PORTUGAL Morais Leitão, Galvão Teles, Soares da Silva & Associados

Transcription

1 Bank Finance and Regulation Survey PORTUGAL Morais Leitão, Galvão Teles, Soares da Silva & Associados I. BANKS AND FINANCIAL INSTITUTIONS SUPERVISION 1) Applicable laws and regulation. Provide a list of the main laws and regulations that refer to the supervision and control of banks and financial institutions. Give a brief summary of the substance of each of them. The supervision and control of banks and financial institutions is mainly governed by the following laws and regulations: a. Legal Framework of Credit Institutions and Financial Companies (Regime Geral das Instituições de Crédito e das Sociedades Financeiras), enacted by Decree-law no. 298/92, of 31 December, as amended by Decree-law no. 246/95, of 14 September, Decree-law no. 232/96, of 5 December, Decree-law no. 222/99, of 22 July, Decreelaw no. 250/2000, of 13 October, Decree-law no. 285/2001, of 3 November, Decreelaw no. 201/2002, of 26 September, Decree-law no. 319/2002, of 28 December, and Decree-law no. 252/2003, of 17 October (hereinafter RGIC ), that governs the business of credit institutions and financial companies; b. Organic Law of the Bank of Portugal (Lei Orgânica do Bank of Portugal), enacted by Law no. 5/98, of 31 January, as amended by Decree-law no. 118/2001, of 17 April, and Decree-law no. 50/2004, of 10 de March (hereinafter LOBP ); c. Securities Market Code (Código dos Valores Mobiliários), enacted by Decree-law no. 486/99, of 13 November, as amended by Law no. 3-B/2000, of 4 April, Decreelaw no. 61/2002, of 20 March, Decree-law no. 38/2003, of 8 March, Decree-law no. 107/2003, 4 June, Decree-law no. 183/2003, of 19 August, Decree-law no. 66/2004, of 24 March, and Decree-law no. 52/2006, of 15 March (hereinafter CVM ), that governs securities and related public offers, the markets in which securities are traded, the settlement and intermediation of operations on securities, as well as the relevant regulatory and sanction framework; d. Statute of the Securities Market Commission (Estatuto da Comissão do Mercado de Valores Mobiliários), enacted by Decree-law no. 473/99, of 8 November, as amended by Decree-law no. 232/2000, of 25 September, and Decree-law no. 183/2003, of 19 August (hereinafter Statute of CMVM ); e. Legal Framework of Insurance Companies (Regime Geral das Empresas Seguradoras), enacted by Decree-law no. 94-B/98, of 17 April, as amended by Decree-law no. 8-A/2002, of 11 January, 169/2002, of 25 July, Decree-law no. 72- A/2003, of 14 April, Decree-law no. 90/2003, of 30 April, and Decree-law no.

2 251/2003, of 14 October (hereinafter RGES ), that governs access to and the exercise of insurance activity; f. Statute of the Portuguese Insurance Institute (Estatuto do Instituto de Seguros de Portugal), enacted by Decree-law no. 289/2001, of 13 November, as amended by Decree-law no. 195/2002, of 25 September (hereinafter Statute of ISP ). 2) Entities/Authorities in charge of the control and supervision. Purposes, powers and functions of each of them their organization and structure (i.e. public or private, independency or body of the Government to which they belong, size etc). Minister of Finance Pursuant to article 91 of RGIC, the oversight of money, financial, and foreign exchange markets, and in particular the coordination of the activities of market operators with the Government s economic and social policy, shall be the responsibility of the Minister of Finance. Whenever a disturbance arises in the money, financial, or foreign exchange markets, which seriously jeopardizes the domestic economy, the Government may, by joint executive order of the Prime Minister and the Minister of Finance, upon consultation with Bank of Portugal, require that appropriate action be taken, namely the temporary suspension of certain markets or of certain types of transactions, or even the temporary closure of credit institutions. Securities Market Commission The Portuguese Securities Market Commission (hereinafter CMVM ) is a legal entity governed by public law, endowed with administrative and financial independence and its own assets, which is governed by the Statute of CMVM, by the CVM, and, with regard to matters not provided for or incompatible with the provisions set down therein, by the rules applying to public sector businesses. CMVM is subject to the oversight of the Minister of Finance, under the terms of Statute of CMVM and of the CVM (vide articles 1 and 2 of Statute of CMVM). CMVM has the following supervisory and regulatory responsibilities: (i) supervision of securities markets, public offers of securities, settlement systems and centralized securities systems; (ii) the regulation of securities markets, public offers of securities, and the activities carried out by entities under the supervision of the CMVM (vide articles 353 of CVM). In relation to securities activities, without prejudice to the authority granted to other regulatory bodies, the following entities are subject to the supervision of the CMVM: (i) those entities responsible for the management of markets, settlement systems and centralized systems of securities, and whose corporate purpose is the clearing of operations on commodities in derivatives markets, that are subject to capital and own funds requirements equivalent to those of the settlement system managing entities acting as central counterpart and that are authorized to that effect by a joint administrative rule of the Minister of Finance and the Minister of the sector of the underlying assets; (ii) financial intermediary and independent investment advisers; (iii) security issuers; (iv) institutional investors and holders of qualifying holdings in public companies; (v) sinking funds and investor compensation schemes and their respective managing entities; (vi) auditors and risk rating companies, registered with the CMVM; (vii) others that carry out, as principal or secondary, activities relating to the issue, distribution, trading, registration or deposit of securities or, in general, the organization and functioning of the security markets. Individuals or entities that carry out cross-border activities are also subject to the supervision of the CMVM provided that the said activities have some relevant connection to markets, operations or securities subject to Portuguese law (vide articles 353 of CVM, and 4/1, b), of Statute of CMVM). Within the scope of its responsibilities, CMVM may adopt the following actions: (i) monitor the activity of entities subject to its supervision and the functioning of the securities market, securities settlement systems and centralized systems of securities; (ii) supervise the compliance with the law and regulations; (iii)

3 approve acts and grant authorizations laid down by law; (iv) effect registrations laid down by law; (v) provide information for claims and punishment of offences within the jurisdiction of CMVM; (vi) give orders and formulate concrete recommendations; (vii) disseminate information; (viii) publish studies (vide article 360 of CVM). CMVM will continuously monitor the activity of the entities that are under its supervision, even when no suspicion of irregularity exists. In this capacity, CMVM may adopt the following procedures: (i) request any details and information, examine books, registers and documents, pursuant to which the supervised entities may not invoke professional confidentiality; (ii) hear any individual, issuing summons when necessary; (iii) require that the parties responsible for the premises where instructions for claims or other proceedings are issued, makes the same available to its agents for the execution of said tasks, in suitable condition; (iv) request from the police authorities, the necessary collaboration needed in the performance of its functions, particularly, in the event where there is resistance to the performance of the same; (v) replace any managing entities of the securities markets when they do not adopt the necessary measures to regularize anomalous situations that put the regular functioning of the market or the interest of investors at risk; (vi) replace supervised entities in their duty to inform (vide articles 361 and 362 of CVM). The following entities are subject to prudential supervision of CMVM: (i) managing entities of markets, settlement systems, centralized systems of securities markets and the entities whose corporate purpose is the clearing of operations on commodities in derivatives markets, that are subject to capital and own funds requirements equivalent to those of the settlement system managing entities acting as central counterpart and that are authorized to that effect by a joint administrative rule of the Minister of Finance and the Minister of the sector of the underlying assets; (ii) collective investment undertakings; (iii) the managing entities of sinking funds and investor compensation schemes. Prudential supervision should be guided by the following principles: (i) preservation of the solvency and liquidity of the institutions, as well as the prevention of risks; (ii) prevention of systemic risk; (iii) control of the ethical standards of the members of the management bodies as well as of the holders of qualifying holdings (vide article 363 of CVM). During the course of its examination, the CMVM should: (i) perform the inspections it considers necessary of the entities under its supervision; (ii) perform inquiries to investigate offences of any nature committed in the securities market or that affect the normal functioning of said market; (iii) execute the necessary actions in order to guarantee the fulfillment of the principles of investor protection, efficiency and regularity of the functioning of security markets, information control, systemic risk prevention, prevention and repression of actions contrary to law or regulation, independence before any entity, whether under its supervision or not. CMVM will inform the competent entities of an offence, which comes to its notice and that occurs outside the CMVM's jurisdiction. The registrations carried out by CMVM are intended to control the legality and compliance with the regulation of facts or details subject to registration and supervision organization. It is also incumbent upon the CMVM to monitor the application of legislation concerning advertising relating to matters regulated by the CVM, commencing the necessary administrative offence proceedings and applying the respective sanctions as warranted (vide articles 364, 365, and 366 of CVM). Portuguese Insurance Institute The Portuguese Insurance Institute is a State-owned corporate body with administrative and financial autonomy and its own assets, and is governed by its statute, its internal regulations, and, in matters not specifically covered by or incompatible with the former or the latter, by the rules applying to State-owned companies (vide articles 1 and 2 of Statue of ISP). Pursuant to article 6 of RGES, the exercise of insurance activity by insurance companies and equivalent companies is subject to the supervision of the Portuguese Insurance Institute (vide also articles 2, 4 and 5 of Statue of ISP). Bank of Portugal

4 The Bank of Portugal is a public-law legal person with administrative and financial autonomy and its own assets. The Bank of Portugal has its head office in Lisbon. As the central bank of the Portuguese Republic, it shall be an integral part of the European System of Central Banks. The Bank of Portugal shall pursue the objectives and shall participate in the performance of the tasks entrusted to the European System of Central Banks and shall be subject to the provisions of the Statute of the European System of Central Banks and of the European Central Bank, acting in accordance with the guidelines and instructions of the European Central Bank, pursuant to the same Statute (vide articles 1, 2 and 3 of LOBP). Under the terms of article 92 of RGIC, and pursuant to LOBP, the Bank of Portugal shall be responsible for the guidance and control of the money and foreign exchange markets; regulation, oversight and promotion of the smooth operation of payment systems, particularly within the scope of its participation in the European System of Central Banks; and for the collection and compilation of the monetary, financial foreign exchange and balance of payments statistics, particularly, within the scope of its cooperation with the European Central Bank. Further, according to article 93 of RGIC, the supervision of credit institutions, and in particular their prudential supervision, including that of their activities abroad, shall be incumbent on the Bank of Portugal, in accordance with LOBP (vide also articles 15 and 17 of LOBP). In order to guide and control the money and foreign exchange markets, pursuant to the rules adopted by the European Central Bank, the Bank of Portugal shall: (i) adopt general measures including intervening, whenever necessary, to ensure compliance with the monetary and foreign exchange policy objectives, particularly as regards the behaviour of interest and exchange rates; (ii) receive minimum reserves from the institutions subject thereto and co-operating in the implementation of other monetary control operational methods to which the European Central Bank decides to resort; (iii) lay down the conditions under which the institutions authorised to deal in foreign exchange may hold foreign assets or assume foreign liabilities (vide article 16 of LOBP). The supervision of credit institutions, including that of their activities abroad, financial companies, investment firms and securities investment fund management companies shall be incumbent on Bank of Portugal (vide articles 93/1, 197/1 and 199-B of RGIC and 17 of the LOBP). Holding companies shall also be subject to the supervision of Bank of Portugal when their holdings, either directly or indirectly, confer on them a majority of the voting rights in one or more credit institutions or financial companies (vide article 117 of RGIC). The supervision of the Bank of Portugal comprises, as well, non-authorised entities engaged in activity only authorised to credit institutions (vide articles 126, 127 and 128 of the RGIC). Pursuant to article 116 of RGIC, in the performance of its supervisory functions, it shall be in particular incumbent on Bank of Portugal to: (i) monitor the activity of credit institutions; (ii) oversee compliance with the rules governing the activity of credit institutions; (iii) issue recommendations to put an end to any irregularities detected; (iv) take extraordinary reorganisation measures (vide articles 139 and following of RGIC); (v) impose penalties on infractions (vide articles 200 and following of RGIC). The Bank of Portugal may require the carrying out of special audits by independent entities appointed by it, at the expense of the audited institution. Pursuant to article 118 of RGIC, if the conditions under which a credit institution carries out its activities do not comply with the rules for sound and prudent management, the Bank of Portugal may grant it a period in which to take the appropriate steps to restore or strengthen the financial equilibrium, or to rectify its management procedures. Whenever it is deemed that the carrying out of a transaction by a credit institution may imply the violation or the aggravation of the violation of applicable prudential rules, or is not in compliance with prudent and sound management rules, the Bank of Portugal may notify that institution to abstain from carrying out such transaction. Finally, the Bank of Portugal shall supervise credit institutions and financial companies on a consolidated basis to the extent provided for in articles 130 and following of RGIC. Combination of control and supervision by different entities In practical terms, it is not possible to draw a strict line between, on one hand, the money, financial and insurance markets, and, on the other hand, the securities market. Consequently, certain activities are subject

5 to the simultaneous supervision of CMVM, the Portuguese Insurance Institute, and the Bank of Portugal. Article 93/2 of RGIC gives evidence of this, providing that the supervision of credit institutions by the Bank of Portugal shall not prejudice the supervisory powers conferred by the Securities Market Code upon the Securities Market Commission. Also, pursuant to article 197/2 of RGIC when a financial institution having its head office abroad and providing services or having a representative office in Portugal, carries on intermediation activity in transferable securities in Portugal, this activity shall likewise be subject to the supervision of the Securities Market Commission. 3) Describe briefly the activities under supervision and give a list the different types of licenses available. Please refer to II. BANKING ACTIVITIES below. 4) Describe briefly non regulated financial and banking activities. Not applicable. 5) Describe briefly non-permitted financial and banking activities and/or government monopolies. Not applicable. II. BANKING ACTIVITIES 6) Different types of banking licenses. Activities permitted under each of them. Activities prohibited. A credit institution is, under the terms of article 2 of RGIC, an undertaking whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account. A credit institution is also an undertaking which issues means of payment in the form of electronic money. Pursuant to article 3 of RGIC, the following entities are credit institutions: (i) banks; (ii) caixas económicas (savings banks); (iii) Caixa Central de Crédito Agrícola Mútuo (central mutual agricultural credit bank) and caixas de crédito agrícola mútuo (mutual agricultural credit banks); (iv) credit financial institutions; (v) investment companies; (vi) financial leasing companies; (vii) factoring companies; (viii) credit purchase financing companies; (ix) mutual guarantee companies; (x) electronic money institutions; (xi) other undertakings, which, in meeting the definition in the preceding article, are classified as such according to the law. Regarding specifically the activities of the banks, article 4 of RGIC sets out that banks may carry on the following activities:(i) acceptance of deposits or other repayable funds; (ii) lending, including the granting of guarantees and other commitments, financial leasing, and factoring; (iii) money transmission services; (iv) issuance and administration of means of payment, e.g. credit cards, travellers cheques and bankers drafts; (v) trading for own account or for account of clients in money market instruments, foreign exchange, financial futures and options, exchange or interest-rate instruments, goods and transferable securities; (vi) participation in securities issues and placement and provision of related services; (vii) money brokering; (viii) portfolio management and advice, safekeeping and administration of securities; (ix) Management and management consultancy in relation to other assets; (x) Advice to undertakings on capital structure, industrial strategy and related questions as well as advice and services relating to mergers and acquisitions of undertakings; (xi) dealings in precious metals and stones; (xii) acquisition of holdings in companies; (xiii) trading in insurance policies; (xiv) credit reference services; (xv) safe custody services; (xvi) leasing of movable property, under the terms allowed to financial leasing companies; (xvii) provision of investment services, not covered by the preceding numbers; (xviii) other similar transactions not prohibited by law.

6 Other credit institutions may only carry out those transactions permitted by the laws and regulations governing their activity. There are also financial companies, which are undertakings other than credit institutions, whose principal activity is to carry one or more activities referred to in above mentioned numbers (ii) to (ix) except for financial leasing and factoring. Hence, pursuant to article 6 of RGIC, the following are financial companies: (i) dealers; (ii) brokers; (iii) foreign-exchange or money-market mediating companies; (iv) investment fund management companies; (v) credit card issuing or management companies; (vi) wealth management companies; (vii) regional development companies; (viii) exchange offices; (ix) credit securitisation fund management companies; (x) other companies classified as such by law. In respect of their activities, financial companies may only carry out the transactions permitted by the laws and regulations governing their activity. Note that only credit institutions other than electronic money institutions may receive deposits or other repayable funds from the public for their own account, and only credit institutions and financial companies may carry on, on a professional basis, the activities referred to in (ii) to (ix) and (xvii) with the exception of the consultancy activities referred to in (ix) relating to the above-mentioned article 4 of RGIC. Those facts do not prevent the following bodies from receiving repayable funds from the public, according to the applicable laws, regulations or statutes: (i) the State, including public funds and institutes having legal status and with administrative and financial autonomy; (ii) autonomous regions and local authorities; (iii) the European Investment Bank and other international organisations of which Portugal is a member and whose legal status allows them to receive repayable funds from the public within the national territory; and (iv) insurance undertakings, in respect of capitalisation operations. 7) Procedures to be followed and requirements to be met to obtain each of the different licenses. Formalities to be fulfilled, documentation to be submitted, guaranties requested, time estimation, etc. Authorization procedure to set up a credit institution Regarding the authorization procedure, according to article 16 of RGIC, the setting-up of credit institutions requires an authorization to be granted, on a case-by-case basis, by Bank of Portugal. It shall be incumbent on the Minister of Finance to authorise the setting-up of credit institutions which are a subsidiary of a credit institution having its head office in a non-ec country, or if they are controlled, or if their capital or corresponding voting rights are in their majority held by natural persons who are not nationals of EC Member States or by legal persons having their head office in non-ec Member credit institutions States. Note that the authorization shall always be notified to the European Commission. Where the Commission or the Council of the European Union thus decide, in accordance with the provisions laid down in Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000, decisions regarding requests pending at the moment of the decision or future requests for authorization must be limited or suspended. Under the terms of article 17 of RGIC, applications for authorization shall be accompanied by the following documents: (i) definition of the type of institution to be set up and a draft of the articles of association; (ii) programme of operations, geographical location, internal organisation, material, technical and human resources to be used and prospective accounts for each of the first three business years; (iii) identity of the founder members, indicating the number of shares subscribed by each; (iv) documentary

7 evidence on the adequacy of the shareholder structure to the stability of the institution; (v) declaration of undertaking to the effect that on the date of setting-up and as a prerequisite of the same, the amount of capital stock required by law has been deposited with a credit institution. In the case of founder members who are legal persons with qualifying holdings in the institution to be set up, the application shall be further accompanied by: (i) articles of association and a list of the members of the management board; (ii) balance sheet and accounts for the last three years; (iii) list of the partners of the legal person in question who have a qualifying holding therein; (iv) list of the undertakings in which the legal person in question has a qualifying holding, as well as an explanatory memorandum of the structure of the group to which that legal person belongs. The presentation of the documents mentioned in the foregoing paragraph may be waived when Bank of Portugal is already aware of them. Bank of Portugal may request additional information of the applicants and make the inquiries deemed necessary. In respect of the authorization procedure for subsidiaries of institutions authorised abroad, article 18 of RGIC establishes that the authorization to set up a credit institution which is either a subsidiary of a credit institution authorised abroad, or a subsidiary of the parent undertaking of such a credit institution, is subject to prior consultation with the supervisory authority of the country in question. The decision is regulated in article 19 of RGIC, which declares that the parties concerned must be notified of the decision within six months of receipt of the application or, where relevant, of receipt of the additional information required from the applicants, but in any case within twelve months of the receipt of the application. It is important to note that non-notification within the above-mentioned periods is taken to imply refusal of the application Under the terms of article 20 of RGIC, authorization shall be refused whenever: (i) the application for authorization is not accompanied by all the required information and documents; (ii) the application file contains inaccuracies or false statements; (iii) the institution to be set up does not conform to the provisions of article 14 of RGIC (referred to below in 8) Legal structure admitted/requested for each of the different licenses; General requisites); (iv) Bank of Portugal is not satisfied as to the suitability of the shareholders, referred to in article 103 of RGIC (referred to below in 8) Legal structure admitted/requested for each of the different licenses; Prudential rules); (v) the credit institution does not have sufficient technical means or financial resources for the type or volume of transactions which it intends to carry out; (vi) the effective supervision of the institution to be set up is prevented due to close links between the credit institution and other natural or legal persons; (vii) the effective supervision of the institution to be set up is prevented by virtue of laws or regulations of a third country governing one or more of the persons with which the credit institution has close links, or of difficulties involved in their enforcement. If there are deficiencies in the application file, Bank of Portugal shall notify the applicants accordingly, allowing them a reasonable period to rectify the deficiency, before refusing authorization. The authorization lapses, pursuant to article 21 of RGIC, if the applicants expressly renounce it or if the institution fails to commence its activity within a period of 12 months. Bank of Portugal may, upon request of those concerned, extend the mentioned time limit for another period of 12 months. The authorization also lapses upon the winding-up of the institution, without prejudice to the action required for its liquidation. The authorization of a credit institution, according to article 22 of RGIC, may be withdrawn on the following grounds: (i) the authorization was obtained through false statements or any other irregular means, regardless of the applicable penalties; (ii) any of the requirements set forth in article 14 of RGIC (referred to below in 8) Legal structure admitted/requested for each of the different licenses; General requisites) ceases to be met; (iii) the activity of the credit institution does not correspond to the authorised statutory

8 purpose; (iv) the institution ceases or curtails its activity to a negligible level for a period over 12 months; (v) serious irregularities are committed in the management, accounting procedures, or internal control of the institution; (vi) the institution is unable to comply with its commitments, in particular, it no longer provides security for the assets entrusted to it; (vii) the institution fails to fulfil the obligations arising out of its participation in the Deposit Guarantee Fund or in the Investor Compensation Scheme; (viii) the institution violates the laws and regulations governing its activity, or fails to observe the instructions of Bank of Portugal, in such a way as to jeopardize the interests of the depositors and other creditors or the regular operation of the money, financial or foreign exchange market. Note also that the withdrawal of the authorization granted to an institution which has branches in other EC Member States shall be preceded by consultation with the supervisory authorities of those States. On grounds of urgency, however, this consultation may be replaced by a mere notification of the withdrawal, accompanied by an explanation as to the reason for this simplified procedure. The withdrawal of authorization implies the winding-up and liquidation of the credit institution, save if in the case that the institution ceases or curtails its activity to a negligible level for a period over 12 months, the winding-up and liquidation are waived by Bank of Portugal. In accordance with article 23 of RGIC, regarding the power of withdrawal and related procedures, the withdrawal of authorization is the responsibility of Bank of Portugal. The reasons for any withdrawal of authorization must be provided, and this decision must be notified to the credit institution and reported to the European Commission, as well as to the supervisory authorities of the EC Member States in which the institution has branches or provides services. At the same time, Bank of Portugal shall duly publicise the withdrawal decision and shall take the necessary steps to ensure the immediate closure of all the institution s premises, which will remain closed until the liquidators have taken office. Whenever the purpose of a credit institution includes any type of intermediation in transferable securities, Bank of Portugal, before deciding, shall request CMVM to provide information on the suitability of the shareholders. The withdrawal of authorization of such a credit institution shall be immediately communicated to the CMVM. Registration Credit institutions shall not commence their activity without being subject to a special registration with Bank of Portugal, without prejudice of a compulsory registration under the terms of CVM (vide article 65 of RGIC). Hence, under the terms of article 66 of RGIC, the registration of institutions having their head office in Portugal covers the following items: (i) company or business name; (ii) purpose; (iii) date of setting-up; (iv) location of head office; (v) capital stock; (vi) paid-up capital; (vii) identity of shareholders with qualifying holdings; (viii) identity of the members of the management and auditing boards as well as of those who chair the general meeting of shareholders; (ix) delegation of management powers; (x) date of commencement of activities; (xi) location and date of the setting-up of branches, subsidiaries, and agencies; (xii) identity of the managers of branches established abroad; (xiii) inter-shareholder agreements involving shareholders of credit institutions and relating to the exercise of voting rights; (xiv) any alterations which may occur in the above particulars. The registration of credit institutions authorised abroad, which have a branch or representative office in Portugal, covers, pursuant to article 67 of RGIC, the following items: (i) company or business name; (ii) date from which it may establish itself in Portugal; (iii) location of head office; (iv) location of branches, agencies and representative offices in Portugal; (v) capital earmarked for transactions to be carried out in Portugal, where required; (vi) activities which the institution may carry on in the home country and activities which it intends to carry on in Portugal; (vii) identity of the managers of the branches and representative offices; (viii) any alterations which may occur in the above particulars.

9 In relation to the institutions not established in Portugal, Bank of Portugal shall publish a list of credit and financial institutions having their head office in EC countries, not established in Portugal, which are entitled to provide services in the country. Pursuant to article 69 of RGIC, the registration of members of the management and auditing boards, including members of the general council and non-executive directors, shall be made, following their appointment, by means of an application on the part of the institution. The credit institution or the parties concerned may request a provisional registration prior to the appointment, in which case the conversion into definitive registration must be applied for within 30 days of appointment, after which the registration will lapse. In the event of re-appointment, this fact will be added to the registration, upon request by the credit institution. Note that the lack of suitability, experience or availability on the part of the members of the management or auditing boards will result in refusal of registration. In this case, that is, in case of refusal of registration on the grounds of lack of suitability, experience or availability of members of the management or auditing boards, such refusal will be communicated to the interested parties and to the credit institution. Failure to register does not invalidate acts practised by the person in question in the exercise of his duties. In respect of supervening facts, that is, facts that occurred either after registration or before registration but that only came to light after the registry took place, on becoming aware of them, credit institutions shall inform Bank of Portugal, pursuant to article 70 of RGIC. According to article 71 of RGIC, the time limit to apply for any registration is 30 days from the date on which the facts to be registered occurred. Exceptionally, the initial registration of credit institutions, the registration of the application for the establishment in Portugal of entities having their head office abroad and the registrations of the members of the management and auditing boards, as well as any others without whose effectiveness the carrying on of the activity or functions in question is not allowed, is not subject to time limits. When the application or documentation presented contains insufficiencies or irregularities which can be remedied by the interested parties, these will be given notice that they are required to do so within a reasonable time limit, failing which they will be refused registration. The registration is considered to have been made if Bank of Portugal raises no objection within 30 days of the date on which the application was properly filed or, if it asked for supplementary information, within 30 days of receipt thereof. In addition to other grounds provided by law, registration will be refused in the following cases, under the terms of article 72 of RGIC: (i) when it is apparent that the fact to be registered is not mentioned in the documents presented; (ii) when it comes to light that the fact reported in the document is already registered or is not subject to registration; (iii) when any legally required authorization is lacking; (iv) when the nullity of the fact is obvious; (v) when it is shown that any of the requirements of the necessary authorization for the constitution of the institution or for the pursuit of the business is not met, namely on the grounds of lack of suitability and experience on the part of the members of the management or auditing boards, or when there are grounds for opposition under the terms of article 33 of RGIC (referred to below in 8) Legal structure admitted/requested for each of the different licenses; General requisites), and in the case envisaged in article 105/10 of RGIC.

10 8) Legal structure admitted/requested for each of the different licenses: a) Different types of legal structures that may be used, i.e corporations, limited liability, partnerships, branches, subsidiaries, etc.; b) Capital requirements and own fund rules; c) Transfer of the control and ownership regime. Is it regulated?; d) Personal requirements and restrictions that may apply in each case for officers, directors, shareholders, etc.; e) Special requirements/restrictions for foreigners and individuals or legal entities General requisites Under the terms of article 14 of RGIC, credit institutions having their head office in Portugal shall: (i) correspond to one of the types envisaged in Portuguese law; (ii) take the form of a sociedade anónima (limited company); (iii) have as their sole purpose the activity legally permitted under the above-mentioned article 4 of RGIC; (iv) have an initial capital not lower than the legal minimum capital, represented by nominative shares or registered bearer shares; (v) have their head office in Portugal. On the date of setting-up, the initial capital shall be fully subscribed and paid up to the amount of the legal minimum capital. Personal requirements and restrictions that are applicable to management and auditing boards are subject to the following regime. As far as the suitability of the members of the management and auditing boards, article 30 of RGIC provides that only persons whose suitability and availability ensure sound and prudent management may be members of the management and auditing boards of a credit institution, the same applying also to members of the general council and to non-executive members of the board, with a view to providing security, in particular, to the funds entrusted to the institution. In appraising this suitability, account shall be taken of the manner in which the person usually does business or carries on his professional activity, particularly of any aspects which show an inability to make wise and judicious decisions, or a tendency not to meet obligations punctually or to behave in a manner incompatible with the maintenance of market confidence. Among other relevant facts, lack of suitability will be deemed to exist in cases where the person in question has been: (i) adjudged bankrupt or insolvent by a national or foreign court, or considered responsible for the bankruptcy or insolvency of a company controlled by the said person or in which he had been a member of the board, a director or manager; (ii) a member of the board, director or manager of a company whose insolvency or bankruptcy, either in Portugal or abroad, was prevented, suspended or avoided by reorganisation measures or by other preventive or suspension measures, or the holder of a controlling interest in such a company, in cases where he was deemed by the competent authorities to have been responsible for that situation; (iii) convicted, in Portugal or abroad, for fraudulent bankruptcy, bankruptcy due to negligence, fraudulent preference, forgery, larceny, theft, fraud, creditors defrauding, extortion, breach of trust, dishonesty, usury, corruption, issue of uncovered cheques, embezzlement of money or property of the public or co-operative sector, harmful mismanagement in an economic unit of the public or co-operative sector, false declarations, unauthorised taking of deposits or other repayable funds, money laundering, improper use of inside information, manipulation of the stock market or crimes envisaged in the Company Law; (iv) convicted, in Portugal or abroad, for infringement of legal rules or regulations governing the activity of credit institutions, financial companies or financial institutions, insurance activity and the stock market, whenever warranted by the seriousness or repetitive nature of the offences. The members of the management board in charge of the day-to-day management of the credit institution and the official auditors belonging to the auditing board shall have, pursuant to article 31 of RGIC, appropriate experience to perform their functions. Appropriate experience is deemed to exist when the person in question has previously held, in a competent manner, positions of responsibility in the financial sector. The duration of the previous experience and the nature and extent of responsibility of the

11 positions previously held shall be consistent with the characteristics and size of the credit institution in question. If for any reason the legal or statutory requirements for the regular operation of the management or auditing boards cease to be met, Bank of Portugal shall stipulate a period for the change in the composition of the board in question, according to article 32 of RGIC. Should the situation not be settled within the stipulated period, authorization may be withdrawn. Respecting the accumulation of posts, Bank of Portugal, under the terms of article 33 of RGIC, can require that the members of the management board or of the general council of credit institutions not occupy managerial posts in other companies, if it deems that the accumulation is liable to hamper the performance of the functions already entrusted to them, in particular, where there are serious risks of conflicts of interest or, in the case of persons responsible for the day-to-day management of the institution, where their availability for management functions is likely to be significantly affected. These provisions do not apply to the accumulation of posts in the management board or in the general council of credit institutions or of other entities included in the same perimeter of supervision on a consolidated basis. In the case of posts to be occupied in an entity subject to registration with Bank of Portugal, the power of opposition shall be exercised within the scope of the registration process governed by article 69 of RGIC (referred to above in 7) Procedures to be followed and requirements to be met to obtain each of the different licenses. Formalities to be fulfilled, documentation to be submitted, guaranties requested, time estimation, etc.; Registration); in the remaining cases, the persons concerned must declare their intention to Bank of Portugal, with at least 30 days notice before the date foreseen for the start of the new functions; should Bank of Portugal not issue its decision within this period, it shall be understood that it does not oppose the accumulation of posts. Activity in Portugal of credit institutions having their head office abroad Pursuant to articles 44 to 47 of RGIC, the activity within the Portuguese territory of credit institutions having their head office abroad is subject to the Portuguese law, namely the regulations governing external and foreign exchange transactions. The managers of branches or representative offices in Portugal of credit institutions not authorised in other EC Member States are subject to all the suitability and experience requirements established by law for the members of the management boards of credit institutions having their head office in Portugal. Namely, credit institutions having their head office abroad and established in Portugal may use the same company or business name that they use in their home country. If this use is likely to mislead the public as far as the transactions, which the credit institution may carry out, are concerned, or to lead to confusion with other company or business names which enjoy protection in Portugal, then Bank of Portugal shall determine that a specific addition be made to the company or business name in order to avoid such ambiguities. In their activity in Portugal, credit institutions having their head office in EC countries and not established in Portugal may use their original company or business name, provided that no doubts are raised as to the legal regulations governing them and without prejudice to the preceding paragraphs. Should Bank of Portugal be informed that the authorization for a credit institution having a branch or providing services within the Portuguese territory has been withdrawn, or has lapsed in its home country, it shall take the appropriate measures to prevent the institution concerned from initiating new activities and to safeguard the interests of depositors and other creditors.

12 Branches One of the legal structures that may be used is the establishment in Portugal of branches of credit institutions authorised in other EC Member States and subject to the supervision of the competent authorities of those States. Under the terms of article 49 of RGIC, as a prerequisite for the establishment of a branch, Bank of Portugal shall receive, from the supervisory authority of the home country, notification of the following: (i) the programme of operations setting out, inter alia, the types of business envisaged and the structural organisation of the branch, and a certificate stating that such business is covered by the credit institution s authorization; (ii) the address of the branch in Portugal; (iii) the identity of those responsible for the management of the branch; (iv) the amount of the credit institution s own funds; (v) the solvency ratio of the credit institution; (vi) a detailed description of the deposit-guarantee scheme in which the credit institution participates and which ensures the protection of depositors in the branch; (vii) a detailed description of the Investor Compensation Scheme in which the credit institution participates and which ensures the protection of investors who are clients of the branch. The management of the branch shall be entrusted to at least two managers, with appropriate powers to deal with and definitely settle, in Portugal, all matters pertaining to its activity. Within two months of receiving the information mentioned in the foregoing paragraph, Bank of Portugal shall organise, under the terms of article 50 of RGIC, the supervision of the branch in all matters under its competence, after which it shall inform the credit institution that the latter is now able to establish the branch, and if necessary it will indicate the conditions under which, in the interest of the general good, the branch may carry on its activity in Portugal. On receipt of a communication from Bank of Portugal, or at the termination of the period provided for in the foregoing paragraph, the branch may be established and, once duly registered, may commence its activity. Pursuant to article 51 of RGIC, the credit institution shall give written notice to Bank of Portugal at least one month in advance, in the event of a change in any of the particulars referred to in (i), (ii), (iii) and (vi) concerning the above-mentioned article 49. As long as the said provisions are complied with, the branch may carry on in Portugal the activities listed in the Annex to Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000, that the credit institution is authorised to carry on in its home country and which are included in the programme of operations referred to in the abovementioned article 49, number 1, (i). With regard to irregularities, article 53 of RGIC establishes that where Bank of Portugal ascertains that a branch is not complying with the Portuguese rules governing the supervision of liquidity, the implementation of monetary policy and the compulsory reporting of information on its activities within the Portuguese territory, Bank of Portugal shall require the institution concerned to put an end to the irregularity. If the branch or the credit institution fails to take the appropriate measures, Bank of Portugal shall inform the supervisory authority of the home country accordingly and request it to take all appropriate measures, at the earliest opportunity. If the supervisory authority of the home country does not take the measures requested, or if they prove inadequate and the branch persists in violating the legal rules in force, the Bank of Portugal, after informing the supervisory authority of the home country, may take appropriate measures to prevent or to punish further irregularities, namely to prevent the branch from initiating further transactions in Portugal. The European Commission shall be informed of the number and type of cases in which measures have been taken under the foregoing paragraph.

13 Before following the procedure provided for in the foregoing paragraphs, Bank of Portugal may, in emergencies, take any precautionary measures necessary to protect the interests of depositors, investors and others to whom the branch provides services, informing the supervisory authority of the home country and the EC Commission of such measures at the earliest opportunity. The provisions of the foregoing paragraphs shall not affect the powers conferred on the competent Portuguese authorities to take appropriate measures to prevent or to punish breaches of the legal rules provided for in the last paragraphs, or others adopted in the interest of the general good. When appeal from a decision is lodged pursuant to these provisions, it is presumed, unless it is shown otherwise, that the suspension of its enforcement will seriously injure the public interest. Concerning the responsibility for debts, article 54 of RGIC sets forth that the branch s assets may back any debts assumed in other countries by the credit institution, but only after meeting all debts contracted in Portugal. Any bankruptcy or liquidation decision taken by foreign authorities with respect to the credit institution shall not be applicable to its Portuguese branches until the provisions of the foregoing paragraph have been complied with, even when such a decision has been examined by the Portuguese courts. The credit institution shall, under the terms of article 55 of RGIC, keep all accounts of transactions carried out within the Portuguese territory centralised in its earliest-established branch in Portugal, the use of the Portuguese language being compulsory in book-keeping. Finally, pursuant to article 56 of RGIC, credit institutions authorised in other EC Member States which have branches in Portugal may be members of Portuguese business associations in the respective sector, under the same terms and with the same rights and obligations as their equivalent bodies having their head office in Portugal, including the right of being appointed to the respective boards. Provision of services According to article 60 of RGIC, the credit institutions referred to in the above-mentioned article 48 and authorized in their home country to provide the services listed in the Annex to Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000, may carry on such activities within the Portuguese territory, even if they are not established in Portugal. With respect to requirements, article 61 of RGIC requires thetas a prerequisite for the commencement of the provision of services in Portugal, the supervisory authority of the home country shall notify the Bank of Portugal of the activities which the institution intends to carry on in Portugal, and certify that such activities are covered by the authorization granted in the home country. Bank of Portugal may instruct the entities referred to in this Section to inform the public as to their legal status, characteristics, major activities and financial situation. The provisions of the above-mentioned article 53, duly adjusted, shall be applicable. Representative offices Under the terms of article 62 of RGIC, the establishment and operation in Portugal of representative offices of credit institutions having their head office abroad, notwithstanding the applicability of the relevant legislation on commercial registration, is subject to prior registration with Bank of Portugal, which involves the presentation of a certificate issued by the supervisory authorities of the home country, specifying the legal system governing the credit institution by referring to the law applicable thereto. The activities of representative offices shall commence within three months of registration with the Bank of Portugal; the latter may, if warranted, extend this period for another three months.