Brussels, 26/04/2001 (Agence Europe) - On Thursday the European Commission proposed a Directive on the surveillance of financial conglomerates foreseen by the action plan for financial services. The initiative is part of the framework for the achievement within the EU of an integrated market by 2005, in order to make up for the delay compared to the United States. To tackle the consolidation underway in the stock markets, which leads to the creation of cross-sectoral financial groups, that is to say assets in several sectors and sub-sectors (bank, collective investments), this new proposal aims to institute closer coordination by the surveillance authorities for the different sectors. To this day, there does not exist any legislation covering the surveillance of financial conglomerates in the EU, which are often treated as "insurance banks" - which is insufficient to the extent that they are active in the field of investments.
The Directive requires a better sharing of information and foresees a series of measures aiming to align the rules applicable to financial conglomerates with those applicable to financial groups active in a single financial sector. In practice, the main aims followed by the Directive are: 1) to guarantee that the conglomerates have sufficient funds, to avoid, for example, covering risks in different entities with the same capital (multiple gearing), or that a mother company issues loans to finance the capital of its regulated subsidiaries (excessive leveraging); 2) define the methods to calculate the solvency position at the level of the financial conglomerate; 3) tackle the issues of intra-group transactions, the exposure to risk and the suitability and professionalism of management. The proposal also imposes on the Member States to ensure the designation of an authority that will be responsible for co-ordinating the actions of the various authorities taking part in the surveillance of conglomerates. A civil servant from the Directorate General Internal Market added that "the Commission's aim is neither to legislate on the institutional framework, which the Member States establish themselves, nor to create a new surveillance authority. In this area, the United States have a more integrated system, through the merger of the surveillance authorities into a single institution.
The joint G-10 Forum on financial conglomerates published in 1999 a series of recommendations on the surveillance of conglomerates.