REGULATION No 244/2004
authorising financial institutions and subsidiaries
of credit institutions established in another state of the European Economic Area
to pursue financial activities in Iceland
This Regulation shall apply to financial institutions and subsidiaries of credit institutions, or the joint subsidiaries of two or more credit institutions, established in another state of the European Economic Area (EEA) and their authorisation to pursue financial activities in Iceland. Furthermore, this Regulation shall apply to the obligation of the Icelandic Financial Supervisory Authority (FME) to give notice of domestic financial undertakings which operate branches in other states of the EEA or states of the European Free Trade Association (EFTA).
A financial institution shall mean any undertaking which is not a credit institution and operates, in particular, in acquiring holdings or pursues any of the activities referred to in Points 2 to 12 of the first paragraph of Article 20 of Act No. 161/2002, on Financial Undertakings.
A credit institution shall mean a financial undertaking which has been granted an operating licence in accordance with Points 1-4 of the first paragraph of Article 4 of the Act on Financial Undertakings.
Undertakings from another state within the EEA, authorised by their Articles of Association to pursue the activities listed in the first paragraph of Article 20 of the Act on Financial Undertakings, may establish a branch or provide services in Iceland without establishing a branch if the following conditions are satisfied:
1. The undertaking must be a subsidiary of a credit institution or the joint subsidiary of two or more credit institutions, as provided for in the second paragraph of Article 97 of the Act on Financial Undertakings.
2. The subsidiary must be subject to the legislation of the EEA state which has granted the parent company or companies referred to in Point 1 an operating licence and the subsidiary must, in addition, pursue the activities in question in that state.
3. The parent company or companies must control at least 90% of the votes deriving from shares in the company.
4. The parent company or companies must fulfil FME's requirements regarding the sound and prudent management of a subsidiary and must furthermore declare, with the approval of the competent authority in their home state, that they are responsible in solidum for any obligations undertaken by the subsidiary.
5. The subsidiary must be subject to supervision on a consolidated basis with the parent company or each of the parent companies. This shall apply in particular to supervision of calculations of its capital adequacy ratio, supervision of its calculations of loans to individual customers or financially connected parties, and supervision of limits on holdings in other undertakings.
The notification of activities referred to in the first paragraph must be accompanied by a confirmation from the competent authority in the home state(s) of the parent company or companies that the above conditions are satisfied. In addition, the competent authorities in the home state(s) of the parent company or companies must declare that they will provide satisfactory supervision of the undertaking's activities. In other respects the provisions of Chapter V of the Act on Financial Undertakings shall apply as appropriate.
The provisions of the first and second paragraphs shall also apply to an undertaking owned by or controlled by one or more subsidiaries, cf. the provisions of Article 97 of the Act, as appropriate.
The subsidiary of a credit institution, or the joint subsidiary of two or more credit institutions established in another state of the EEA, may carry out the issuing and handling of payment cards, as referred to in Point 4 of Article 3 of the Act on Financial Undertakings, provided it is authorised to carry out such activity in its home state.
A subsidiary as referred to in the first paragraph must give notification of its activities to FME. The notification must be accompanied by confirmation that the company is owned by parties subject to supervision and is authorised to carry out the activities in question in its home state. The company may not begin operations until FME has verified its authorisations and activities.
FME may obtain information on the company's activities and set conditions for its activities in Iceland. Should the company violate the conditions provided for in this Article, or fail to comply in other respects with sound and proper business practices, FME may prohibit its activities in Iceland.
In the event that an financial undertaking operates a branch in an other state of the EEA or EFTA state, as authorised in Article 36 of Act No. 161/2002, FME must notify the competent authorities of the state where the financial undertaking operates a branch of any changes which may occur to the information previously provided on the compensation scheme to protect customers of the branch of the Icelandic financial undertaking, cf. the third paragraph of Article 36 of Act No. 161/2002.
This Regulation, which is set by authority of Article 35 of Act No. 161/2002, on Financial Undertakings, and Article 19 of Act No. 87/1998 on Official Supervision of Financial Activities, shall enter into force at once.
Ministry of Commerce, 5 March 2004