Slovakia: Changes Ahead for Transborder Banking Business

This article was first published on International Law Office

An amendment to the Banking Act came into force on January 1 2005. The amendment focuses on transborder banking business and multinational banking holdings, and implements the Directive on the Implementation of Article 67 of the Treaty (88/361/EEC). It introduces a system of consolidated banking supervision and defines, among other things, the terms 'banking consolidated group', 'financial consolidated group' and 'mixed consolidated group'. The amendment also sets out new regulations for multi-national banking holdings.

The consolidated banking supervision will be carried out by the National Bank of Slovakia in order to limit the risks to which banks are exposed as a result of their participation in a consolidated group or subconsolidated group.

The National Bank will exercise this supervision over a financial consolidated or subconsolidated group provided the entity controlling the group is a financial holding institution that is not subject to supervision under the Financial Markets Supervision Act. The National Bank will maintain the list of such financial holding institutions and must give the list to:

• the Financial Market Office;

• the relevant supervising authorities in the member states of the European Union; and

• the European Commission.

Further, the consolidated banking supervision will extend over the mixed consolidated group and mixed subconsolidated group to the extent of intragroup trades between a bank or an electronic money institution and a holding company with mixed activities and its subsidiaries.

The National Bank can decide that certain entities from a consolidated or subconsolidated group will not be taken into account for the purposes of banking supervision. This may apply if the entity is resident in a member state where the law does not allow the exchange of information for the purposes of banking supervision. The national bank can also decide not to supervise any consolidated or subconsolidated group that is already under its supervision for other reasons or that is under the supervision of the relevant authority of another member state on the basis of a written agreement between the National Bank and that authority.

The auditor of an entity included in the consolidated or subconsolidated group is obliged, for the purposes of banking supervision, to provide the National Bank with any required information. A person controlling a consolidated or subconsolidated group shall provide the National Bank with details of the group's auditors by the end of each audited calendar year. The same applies to an entity controlling a mixed consolidated or subconsolidated group.

If a Slovakian bank that is controlled by a foreign bank or a financial institution with a seat in another member state is part of the consolidated or subconsolidated group, the National Bank is authorized to agree (i) written terms for banking supervision with the relevant supervising authority of that member state, and (ii) the way in which information will be exchanged. Details of such agreements are given by the National Bank to the European Commission. If such an agreement is not reached, the consolidated supervision is carried out by the supervising authority that granted the banking licence to a bank or a foreign bank with the largest assets or, if the assets are the same, by the supervising authority that granted the first licence.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.