Brussels, 07/05/2002 (Agence Europe) - On Tuesday, the Ecofin Council reached a political agreement on the "conglomerates" directive that is to strengthen prudential surveillance of credit establishments, insurance companies and investment firms grouped within conglomerates. It approved an essential part of the amendments adopted by the European Parliament on 14 March. The text will impose rules of solvency on conglomerates and ban duplication of own funds to cover risks in various entities of the same conglomerate. A certain margin of manoeuvre is, however, left to companies, which will be able to choose the method they wish for eliminating duplication. The directive will also make surveillance mechanisms for intra-group transactions and risk concentration a requirement.
In its political agreement, which is soon to become a common position, without discussion, the Council followed the Parliament by fixing 40% of the threshold of financial activity on the basis of which a group is considered a financial conglomerate (instead of 50% in the initial proposal). The Council also accepted mechanisms for coordinating control authorities that limit overlapping of competences, for example with coordination being assured by a single authority and not by a college. It strengthened the obligations concerning information exchange between control authorities. Finally, the Council approved the "sunset clause" introduced by Parliament, providing for provisions to be reviewed after four years allowing adoption of technical rules arising from the directive through comitology procedure, according to the so-called "Lamfalussy" procedure. At a request made by France, which stressed that the Lamfalussy method only in principle applies to the securities market, the Council nonetheless adopted a declaration specifying that this clause will not create a precedent. France, moreover, felt that such a clause could create legal uncertainty for business.
Commissioner Frits Bolkestein congratulated the Spanish Presidency in a press release for having reached an agreement on this text so rapidly, as, it says, this is "vital for implementation of the action plan on financial services".