Acquisition or increase of qualifying holdings: Credit institution
1. Notification to Banco de Portugal
‘Qualifying holding’ means a direct or indirect holding in an undertaking which represents 10% or more of the capital or of the voting rights or which, for whatever reason, makes it possible for its holder to exercise a significant influence over the management of that undertaking (Article 2-A (ee) of the Legal Framework).
Any natural or legal person who plans to own, directly or indirectly, a qualifying holding in a credit institution must inform Banco de Portugal of such intention in advance, which notifies the ECB.
Acts involving direct or indirect increases in a qualifying holding must also be previously notified to Banco de Portugal, whenever a proportion reaching or exceeding 10%, 20%, one third or 50% of the capital or of the voting rights held in the institution concerned may result from them, or when the latter becomes a subsidiary of the acquiring entity.
In turn, any natural or legal person intending to dispose of a qualifying holding in a credit institution, or to reduce it so that the proportion of the voting rights or of the capital held would fall below any of the thresholds of 20%, one third or 50%, or so that the institution would cease to be its subsidiary, must inform Banco de Portugal in advance, indicating the new proportion of the holding.
The ECB is exclusively responsible for deciding whether to oppose the acquisition of a qualifying holding.
Generally, the stages of the procedure are the following:
- the intention to acquire a qualifying holding is notified to Banco de Portugal;
- Banco de Portugal notifies the ECB of such notification;
- Banco de Portugal assesses the proposed acquisition and forwards to the ECB the notification and a proposal for a decision to oppose or not to oppose the acquisition;
- the ECB decides whether to oppose the acquisition on the basis of its assessment of the proposed acquisition and the draft decision of Banco de Portugal;
- the ECB notifies Banco de Portugal and the proposed acquirer of its decision.
Banco de Portugal may determine the suspension of the voting rights attached to a qualifying holding, to the extent necessary and appropriate to prevent the influence over the management which has been obtained through the act resulting in the acquisition of or increase in the said holding, provided that it had been acquired in breach of the applicable laws, without prejudice to other applicable penalties (Articles 105 and 106 of the Legal Framework).
Type of legal act: Decision to oppose or not to oppose
Competent authority: the ECB, based on its assessment and the draft decision of Banco de Portugal
2. Regulations applicable
European Union law:
- Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 (Directive 2013/36/EU) (Chapter 2, Title III, Articles 22 to 27);
- Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013, point 36;
- Single Supervisory Mechanism Regulation – Council Regulation (EU) No 1024/2013 of 15 October 2013 – (Articles 4 (c) and 15);
- SSM Framework Regulation – Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014 – (Articles 85 to 87);
- Guidelines for the prudential assessment of acquisitions and increases in holdings in the financial sector (JC/GL/2016/01).
- Legal Framework of Credit Institutions and Financial Companies, approved by Decree-Law No 298/92 of 31 December 1992 (Articles 102 to 107);
- Notice of Banco de Portugal No 5/2010.
The acquisition of a qualifying holding must be notified together with the data and information provided for in Notice of Banco de Portugal No 5/2010 (Notice) and respective annexes, and in the Legal Framework:
- general information (Annex I):
- information on the proposed acquirer;
- information on the acquisition;
- information on the financing of the acquisition.
- additional information related to the relevance of the qualifying holding to be acquired (Annex II);
- declaration of honour (Annex III);
- in the case of acquisitions of indirect qualifying holdings, the data and information provided for in Annexes I, II and III must be submitted not only by the proposed direct acquirers, but also by the person(s) at the top of the chain of shareholdings (Article 6 (1) of the Notice);
- Banco de Portugal may require the presentation of the data and information provided for in Annexes I, II and III to intermediate shareholders, in case of doubts or any other reasons justifying its assessment, in particular if it is the case of an entity under the supervision of another supervisory authority of the financial sector (Article 6 (2) of the Notice);
- the proposed acquirer must inform Banco de Portugal of the identity of the ultimate beneficial owner(s), as defined in Article 2 (5) of Law No 25/2008 of 5 June 2008, of the qualifying holding in question, as well as any subsequent changes to it (Article 102 (5) of the Legal Framework).
- Banco de Portugal may, at any time, request additional data and information from the proposed acquirer and make the inquiries deemed necessary (Article 7 of the Notice and Article 103 (3) of the Legal Framework).
The notification of acquisition of a qualifying holding must be subscribed not only by the proposed direct acquirer, but also by all the remaining layers in the corporate holding structure of the proposed acquirer, including the persons at the top of that chain (ultimate beneficial owners).
Banco de Portugal assesses whether the proposed acquisition fulfils all the conditions set out in national law. When assessing the acquisition project, Banco de Portugal evaluates certain criteria, taking into account:
- the suitability of the proposed acquirer;
- the likely influence of the proposed acquirer on the credit institution;
- the financial soundness of the project.
(Article 103 (2) of the Legal Framework and Article 23 of Directive 2013/36/EU)
- the suitability of the proposed acquirer;
- the reputation, professional qualification, independence and availability of the members of the management body of the credit institution, to be appointed as a result of the proposed acquisition, under the terms of Articles 30 to 33-A of the Legal Framework;
- the financial soundness of the proposed acquirer, in particular in relation to the type of business pursued by or envisaged for the credit institution;
- whether the credit institution will be able to comply and continue to comply with the applicable prudential requirements and, in particular, if it belongs allows the exercise of effective supervision, the effective exchange of information with the competent authorities and the determination of the allocation of responsibilities among the competent authorities;
- whether there are reasonable grounds to suspect that, in connection with the proposed acquisition, money laundering or terrorist financing, within the meaning of Article 1 of Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005, is being or has been committed or attempted, or that the proposed acquisition could increase the risk thereof.
The proposed acquirer shall submit the elements identified in Notice of Banco de Portugal No 5/2010, together with supporting documents that allow Banco de Portugal to conclude on the fulfilment of the criteria listed above.
Cooperation among competent authorities
In order to assess the proposed acquisition, and in the context of cooperation between the competent authorities, Banco de Portugal carries out a set of steps, including consulting several databases and requesting opinions from:
- the competent authorities of the home country;
- the Portuguese Insurance and Pension Funds Supervisory Authority, if the proposed acquirer corresponds to one of the types of entities authorised by that authority;
- the Portuguese Securities Market Commission, if the corporate object of the credit institution includes the activity of intermediation in financial instruments, or if the proposed acquirer corresponds to one of the types of entities authorised by that authority.
Procedures and deadlines
Receipt of the notification
After receipt of the notification regarding the acquisition of a qualifying holding:
- if the notification is accompanied by all the required data and information, Banco de Portugal informs the proposed acquirer in writing of the expity date of the assessment period;
- if the notification is not accompanied by all the required data and information, Banco de Portugal informs the proposed acquirer in writing of the missing data or information.
Assessment of the notification
After the date on which all data and information legally required have been submitted by the proposed acquirer, Banco de Portugal has a period of 45 working days to assesses the notification regarding the acquisition of a qualifying holding and to submit to the ECB a draft decision to oppose or not to oppose the acquisition.
The ECB then has a period of 15 working days to decide whether or not to oppose the acquisition, as the legal decision period is of 60 working days.
During the assessment period, Banco de Portugal may request additional data and/or information from the proposed acquirer in writing and make the inquiries deemed necessary to complete the assessment. In this situation:
- the assessment period is suspended between the date of the request of the additional data and/or information and the date of receipt of the reply by the proposed acquirer;
- the proposed acquirer is informed in writing of the receipt of the data and/or additional information and of the new deadline for the assessment of the acquisition project.
The interruption must not exceed:
- 20 working days or;
- 30 working days, if the proposed acquirer:
- has its residence or head office in a third country or is subject to non-EU regulations;
- is not subject to supervision under Directive 2013/36/EU, or Directives 2009/65/EC of the European Parliament and of the Council of 13 July 2009, 2009/138/EC of the European Parliament and of the Council of 25 November 2009, and 2004/39/EC of the European Parliament and of the Council of 21 April 2004.
The ECB shall decide whether to oppose the acquisition on the basis of the assessment of the proposed acquisition, according to the criteria set out in the applicable EU law, and Banco de Portugal’s draft decision.
The decision must be notified to the proposed acquirer within the assessment period defined in national law and EU law, i.e. within 60 working days following receipt of all data and information deemed necessary for the completeness of the notification, without prejudice to any suspensions of the assessment period, as mentioned above.
Before the ECB may adopt a decision which would adversely affect the rights of the proposed acquirer, it shall grant the proposed acquirer the right to be heard.
The ECB may oppose the proposed acquisition in the following situations (Article 103 (1) of the Legal Framework and Article 23 (2) of Directive 2013/36/EU):
- if it deems that it has not been demonstrated that the proposed acquirer fulfils the conditions to ensure the sound and prudent management of the credit institution, based on the above-mentioned assessment criteria;
- if the information provided by the proposed acquirer is incomplete.
If the ECB decides to oppose the proposed acquisition, it:
- informs the proposed acquirer, in writing, of its decision and of the reasons thereof, within two working days of that decision and prior to the expiry of the assessment period;
- may make the decision and the reasons thereof accessible to the public, on its own initiative or upon request of the proposed acquirer.
If the ECB does not oppose the proposed acquisition, in writing, within the assessment period, it shall be deemed to be approved.
The ECB notifies the proposed acquirer of its decision regarding the acquisition of a qualifying holding in a credit institution.
If the ECB decides not to oppose, it may set a reasonable time limit for the completion of the proposed acquisition, which shall be of one year except where otherwise provided for.