S.L. 371.11 Art. 14Contraventions by European credit institutions.

(1) Where Malta is the host Member State and the competent authority, on the basis of the information received from the European regulatory authority of the home Member State in accordance with Article 50 of the CRD, ascertains that a European credit institution which has a branch or provides services in Malta in exercise of a European passport right fulfils one of the following conditions in relation to the activities carried out in Malta, it shall notify the European regulatory authority -

(a) the credit institution does not comply with the provisions of the Act or any regulations made or Banking Rules issued thereunder which transpose the requirements of the CRD, with any binding legal instruments issued under the CRD, or with the CRR;

(b) there is a material risk that the credit institution will not comply with the provisions of the Act or any regulations made or Banking Rules issued thereunder transposing the requirements of the CRD, with any binding legal instruments issued under the CRD, or with the CRR.

(2) Where the competent authority considers that the European regulatory authority of the home Member State, after having been notified in terms of sub-regulation (1), has not fulfilled its obligations or will not fulfil its obligations to take appropriate measures to ensure that the credit institution concerned remedies its non-compliance or takes measures to avert the risk of non-compliance, it may refer the matter to EBA and request its assistance in accordance with Article 19 of Regulation (EU) No 1093/2010.

(3) Before following the procedures set out in sub-regulations

(1) and (2), where Malta is the host Member State, the competent authority may, in emergency situations, pending measures by the European regulatory authority of the home Member State or reorganisation measures referred to in Article 3 of Directive 2001/ 24/EC on the reorganisation and winding up of credit institutions, take any precautionary measures necessary to protect against financial instability that would seriously threaten the collective interests of depositors, investors and clients in Malta.

(4) Any precautionary measures under sub-regulation (3) shall be proportionate to their purpose to protect against financial instability that would seriously threaten collective interests of depositors, investors and clients in Malta as the host Member State. Such precautionary measures may include a suspension of payment. They shall not result in a preference for the creditors of the European credit institution in Malta over creditors in other Member States.

(5) Any precautionary measure under sub-regulation (3) shall cease to have effect when the administrative or judicial authorities of the home Member State take reorganisation measures under Article 3 of Directive 2001/24/EC on the reorganisation and winding up of credit institutions.

(6) Where Malta is the host Member State, the competent authority shall terminate precautionary measures taken in accordance with sub-regulations (3) to (5) where it considers those measures to have become obsolete under sub-regulations (1) and (2), unless they cease to have effect in accordance with sub-regulation (5).

(7) The competent authority shall, without undue delay, notify the European Commission, the EBA and the European regulatory authorities concerned of precautionary measures taken under sub-regulation (3).

(8) Where Malta is the host Member State, the competent authority may, notwithstanding regulation 6 and sub-regulations (1) and (2) of this regulation, exercise the powers conferred upon it under the CRD to take appropriate measures to prevent or to punish breaches committed in Malta of the provisions of the Act or any regulations made or Banking Rules issued thereunder transposing the requirements of the CRD or of any binding legal instruments issued under the CRD or in the interests of the general good. This shall include the possibility of preventing credit institutions who have so acted in breach, from initiating further transactions in Malta.

(9) Any measures taken in accordance with sub-regulations (3) to (7) or sub-regulation (8) involving penalties or restrictions on the exercise of the freedom to provide services or the freedom of establishment shall be properly reasoned and communicated to the credit institution concerned.

(10) Where Malta is the host Member State and a European credit institution carrying out its activities in Malta in exercise of a European passport right has had its authorisation withdrawn by the European regulatory authority of the home Member State, the competent authority shall take appropriate measures to prevent the European credit institution concerned from initiating further transactions in Malta and to safeguard the interests of depositors.

(11) Where Malta, neither being the home Member State nor the host Member State, is affected by the precautionary measures taken by the European regulatory authority of any host Member State in terms of Article 43 of the CRD, the competent authority may:

(a) object to such precautionary measures;

(b) refer the matter to the EBA; and

(c) request the EBA’s assistance in accordance with Article 19 of Regulation (EU) No 1093/2010.