June 2010

Romanian Government amends the current

regulatory framework regarding the credit

facilities for consumers

The Romanian Government enacted the

Emergency Ordinance no. 520/2010 regarding

the credit facilities for consumers („GEO

520/2010”). Further to entry into force of the

GEO 520/2010, provisions of Law no. 289/2004

regarding the legal regime of the credit facilities

for consumers - natural persons, shall be

repealed.

It is worth mentioning that the protection

granted to the consumers through the provisions

of GEO 520/2010 shall be also maintained in

case that the law applicable to the agreement is

the law of a non-member state, if the credit

facility is closely related to the territory of a

member state.

The most significant amendments brought

through the provisions of GEO 520/2010 are

presented below:

The withdrawal right of the consumer

In accordance with the provisions of GEO

520/2010, the consumer may withdraw from the

credit facility, without giving any reason, within

14 calendar days either as of the conclusion date

of the credit agreement, or as of the day when

the consumer is notified with respect to the

amendments that the creditor envisages to bring

to the existing credit agreement. If the consumer

exercises his/her right of withdrawal, he/she will

pay to the creditor the principal or the amounts

drawn down and the related accrued interest.

Provisions with respect to commissions

With respect to the commissions to be charged

by credit institutions in relation to the consumer

credits, GEO 520/2010 establishes the following:

the increase of the commissions, taxes,

costs, bank charges or other costs related to

the credit agreement is prohibited, except

for those imposed by legislation (i.e. file

analysis fee, administration credit fee or

current account administration fee, early

repayment fee, insurance costs, penalties,

or single commission for services provided

upon the consumer demand);

in relation to the amounts drawn down, it

is prohibited to charge a commission for the

disbursement of the respective amounts;

in case that the facility is not granted, it is

forbidden to charge a file analysis fee.

Early repayment fee

According to the provisions of GEO 520/2010,

the early repayment fee in relation to credit

facilities having a variable interest rate is

prohibited. In case of credit facilities having a

fixed interest rate, the early repayment fee may

not exceed 1 %, if the period of time between

the early repayment date and the maturity date

of the credit agreement exceeds one year, and it

may not exceed 0,5 % in case the mentioned

period of time does not exceed one year.

The regulations regarding the early repayment

shall be applicable to the leasing agreements

which are subject to the provisions of GEO

520/2010, further to the expiry of a12 months

period as of their conclusion.

Limitation of default interest rate amount

In accordance with the provisions of GEO

520/2010, the default interest rate in case of late

payments cannot be 2 percentage points higher

than the interest rate to be paid in lack of such

delay, in case the consumer or his/her spouse is

in one of the following situations: unemployed,

extended sick leave, divorced, death, decreased

of the salary by at least 15% of its value.

Provisions concerning the amendment of

credit facilities

In accordance with GEO 520/2010, there are

prohibited the contractual clauses giving to the

creditor the right to unilaterally amend the

contractual terms without the execution of an

additional act agreed by the consumer.

In case of amendments requested by the

applicable legislation, the lack of execution

of the additional acts by the consumer shall

be deemed an implicit approval. In this

case, the inclusion in the additional acts of

provisions different to those requested by

the legislation are null by law;

In case of amendment of contractual terms

regarding the costs, the creditor should

send to the consumers a notification with at

least 30 days prior to their application. The

consumer has to notify its option within 15

days as of receipt of the notification. The

lack of any answer from the consumer

cannot be considered implicit acceptance of

the new conditions and the agreement will

remain unchanged. In case that the

consumer does not accept the new

conditions, the creditor does not have the

right to sanction the consumer or to

accelerate the credit;

In case of the consumer's impossibility to

accept the amendment of the contractual

terms regarding the increase of interest, the

creditor does not have the right to

unilaterally terminate the credit facility

without firstly proposing to the consumer a

rescheduling or a refinancing of the facility,

taking into account the consumer’s income,

if such rescheduling / refinancing is possible

according to internal regulations of the

creditor.

Assignment of the creditor's rights under

the credit agreement

In the event that the creditor assigns its right

under the credit agreement or the credit

agreement itself, the assignor is obliged to notify

the assignment to the consumer within 10 days

as of the execution of the assignment agreement

by registered mail with confirmation receipt.

The assignee is requested to have a contact

person in Romania for the purpose of solving the

potential disputes and to be kept liable in front

of the public authorities.

Linked credit agreements

The GEO 520/2010 prohibits the execution of

credit agreements having for object the

acquisition of goods / services in the trading

spaces of such goods and / or services, even in

case such credit agreements would be executed

through the dealers of the goods and / or

services.

However, linked credit agreements are excluded

from the application of this interdiction. The

linked credit agreement means a credit

agreement where the credit serves exclusively to

finance an agreement for the supply of specific

goods or the provision of a specific service, and

it is characterized by the fact that the two

agreements, facility and sale-purchase

agreements, form a commercial unit from an

objective point of view.

GEO 520/2010 mentions that, where the goods

or services covered by a linked credit agreement

are not supplied, or are supplied only in part, or

are not in conformity with the contract for the

supply thereof, the consumer shall have the right

to pursue remedies against the creditor if the

consumer has pursued his remedies against the

supplier but has failed to obtain the satisfaction

to which he/she is entitled. In this case, the

creditor is jointly liable with the supplier with

respect to any remedies the consumer may

pursue against the supplier.

The competent authority for the application

of provisions of GEO 520/2010

For the application of the provisions of the GEO

520/2010, the consumers may refer to National

Authority for Consumer Protection. In exercising

its attributions, National Authority for Consumer

Protection is entitled to apply fines in amount

between 10,000 lei to 100,000 Lei. In addition,

the National Authority for Consumer Protection

may also order: (i) immediately compliance of

the infringed contractual terms, (ii)

reimbursement of the amounts disbursed

without legal basis, (iii) bringing the contract in

accordance with legal provisions and (iv)

reparation of the deficiencies ascertained under

the protocol.

GEO 520/2010 was published in the Official

Gazette no. 389/11.06.2010 and will entry into

force within 10 days as of the publication date,

respectively on June 21, 2010. Within 90 days as

of its entry into force all the credit agreements in

place should be amended in order to comply

with the provisions of GEO 520/2010.

NBR established the level of the reference

interest rate for June 2010

NBR issued Circular no. 18/2010 regarding the

level of the reference interest rate valid for June

2010. According to the above mentioned

Circular, the interest reference rate of NBR valid

for June 2010 was 6.25% per year. The above

mentioned Circular was published in the Official

Gazette no. 360/01.06.2010 and may be

accessed here.

NBR amended the interest rates payable on

minimum mandatory reserves

NBR issued Circular no. 19/2010 regarding the

interest rates payable on minimum mandatory

reserves. The above mentioned Circular sets

forth the interest rates payable on minimum

mandatory reserves during May 24 - June 23,

2010 as follows:

2.02% per year for minimum mandatory

reserves set up in RON;

1.07% per year for minimum mandatory

reserves set up in Euro;

0.99% per year for minimum mandatory

reserves set up in U.S. dollars.

The said Circular was published in the Official

Gazette no. 389/11.06.2010 and may be

accessed here.

MPF amended the regulatory framework

regarding the implementation of “First house”

programme

MPF issued Order no. 1.814/2010 for the

amendment of MPF’s Order no. 2.225/2009. The

said order amends among others the template

convention for the guarantee of housing

construction and was published in the Official

Gazette no. 407/18.06.2010.

ISC amended the regulatory framework

regarding the activity of entities organizing

unitary professional trainings for insurance

personnel

ISC enacted Order no. 6/2010 for the

implementation of the Norms regarding the

activity of entities organizing unitary professional

training courses for insurance personnel. The

above mentioned Order was published in the

Official Gazette no. 417/22.06.2010 and may be

accessed here.

ISC amended the regulatory framework

regarding the professional qualification and

continuous training of the persons active in the

distribution of insurance products

ISC enacted Order no. 7/2010 for the

implementation of the Norms regarding the

professional qualification and continuous

training of the persons active in the distribution

of insurance products. The above mentioned

Order was published in the Official Gazette no.

417/22.06.2010 and may be accessed here.

PPSSC set the regulatory framework regarding

the profitability rates of the privately managed

pension funds

PPSSC adopted Decision no. 9/2010 for

approving Norm no. 7/2010 regarding the

profitability rates of the privately managed

pension funds. The above mentioned Decision

was published in the Official Gazette no.

369/04.06.2010 and may be accessed here.

NSC amended the regulatory framework

regarding the certification of the professional

training institutions, operators and specialists

within capital markets

NSC issued Order no. 36/2010 for the approval

of Regulation no. 12/2010 regarding the

certification of the professional training

institutions, operators and specialists within

capital markets. The above mentioned Order was

published in the Official Gazette no.

404/17.06.2010 and may be accessed here.

NSC amended the regulatory framework

regarding the performance of public offers

through the trading system of a market/system

operator

NSC issued Order no. 37/2010 regarding the

approval of Instruction no. 2/2010 for the

amendment of Instruction no. 3/2007 regarding

the performance of public offers through the

trading system of a market/system operator. The

above mentioned Order was published in the

Official Gazette no. 401/16.06.2010 and may be

accessed here.

Romanian Government amended

law no. 571/2003 regarding the Fiscal Code and

other financial-fiscal measures.

The Romanian government has enacted an

Emergency Ordinance for the amendment of law

no. 571/2003 regarding the Fiscal Code and

other financial fiscal measures.

We point out that starting 1 July 2010 income

derived from deposits, current accounts and

savings accounts received by individual residents

in Romania and non-residents is taxable income.

This income would be subject to a tax of 16%.

New criteria were introduced for requalification

of the independent activities as dependent,

which it is possible to have as consequences the

increase of the social securities contributions for

certain persons. This requalification may have a

very significant impact on the capacity of

individuals for reimbursement of the credits

obtained, especially when the tax authorities set

up additional liabilities further to tax controls.

The above mentioned law was published in the

Official Gazette no. 431/28 June 2010 and can

be accessed here.

NBR published a proposal of Regulation on

temporary holding of shares during an assistance

operation or financial restructuring of an entity

outside the financial sector.

For more information please access here.

Proposal of Order regarding the implementation

of the International Financial Reporting

Standards by credit institutions as a basis for

accounting and preparation of individual annual

financial statements as of the financial year 2012

General objective and reasons for elaboration of

the normative act

Implementation of International Financial

Reporting Standards in the banking sector is an

objective set out both in the Report on the

Observance of Standards and Codes–

Accounting and Auditing – ROSC issued by the

World Bank in December 2008 and in the FSAP

program (Financial Sector Assessment Program)

issued by the International Monetary Fund and

the World Bank in May 2009, as well as in the

Letter of Intent signed in Bucharest on the 5th of

February 2010 and approved by the Decision of

the International Monetary Fund’s Executive

Board on the 19th of February 2010, whereby

the National Bank of Romania and the Ministry

of Public Finance commit themselves to adopt

towards the end of the program’s period the

necessary legal framework so as to achieve the

comprehensive implementation of IFRSs starting

with the beginning of 2012.

The main provisions of the draft order

starting with financial year 2012, credit

institutions will keep the accounts and will

prepare the annual individual financial

statements in accordance with IFRSs as

adopted following the procedure set out in

Article 6(2) of the Regulation (EC) No.

1606/2002 of the European Parliament and

of the Council of 19 July 2002 on the

application of international accounting

standards;

starting with January 1, 2012, credit

institutions will organize and run the

accounting in accordance with the IFRS

provisions, the Accounting Law’s provisions

and other applicable legal provisions, as

well as with the regulations issued by the

National Bank of Romania for the

implementation of this order.

The full text of the proposal may be accessed

here.

Proposal of Order amending NBR’s Order no.

13/2008 for the approval of Accounting

Regulations in accordance with European

directives applicable to credit institutions, non-

banking financial institutions and to the Fund for

deposit guarantee in the banking system

General objective and reasons for elaboration of

the normative act

The draft order is issued following the

recommendation of the Superior Council of

Accounting and Financial Reporting Council to

adopt a unified framework in terms of

accounting rules and treatments applied by

entities covered by the regulation and

supervision of the NBR for similar operations

with those performed by the other economic

operators.

The draft order aims at implementing and

tailoring of changes and additions made by the

Ministry of Public Finance Order no. 3055/2009

for approval of accounting regulations according

with European directives, to the extent they are

applicable to institutions regulated and

supervised by the National Bank of Romania.

The main changes and additions to existing

accounting rules (Order NBR no. 13/2008) by the

draft order, refer to the following issues

inserting of provisions relating to the annual

financial statements’ users categories and

the qualitative characteristics of these

reports;

examples and additions to provisions on

general accounting principles;

supplementing the provisions on valuation

of assets, liabilities and equity when

inventoried and on presenting these

elements in balance sheet;

supplementing the provisions on

accounting errors correction;

change in accounting treatment for

government grants;

expanding the current provisions of the

accounting treatment for given and

received trade discounts;

specifying the factors which indicate

impairment of tangible and intangible

assets;

separate accounting for tangible assets and

inventories purchased, in case of which the

risks and benefits were transferred, but that

are not yet received.

The full text of the proposal can be accessed

here.

Proposal of Regulation amending Regulation no.

6/2008 regarding the changes in the situation of

the credit institution, Romanian legal entities

and the Romanian branches of the third-country

credit institutions

According to the provisions of the Article 108 of

the Government Emergency Ordinance no.

99/2006 on Credit Institutions and Capital

Adequacy, subsequently amended and

supplemented, each of the persons appointed to

perform the administration and/or management

duties in a credit institution, as well as any

person appointed to ensure middle management

functions relative to the activities of a significant

importance, should be approved by the National

Bank of Romania before starting the fulfillment

of their tasks, according to the regulations

issued.

The draft regulation is aiming to amend the

relevant provisions of the Regulation no. 6/2008

in order to expressly cover all cases when, due to

the changes in the credit institution’s internal

organizational structure or lines of

responsibilities, new persons are appointed to

fulfill the referring tasks, or the persons already

approved by the National Bank of Romania are

assuming new responsibilities. In all of these

cases, according to the law, the National Bank of

Romania’s prior approval is required.

The full text of the proposal can be accessed

here.

LMA amended coordinating committee letters

On 17 June 2010, LMA published amended

versions of its coordinating committee letters.

The letters govern the appointment of a

coordinating lender and coordinating committee

of lenders in connection with the refinancing of

a borrower's bank loans. The above mentioned

letters may be accessed by LMA members here.

LMA published new netting agreements,

termination and transfer agreements

On 30 June 2010, LMA published the following

new documents: Multilateral Netting

Agreement; Bilateral Netting Agreement;

Bilateral Termination and Transfer Agreement;

Termination Agreement.

LMA also published updated versions of the

following documents: Multilateral Termination &

Transfer Agreement (Novation); Secondary

Trading Documentation User Guide. More details

may be accessed by LMA members here.

EPCEMA recommends legislation on cross-

border insolvency or "crisis management" for

banks

On 28 June 2010, EPCEMA passed a request to

the European Commission to draft a legislative

framework creating a common insolvency

regime for financial institutions operating across

borders within the European Union. The motion

follows a consultation process that began on 20

October 2009 on crisis management in the

banking sector. For more details, please access

here.

CEBS revised consultation papers on settlement

of OTC derivatives

On 23 June 2010, CEBS published a revised

consultation paper on its draft guidelines on the

management of operational risk in market-

related activities. CEBS originally published the

guidelines in December 2009 but, following

feedback, has now revised them and launched a

second consultation. The consultation period

ends on 23 July 2010.

The above mentioned guidelines can be accessed

here.

CEBS published on June 14, 2010 the

Implementation Guidelines on capital

instruments referred to in Article 57 (a) of

Directive 2006/48/EC recast.

The above mentioned Implementation

Guidelines can be accessed here.

CEBS published on June 15, 2010 its Annual

Report for 2009.

The mentioned report may be accessed here.

CEBS initiated on June 17, 2010 a public

consultation on several amendments to the

Guidelines on Common Reporting.

The mentioned amendments may be accessed

here.

CEBS published on June 11, 2010 its report on

national implementation of CEBS’s high-level

principles for remuneration policies.

The said report may be accessed here.

CEBS published on June 30, 2010 two follow-up

reports setting out the outcome of its efforts in

assessing banks’ disclosures.

For more information please access here.

CEIOPS released on June 29, 2010 the half-

yearly report on the financial conditions and

stability of the insurance and occupational

pension fund sector in the EU/EEA covering

developments in the insurance, reinsurance and

occupational pension fund markets for recent

years.

For more information about the press release

please access here.

EC initiated on June 14, 2010 a consultation on

the options to be be considered for a

forthcoming legislative proposal dealing with

potential risks from short selling.

For further information please access here.

EC initiated on June 14, 2010 a public

consultation on derivatives and market

infrastructures.

The mentioned consultation may be accessed

here.

EC has published on 25 June, 2010, a

consultation paper on the review of the Market

Abuse Directive.

For more details please access here.

On 17 June 2010, the European Parliament

approved, with amendments, the Commission's

proposal to amend the Prospectus Directive

(2003/71/EC). The proposal still has to be passed

by the rest of the EU legislature before the

Prospectus Directive is amended.

For more information please access here.

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