European Law and Credit Institutions

Extract

[...] - The factoring companies have also always been interdicted from receiving public funds. These activities have been known since the dawn of time and have always been interdicted from receiving public funds. All intermediate categories enabled to receive public funds for a limited number of years have been abolished. We are now facing a narrowed definition of credit institutions by European Union law. Why not establish a broader definition? In fact, financing companies are also subject to systemic risk since they feed on the market. [...]

[...] There is a great distinction to be made from now on between the credit establishments and the societies of financing. These two types of organizations have a major role, but there are also organisations authorised to carry out banking operations that are not strictly speaking banks. Article L511-1, I of the Monetary and Financial Code operates a referral to Regulation CRR No. 575-2013 of 26 June 2013, which sets the prudent rules for credit institutions and defines them in its Article 4§1, 1°. [...]

[...] In the case where half of its clientele was led to default, there would certainly be consequences on the financial markets, but the company does not have to fear a possible default of repayment of the sums deposited by its clients. There is therefore a financial risk, but this risk is less than that of a credit institution, which explains the narrow vision of the CRD and the CRR. One might imagine that a country in the European Union only regulates credit operations and liberalizes all others. At a certain time, certain European countries did not regulate financing companies. In France, it is unthinkable. The The qualification of financing company is a qualification of pure internal law. [...]

[...] All establishments that, in France, do not receive funds from the public are outside the scope of European law, so that the French law is entitled to establish new categories subject to the regimes it decides to institute. It is for this reason that the societies of financing exist. Article L511-1, II of the Monetary and Financial Code : « Societies of financing are moral persons, other than credit institutions, who perform as their habitual profession and for their own account credit operations within the conditions and limits defined by their authorization. They are financial institutions. [...]

[...] The The European law leaves it up to the internal laws to take the initiative to prudentially encircle financing companies. The European law, in banking as in finance, is the support of the European passport, so that if one is not a credit institution in the sense of European law, one cannot passport. However, the concept of financing company is purely internal law. A classic credit institution like BNP has its headquarters in France and wants to set up a branch in Greece, it just has to notify the Greek authorities, but it does not need to ask for authorization. [...]