M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European UnionWorking Group for Chapter 9 – Financial services
Bilateral screening: Chapter 9
PRESENTATION OF MONTENEGRO
Brussels, 10 June 2013
Chapter 9: Financial Services
Chapter 9: Financial Services
Reorganisation and winding-up ofcredit institutions
Miomir Ćirović
Head of Legislation Division
Supervision Department
Central Bank of Montenegro
miomir.cirovic@cbcg.me
M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
Chapter 9: FINANCIAL SERVICES
Chapter 10: Information society and media
Chapter 10: Information society and media
M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
Relevant Acquis
•DIRECTIVE 2001/24/EC OF THE EUROPEANPARLIAMENT AND OF THE COUNCIL of 4 April 2001 on thereorganisation and winding up of credit institutions
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M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
National Legislation
•Bank Bankruptcy and Liquidation Law (OGRM 47/01 andOGM 62/08, 44/10);
•Banking law ( OGM 17/08, 44/10);
•Central Bank of Montenegro Law (OGM 40/10, 46/10, 6/13)
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Chapter 10: Information society and media
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M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
Institutes “ winding up ” and“reorganisation measures” in the nationallegislation
•“Winding up procedure”, within the meaning of Directive2001/24/EC, in Montenegrin regulations refers to the bankingbankruptcy and liquidation proceedings prescribed under the BankBankruptcy and Liquidation Law
•“Reorganisation measure”, within the meaning of Directive2001/24/EC, is a measure of interim administration against a bankprescribed by the Banking Law, as this measure includes restrictions tothird-party rights (Article 125, paragraphs 5-9)
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Chapter 10: Information society and media
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M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
Institutional Framework
•The measures of reorganisation and winding up are performed bythe Central Bank of Montenegro pursuant to the powers grantedunder the:
1. Central Bank of Montenegro Law, Article 14:
“The Central Bank shall:
3) carry out bankruptcy and liquidation proceedings against banks and financialinstitutions in line with the law.”
2. Bank Bankruptcy and Liquidation Law, Article 3:
“The bankruptcy proceedings and liquidation proceedings over a bank shall becommenced and conducted by the Central Bank.”
3. Banking law, Article 116:
“If the Central Bank establishes irregularities in the bank’s operations, it may take oneof the following measures:
5) institute interim administration in the bank in accordance with Article 120 of this Law.“
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Chapter 10: Information society and media
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M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
Level of Transposition
General assessment:
•Provisions of Directive 2012/44/EC which shall be applied only uponMontenegro's accession to the European Union so they are not transposedinto the national legislation.
•The Bank Bankruptcy and Liquidation Law is highly complied with therequirements from Article 10 of the Directive 2012/44/EC which prescribesissues that must be regulated by national legislation.
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M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
Level of Transposition
Compliance with Article 10 of the Directive:
A. Powers of the credit institution and the liquidator:
•The CBCG commences the bankruptcy proceedings and appoints thebankruptcy administrator and the bankruptcy board, and the bodies of theCBCG in the bankruptcy proceedings;
•The bankruptcy administrator prepares the initial balance of bankruptcy,takes care of the payment of claims of the bank, adopts a decision onclaims of the creditors, cashes in the property of the bank, prepares a draftof the main distribution, performs the payment of creditors from thebankruptcy pool of assets and prepares the final bankruptcy balance.
•The Bankruptcy Board shall supervise the performance of the BankruptcyAdministrator, give instructions for the conduct of the bankruptcyproceedings, decide on appeals against decisions of the BankruptcyAdministrator ( Article 13)
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M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
Level of Transposition (cont.)
B. Dealing with the property of the bank under bankruptcy proceedings:
•Bankruptcy administrator is obliged to convert into cash the bank’sproperty that will be a part of the bankruptcy pool of assets (Article 13)
•Bankruptcy administrator may transfer a part or total assets and/orliabilities of the bank under bankruptcy proceedings to other bank orbanks (Article 43);
•The property of the bank that goes into the bankruptcy pool of assets shallbe sold by public auction, and in exception, through the acquiring of theoffers or through direct negotiation (Article 43);
•In any sale, the Bankruptcy Administrator should accomplish as favourableprice as possible, secure equal treatment of potential buyers, and disableany type of discrimination in the process of bidding and considering thebids (Article 55)
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M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
Level of Transposition (cont.)
C. Off-set claims:
•The Bankruptcy administrator may, without the authorisation of thecreditors, offset mutual claims of the bank and its creditors that haveoccurred before passing a decision on commencing bank bankruptcyproceedings (Article 42a).
D. Treatment of current contracts:
•The contracts entered into with the bank before commencing thebankruptcy proceedings shall remain valid.
•Bankruptcy Administrator may in a period of 90 days rescind contracts . Inthat case, the other contracting party may only claim compensation ofactual damages, as a bankruptcy creditor. (Articles 32-33)
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M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
Level of Transposition (cont.)
E. Treatman of proceedings against a bank:
•All pending lawsuits against the bank shall be suspended on the day ofcommencing bankruptcy proceedings;
•No lawsuit against the bank may be filed except as provided in this Law.;
•On the day of commencing the bankruptcy proceedings, no collateral canbe foreclosed against the bank nor can compulsory enforcement be donefor the purpose of settlement of claims in respect of which there is anenforcement decision;
•Any proceedings related to security foreclosure and enforcement shall bestopped ( Articles 35-36).
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M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
Level of Transposition (cont.)
F. Deciding on claims:
•The creditors of the bank report their claims within 30 days from thepublication of the notice in the “Official Gazette of Montenegro”.
•The claims from the bank’s business records, as well as the claimsidentified under the final and binding court decision before thecommencement of the bankruptcy proceedings, shall be considered filed.
•The Bankruptcy Administrator passes a decision in reference to theamount of the recognized claims and submits it to the creditors. An appealmay be adopted against those decisions before the Bankruptcy Board, anda complaint may be adopted against the decision before the AdministrativeCourt.
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M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
Level of Transposition (cont.)
G. Order to priority:
1) Secured claims,2) Central Bank 3) Deposit Protection Fund in accordancewith guaranteed deposits; 4) non-compensated protected deposits; 5) otherdepositors; 6) other creditors, 7) subordinated debt and/or hybridinstruments; 8) bank shareholders.
H.Creditors' rights after the closure of winding-up proceedings:
- creditors who have not reported the claims up to the day of distribution ofthe bankruptcy pool of assets have the right to settle from the funds whichwent to the shareholders of the bank upon the closure of the liquidationproceedings
- the request in reference to the settlement of the claims is submitted to theshareholders in a term of six months following the closure of the liquidationproceedings,
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M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
Level of Transposition (cont.)
I. Costs of the proceedings:
- The costs of the bankruptcy proceedings are defrayed by the bank inbankruptcy,
J. Challenge the Legal Actions:
- The Bankruptcy Administrator and creditors shall have the right to challengethe legal actions that the bank has made to the detriment of creditors duringthe last three years preceding the day the legal effects of commencing thebankruptcy proceedings have come into force, before the Commercial Court.
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M O N T E N E G R O
Negotiating Team for the Accession of Montenegro to the European Union
Manner of compliance andtimeframe
•The adoption of the new Law that will :
- be fully complied with requirements of the Directive 2001/24 which refer tothe universality in the winding up and reorganisation of credit institutionswith branches on other EU countries, mutual recognition of measures andproceedings and cooperation of authorities
- treat the interim administration in banks as the measures of reorganisationin the sense of Directive 2001/24/EC.
•Time frame: end-2016.
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Thank you for your attentionThank you for your attention
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