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Memorandum of Understanding between the National Bank of Slovakia and the Bundesaufsichtsamt für das Kreditwesen Co-operation in the Field of Supervision of Banks
1. The National Bank of Slovakia (“NBS”) and the German Bundesaufsichtsamt für das Kreditwesen (“BAK”), both hereinafter referred to jointly as “the Authorities” express their willingness to cooperate on the basis of mutual trust and understanding and agree to base their cooperation in the field of supervision of banks on the principles and procedures outlined in this Memorandum.
2. According to National Bank of Slovakia Act and to the Banking Act the National Bank of Slovakia is responsible for the conduct of supervision over the safe functioning of the banking system and banks, the Deposit Protection Fund, other entities, and groups of entities where required by the New Banking Act. Banking supervision is carried out over individual banks, foreign bank’s branches or other entities and also over consolidated groups and sub-consolidated groups of which banks are members.
3. As central body in accordance with the German Banking Act (BA) and other special laws, the BAK, which was established in 1962, is entrusted with the supervision of banks in Germany. As (organisationally) independent superior federal authority within the purview of the Ministry of Finance, the BAK forms a part of the direct federal administration. Exercising its sovereign functions, the BAK closely cooperates with the Deutsche Bundesbank which assists in carrying out the supervision of banks and investment firms. The BAK and the Deutsche Bundesbank are hereinafter jointly referred to as “German banking supervisors”.
Information regarding institutions
4. The Authorities intend to cooperate in the supervision of cross-border establishments of banks incorporated in the respective other country and within their respective jurisdiction. For the purpose of this Memorandum “cross border establishment” means a branch or a direct or indirect subsidiary or a representative office of a bank within the Authorities juris-diction in the respective other country. The scope of cooperation encompasses the licens-ing (both issuance and revocation) as well as the ongoing supervision of the cross-border establishments, be they branches or subsidiaries. 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. The BAK will pass on information received by the NBS to the Deutsche Bundesbank, with regard of the domestic allocation of responsibility and in accordance with the provisions of this Declaration.
5. If a bank based in one of the two countries applies to the authority of the other country to establish a branch, the latter is hold to inform the home-country authority without delay. If the adequacy of home supervision is a statutory prerequisite which the host-country authority needs to address in the licensing procedure, it would contact the home-country authority to settle any question in this regard.
6. The home-country authority informs the host-country authority of the amount of own funds and the solvency ratio of the parent bank, and whether it 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 control to run the cross-border estab-lishment in an orderly and proper manner. The home-country authority discloses any piece of information available to the host-country authority which might give rise to doubts as to the fit- and properness of the prospective managers of the cross-border establishment.
Cooperation concerning owner control
7. The Authorities shall consult before granting authorisation to a subsidiary of a bank authorised in the other country or assessing any acquisition of a qualified participating interest according to the respective national law in a domestic bank through a bank within the jurisdiction of the other Authority.
Ongoing supervision; corrective actions
8. The NBS and the German banking supervisors inform each other, in good time and to the extent reasonable, about any event which has the potential to endanger the stability of banks 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 branch establishment as host supervisor or on the parent bank as home supervisor if the information is important to the other authority.
9. The NBS and the German banking supervisors discuss any significant information on banks 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, 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 supervi-sory arrangements in third countries.
10. Representatives of the NBS and the German banking supervisors convene for ad-hoc meetings to promote the resolution of supervisory problems concerning a cross-border establishment in the respective other country, whenever either side deems it necessary.
11. For any institution located in Slovakia and in Germany respectively and which apply for a licence with the other authority, the NBS and the BAK will, as far as they are able, discuss any significant information available to them which might be relevant to the other Authority.
12. The Authorities will cooperate closely when they identify suspected financial crime activities in supervised institutions. For the purposes of this agreement, financial crimes are in particular: money laundering and all violations of law on financial markets. This also includes unauthorised banking. 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 authorities in the national jurisdiction.
13. The Authorities will inform each other without delay if they learn of an incipient crisis relating to any institution supervised which has cross-border establishments in the other country.Customer complaints
14. Complaints made about any institution should be handled by the relevant authorising authority. If as a results any information comes to the attention of either the NBS or the BAK which is relevant to the other authority the NBS and the BAK will ensure that this properly communicated.
15. In Germany, the BAK is not empowered to intervene as fact-finder, mediator or arbitra-tor 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 BAK 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 (cf. Section 6 (2) and (3) BA).
In the Slovak Republic, the subject of banking supervision shall not be disputes ensuing from contractual relations between banks or branches of foreign banks and their clients, the review of which or decisions on which fall within the jurisdiction of courts or other authorities under separate regulations (Civil Court Procedures Act, Act on Arbitration Proceedings).
On-site inspections and audits
16. The Authorities agree that cooperation is particularly useful in assisting each other in carrying out on-site inspections of cross-border establishments. The NBS will allow the BAK or the auditors commissioned by it, to carry out inspections of branches and direct or indirect subsidiaries of German banks in Slovakia. In return, the BAK will allow the NBS to carry out inspections of German branches and direct or indirect subsidiaries of banks authorised in Slovakia.
17. The Authorities shall notify each other 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 either by the Authorities themselves or the auditors commissioned by the Authorities. 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.
18. 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 neces-sary condition for a successful cooperation 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 without first obtaining 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 the other authority of the request for information and will cooperate in seeking to preserve the confidentiality of such information. The BAK will pass on the information received from the NBS to the Deutsche Bundesbank as to the extent that information is of significance for the performance of the Deutsche Bundesbank as outlined in Section 7 BA.
19. In order to enhance the quality of cooperation, representatives of the NBS and the German banking supervisors convene regularly to discuss issues concerning banks which maintain cross-border establishments within their respective jurisdiction. In these meetings they will also review the effectiveness of these arrangements. The NBS and the German banking supervisors intend to promote their cooperation by visits for informational purposes and by short exchange of staff for practical internships.
20. 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 cooperation the Authorities will in 20 days 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).
21. 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 MoU. One months notice of any such action will be given.
22. 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 of Understanding will continue to be treated confidentially.
23. This agreement is written in the English language in four copies.
SIGNED at Bonn, this 17th day of April, 2002.
|For the National Bank of Slovakia||For the Bundesaufsichtsamt
für das Kreditwesen of Germany
Vice – Governor
of the NBS
Dr. Burkhard Lehmann