Banking Monopoly and Credit Operations in EU Law

Extract

[...] The banking sector, due to its lack of interest for certain categories of activities or sectors, such as social housing or other social works, is not always present. However, it would be inconceivable to deprive these sectors of funding. That is why special derogations have been put in place, allowing non-banking organizations to meet these needs. These derogations ensure that the absence of banks does not hinder projects of general interest. The intercompany credit is another striking example. It allows companies to grant credit to other companies within the framework of their commercial relationships. [...]

[...] Therefore, the main sanction remains of a penal, and not civil nature. This means that a loan granted by an unlicensed entity cannot be automatically cancelled, except in specific circumstances, for example if the lender presented themselves fraudulently as the holder of a banking license. If nullity was systematically recognized, it could encourage opportunistic behaviors : of of debtors who would seek to cancel their loan simply by invoking the absence of consent from their creditor, even though they were perfectly aware of this situation from the start. [...]

[...] These cash movements enable the group to optimize its financial management without resorting to external financing. On the other hand, some derogations are of a more institutional order, without a particular teleological objective. For example, it would be practical to prohibit to the investment service providers (ISPs) of to propose credit operations on securities for this would harm the liquidity of the financial markets. Similarly, the insurance companies may be authorized to perform credit operations in specific situations, such as within the framework of international trade activities. [...]

[...] It is, in addition, prohibited for any person other than a credit institution to receive habitually repayable funds from the public or to provide banking payment services. The principle of banking monopoly also applies to financing companies, prohibiting unauthorized entities from performing credit operations on a habitual basis. The the question of how to circumvent this rule may seem tempting, but it is essential to to exercise extreme prudence. The chunger for criminal cassation by the Court of cassation is in charge of these matters, as the violation of the banking monopoly constitutes a criminal offense. [...]

[...] This omission creates an inconsistency within the European legal framework, as although credit operations are part of banking activities, the directive limits itself to sanctioning the sole receipt of funds from the public by non-banking establishments. This is a weakness of the European legislation. On the other hand, at the same time, the CRD IV does not prohibit member states of sanctioning the fact for a non-banking institution to carry out credit operations as a matter of course. Thus, in French law, the the banking monopoly is stricter and covers both aspects : the receipt of funds from the public and the realisation of credit operations is granted on a remunerative basis. [...]