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Reorganisation and winding-up of credit institutions

The Directive aims to ensure that, where a credit institution with branches in other Member States fails, a single winding-up procedure is applied to all creditors and investors.


European Parliament and Council Directive 2001/24/EC on the reorganisation and winding-up of credit institutions.


Identified by the Financial Services Action Plan (FSAP) as a top priority, the Directive fills a major gap in the financial services legislation. Its adoption comes at a time when financial services and personal investment are booming. The Directive was first proposed in 1985 but was back by the Gibraltar issue among others. The situation is now resolved thanks to the arrangements agreed between the United Kingdom and Spain on designating competent authorities.

As matters stand, if a credit institution with branches in other Member States has to be wound up and its assets divided among its creditors, the authorities in each Member State where the institution is represented can initiate separate insolvency proceedings. This can lead to conflicts of jurisdiction and means that creditors are not always treated equally. Similarly, if an institution has to be reorganised, the approaches can differ from one Member State to another. The Directive is designed to guarantee consumer protection in such instances.

Principle of home country control

If a credit institution with branches in other Member States fails, the winding-up will be subject to a single bankruptcy proceeding initiated in the Member State where the credit institution has its registered office (known as the home State) and will thus be governed by a single bankruptcy law. This approach is consistent with the home country control principle that is the basis for the banking directives (codification Directive 2000/12/EC).

Protection of creditors

  • Publication
    The Directive provides that reorganisation and winding-up measures will be fully effective in all the Member States and as against third parties in particular. Administrators are required to publish an extract from the decision in the Official Journal of the European Communities and in two national newspapers in each host Member State (publication deadline).
  • Information
    Known creditors established in other Member States must be similarly informed (equal rank and treatment). They must be informed rapidly and individually in the official language or one of the official languages of the home Member State. The heading of the form used must be in all the official languages of the European Union and creditors may submit claims in the official language or one of the official languages of "their" Member State. In addition, the liquidators must keep creditors regularly informed on the progress of the winding-up.

Cooperation between the supervisory authorities

The administrative or judicial authorities of the home Member State will be required without delay to inform, by any available means, the competent authorities of the Member State in which the branch is established of their decision to open winding-up proceedings.

Law applicable

A credit institution must be wound up in accordance with the laws applicable in its home Member State insofar as the Directive does not provide otherwise.

If the head office of the institution is in a third country, the Member State in which the branch is established will be regarded as the home Member State.

The text provides for exceptions to the application of the principle of the home Member State as regards the effects of reorganisation measures and winding-up proceedings on employment contracts and relationships (law applicable to employment contracts), contracts conferring the right to make use of or acquire immovable property (law of the Member State in which the property is located) and rights in respect of immovable property subject to registration (law of the Member State in which the register is kept). The lex rei sitae will also apply to the enforcement of proprietary rights in instruments recorded in a register or in an account (law of the Member State of registration). Transactions carried out in the context of a regulated market will be governed solely by the law of the contract which governs such transactions. Lastly, the effects of reorganisation measures and winding-up proceedings on a lawsuit pending are governed by the law of the Member State in which the lawsuit is pending.

Withdrawal of authorisation

In the absence, or following the failure, of reorganisation measures, the authorisation of the institution will be withdrawn in accordance with the procedure laid down in Article 22(9) of Directive 2000/12/EC.

Professional secrecy

The Directive provides that all administrative authorities involved in information or consultation procedures are bound by professional secrecy in accordance with Directive 2000/12/EC, whilst judicial authorities continue to be bound by existing national provisions.


ActEntry into forceDeadline for transposition in the Member StatesOfficial Journal
Directive 2001/24/EC05.05.200105.05.2004OJ L 125 of 05.05.2001
Last updated: 06.07.2005
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