,,the Authorities" express their willingness to co-operate on the basis of mutual trust and understanding and agree to base their co-operation in the field of supervision of credit institutions on the principles and procedures outlined in this Memorandum.
  2. The Banca d'ltalia is the Italian central bank, is constituted in the form of public law institution, and it is independent from the Italian government. According to the 1993 Banking Code Bl is responsible for the supervision of banks, banking groups, and non-bank financial intermediaries. In this responsibility Bl has regard to the sound and prudent management of supervised institutions, to the overall stability, efficiency and competitiveness of the financial system and to compliance with provisions concerning credit. Moreover, according to the 1998 Code on financial intermediation, the Bl is responsible for matters related to the limitation of risks and financial stability of securities investment firms, and collective investment undertakings.
  3. The National Bank of Romania is the central bank of Romania, set up as a legal entity. In accordance with the Law 101/1998 on the Statute of NBR, the National Bank of Romania elaborates, implements and is responsible for the monetary, foreign exchange, lending and payment policies, as well as for bank licensing and prudential supervision in the framework of the general policy of the State, aiming at both the smooth function of the banking system and the promotion of a market-oriented financial system. At the same time, according to the provisions of the Law 200/2002 for the approval of the Emergency Ordinance No. 97/2000, the NBR is in charge with the licensing and supervision of the credit cooperatives organizations.

    Information regarding institutions
  4. The Authorities intend to co-operate in the supervision of cross-border establishments of credit institutions incorporated in the respective other country and within their respective jurisdiction. For the purpose of this Memorandum "credit institution" means an undertaking whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account. For the purpose of this Memorandum "cross-border establishment" means a subsidiary or a branch authorised in Italy of a (parent) credit institution, which is authorised in Romania, or a subsidiary or a branch authorised in Romania of a (parent) credit institution, which is authorised in Italy. The scope of co-operation encompasses the licensing (both issuance and revocation) as well as the ongoing supervision of the cross-border establishments, be they subsidiaries or branches. The Authorities advise each other on cross-border establishments in or from the respective other country upon specific request to the extent allowed under the law and on any other relevant information that might be required to assist with the supervisory process.

    Licensing
  5. If a credit institution incorporated in one of the countries applies to the Authority in the other country for a license (permission) to open a branch, 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. In the process of establishing a branch within the territory of the other Authority, the home-country authority informs the host-country authority of the programme of operation and type of business envisaged by the branch, the amount of own funds, the solvency ratio and the historic track-records of the parent bank, as well as details of the deposit guarantee schemes in the home country. In addition, the home-country authority informs the host-country authority whether the parent bank is fully subject to and complies with the domestic banking regulation, and whether it is expected in the light of its administrative structure and internal controls to run the cross-border establishment in an orderly, prudent and proper manner. 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 institution to open a branch, which has applied to it.
  6. Prior to the actual appointment of managers of cross-border establishments, on request the home-country authority discloses without delay any piece of available information to the host-country authority which might be useful in assessing the ability and professional skills of potential candidates (or management positions) and also provides information which might give rise to doubts as to the fit- and properness of the prospective managers of the cross-border establishments.

    Co-operation concerning ownership control
  7. The Authorities shall consult before granting authorisation to a subsidiary of a credit institution authorised in the other country or when assessing any acquisition of a significant participating interest, as defined by their respective national laws, in a domestic credit institution by a credit institution within the jurisdiction of the other Authority.

    Ongoing supervision; corrective actions
  8. The Bl and the NBR inform each other, in good time and to the extent reasonable, about any event which has the potential to endanger the stability of credit institutions having cross-border establishments in the respective other country. They also notify each other on administrative penalties which they have imposed or any other action which they have taken on such a cross-border establishment as host supervisor or on the parent credit institution as home supervisor.
  9. The Bl and the NBR discuss any significant information on credit institutions having cross-border establishments in the other country which might be relevant to the other authority. Relevant matters are in particular: concerns about financial soundness of an institution (failure to meet capital adequacy or other financial requirements, significant losses, rapid decline in profits or a deterioration in profitability), concerns relating to compliance or control procedures, concerns arising from supervisory visits and on-site examination, prudential interviews or reports from and communications with an institution or other regulatory body, concerns arising from late or inaccurate prudential returns and concerns relating to supervisory arrangements in third countries.
  10. Representatives of the Bl and the NBR banking supervisors may require clarifications from the other party any time, as well as the carrying out of the meetings deemed necessary.
  11. For any institution located in Romania and in Italy respectively, which are licensed in a third country and which apply for a license with the other authority, the Bl and the NBR will, as far as they are able, discuss any significant information available to them which might be relevant to the other Authority.

    Crisis situations
  12. The Authorities will inform each other without delay if they learn of an incipient crisis relating to any supervised institution that has cross-border establishments in the other country.

    On-site inspections
  13. The Authorities agree that co-operation is particularly useful in assisting each other in carrying out on-site inspections of cross-border establishments. The Bl is allowed to carry out inspections of subsidiaries and branches of Italian credit institutions (authorised in Italy) in Romania. The NBR is allowed to carry out inspections of subsidiaries and branches of Romanian credit institutions (authorised in Romania) in Italy.
  14. The Authorities shall notify each other at least two months in advance of any inspection, giving details of the names of the examiners, the purpose of the audit and its expected duration. The Authorities will allow each other to accompany any such on-site inspection carried out by the Authorities themselves. The Authorities will keep each other informed on the results of the inspections, if of interest to the host-country supervisor, to the extent reasonable and in a timely manner. If the parent institution has been audited along with its cross-border establishment in the other country, the home-country authority provides the host-country authority with a summary report on the findings which bear relevance to the cross-border establishment.

    Professional secrecy
  15. Compliance with the obligation of professional secrecy by all employees who receive confidential information from the other Authority in the course of their activities is a necessary condition for a successful co-operation between the Authorities. The Authorities agree that any confidential information shared through these arrangements will be used only for lawful supervisory purposes. To the extent permitted by law, the Authorities will maintain the confidentiality of all information received through these arrangements from each other and will not disclose any such information unless it is necessary for carrying out their supervisory responsibilities and after having obtained the prior consent of the other authority. The Authorities will, when receiving legally enforceable demand for information originally received from the other authority or acquired in the course of an on-site examination in the other authority's jurisdiction, promptly notify in writing the other authority of the request for information.

    Technical arrangements
  16. In order to enhance the quality of co-operation, representatives of the Bl and the NBR banking supervisors will convene regularly to discuss issues concerning credit institutions which maintain cross-border establishments within their respective jurisdiction. In these meetings they will also review the effectiveness of these arrangements. The Bl and the NBR banking supervisors intend to promote their co-operation by visits for informational purposes and by short exchange of staff for practical internships.
  17. The Authorities will ensure that they send each other the relevant lists of licensed and authorised institutions which they have authorised. They advise each other upon request on any aspect of their regulatory systems and notify about any major change in their domestic rules and regulations within their jurisdiction, in particular about those changes which have a significant bearing on the activities of cross-border establishments. To facilitate practical co-operation, the Authorities, after this agreement enters into force, exchange a written list with contact persons for the exchange of information (names, positions, telephone, fax and e-mail connection).
  18. This Memorandum of Understanding shall remain in existence until either party notifies the other in writing of its wish to revise, amend or withdraw from the Memorandum of Understanding. One month's notice of any such action will be given.
  19. Co-operation 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 co-operation and assistance. If either Authority gives such notice, co-operation 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 of Understanding will continue to be treated confidentially.
  20. The Bl and the NBR undertake to revise the present Memorandum of Understanding in the light of future developments in national and EU legislation and of experience gained in the supervision of respective institutions.
  21. This agreement is written in the English language in two copies.
    In Roma on 12 December 2002

 

For the Banca d'ltalia For National Bank of Romania
Antonio Fazio Mugur Constantin Isărescu
Governor Governor
T: +4031 132 2321
E: press@bnro.ro