LAW
the banking law no. 58 of 1998

 

CHAPTER I
General provisions

Section 1
Field of operation

 

            Art. 1. - Banking activities in Romania shall be carried on through the National Bank of Romania and through banks.
            The carrying on of banking activities also by other juristic persons may be authorized by law, with observance of the principles under the present law.

            Art. 2. - The present law shall operate on banks which are Romanian juristic persons constituted as trading companies as well as on branches in Romania of the banks constituted as foreign juristic persons.
            The provisions under chapter X of the present law shall also operate on juristic persons carrying out interbanking funds transfers.

 

Section 2
Definitions

 

            Art. 3. - In the meaning under the present law, the terms and phrases farther down shall have the following significations:
            a) The National Bank of Romania - the central bank of the Romanian state, having legal personality; its powers are those provided under the Law on the Status of the National Bank of Romania and under the present law;
            b) bank - a juristic person authorized mainly to carry out activities of attraction of deposits and granting of credits in its own name and on its own account;
            c) subsidiary - a juristic person in which another person or group of persons acting together hold fifty-per-cent or more of the shares with voting right or a significant participation, enabling them to exercise an effective control over the management or policies of the subsidiary;
            d) branch - a bank's operational establishment without legal personality directly carrying out all or some of the bank's activities, within the limits of the mandate given by it;
            e) affiliate of a bank - a subsidiary of the respective bank or a trading company for which the bank is a subsidiary, or a trading company which, together with the respective bank, are under the common control of another trading company;
            f) deposit - a sum of money entrusted under the following conditions:

            - that it be reimbursed in totality, with or without interest or any other facilities, on request or at a term agreed by the depositor with the depositary;

            - that it should not refer to the transmission of property, to the provision of services, or to the granting of guarantees;

            g) credit - any engagement for the payment of a sum of money in exchange of the right to reimbursement of the sum paid as well as to the payment of interest or other expenses linked to this sum or any extension of the date of payment of a debt and any engagement to acquire a title embodying a debt or another right to the payment of a sum of money.
            From the point of view of the date of payment, the credit may be:

            - on short term, whose reimbursement duration does not exceed twelve months;

            - on medium term, whose reimbursement duration is from one to five years;

            - on long term, whose reimbursement duration exceeds five years;

            h) managers of the bank - the no less than two persons, who, according to the constitutive deeds and/or the resolution of the statutory bodies of the bank, are empowered to manage and co-ordinate its daily activities, and are invested with the competence to engage the bank's responsibility. These are the president and vice-president(s) of the Managing board, in the case of banks which are Romanian juristic persons, and the directors empowered lawfully to engage in Romania the foreign bank authorized to operate in Romania's territory, through a branch;
            i) significant shareholder - a person holding at least five-per-cent of the shares of a bank;
            j) person - the juristic or natural person and any group of persons acting together and which constitute or do not a juristic person;
            k) group of persons acting together - two or more persons having concluded an agreement with a view to getting or exercising the voting rights with a view to carrying out a common policy towards the bank.
            An agreement shall be considered to exist:

a.       between man and wife, relatives, and up to twice-removed in-laws inclusive as well as

b.      between these and the companies effectively under their control;

c.       between a company, the president of the Managing board, and its managers;

d.      between a company and the companies on which it directly or indirectly holds the effective control power;

e.       between companies under the effective control of the same person(s);

            l) company under effective control - a company in which a natural or juristic person:

            holds at least fifty-per-cent of the voting rights;

            has the right to appoint or replace the majority of the members of the Managing board;

            may decide on the financial-and-banking policy and management on the basis of an agreement concluded with other shareholders or partners;

            m) authorization - a deed issued by the National Bank of Romania granting the right to carry on the activities specified in it;
            n) regulation - a statutory instrument issued by the National Bank of Romania in application of the present law and which is compulsory for all the banks. In this class are included: rules and regulations, norms, circular letters and other deeds with a general character issued by the National Bank of Romania;
            o) order - an instrument issued by the National Bank of Romania in application of the present law or of a regulation issued on the basis of the present law and which is mandatory for one or more banks;
            p) capital - net assets' value calculated as the difference between total assets, and liabilities representing obligations made evident in the balance sheet in keeping with the regulations of the National Bank of Romania. When first set up, this represents the registered capital;
            r) own funds - a bank's own funds, whose calculation method and minimum level are established by the National Bank of Romania;
            s) credit documentation - documentation underlying an agreement between a bank and another person for the granting of a credit, and including at least:

            - current financial statements of the credit applicant and of any of his or her guarantors, the projection of the financial flows for the reimbursement period of the credit and payment of interest inclusive;

            - a description of the guaranteeing modalities for the integral payment of the debt, and an assessment of the value of the goods forming the object of the guarantee;

            - a description of the conditions of the credit, including the value of the credit, interest rate, reimbursement schedule and debtor's objective or purpose which the credit was applied for;

            - signature of every person having authorized the credit in the bank's name;

            t) remedy measures - measures for the removal of the consequences of one or some of the deeds provided under Art. 69, and which may include:

            - establishment of a plan for increasing the bank's own funds;

            - setting up by the bank's Managing board of committees for the supervision of the credit's administration, management of the assets and liabilities, or of the internal check and auditing;

            - suspension of the managers over a period not exceeding one year or their replacement;

            - replacement of the executive directors and of the auditors;

            - improvement of the internal check and auditing measures;

            u) a single debtor - any person or group of natural and/or juristic persons towards which the bank has an outstanding credit and which are economically linked among themselves in the sense that:

1.      one of the persons, directly or indirectly, exercises on the others a power of control;

2.      the cumulated level of the loans granted represents a single credit risk for the bank, since the persons are linked to such an extent that, if some of them should face difficulties of reimbursement, another or the others would face similar difficulties. In the case of these persons, the following situations will be taken into consideration, this being an unlimitative enumeration:

3.      they are subsidiaries of the same person;

4.      they have the same management;

5.      they have crossed guarantees;

6.      they have direct commercial interdependence, which is not susceptible of short term substitution;

            v) outstanding credit - any engagement assumed by a bank towards a single debtor, regardless of whether it is effective or potential, in or outside the balance sheet, without being restricted to these:

credits;

1)      discounted mercantile bills;

2)      investments in shares and other transferable securities;

3)      mercantile bills endorsed as guarantee;

4)      issued guarantees;

5)      open or confirmed letters of credit;

            x) prudential banking supervision - the establishment of norms and indicators for banking prudence and the following up of their observance for the purpose of preventing and limiting banking risks and thereby ensuring the stability and viability of the whole banking system.

 

Section 3
Interdictions

 

            Art. 4. - Any person shall be prohibited from carrying out banking activities in Romania's territory without an authorization issued by the National Bank of Romania.

            Art. 5. - Any person lacking an authorization issued by the National Bank of Romania shall be prohibited from using the name of bank or derivatives of the name of bank, in connection with an activity, a product, or a service, except the case in which this use is established or recognized by law or by an international agreement, or when, from the context in which the name bank is used it undoubtedly follows that it is not a question of banking activities.

Art. 6. - Any foreign bank shall be prohibited from engaging directly in banking activities in Romania, except the case in which the activities are carried out through a subsidiary constituted as a. bank, Romanian juristic person, or through a branch for which an authorization has been issued by the National Bank of Romania.

Art. 7. - Any person, other than a bank or company authorized according to the law, shall be prohibited from engaging in activities of acceptation of deposits.

 

CHAPTER II
Permitted banking activities

 

Art. 8. - Banks, which are Romanian juristic persons, and branches of foreign banks shall be permitted, within the limits of the granted authorization, to carry out the following activities:

a)      acceptance of deposits;

b) contracting of credits, factoring operations and mercantile bills discounting, agreed ones inclusive;

c) issue and management of credit and payment instruments;
d) payments and settlements of accounts;
            e) financial leasing;
            f) transfers of funds;
            g) issues of guarantees and assumption of engagements;
            h) transactions on their own account or on account of their clients with:

negotiable monetary instruments (cheques, bills of exchange, deposit certificates);

foreign currency;

derived financial instruments;

precious metals, objects made from them, precious stones;

transferable securities;

i) intermediation in the placement of transferable securities and offer of services in connection therewith;
            j) administration of clients' portfolios, in their name and at their risk;
            k) custody and administration of transferable securities;
            l) depositary for transferable securities collective placement bodies;
            m) leasing of strongboxes;
            n) financial-and-banking consulting;
            o) mandate operations.
            Banks may carry on the activities provided under the legislation on transferable securities and stock exchanges through distinct companies specific to the capital market, functioning under the regulation and supervision of the National Commission on Transferable Securities, except activities which, according to this legislation, may be carried on directly by the banks.
            Financial leasing operations shall be carried on by the banks through distinct companies constituted to this end.

 

CHAPTER III
Authorization of banks

 

Art. 9. - Banks which are Romanian juristic persons may function only on the basis of an authorization issued by the National Bank of Romania. They shall be constituted in the juridical form of a trading company by shares, on the basis of the approval of the National Bank of Romania, with observance of the legal provisions in force, applicable to trading companies.
            The provisions of the preceding paragraph shall also correspondingly apply in the case of the banks' branches which are foreign juristic persons.

Art. 10. - Foreign banks shall be under an obligation to notify the National Bank of Romania on the opening of representations in Romania conformably to its regulations.
            The representations of foreign banks shall limit their activity to acts of information, connection, or representation, and shall not carry on operations of any kind subject to the provisions of the present law.

Art. 11. - The application for an authorization shall be forwarded to the National Bank of Romania in the form established by it. The documentation that must attend the application, terms and authorization procedure shall be established by the regulations of the National Bank of Romania.
            The conditions under which the authorization may be granted shall be regulated by the National Bank of Romania, and shall refer, without being limitative, to:
            a) the professional experience and qualification of the bank's managers;
            b) the minimum level of the subscribed registered capital, which has to be paid in form of cash, in totality, at the moment of the setting up;
            c) the feasibility study of the bank;
            d) the founders and significant shareholders of the bank;
            e) structure of the shareholders body;
            f) head office of the bank;
            g) the independent auditor as provided under Art. 61.

Art. 12. - The National Bank of Romania may request an applicant to present any supplementary documents and information if the presented ones are incomplete or insufficient.

Art. 13. - Within not more than four months after the application was received, the National Bank of Romania shall approve the constitution of a bank or reject the application and shall communicate in writing to the applicant its decision, together with the motives underlying it, in case the application is rejected.
            Documents attesting the legal constitution of the bank shall be presented to the National Bank of Romania within two months after the communication of the constitution approval with a view to the granting of the functioning authorization. In the case of banks constituted by way of public subscription, the presentation term of these documents shall be of eight months.
            The National Bank of Romania shall decide with regard to the functioning authorization of a bank within not more than four months after receiving the documents provided under para. 2.

Art. 14. - The authorization application shall be rejected if:
            a) the documentation presented is incomplete or is not drawn up conformably to the legal provisions in force;
            b) the documentation presented is insufficient to determine whether:

1.      the bank will carry on an activity in accordance with the provisions of the present law;

2.      the honourableness, professional experience and training of the bank's heads and the quality of the significant shareholders are adequate to the realization of the objectives provided in the feasibility study and to the financial-and-banking activities proposed to be carried on;

c) the registered capital is smaller than the minimum level established by the National Bank of Romania;
            d) the juridical form is different from that provided under Art. 9;
            e) from an evaluation of the feasibility study and/or from the yearly reports of the foreign bank, as the case may be, it follows that the bank cannot assure the realization of the objectives proposed under conditions compatible with a good functioning of the banking system and with the rules of a prudent banking practice providing the clients with a satisfactory surety, or these fail to correspond to the conditions existing within the framework of the market segment which is to be covered by the services supplied by the bank;
            f) the heads of the bank, its managers, or auditors have not the necessary honourableness, professional experience and qualification adequate to the function, according to Art. 25, or with regard to whom one of the measures provided under Art. 69 or 70 was taken;

g) the quality of the founders or of the significant shareholders falls short of the need of a guaranteed sound and prudent management of the bank, for causes such as would be that:

their financial power is not sufficient for avoiding the dependence on the distributed dividends or on other advantages that could be obtained from the bank with a view to the satisfaction of their financial obligations in the first three years of the bank's activity;

the source of the funds used for obtaining the participation is an internal credit;

criminal sentences;

the juristic persons having the quality of founders or significant shareholders have a length of time in function of less than three years;

h) before obtaining the approval of constitution, the founders have made public communications on the founding or functioning of the bank;

i) the provisions under the present law or the regulations given in their application are not observed.

Art. 15. - The provisions under articles 11-14 shall also apply correspondingly in the case of the branches of foreign banks, the authorization application being forwarded to the National Bank of Romania by the respective foreign bank.

 

CHAPTER IV
Withdrawal of authorization

 

Art. 16. - The National Bank of Romania may withdraw the authorization of a Romanian bank or subsidiary, or a subsidiary or branch of a foreign bank:

1.      at the request of the bank;

2.      as a sanction, according to Art. 69 para. 2 letter e);

3.      on the basis of one of the following grounds:

a) the bank has not started the operations for which it has been authorized, within a year after the authorization was received, or it has not exercised the activity of accepting deposits for more than six months;
            b) the authorization was obtained on the basis of false statements or by any other unlawful means;
            c) the shareholders have decided to dissolve and wind up the bank
            d) a merger or a division of the bank has taken place;
            e) the competent authority from the country where the foreign bank has its head office, and which has set up a branch in Romania, has withdrawn its authorization to carry on banking activities;
            f) the authorization of the bank, whose subsidiary it is, has been withdrawn.

Art. 17. - The decision of the National Bank of Romania to withdraw the authorization shall be notified in writing to the bank, subsidiary, or branch in question, together with the reasons on which it was based, and it shall be published in the "Monitorul Oficial" (Official Gazette of Romania), Part I, as well as in two publications of national circulation.
            The withdrawal decision of the authorization shall produce effects after the date of its publication in the "Monitorul Oficial" (Official Gazette of Romania) or after a subsequent date specified in the respective decision.

Art. 18. - The bank, subsidiary, or branch shall be prohibited to engage in any financial operation as from the date of coming into force of the withdrawal decision of the authorization.

 

CHAPTER V
Merger and division of banks

 

Art. 19. - The merger or division of banks shall be carried into effect according to the legal provisions as well as with observance of the regulations of the National Bank of Romania.

Art. 20. - The merger of two or more banks or the division of a bank shall be decided by each bank according to its own statute. Before beginning to operate, the bank or banks resulting from the merger or division shall be under an obligation to obtain the authorization of the National Bank of Romania.

 

CHAPTER VI
Organization and management of banks

 

Art. 21. - The organization and management of the banks shall be established by their constitutive deeds in conformity with the commercial legislation and with observance of the provisions under the present law,

Art. 22. - In all its official papers, the bank shall have to identify itself clearly by a minimum of data: the trade name under which the bank is incorporated with the trade register, the registered capital, the address of the head office, number and data of incorporation with the trade register, number and date of registration in the banking register.

Art. 23. - The bank shall be engaged by the signature of at least two of its heads, having competencies established by the bank's own constitutive deeds, or by at least two persons empowered by them, in accordance with the bank's own regulations and with the regulations issued by the National Bank of Romania in this sense.

Art. 24. - Each bank shall have its own functioning regulations, approved by the statutory bodies, establishing at least:
            a) the organizational structure of the bank;
            b) the powers of the bank's compartments and relations existing between them;
            c) the powers of the branches and of other secondary seats of the bank;
            d) the powers of the risk committee, of the assets and liabilities administration committee, of the credits committee, whose setting up is compulsory in the carrying on of the bank's activity;
            e) the competences and responsibility of the heads and of the bank's executive directors, of the chief executives of the branches and other secondary seats of the bank, and of other employees embarking upon banking-and-financial operations in the bank's name and on its account;
            f) the bank's internal check system.

Art. 25. - The heads of the bank shall be resident in Romania, shall exercise exclusively the function to which they were appointed, and at least one of them shall have Romanian citizenship. They must hold a university degree, and have a length of time of five years in banking-and-financial activities.      

Through their activity, they shall not have caused the bankruptcy of a trading company.
            Persons designated as heads of a bank shall have to ~e approved by the National Bank of Romania before starting to exercise the function.
            The National Bank of Romania may also establish other ethical and professional rules and norms for the quality and activity of the banking personnel.

Art. 26. - In case that the bank's Managing board should delegate part of its competencies to a committee of management, according to the law, all managers of the bank shall belong to it.
In this case, the president of the Managing board shall also conduct the committee of management.

Art. 27. - Managers of the bank shall be only natural persons. Their number shall not exceed eleven. The term of their mandate shall not be longer than four years, with a possibility of their being reelected.
            In addition to the conditions provided under the legislation in force with reference to managers, a person shall not be elected to the Managing board of a bank, or lose the mandate if elected, when:
            a) he or she is an employee of the bank in question, except its managers;
            b) he or she is an employee, manager, or auditor in another bank; except the employees and managers of a bank, in case they are elected managers in a subsidiary of the bank;
            c) his or her approval by the National Bank of Romania was withdrawn, according to Art. 69, in the last five years, or replaced, according to Art. 70, as a result of a remediation measure taken by the bank.

Art. 28. - Auditors of a bank shall be only natural persons having the capacity of expert or authorized accountant, with university degree, under the conditions of law, and an experience of at least five years in the banking-and-financial field as well as audit companies authorized to carry on this activity in Romania' s territory.
            Persons who, according to Art. 70 under the present law, were replaced during the last five years as a result of a remediation measure taken by a bank, cannot be auditors of a bank.

 

CHAPTER VII
The conflict of interests

 

Art. 29. - The manager shall notify the bank in writing on the nature and extent of his or her material relation or interest, if he or she:
            a) is party to a contract with the bank;
            b) is manager of a juristic person that is party to a contract with the bank;
            c) has a material interest or a material relation with a person who is party to a contract with the bank, except contracts of deposit or custody of securities.

Art. 30. - The obligation provided under Art. 29 devolves upon the manager when he has known or should have known the fact that such a contract was concluded or was under way of being concluded.

Art. 31. - The manager of a bank shall be under an obligation, whenever necessary, but not less than once a year, to present in writing to the Managing board of the bank a statement showing the names and addresses of his or her associates and data with reference to the material interest of financial, commercial, agricultural, industrial or of another nature of the manager and of his or her family.

Art. 32. - A manager having a material interest or a material relation in the sense of articles 29, 31 and 33 shall not participate in the debates on the contract and shall abstain from voting on any problem in connection with this contract.

For the purpose of achieving the necessary quorum for taking a decision on the contract in question, the manager will be considered present.

Art. 33. - An interest shall be considered material in the sense of the provisions under articles 29 and 31, if it refers to the wealth, affairs or interests of the family (of the husband or wife, relatives, and in-laws up to twice removed inclusive) of the person who has an interest.

Art. 34. - When a manager fails to declare a conflict of interests, conformably to the provisions under the present chapter:
            a) the bank, or one of its shareholders, or the National Bank of Romania may petition the appropriate judicial instance to annul any contract in which the respective manager has an undeclared material interest, in keeping with the provisions under the present chapter;
            b) according to Art. 70, the National Bank of Romania may request the bank the suspension of the manager over a period not exceeding one year, or his/her replacement.

 

CHAPTER VIII
The professional secret

 

Art. 35. - The bank shall preserve the confidentiality of all transactions and services it offers, with regard to the holders of the accounts' identity inclusive.

Art. 36. - The personnel of a bank, subject to the provisions of the present law, shall not either during their activity, or after its cessation, have the right to use or to disclose facts or data which, having become public, might be prejudicial to the interest or prestige of a bank or of its clients.
            The above provisions shall also apply to persons who get such information from reports or other documents of the bank.

Art. 37. - Any member of the Managing board of a bank as well as all persons participating in the bank's activity shall be under an obligation to preserve the professional secret. Information with regard to the sums of money deposited and operations carried out in the name of natural or juristic persons shall be transmitted only to the holders or their lawful representatives, and in criminal causes in which a criminal trial was set in motion against the holder at the written request of the public prosecutor or of the judicial instance. The bank's personnel may not use to their own advantage banking information it holds or of which they have taken cognizance in any way what-so ever.
            The provisions of para. 1 shall also apply to persons having obtained information of the nature of that shown above from the check and supervision activity or from reports or documents of the bank.

 

CHAPTER IX
Operational requirements

Section 1
General provisions

 

Art. 38. - In their activity, the banks shall be subject to the orders and regulations issued by the National Bank of Romania, given in application of the legislation on the monetary, credit, foreign currency, payments, ensuring the banking prudence, and banking supervision policy.
            The banks shall organize their whole activity in accordance with the rules of a prudent and healthy banking practice and with the requirements of the law.
            Modifications in a bank's situation shall be subject to the approval of the National Bank of Romania, under the conditions established by its regulations. Registration in the trade register of the mentions with regard to the respective modifications shall be made only after having obtained this approval.
            In their statutes, the banks may not establish exceptions from the principle according to which one share entitles to a single vote only.
            Shares issued by banks can only be registered ones.

Art. 39. - With a view to their functioning, each bank shall be under an obligation to open a current account at the National Bank of Romania, according to the regulations issued by it, within thirty days after obtaining the authorization. Money transfers operated by carrying to the running account opened in the books of the National Bank of Romania are irrevocable and unconditional.
Banks may also open other accounts at and under the conditions established by the National Bank of Romania.

 

Section 2
Capital requirements

 

Art. 40. - The registered capital of a bank must be paid in completely, and in form of cash, at the moment of the subscription.
            The minimum registered capital shall be established by the National Bank of Romania.
            At constitution, the capital contribution shall be paid in into an account with interest at sight or at term, opened at a bank which is a Romanian juristic person, or at the branch of a foreign bank authorized to function on Romania's territory. The capital account shall be blocked up to incorporation of the bank with the trade register.
            Banks shall permanently maintain a minimum level of the registered capital in form of cash, in agreement with the regulations of the National Bank of Romania.
            Branches of foreign banks shall permanently maintain an endowment capital at the level provided through the regulations of the National Bank of Romania for the minimum registered capital of the banks which are Romanian juristic persons.

Art. 41. - Banks may increase their registered capital, in addition to subscriptions of new contributions in cash, according to the legislation in force, by making use of the following sources, too:
            a) issue or contribution bonuses and other bonuses linked to capital, integrally cashed, remaining after the payment and coverage of unredeemed expenses carried out with such operations, as well as reserves constituted on account of such bonuses;
            b) dividends on the net profit due to shareholders after payment of taxes on dividends according to the law;
            c) reserves from foreign exchange rate influences relating to the appreciation of foreign currency disposable funds representing registered capital in foreign currency;
            d) reserves constituted from the net profit, existing in the balance of the last balance sheet;
            e) the favourable differences from revaluation of the assets which may be included in the reserves and used for increasing the registered capital.

Art. 42. - Any modification of the level of the registered capital of a bank shall be subject to the approval of the National Bank of Romania.

Art. 43. - Banks shall share out twenty-per-cent from the gross profit for the constitution of a reserve fund until the fund thus constituted becomes equal to the registered capital, thereafter ten-per-cent maximum up to the moment when the fund has reached twice the amount of the registered capital.      

After reaching this level, the allocation of sums of money to the reserve fund shall be made from the net profit.
            From the gross profit, the banks shall portion out the sums of money destined for the constitution of the general reserve for the credit risk, within the limit of two-per-cent from the balance of the credits granted.

 

Section 3
Prudential requirements

 

Art. 44. - On granting credits, the banks shall have in view that the applicants should present credibility in respect of reimbursement at their term. To this end, the banks shall ask from the applicants a guarantee for the credits under conditions established by their crediting norms.

Art. 45. - The banks must observe the following prudential requirements when these are provided under the regulations of the National Bank of Romania:
            a) the minimum level of solvency, determined as a ratio of the level of their own funds and the total of assets and elements outside the balance sheet, weighted depending on their degree of risk;
            b) the maximum outstanding credits towards a single debtor, expressed in percentage, as a ratio between their total value and the level of the bank's own funds;
            c) the aggregate maximum outstanding credits, expressed in percentage, as a ratio between the total value of the large outstanding credits and the level of their own funds;
            d) the minimum level of liquidity, determined depending on the terms of the debts and engagements of the bank;
            e) the classification of the credits granted and of interests receivable relating to them and the constitution of the specific risk provisions;
            f) the foreign currency position expressed in percentage depending on the level of its own funds;
            g) the management of the bank's resources and placements;
            h) the extension of the network of branches and other secondary seats of the bank.

Art. 46. - Banks which are Romanian juristic persons may open branches and other secondary seats (agencies and other similar ones) in Romania's territory under the conditions provided by the regulations of the National Bank of Romania.
            The provisions under para. (1) shall also apply correspondingly in the case of the branches of foreign banks.
            Banks which are Romanian juristic persons may open representations and branches or may set up subsidiaries abroad only with the previous approval of the National Bank of Romania, in keeping with the regulations issued by it.

Art. 47. - A bank may not carry out distributions from profit for dividends, if, as a result of this distribution, the bank records a solvency level below the minimum provided by the regulations of the National Bank of Romania.

Art. 48. - The total value of the long term investments of a bank in the transferable securities issued by a trading company which is not engaged in one or more of the financial activities provided under Art. 8 may not exceed:
            a) twenty-per-cent of the registered capital of the respective trading company; and
            b) ten-per-cent of the bank's own funds.

The total value of the bank's long term investments in transferable securities issued by such trading companies may not exceed fifty-per-cent of the bank's own funds.

Art. 49. - The total value of a bank's investments in transferable securities carried out in its own name and on its own account may not exceed the level of one hundred-per-cent of the bank's own funds, except those in public securities.

Art. 50. - Loans granted to persons in special relations with the bank or its personnel, their families included, shall be permitted only under the conditions established by the regulations of the National Bank of Romania.

 

Section 4
Significant shareholders

 

Art. 51. - Any person intending to acquire a participation of at least five-per-cent of the bank's registered capital must obtain the previous approval of the National Bank of Romania, in agreement with the regulations issued by it.

Art. 52. - Any significant shareholder who intends to increase his, her or its participation, so that the proportion of the registered capital held should reach or exceed levels representing multiples of five-per-cent, must obtain the previous approval of the National Bank of Romania.

 

Section 5
Prohibited transactions

 

Art. 53. - Banks shall not carry on the following operations:
            a) engagement in transactions with movables and immovables, except transactions with such goods necessary for the carrying on of the activity and for the use of the employees as well as transactions with movables and immovables acquired as a result of the execution of the bank's claims.

Movables and immovables acquired as a result of the enforcement of the claims, other than those necessary for the carrying on of the activity and for the use of the employees shall be sold by the bank within one year after their acquisition. For immovables, the term may be extended with the approval of the National Bank of Romania;
            b) the acquisition of the bank's own shares or their pledging on account of the bank's debts, except the redemption of its own shares with a view to a reduction of the registered capital, forming the object of a previous approval of the National Bank of Romania;
            c) the granting of loans or providing of other services to clients, conditioned by the sale or buying of the bank's shares;
            d) the granting of credits guaranteed with the shares issued by the bank;
            e) the acceptance of deposits, titles, or other values, when the bank is in a state of stoppage of payments;
            f) the engagement in acceptation of deposits, if the majority of the deposits comes from the bank's employees, except operations of placement funds and other financial operations based on the principle of mutuality.

 

Section 6
Contracting documents, registers and records

 

Art. 54. - Each bank shall draw up and preserve at its registered office documents and records in Romanian, including:
            a) the memorandum of association and articles of association as well all additional deeds by which these were modified;
            b) a register of its shareholders, according to the law;
            c) the minutes and decisions of the shareholders' general meeting;
            d) the minutes and decisions of the Managing board;
            e) the books and accounting registrations clearly and correctly making evident the situation of its activity, the explanation of the transactions and financial position so as to enable the National Bank of Romania to determine whether the bank has complied with the provisions of the present law;
            f) its own regulations referring to the carrying on of the activity as well as all their amendments;
            g) other records required according to the present law or the provisions of the regulations of the National Bank of Romania.
            The documents provided under letters a) and f) shall be transmitted to the National Bank of Romania, and the documents representing the daily recording of the registrations for each client of the bank, the characteristics of its transactions with that client or on the client's account, and the balance due to or by the client shall be kept at the registered office of the bank or at its secondary seats.

Art. 55. - Each bank shall draw up and keep at its registered office or at its secondary seats a copy of the adequate credit documentations and any information with regard to business relations with its clients and with other persons which the National Bank of Romania might provide by regulations and which shall be kept at the disposal of the authorized personnel of the National Bank of Romania at their request.

Art. 56. - All credit and guarantee operations of the banks shall have to be recorded in contractual documents from which there should clearly result all the terms and all the conditions of the respective transactions. All these documents must be kept by the banks and put at the disposal of the authorized personnel of the National Bank of Romania at their request.
            The banking credit contracts as well as the real and personal guarantees, constituted for the purpose of forming a guarantee for the banking credit shall constitute writs of execution.
            After investment of the credit contract with the executory formula, interests shall be farther calculated and recorded by the bank outside the balance sheet, together with the respective credits.

 

Section 7
Accounts, financial statements and their checking

 

Art. 57. - Banks shall permanently keep accounting records in agreement with the provisions of the Accounting Law and of the specific regulations given in its application, and to draw up adequate financial statements in order to adequately reflect their financial operations and condition. The accounting records and the financial statements of a bank shall also reflect the operations and financial position of the subsidiaries, branches, and other secondary seats, on an individual basis and on a consolidated basis, as the case may be.

Art. 58. - The National Bank of Romania shall establish rules on the keeping of accounting and the drawing up of the balance sheet, which must previously be approved by the Ministry of Finance.
            The banks shall be under an obligation to present to the National Bank of Romania their financial statements consisting of elements of the balance sheet as well as other data requested by the National Bank of Romania, at the terms and in the form established by regulations.

Art. 59. - The balance sheet of the banks shall not be accepted as having legal validity by the legitimate authorities without having been checked and signed by the bank's auditors.

Art. 60. - The provisions under articles 58 and 59 shall apply also to the branches of foreign banks, the power of the auditors being carried out by expert accountants, by authorized accountants with university education, or by audit companies authorized to carry on this activity on Romania's territory.
            The branches of foreign banks shall draw up a balance sheet which shall cover their activity, and that of the secondary seats subordinated to them.

Art. 61. - Each bank shall appoint an independent auditor. As auditor of a bank can be appointed only a company of accounting expertise authorized under the conditions of the law to carry on this activity in Romania.
            The independent auditor shall:
            a) grant aid to the bank in the keeping of the accounting books according to the accounting legislation in Romania and to the regulations of the National Bank of Romania;
            b) draw up an annual report together with an expressed opinion from which it shall result whether the financial statement shows a true image of the bank's condition;
            c) examine the practice and procedure of the internal check and of the auditors and, if considered inadequate, make recommendations to the bank for their remediation;
            d) inform the National Bank of Romania with regard to any fraudulent act of a manager or employee which could have as a consequence a loss of significant importance for the bank.

Art. 62. - Each bank shall publish the balance sheet, after its approval by the general assembly of the shareholders, together with the independent auditor's opinion on it, in the form and at the terms established by the National Bank of Romania and the Ministry of Finance.

 

CHAPTER X
Transfer of funds

 

Art. 63. - The transfer of funds shall be organized as part of the banking activity, for the purpose of finalizing the settlement of accounts and preventing non-payment risks. Each bank shall bear the responsibility for the lawfulness and discipline of the funds transfer between its seats.
            The authorization of the funds transfer systems and of the juristic persons who carry out interbanking funds transfer shall be done by the National Bank of Romania.

The representative means of payment and the funds transfer circuits shall previously be approved for each bank by the National Bank of Romania in the interest of the protection of the consumer of such services and the promotion of efficient payments without cash.

Art. 64. - With a view to strengthening the discipline of payments without cash and of reducting the cost of banking activities, on request, the National Bank of Romania may authorize a juristic person to function as an interbanking clearing office.
            No collective arrangement for carrying out reciprocal clearing and interbanking settlements may function on Romania's territory without the previous authorization of the National Bank of Romania.

Art. 65. - Beside settlements of accounts, the juristic persons provided under Art 64 may, on request, obtain the National Bank of Romania' s authorization also to carry out other services of funds administration over a period of not more than one working day as well as other services which might contribute to the fulfilment of the purpose provided in their constitutive deeds and in their working norms.

 

CHAPTER XI
Prudential supervision of banks

 

Art. 66. - The National Bank of Romania shall supervise the activity of the banks which are Romanian juristic persons and of the branches of foreign banks on the basis of prudential banking references made in keeping with the present law and regulations of the National Bank of Romania issued in its application as well as by inspections:

at the registered office of the banks, of seats of branches, and at other secondary seats at home and abroad;

at the registered office of the branches of foreign banks and at the secondary seats in their subordination.

Art. 67. - Inspections at the registered office of the bank shall be carried out by the personnel of the National Bank of Romania empowered in this sense, or by independent auditors appointed by the National Bank of Romania.
            In the case of branches and subsidiaries of foreign banks, the inspection teams may also include representatives of the supervision authorities from the country of origin of the foreign bank.
            For the supervision of Romanian banks functioning abroad, the National Bank of Romania shall cooperate with the banking supervision authorities of the respective states.
            Information referring to foreign banks carrying on activities in Romania may be provided to the banking supervision authorities from the country of origin only under conditions of reciprocity.

Art. 68. - Banks shall be under an obligation to allow the personnel of the National Bank of Romania and independent auditors appointed according to the provisions under Art. 67, carrying out the inspection, to examine the records, accounts, and operations, and to provide all documents and information in connection with the administration, internal check, and operations of the bank, such as they shall be solicited by them.

 

CHAPTER XII
Remedy measures and sanctions

 

Art. 69. - In the situation in which the National Bank of Romania shall find that a bank and/or any of its managers, executive directors, or auditors are to be blamed for:
            a) the violation of a provision of the present law or of the regulations or orders issued by the National Bank of Romania in application of the present law;
            b) the violation of any condition or restriction provided in the authorization issued to the bank;
            c) the carrying out of fictitious operations or without real coverage;
            d) failure to report, belated reporting, or reporting of erroneous data with regard to the prudential banking indicators, or of other indicators provided in the regulations of the National Bank of Romania;
            e) non-observance of the measures established by check deeds or as their result;
            f) endangering the bank's viability and credibility by inadequate administration of the funds enstrusted to it, The National Bank of Romania may apply the following sanctions:
            a) written warning given to the bank;
            b) limitation of the bank's operations;
            c) a fine applicable to the bank, from 0.1 to 1% from the registered capital, or to managers, executive directors, or auditors, from one to six average salaries-per-bank from the previous month, when the deed was established. The fines collected shall be made revenue to the state budget;
            d) withdrawal of the approval given to the heads of the bank;
            e) withdrawal of the bank's authorization.

Art. 70. - As a result of the findings, the National Bank of Romania may take the following measures:
            a) conclude a written agreement with the Managing board of the bank, which shall include a programme of remedy measures;
            b) oblige the bank at fault to apply measures of remediation of the consequences of the findings;
            c) institute measures of special supervision and of management, according to the provisions under chapter XIII.

Art. 71. - The finding of the deeds described in the present chapter, constituting violations of the banking discipline, shall be made by the personnel of the National Bank of Romania, empowered in this sense by the persons mentioned under para. 2.
            The deeds of application of the measures and sanctions provided in the present chapter shall be issued by the governor or vice-governors, in the cases provided under the regulations of the National Bank of Romania issued in this sense.

Art. 72. - The application of the sanctions provided under Art. 69 shall fall under the statute of limitation after two years from the date when the deed was committed.
            The application of sanctions shall not remove the material, civil, administrative, or criminal responsibility, as the case may be.

Art. 73. - The exercise of the right to vote of the significant shareholders not having obtained the approval of the National Bank of Romania, according to section 4 of chapter IX, shall be suspended.
            The National Bank of Romania shall order the significant shareholders provided under para. 1 to sell the shares held above the participation approved by the National Bank of Romania within three months. After expiry of this term, if the shares have not been sold, the National Bank of Romania shall order the bank to cancel the respective shares, the issue of new shares bearing the same number, and to sell them, following upon which, the price collected from the sale to be deposited at the initial acquirer after deduction of selling expenses.

Art. 74. - The perpetration by natural persons of the deeds provided under section 3 of chapter I constitutes offences and shall be punished with imprisonment from one month to two years or with a fine.

 

CHAPTER XIII
Measures for instituting special supervision and special management of banks

 

Art. 75. - The National Bank of Romania, as prudential banking supervision authority, may decide on measures for instituting a special supervision and a special management of the banks.

 

Section 1
Measures for instituting special supervision of the banks

 

Art. 76. - The Managing board of the National Bank of Romania may decide on measures for the instituting of special supervision of banks, for violations of the law or of the prudential regulations issued by the National Bank of Romania, found as a result of the supervision activities effected and/or of the examination of the bank's reports as well as in the case of the finding of a precarious financial position. The special supervision shall be ensured through a commission instituted to this end, consisting of five to seven specialists from the National Bank of Romania, one of whom will fulfil the function of chairman and another that of vice-chairman.

Art. 77. - The powers of this commission shall be established by the Managing board of the National Bank of Romania, and shall refer mainly to:
            a) the following up of the way in which the management of the bank acts for the establishment and application of the measures necessary for the remediation of the deficiencies written in the control instrument drawn up by the inspection bodies of the National Bank of Romania;
            b) the advice of all decisional deeds of the bank's statutory bodies, with reference to the financial position, observance of the prudential regulations as well as the compulsory suspension or suppression of such deeds;
            c) the modification of the bank's own regulations;
            d) the limitation and/or suspension of banking activities or operations over a certain period;
            e) any other measures considered necessary for the remediation of the bank's position.
            The special supervision commission shall not substitute itself to the management of the bank.
            During the exercising period of the special supervision, the general shareholders' meeting, the bank's heads and Managing board may not decide on measures contrary to those disposed by the special supervision commission.
            Members of the special supervision commission shall have access to all documents and registers of the bank, being under an obligation to preserve the secret with regard to banking operations.

Art. 78. - The special supervision commission shall present periodical reports on the bank's position to the Managing board of the National Bank of Romania.
            Depending on the conclusions resulted from these reports, the Managing board of the National Bank of Romania shall decide on the cessation or continuation of the special supervision, without however exceeding a period of more than one hundred and twenty days after the institution of the special supervision measure.
            In case that further severe deficiencies shall be found in the bank's activity, the Managing board of the National Bank of Romania may, from case to case, decide on measures of special management of it.

 

Section 2
Measures of special management of the banks

 

Art. 79. - Measures of special management of the bank may be disposed in the situation in which the National Bank of Romania shall have found or been informed with regard to the following situations:
            a) the measures of special supervision have not given results over a period of up to one hundred and twenty days;
            b) there are certain data leading to the conclusion that the bank will become insolvent in the following ninety days.
            The value of the bank's assets and liabilities shall be calculated according to the evalution procedures provided under the regulations of the National Bank of Romania.
            In order to determine the value of the assets and liabilities of a bank at a subsequent date, its anticipated revenues and expenditures up to the respective date shall be taken into consideration.

Art. 80. - The special management activity shall be carried out by a special manager appointed by the Managing board of the National Bank of Romania. The special manager may also be a specialized juristic person constituted in accordance with the law.

Art. 81. - The special manager shall entirely take over the powers of the Managing board of the bank subject to the special management form of administration.
            The right to vote regarding the appointment and dismissal of the managers and the right to dividends of the shareholders, the activity of the Managing board and of the auditors as well as the right to remuneration of the managers and auditors shall be suspended over the period of application of the special management.
            The special manager shall forthwith inform the bank's departments as well as its secondary seats with the measure thus taken.
            In managing the bank, the special manager shall establish optimum conditions for the preservation of the assets and collection of claims in the interest of the depositors and of other creditors.
            An advertisment with regard to the institution of the special management shall be published in the "Monitorul Oficial" (Official Gazette of Romania) and in several newspapers of national circulation.

Art. 82. - Within forty-five days after appointment, the special manager shall submit a written report to the Managing board of the National Bank of Romania with regard to the financial position of the bank and the possibility of the recovery of its position from the point of view of the financial security, and shall attach documents relating to the evaluation of the assets and liabilities of the bank, the situation of the recovery of assets, the cost of maintaining the assets and the situation of liquidation of debits.
            Within fifteen days after receiving the special manager's report, the Managing board of the National Bank of Romania shall make a decision on the extension of the special manager's activity, over a limited period, or withdrawal of the authorization, and inform the competent instance on the starting of the bank's winding up procedure.
            The special manager whose activity was extended shall periodically submit an evaluation of the bank's financial position.
            If the Managing board of the National Bank of Romania should, on the basis of information supplied by the special manager, find that the bank has recovered financially and tallies with prudential supervision parameters established by law and by the regulations of the National Bank of Romania, the measures of special management shall cease, and the bank shall resume its activity under the check of its statutory bodies.

 

CHAPTER XIV
Ways of contestation

 

Art. 83. - The deeds issued in application of the present law may be disputed within fifteen days after their communication. The contestation shall be lodged with the Managing board of the National Bank of Romania, which is to pass a decision within thirty days after the information.
            The decision of the Managing board may be sued at the Supreme Court of Justice within fifteen days after the communication.

 

CHAPTER XV
Transitory provisions

 

Art. 84. - The banks and branches of foreign banks, authorized at the moment of coming into force of the present law, shall be considered to hold an authorization issued according to the provisions of the present law.

Art. 85. - Authorization applications unsolved at the date of coming into force of the present law, and which are not in accordance with its provisions, may be withdrawn and presented again by the authors of the applications, in keeping with the provisions of this law.

Art. 86. - For banks which are Romanian juristic persons, and for the branches of foreign banks, whose organization, management, financial position and operations are not in agreement with the requirements of the present law or with the regulations issued in its application, the National Bank of Romania shall, by regulations and orders, establish the period within which these shall have to harmonize with the provisions of the present law.

 

CHAPTER XVI
Final provisions

 

Art. 87. - All issued authorizations and those in force shall be entered by the National Bank of Romania in the banking register, which shall be permanently accessible to the public.

Art. 88. - Banks may organize a professional association to represent their collective interests in front of the public authorities, to study problems of common interest, to promote cooperation, to inform members of the association and the public, and to organize services of common interest. The professional association of the banks shall collaborate with the National Bank of Romania.

Separately or within the framework of the professional associations, the banks may organize their own body of executors, whose activity shall be strictly linked to the putting into force of the writs of execution belonging to the banks.
            The statute of this body of executors shall be approved by order of the minister of justice.

Art. 89. - By decision of the Government and with the advice of the National Bank of Romania, the banks may be approved to unfold financing activities for the stimulation of small and medium-sized enterprises, for the restructuring, modernization, and privatization of trading companies as well as for the support and stimulation of exports, the development of the infrastructure and of other utilities of public interest.
            The sums of money required for the unfolding of the financing activity provided under para. (1) may be ensured from public funds also by the respective banks by loan agreements with Romanian or foreign financial institutions as well as by the mobilization of resources from the home or international capital market, which may also be guaranteed by the Romanian Government through the Ministry of Finance.
            Banks carrying on financing activities in agreement with the provisions under the preceding paragraps shall, corresponding to the respective activities, be exempt from the payment of the profits tax as well as from the distribution and payment of dividends and of the tax on dividends, the respective sums of money being destined to an increase of their reserve fund.

Art. 90. - Institutions, other than banks, qualified by law to carry on banking activities, shall be subject to the authorization, prudential supervision, and regulations of the National Bank of Romania.
            According to the provisions of the preceding paragraph, the legislation relating to the Saving and Consignments Institution and the legislation relating to the credit cooperation shall be adapted correspondingly.

Art. 91. - All regulations and orders issued by the National Bank of Romania in application of the present law shall be published in the "Monitorul Oficial" (Official Gazette of Romania), Part I.

Art. 92. - The present law shall come into force within thirty days after the date of its publication in the "Monitorul Oficial" (Official Gazette of Romania).
            The law shall be completed with the provisions under the legislation applicable to trading companies to the extent to which this shall not come in conflict with the provisions under the present law.

Art. 93. - The National Bank of Romania shall draw up regulations and orders in application of the present law, within one hundred and eighty days after the date of its coming into force.

Art. 94. - The Law No. 33/1991 on banking activity, published in the "Monitorul Ofcial" (Official Gazette of Romania), Part I, No. 70 of April 3, 1991; the Law No. 36/199 7 on the approval of the Government Ordinance No. 40/1996 on the modification and completion of the regulations relating to the increase of the registered capital of banking companies, published in the "Monitorul Oficial" (Official Gazette of Romania), Part I, No. 54 of April 1, 1997 as well as any other contrary provisions shall be abrogated after the date of coming into force of the present law.
            From the provisions of the preceding paragraph shall be excepted the present regulations of the National Bank of Romania wich shall remain in force until the adoption of the new regulations.

 

 

Published in the "Monitorul Oficial" (Official Gazette of Romania), Part I, No. 121 of March 23, 1998

 

 

 

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