European Parliament Approves EC Plans To Amend Banking M And A Rules

by Ulrika Lomas, for LawAndTax-News.com, Brussels

15 March 2007

The European Parliament on Tuesday reached agreement in its first reading of the European Commission's proposal to tighten the procedures that member States' supervisory authorities have to follow when assessing proposed mergers and acquisitions (M&A) in the banking sector.

Internal Market Commissioner, Charlie McCreevy welcomed the vote, observing that:

"The European Parliament today voted in favour of making the whole acquisition process in financial sectors more efficient. The purpose of this Directive is neither to encourage nor to discourage acquisitions in the financial sector. We want to ensure that business decisions to make acquisitions in the financial sector are examined in a clear and transparent manner by the appropriate supervisor."

"It is imperative that legitimate business decisions are not frustrated by over-zealous authorities or by political interference. For the Internal Market to function correctly it is critical to have clear, fair and predictable procedures and processes. We believe that with this Directive we will remove the ambiguity that has existed so far."

Current EU rules allow supervisory authorities to block planned M&A if they consider that the 'sound and prudent management' of the target company could be put at risk.

The proposed new Directive, which amends various existing Directives in these sectors, would in particular clarify the criteria against which supervisors should assess possible M&A operations.

The proposed Directive would amend the following existing Directives: the Banking Directive, the Third Non-life Insurance Directive, the Recast Life Assurance Directive, the Reinsurance Directive, and the Directive on markets in financial instruments.

Recommended