Banking approval withdrawal, credit institution, European Central Bank, ECB, prudential requirements, banking regulation, non-disciplinary withdrawal, disciplinary withdrawal, banking license revocation, financial regulation
Reader
Abstract
Extract
of 3
Abstract
This document outlines the circumstances and procedures surrounding the withdrawal of banking approval, including disciplinary and non-disciplinary reasons, and the implications for credit institutions.
Extract
[...] Unlike non-disciplinary withdrawal, this measure leads to the total disappearance of the credit institution, which cannot be transformed or continue under a different legal or structural form. Disciplinary withdrawal therefore leads to the complete dissolution of the concerned entity, marking the end of its existence as a legal person. The credit institution is then forced to cease all its operations, without possibility of reconversion in another sector. This approach aims to guarantee the integrity of the banking system by definitively removing actors who seriously breach the rules governing the sector or who compromise public and regulator confidence. [...]
[...] Withdrawal of accreditation The withdrawal of accreditation can be disciplinary or non-disciplinary §1. Non-disciplinary withdrawal Non-disciplinary withdrawal, although so named, may cause confusion. In fact, some of the reasons that justify this type of withdrawal may seem to belong to the disciplinary, but it is not so. This type of withdrawal can be initiated by the credit institution itself, but it may may also result from a decision taken at the initiative of the European Central Bank (ECB). The circumstances that may lead to a non-disciplinary withdrawal of approval are diverse and mainly reflect the respect of prudential requirements and the transparency of banking activity. [...]
[...] - The establishment has not carried out any banking activity for at least six months. These situations reflect the regulatory authorities' desire to maintaining the solidity and reliability of the banking sector by avoiding the persistence of inactive or non-conforming structures. The withdrawal of approval therefore occurs as a a regular cleansing mechanism of the banking space, preventing the proliferation of what could be called 'ghost ships' or 'empty shells'. This control is exercised over time. In fact, the ECB and national authorities are responsible for surveil continuously and rigorously the conditions for maintaining the license, rather than performing a single check at the time of its grant. [...]
