July 2010 issue of the Financial Services Industry Monthly Bulletin – a banking and finance law publication by Reff & Associates (correspondent law firm of Deloitte Romania) and Deloitte Tax.
Since 2009, our specialist team of finance lawyers and tax advisors prepares for you a summary of the latest legal, tax and regulatory developments relevant for banks, non-banking financial institutions, private pensions funds and capital markets participants in Romania. In addition, our bulletin updates you on the most recent changes and trends in the international financial services industry regulatory framework.
3. Legal Updates
NBR amended the regulatory framework
Banking regarding the evaluation of the supervisory
framework from the origin third state and
Issuer: National Bank of Romania verification of the supervisory equivalence
performed by the competent authorities
(“NBR”)
from third states.
NBR established the level of the reference
interest rate applicable for July 2010. NBR enacted Regulation no. 8/2010 for the
amendment of NBR’s Regulation no. 2/2008
NBR enacted Circular no. 22/2010 regarding regarding the evaluation of the supervisory
the level of the reference interest rate valid for framework from the origin third state and
July 2010. According to the above mentioned verification of the supervisory equivalence
Circular, the interest reference rate of NBR performed by the competent authorities from
valid for July 2010 was set at 6.25% per year. third states with the one governed by the
principles provided by Government’s
The above mentioned Circular was published Emergency Ordinance no. 99/2006 regarding
in the Official Gazette no. 447/01.07.2010 and the credit institutions and capital adequacy.
may be accessed here. The above mentioned Regulation was
published in the Official Gazette no.
NBR amended the interest rates payable on 477/12.07.2010.
minimum mandatory reserves.
NBR established the regulatory framework
NBR enacted Circular no. 23/2010 regarding for the transmission through electronic
the interest rates payable on minimum means of certain documents related to
mandatory reserves. The above mentioned money market operations.
Circular sets forth the interest rates payable on
minimum mandatory reserves during June 24 - NBR enacted Norm no. 1/2010 regarding the
July 23, 2010 as follows: transmission through electronic means of
certain documents related to money market
1.84% per year for minimum mandatory operations performed by NBR through auctions
reserves set up in RON; and permanent facilities granted by it to eligible
participants.
1.08% per year for minimum mandatory
reserves set up in Euro; The above mentioned Norm was published in
the Official Gazette no. 480/13.07.2010 and
1.06% per year for minimum mandatory may be accessed here.
reserves set up in U.S. dollars.
NBR established the regulatory framework
The said Circular was published in the Official for the transmission through electronic
Gazette no. 498/19.07.2010 and may be means of certain documents related to
accessed here. auctions and subscriptions of state bonds.
NBR repealed the regulation regarding the NBR enacted Norm no. 2/2010 regarding the
transformation of financial institutions in transmission through electronic means of
credit institutions. certain documents related to auctions and
subscriptions of state bonds.
NBR enacted Regulation no. 7/2010 repealing
NBR’s Regulation no. 1/2008 regarding the The above mentioned Norm was published in
transformation of financial institutions in credit the Official Gazette no. 480/13.07.2010 and
institutions. The above mentioned Regulation may be accessed here.
was published in the Official Gazette no.
477/12.07.2010.
4. NBR established the regulatory framework Consequently, starting from 2012, the credit
for the reporting of the modifications of the institutions shall prepare and issue statutory
potential economic value of credit financial statements in accordance with the
institutions subsequent to the change of IFRS provisions, in RON and in Romanian
the level of interest rates. language. Said financial statements will be
audited and made available to NBR within the
NBR enacted Order no. 6/2010 regarding the deadline set out by the law. By the end of the
reporting of the modifications of the potential current year, credit institutions should send to
economic value of credit institutions NBR their measure plans for IFRS
subsequent to the change of the level of implementation.
interest rates. The above mentioned Order was
published in the Official Gazette no. The above mentioned Order was published in
480/13.07.2010 and may be accessed here. the Official Gazette no. 535/30.07.2010.
NBR established the regulatory framework Issuer: Romanian Government
for the reporting of the exposures towards
persons having special relations with the Romanian Government amended the
credit institution. regulatory framework regarding the
payment services.
NBR enacted Order no. 7/2010 regarding the
reporting of the exposures towards persons Romanian Government enacted Emergency
having special relations with the credit Ordinance no. 61/2010 which sets forth the
institution. institutional and legal framework for solving the
complaints filed also by legal entities users for
The above mentioned Order was published the non observance by the payment services
with the Official Gazette no. 483/14.07.2010 providers of the obligations mentioned under
and may be access here. the Government Emergency Ordinance no.
113/2009 on payment services.
NBR amended the regulatory framework
regarding the implementation of the In this respect, the legal entity users may refer
International Financial Reporting Standards to the Financial Guard in connection with the
by credit institutions. cases of violation by payment services
providers of the provisions of the said
NBR enacted Order no. 9/2010 on the ordinance or may file court actions against the
implementation of International Financial respective service providers. The Ordinance
Reporting Standards by credit institutions as a was published in the Official Gazette no. 446 /
basis of accounting and for the preparation of 01.07.2010.
individual annual financial statements
(“Order”). Issuer: Deposits Guarantee Fund
In accordance with the Order, the credit Deposits Guarantee Fund amends the
institutions shall prepare their accounting regulatory framework regarding the
records as of 1 January 2012 in accordance transmission of the status of the secured
with the treatments provided by International depositors.
Financial Reporting Standards enacted as per
the procedure described in Article 6 (2) of CE Deposit Guarantee Fund enacted Regulation
Regulation no. 1606/2002 regarding the no. 3/2010 for the amendment of Regulation
application of the international accounting no. 3/2009 issued by the Deposit Guarantee
standards. On the same date, the accounting Fund regarding the transmission to the said
regulations compliant with the European fund of deposits in the banking system of the
directives approved through NBR’s Order no. status of the secured depositors. The
13/2008 shall be reppealed. Regulation was published in the Official
Gazette no. 449/02.07.2010.
5. ISC amended the current regulatory
Insurance framework on the accounting reporting
system.
Issuer: Insurance Supervision
ISC enacted Order no. 9/2010 approving
Commission (“ISC”)
accounting reporting system as of June 30,
ISC amended the current regulatory 2010 carried by the insurance/reinsurance
framework regarding the authorization companies and by the insurance/reinsurance
process of insurance companies. brokers. The said Order was published in the
Official Gazette no. 516/23.07.2010 and may
ISC enacted Order no. 8/2010 for the be accessed here.
amendment of ISC’s Order no. 16/2009
regarding the authorization of insurance
companies. Through the said Order the Private Pensions
following changes are implemented with
respect to the authorization process of Issuer: Private Pension System
insurance companies: Supervision Commission (“PPSSC”)
the persons nominated for executive PPSSC amended the regulatory framework
management positions within the regarding the authorization of the
insurance company shall be subject to an administrators of private pensions funds,
interview in front of ISC, both with respect the acquisition of the management of
to the approval of their appointment as voluntary pension fund and the
well as with respect to the approval of the organization of assets and liabilities at the
envisaged feasibility study of the level of the administrators of private
insurance company; pensions funds.
within 90 days as of the entry into force of PPSSC adopted Decision no. 15/2010
Order 8/2010, ISC shall initiate an approving Norm no. 8/2010 regarding the
evaluation process with respect to the authorization of the administrators of private
persons having, at the time of entry into pensions funds, the acquisition of the
force of the said Order, executive management of voluntary pension fund and the
management positions within already organization of assets and liabilities at the level
authorized insurance companies as well of the administrators of private pensions funds.
as with respect to the actuary, managers
of the life/non – life insurance activity and The above mentioned decision was published
persons in charge with the running of in the Official Gazette no. 471.08.07.2010 and
certain departments of the said insurance may be accessed here.
companies (i.e. financial, legal, risk
management, internal control).
The said Order was published in the Official
Gazette no. 444/01.07.2010, entered into force
on 1 July 2010 and may be accessed here.
6. options, futures agreements, swaps,
Capital Markets forward contracts and any other derivative
contracts related to goods that may be
Issuer: National Securities settled physically included in the category
Commission (“NSC”) of the letter. f) and having no commercial
purposes, which have characteristics of
NSC amended the regulatory framework other derivative financial instruments,
regarding the investment and related taking into account, among other things, if
services. they are cleared and settled through
recognized clearing houses or are subject
NSC adopted Notice no. 24/09.07.2010 to regular margin calls;
regarding the investment and related services.
According to the said notice the financial derivatives instruments for transfer credit
investments firms can provide investments and risk;
related services only in connection with the
following financial instruments, as defined by financial contracts for differences;
Article 7 (1) point 141 of the Government’s
Emergency Ordinance no. 99/2006 regarding options, futures agreements, swaps,
credit institutions and capital adequacy: forward rate agreements and any other
derivative contracts related to climatic
securities; variables, freight, emissions of substances
approvals or inflation rates or other official
instruments of the monetary market; economic indicators, to be paid in cash
funds or can thus be settled at the request
titles of participation to the collective of either party (otherwise than for default
placement bodies; or other incident that leads to termination)
and any other derivative contracts related
options, futures agreements, swaps, to assets, rights, obligations, indices or
forward rate agreements and any other indicators, not included in this definition,
derivative contracts related to securities, that shows characteristics of other
currencies, interest rates or profitability or derivative financial instruments, taking
other derivative instruments, financial account, inter alia, whether they are
indices or financial indicators, which may traded on a regulated market or
be settled physically or in cash funds; alternative trading systems and are
cleared and settled through recognized
options, futures agreements, swaps, clearing houses or are subject to margin
forward rate agreements and any other calls regularly.
derivative contracts related to goods
which must or may be paid in cash funds The above mentioned notice may be accessed
at the request of either party (otherwise here.
than for default or other incident that leads
to termination);
options, futures agreements, swaps and
other derivative contracts related to goods
that can be physically settled, provided
they are traded on a regulated market
and / or in an alternative trading system;
7. NSC clarifies the implementation of NSC’s NSC suspends the application of certain
Regulation no. 5/2010. provisions of NSC’s Regulation no. 2/2006.
NSC issued Decision no. 885/12.07.2010 NSC issued Decision no. 14/15.07.2010 for the
regarding some aspects related to the suspension of Articles 8 (1) and 19 letter (f) of
implementation of NSC’s Regulation no. NSC’s Regulation no. 2/2006 regarding the
5/2010 regarding the usage of global accounts regulated markets and alternative trading
system, application of the mechanisms with systems. The mentioned Articles referred to
/without pre-validation, performance of lending the holding of participations by a market
of securities operations and those establishing operator and to some of the conditions which
associated guarantees and of the short-selling must be observed by the members of the
transactions. board and the managers of the market
operator. We underline that for the period of
The above mentioned Decision may be suspension, the said decision provides for
accessed here. alternate legal provisions until the amendment
of the suspended ones.
NSC suspends the application of certain
provisions of NSC’s Regulation no. 32/2006. For more details please access here.
NSC issued Decision no. 13/12.07.2010 for the
suspension of Articles 141, 191 and 205 (2) of
NSC’s Regulation no. 32/2006 regarding the
financial investment services. The mentioned
Articles referred, among others, to the prompt
delivery of the clients’ instructions and to the
obligation of the market operator to publish the
list of the securities admitted for trading on a
regulated market which might be the subject of
short selling. It is to be underlined that for the
period of suspension, the said decision
provides for alternate legal provisions until the
amendment of the suspended ones.
For more details please access here.
8. Tax updates
Registrations of intra-community
operators
As of August 1, 2010, all entities performing
intra-community transactions with goods
and services must be registered in the
registry of intra-community operators. The
procedure is detailed in ANAF Order no.
2101/2010.
This requirement is also applicable to credit
and financial institutions which receive services
from EU suppliers who are taxable from a VAT
perspective under the business to business
main rule. Such services include advisory
services, IT licenses and maintenance, access
to databases and information streams.
Non-registration attracts a fine between RON
1,000 – 5,000, as well as the invalidity of the
VAT number for intra-community transactions.
For the press release of the authorities, please
access here.
10. Issuer: Committee of European
Banking Banking Supervisors (“CEBS”)
CEBS published its implementation
Issuer: European Central Bank
guidelines on large exposures exemptions
(“ECB”)
for money transmission, correspondent
ECB reviews risk control measures in Euro- banking, clearing and settlement and
system market operations. custody services.
The Governing Council of ECB has reviewed CEBS published on 29 July 2010 its
the risk control measures in the framework for implementation guidelines on Article 106 (2)
assets eligible for use as collateral in Euro- letters (c) and (d) of Capital Requirements
system market operations. The amendments Directive. As a consequence of the deletion of
shall enter into force as of 1 January 2011. the general preferential treatment for inter-bank
exposures in the large exposures rules, the
For more details please access here. Capital Requirements Directive currently
provides exemptions from large exposures
rules for specific short-term exposures arising
from the provision of money transmission,
correspondent banking, clearing and
settlement and custody activities. The above
mentioned guidelines have to be transposed
into Member States’ national law by 31
October 2010 and to be applied from 31
December 2010.
For more details please access here.
12. Internal Capital Adequacy Assessment
Banking Process (ICAAP), so as to clarify certain
aspects related to the structure and
Issuer: Romanian Parliament implementation of this process within the
credit institutions;
Proposal of Law regarding the activity of
electronic currency issuance. exposures to related parties, so as to
extend the definition of related parties;
The full text of the proposal may be accessed
here. non arm’s length transactions, so as to
transfer the provisions on non arm’s
Issuer: NBR length transactions from the NBR-NSC
Regulation no. 16/21/2006 regarding large
Proposal of Regulation regarding the exposures of credit institutions and
amendment and supplementation of investment firms;
Regulation no. 18/2009 regarding the
administration framework of the activity of restructuring loans portfolios, so as to
credit institutions, the internal evaluation extend the scope of application by
process of adequacy of the capital to risks introducing in place of the existing
and the conditions of the externalization of operations, i.e. loans refinancing/
their activities as subsequently amended. rescheduling, the so-called “replacement
operations”, as well as to introduce
The draft regulation was induced by the reporting requirements regarding
necessity of solving certain problems related to replacement operations performed by
the practical implementation of the provisions credit institutions in relation to their loans
of the NBR Regulation no. 18/2009, as well as and the impact of those operations on the
by the necessity of transposing certain application of NBR Regulation No. 3/2009
documents issued by the communautaire foras on classification of loans and investments,
into the Romanian legislation. and establishment, adjustment and use of
specific provisions for credit risk;
The draft regulation amends and/or
supplements the provisions related to: liquidity risk, so as to amend the NBR
Regulation No. 18/2009 due to the
governance arrangements, so as to take necessity of transposition of the relevant
into consideration some issues raised by provisions of Directive 2009/111/EC of the
the Romanian Banking Association, as European Parliament and of the Council
well as Section D - Public Disclosure and amending Directives 2006/48/EC,
Transparency from the Guidelines on 2006/49/EC and 2007/64/EC as regards
Internal Governance of the document banks affiliated to central institutions,
Guidelines on the Application of the certain own funds items, large exposures,
Supervisory Review Process under Pillar supervisory arrangements, and crisis
2, issued by the Committee of European management and Guidelines on Liquidity
Banking Supervisors (CEBS), document Buffers & Survival Periods issued by
which has already been partially CEBS.
transposed into the NBR Regulation No.
18/2009; For more details please access here.
outsourcing activities, so as to clarify the
definition of outsourcing;
13. Private Pensions
Issuer: PPSSC
Proposal of Norm regarding the
authorization of establishing the pensions
legal entity and authorization of
management of facultative pension funds.
The full text of the proposal can be accessed
here.
15. Banking Insurance
Issuer: CEBS Issuer: International Accounting
Standards Board (“IASB”)
CEBS published on 1 July 2010 its
consultation paper on guidelines to the new IASB proposes improvements to insurance
Article 122 (a) of the Capital Requirements accounting.
Directive.
IASB published on 30 July 2010 the Exposure
Article 122 (a) of the Capital Requirements Draft of the new International Financial
Directive provides for new requirements to be Reporting Standard for insurance contracts.
fulfilled by credit institutions when acting in a
particular capacity, such as original lender and For more information please access here.
also when investing in securitisations.
For more information please access here. Private Pensions
CEBS published on 23 July 2010 the results of
Issuer: Committee of European
a stress test performed over several credit
Insurance and Occupational
institutions from the European Union.
Pensions Supervisors (“CEIOPS”)
The results of the said stress test may be
CEIOPS published on 14 July 2010 a Draft
found here.
Advice to the European Commission on
equivalence assessments to be undertaken
CEBS published on 13 July 2010 a
in relation to Articles 172, 227 and 260 of
consultation paper on its draft guidelines
the Solvency II Directive 2009/138/CE
on revised Article 3 of the Directive
(Solvency II).
2006/48/EC relating to the taking up and
pursuit of the business of credit
The mentioned Draft Advice was produced as
institutions.
a response to the EC Call for Advice asking
CEIOPS to identify and prioritise the third
CEBS published on 13 July 2010 a
countries where an equivalence assessment
consultation paper on its draft guidelines
would be desirable before the introduction of
on revised Article 3 of the Directive
Solvency II, while recognising that further
2006/48/EC relating to the taking up and
equivalence assessments will be carried out
pursuit of the business of credit
subsequent to the first wave.
institutions. The debate period ends on 27
August 2010.
For information please access here.
For more information please access here.
CEBS published on 13 July 2010 its
comments to the International Accounting
Standards Board Exposure Draft on the fair
value option for financial liabilities.
For more information please access here.
16. CESR published on 28 July 2010 its final
Capital Markets guidelines on risk measurement and the
calculation of global exposure and
Issuer: Committee of European counterparty risk for Undertakings for
Collective Investments in Transferable
Securities Regulators (“CESR“)
Securities.
CESR published on 9 July 2010 the
eleventh version of Frequently Asked For more details please access here.
Questions regarding the prospectus.
CESR published on 29 July 2010 its report on
Please find more information here. trends, risks and vulnerabilities in financial
markets.
CESR initiated on 19 July 2010 public
consultations on standardisation and exchange For more details please access here.
trading of OTC derivatives. The consultation
CESR published on 29 July 2010 its
period ends on 16 August 2010.
Technical Advice to the European
For more information please access here. Commission in the Context of the MiFID
Review and Responses to the European
CESR initiated on 19 July 2010 public Commission Request for Additional
consultations on transaction reporting on Information.
the OTC derivatives and extension of
transaction reporting scope. The For more details please access here.
consultation period ends on 16 August
2010. Issuer: International Organization of
Securities Commissions ("IOSC")
For more information on transaction reporting,
IOSC published on 9 July 2010 its final
please access here.
report regarding the transparency of the
structured finance products.
The above mentioned report may be accessed
here.
17. 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.).
For more details on our services and credentials in the FSI sector, please
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Contacts
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Partner
+ 40 21 207 52 05
aburzpinzaru@deloittece.com
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Manager
+ 40 21 207 52 69
smut@deloittece.com
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Manager
+ 40 21 207 53 13
ltrifa@deloittece.com