SLOVAK REPUBLIC Cechova & Partners

Transcription

1 Bank Finance and Regulation Survey SLOVAK REPUBLIC Cechova & Partners I. BANKS AND FINANCIAL INSTITUTIONS SUPERVISION 1) Applicable laws and regulation. Provide a list of the main laws and regulations that refer to the supervision and control of banks and financial institutions. Give a brief summary of the substance of each of them. a) National Bank of Slovakia Act (Law No. 566/1992 Coll.) establishes the National Bank of Slovakia (hereinafter NBS ) as the main supervisory authority in the area of financial services, and regulates its position and organization. b) Financial Market Surveillance Act (Law No. 747/2004 Coll.) regulates general rules applicable to surveillance performed by NBS over financial market in the areas of banking, capital market, insurance and pension savings. c) Banking Act (Law No. 483/2001 Coll.) - regulates establishment, organization, governance, performance of business and dissolution of banks, and their surveillance performed by NBS. d) Payment System Act (Law No. 510/2002 Coll.) regulates performance of domestic and foreign payments, issuance and use of electronic payment instruments, establishment and use of payment systems and the surveillance performed by NBS over executions of payments and payment systems. e) Home Savings Act (Law No. 310/1992 Coll.) regulates the conditions for home savings and the surveillance performed by the Ministry of Finance of the Slovak Republic concerning the state premium. f) Securities and Investment Services Act (Law No. 566/2001 Coll.) and Bonds Act (Law No. 530/1990 Coll.) regulate securities and bonds, and the surveillance performed by NBS over their issuance and the activities of licensed securities traders. g) Collective Investment Act (Law No. 95/2002 Coll.) regulates collective investments and their surveillance performed by NBS. h) Stock Exchange Act (Law No. 429/2002 Coll.) regulates establishment, organization, governance, performance of business and dissolution of stock exchange, trading at the stock exchange and its surveillance performed by NBS.

2 i) Insurance Act (Law No. 95/2002 Coll.) regulates establishment, organization, governance, performance of business and dissolution of insuring and assuring companies, and their surveillance performed by NBS. j) Supplementary Pension Savings Act (Law No. 650/2004 Coll.) regulates the conditions for supplementary pension savings, its organization and financing, and surveillance performed by NBS over this area. k) Protection against Legalization of Incomes from Criminal Activity Act (Law No. 367/2000 Coll.) regulates protection against legalization of incomes from criminal activity, reporting of suspicious transactions and the role of financial police in this field. l) Consumer Protection in Distance Provision of Financial Services Act (Law No. 266/2005 Coll.) regulates the distance marketing of consumer financial services and its surveillance performed by NBS. m) Deposit Protection Act (Law No. 118/1996 Coll.) regulates the protection of deposits held on accounts with banks and branches of foreign banks, the provision of compensation for these deposits in the event of their inaccessibility and the surveillance performed by NBS over this system. 2) Entities/Authorities in charge of the control and supervision. Purposes, powers and functions of each of them- their organization and structure (i.e. public or private, independency or body of the Government to which they belong, size, etc). The control and supervision over banks and financial institutions is mainly exercised by NBS, which is an independent public authority. NBS formulates and implements the country s monetary policy; issues banknotes and coins; controls, co-ordinates and provides for the circulation of money, inter-bank payments and settlement of payment data; supervises sound development of the banking sector and performance of banking activities. The supreme governing body of NBS is the Bank Board, which formulates monetary policy, applies appropriate instruments, and rules on monetary measures. NBS has, inter alia, the following divisions: Banking Sector and Securities Dealers Supervision Division; Capital Market, Insurance and Pension Savings Supervision Division; Financial Management and Payments System Division, Banking Transactions and Foreign Exchange Division. 3) Describe briefly the activities under supervision and give a list the different types of licenses available. NBS supervises the functioning of the financial market in area of banking, capital market, insurance and assurance, and additional pension savings. It performs supervision of banks, branch offices of foreign banks, securities dealers, branch offices of foreign securities dealers, intermediaries of investment services, stock exchanges, central securities depositories, asset management companies, branch offices of foreign asset management companies, mutual funds, foreign collective investment undertakings, insurance companies, reinsurance companies, branch offices of foreign insurance companies, branch offices of foreign reinsurance companies, intermediaries of insurance, intermediaries of reinsurance, pension asset management companies, pension funds, old-age pension intermediaries, supplementary pension insurance companies, supplementary pension companies, supplementary pension funds, electronic money institutions, branch offices of foreign electronic money institutions, the Deposit Protection Fund, the Investment Guarantee Fund, the Slovak Bureau of Insurers, consolidated groups, sub consolidated groups, financial holding institutions, mixed financial holding companies, financial conglomerates, and also over other persons, other property associations with a designated purpose and over groups of persons and property

3 associations with a designated purpose, charged with obligations under laws in the area of banking, capital market, insurance business, pension insurance or pension schemes. NBS may set out prudential business rules, rules for safe operation and other requirements on business pursued by the supervised entities; may supervise compliance with legal regulations, which apply to the supervised entities or their activities, as well as compliance with the provisions of legal acts of the European Communities and the European Union, which apply to the supervised entities or their activities, if provided so by them; may conduct proceedings, grant authorizations, licenses, approvals and prior consents, impose sanctions and remedial measures, issue other decisions, positions, methodological guidance and recommendations, and supervise compliance with its decisions, including the fulfillment of the conditions set in these decisions; and may perform on-site and off-site supervision of supervised entities. The following business activities may be performed only upon the banking license granted by NBS: accepting the deposits from the public including the payment of interests and other payoffs, providing credits and loans from the funds gained from the public, the payments and settlements processing for third persons and issuance of credit cards. Further, the authorization or license granted by NBS is necessary to run business in the following areas: issuance of electronic payment instrument, such as credit cards, electronic money, internet banking; operation of payment systems; emission of certain securities and bonds; trading with securities and bonds as a securities trader, broker; the activities of the central depositor of securities, stock exchange, undertakings for collective investment in transferable securities; providing the financial services concerning additional pension savings; insurance and assurance. 4) Describe briefly non regulated financial and banking activities. The non-regulated financial and banking activities are all the other activities non-mentioned above, e.g. financial leasing, factoring, forfeiting, provisions of credits and loans, other trading for own account, if the financial institution uses no client s funds, public offer of investment etc. Nevertheless, if someone intends to provide these services as business activity, he needs to obtain a free trade license or other required authorization, and such activity is under the surveillance of competent authorities. 5) Describe briefly non-permitted financial and banking activities and/or government monopolies. As to non-permitted financial and banking activities, the usury is prohibited and is punished by criminal law. The government monopoly is to issue banknotes and coins, and maintain the accounts where the funds from the state budget are to be kept. In case of state of emergency, certain financial and banking activities may be restricted or prohibited. For example, in relation to foreign exchange, if foreign solvency of the Slovak Republic is seriously threatened, the following activities may be prohibited: the acquisition, by residents as well as non-residents, of foreign exchange assets in return for Slovak currency, this prohibition does not apply to places of foreign exchange; the payment of any kind of compensation from the country to a foreign country, including transfers of funds between banks and their branches; and the deposit of funds in accounts abroad. Where the internal monetary balance of the Slovak Republic is seriously threatened, the additional activities may be prohibited, such as the sale of domestic securities to non-residents; the acceptance of financial credits from non-residents; the opening of accounts in the country by non-residents and the deposit of funds in the accounts of non-residents; the transfer of funds from abroad between banks and their branches.

4 II. BANKING ACTIVITIES 6) Different types of banking licenses. Activities permitted under each of them. Activities prohibited. NBS grants to the banks and branches of foreign banks the banking license allowing them to accept deposits from the public and provide credits and loans. The banks and branches of foreign banks may perform other banking activities stated in the banking license, such as domestic and foreign payments, provision of financial services, issuance and administration of credit instruments, deposit of items, lease of safe deposit boxes, mortgages etc. The branches of foreign banks with the authorization granted by one of EU Member States needs no license granted by NBS, except in case of acting as a depositor of securities and bonds, and providing mortgages. They may provide banking services upon the written notification sent by the competent supervisory authority of the concerned EU Member State to NBS. 7) Procedures to be followed and requirements to be met to obtain each of the different licenses. Formalities to be fulfilled, documentation to be submitted, guaranties requested, time estimation, etc. An application must contain mainly the following particulars: the identification of a person filing the application and other concerned persons; indication of what is requested thereby, i.e. banking activities for which the applicant is applying; fair account of all decisive facts such as the business name and registered address of the future bank or branch of a foreign bank, ownership structure of the future bank, the amount of the share capital as well as the presumed expenses to establish the bank or branch; indication of any evidence if the applicant refers to circumstances proved by it; the applicant s declaration concerning the completeness, correctness, truthfulness, genuineness and timeliness of the application filed, including its attachments; the date and place where the application was signed and officially certified signature of the applicant or of its governing body; attachments; further particulars specified by law. Numerous deeds needed by NBS for its decision in the proceedings must be attached to the application, first of all, an excerpt from a register or from other records where the applicant is registered, and the deeds credibly attesting to, and documenting, the fulfillment of prerequisites and conditions, which must be met in order to grant the applicant an authorization, license, approval, consent or prior consent he has requested by an application. Where based on the application an act or proceedings is to be conducted, for which a fee is collected, which is to be paid to NBS, a document on the payment of the respective fee to the full amount is to be attached to the application. There is a detailed list of required documents attesting that all required conditions were fulfilled, such as the following: a) a foundation agreement or a foundation deed of the future bank, the integral part of which are draft statutes of the future bank, b) proposed organizational structure of the future bank, c) a business plan of the future bank or branch for the first three years of operations, d) a document attesting ownership, rent, or another legal relation certifying the right to use real estate or commercial premises where banking activities will be carried out, e) a document containing information about the presumed number of employees, f) a statement from a foreign supervision authority and its binding commitment to cooperate with NBS. There are plenty other documents to be attached, inter alia, attesting:

5 a) the origin and extent of a financial deposit into the share capital and other funds of the future bank, eligibility and appropriateness of shareholders with qualified interest in the future bank, transparency of their relations with other persons, in particular transparency of participation in the share capital and voting rights in the future bank, as well as the ability of shareholders to bridge an unfavorable financial situation in the future bank, b) the trustworthiness of a foreign bank and its financial strength appropriate to the scope of business of its branch; c) professional qualification and trustworthiness of persons proposed as members of the statutory body, authorized representative, members of the supervisory board, bank managements directly subordinated to the statutory body, manager of a branch, deputy manager of a branch, and head of internal control and internal audit. NBS is to decide on an receiving a complete application and it shall decide on an application for granting of an approval, consent or prior consent, or another application in accordance with a separate law within three months of receiving a complete application, unless a different time limit for the decision is provided by law; but it is to decide no later than within 12 months after receiving the application. 8) Legal structure admitted/requested for each of the different licenses. a) Different types of legal structures that may be used, i.e. corporations, limited liability partnerships, branches, subsidiaries, etc. The bank in Slovakia may only be established in the legal structure of corporation. The foreign banks may set up their branch in Slovakia. b) Capital requirements and own fund rules. The registered capital may not be lower than SKK 500,000,000 or in case of banks dealing with mortgages lower than SKK 1,000,000,000. There are detailed own fund rules implementing Directive 2000/12/EC relating to the taking up and pursuit of the business of credit institutions. They regulates own funds, solvency ratio and large exposures. The banks are required to permanently maintain the solvency ratio at a level of at least 8%, what expresses own funds as a proportion of risk-adjusted total assets and off-balancesheet items. The bank may not incur large exposures which in total exceed 800% of its own funds. c) Transfer of control and ownership regime. Is it regulated? The NBS s prior consent is required for the acquisition of the proportion of the voting rights or of the registered capital reaching or exceeding 5%, 10%, 20%, 33%, 50% or 66% in one or several consecutive transactions directly or indirectly. d) Personal requirements and restrictions that may apply in each case for officers, directors, shareholders, etc. The members of governing bodies, directors, senior managers directly under the power of governing bodies are required to fulfill the statutory requirements concerning their professional proficiency and integrity. The former requires university education and at least three-year working experience and threeyear managing experience in the banking or other financial sectors, or secondary-school education and at least seven-year working experience including three-year managing experience in the banking or other financial sectors. The latter requires that such person has not been sentenced for certain types of crimes; during the last ten years has not been in the leading position in the bank, which license was revoked by

6 NBS, upon which was imposed forced administration by NBS, or which went to bankruptcy or restructuralization; during the last ten years has not been fined by fine exceeding 50% of its maximum possible amount; and during the last ten years has performed his duties fairly and without violation of legal regulation or by-laws. NBS may grant exceptions depending upon the circumstances of the case. NBS may refuse to grant the banking license if, taking into account the need to ensure the bank s sound and prudent management, it is not satisfied as to the suitability of the qualified shareholders (at least 5% direct or indirect share of the voting rights or the registered capital). Where close links exist between the credit institution and other natural or legal persons, NBS may grant the banking license only if those links do not prevent the effective exercise of its supervisory functions. e) Special requirements/restrictions for foreigners either individuals or legal entities (including short description of WTO/GATS commitments and exemptions). The foreign banks or other financial institutions with the corresponding authorization granted in one of EU Member States may establish its branch or provide such financial services without any banking license granted by NBS and only upon the written notification sent by the competent supervisory authority to NBS. However, the banking license granted by NBS is required for acting as a depositor of securities and bonds, and providing mortgages. Other foreign banks may provide banking services in Slovakia only through their branches with a banking license granted by NBS. There are no limitations on national treatment concerning to cross-border supply, consumption abroad and commercial presence. As to limitations on market access, cross-border supply is unbounded for services such as participation in issue of all kinds of securities, asset management, settlement and clearing services for financial assets, and for transferable securities, other negotiable instruments and financial assets. Consumption abroad is unbound for services such as asset management. In case of other banking activities, there is no other limitation concerning cross-border supply, consumption abroad and commercial than mentioned above. 9) Is there a Deposits Insurance? Is it mandatory or based on self-regulation? Provide a brief explanation of how it operates. There is a mandatory Deposits Insurance covering deposits, interests and other proprietary benefits from them in the banks and branches of foreign banks. The Deposit Protection Fund is set up to provide for the accumulation of financial contributions from the banks and branches of foreign banks for eventual compensation of inaccessible deposits held by them and for their management. The banks and branches of foreign banks are obligated to pay the initial, annual and extraordinary contributions to the Fund. The deposits of natural persons and certain legal entities are protected at a rate of 90% of the inaccessible deposit and up to EUR 20,000 for one depositor, with certain exceptions. 10) Interest rate. Is it regulated? Should the answer be affirmative, explain briefly its regulatory framework. The commercial interest rates are regulated only by market. But they depend upon the basic interest rate, two-week REPO tender limit rate, O/N refinancing rate and O/N sterilization rate determined by NBS. Usury constitutes a crime. There is a special regulation of interest rates on late payments in Civil Code (twice the NBS basic interest rate) and Commercial Code (the NBS basic interest rate plus 10%). 11) Sanctions (civil, administrative, or criminal) for violations of the legal and regulatory dispositions. The aggrieved person may claim damages and adequate satisfaction, depending upon the type of harm, in civil proceedings.

7 There are various administrative sanctions depending on the seriousness, scope, duration, consequences, and nature of detected shortcomings. NBS may order to adopt recovery measures; to submit special returns, reports and statements; to terminate the unauthorized activity; to impose a fine; to limit or suspend the conduct of certain banking activities or certain types of transactions; to revoke the banking license for some banking activities; to reconcile the accounting books or other records; to publish a correction of incomplete, incorrect or wrong information; to settle a loss from business operations using registered capital, after using retained earnings, and funds created from profit, and capital funds to cover the loss; to introduce forced administration over the bank; or to revoke the banking license. Except the crime concerning violations of bank secrecy and frauds in relation to loans and credits, and in relation to securities, their issuance and trading, there are no special criminal sanctions. But many general economic crimes may be committed in relation to banking activities, such as fraud, theft, misuse of information in commercial relations, usury, conspiracy etc. III. BANK SECRECY LAWS 12) Is clients information protected? Are there any restrictions for its use? The clients information is protected. The banks are obliged to keep the bank secrecy and are not allowed to provide them to third parties without the clients consent except certain situations stipulated by law. 13) Should answer to number 12) be affirmative, please describe the legal framework, i.e. scope, limitation, exceptions. The banks may provide information covered by bank secrecy to various public authorities for specific purposes regulated by law, such as civil or criminal proceedings, crime investigation, enforcement of public authorities decisions etc. The banks may maintain a black list of clients, who violated their duties and defaulted on the performance of their obligations, as well as the data concerning the respective banks claims and their classification. They may share this information with other banks. The bank may keep a register of clients who do not meet their commitments properly and in time ensuing from contractual relations between the bank and a client, and clients who make what a bank or branch of a foreign bank considers as an unusual commercial transaction as stipulated by law, and may disclose, even without a client s consent, information from this register to other banks or branch of foreign banks, except for information concerning unusual commercial transactions. The banks may set up a joint register of banking information concerning the data on loans and bank guarantees granted to their clients, the data on requested loans and bank guarantees, where the clients have demonstrably applied for them and the data on these clients. 14) Sanctions (civil, administrative, or criminal) for violations. There are civil, administrative and criminal sanctions for violations of bank secrecy. The aggrieved person may claim damages and adequate satisfaction, depending upon the type of harm, in civil proceedings. The civil remedies concerning the violation of trade secret and personality are also applicable to certain types of violations of bank secrecy. There are no special administrative sanctions for a violation of bank secrecy, but various administrative sanctions mentioned above under number 11), such as fines and numerous orders to achieve the lawful state, are also applicable to violations of bank secrecy. In case where banking information is considered by law as personal data, the administrative sanctions under the Personal Data Protection Act are also applicable and the Personal Data Protection Office of the Slovak Republic may impose fines and may order to take measures in order to remove the shortcomings and their causes; to prepare or supplement necessary

8 documentation or security project pursuant to this Act; to take the technical, organizational and personal measures adequate to the manner of data processing; to prohibit processing of personal data, which is contrary to this Act; to remove or destruct personal data, if processed unlawfully; and to cancel by the bank a written authorization or written contract with the data processor. In case of criminal sanctions, there are crimes of violation of commercial, banking, postal, telecommunication and tax secrecy, and of unlawful use of personal data, which are sanctioned by an imprisonment depending upon the amount of damage, intention and seriousness of such crime, such as conspiracy and commission of crime in time of crisis.