France: Implementation Of The CRD IV Package Into French Law: Where Do We Stand?

Last Updated: 18 March 2014
Article by Philippe Goutay

The legislative implementation of the CRD IV Package into French law was finalized by Ordinance (a government act having the force of a legislative action) no. 2014-158 dated February 20, 2014 (the "Ordinance"). The CRD IV Package is intended to implement the Basel III agreement in the EU. It consists of the Capital Requirements Regulation no. 575/2013 dated June 26, 2013 (the "CRR"), which is directly applicable to firms across the EU without further national implementation, and the Capital Requirements Directive no. 2013/36 dated June 26, 2013 (the "Directive"), which must first be made into national law before it may become enforceable.

Law no. 2013-672 dated July 26, 2013 relating to the separation and regulation of banking activities (the "Ring-Fencing Law") had already implemented a number of new requirements arising from the CRD IV Package:

  • Credit institutions, investment firms, financial holding companies, and mixed financial holding companies country-by-country reporting on, inter alia, the number of employees on a full time equivalent basis, profit or loss before tax, and public subsidies received;
  • The extension of the mandate of the French banking regulator (the "ACPR") to oppose where necessary the appointment of members of the board of directors;
  • Rules on remuneration (including bonus cap). It is worth noting in this respect that the European Banking Authority published on February 19, 2014 final draft Regulatory Technical Standards on classes of instruments that may be used for the purposes of variable remuneration.

Of particular interest are new provisions introduced by the Ordinance in the areas of governance, prudential supervision, and authority of the ACPR.

Scope of the Ordinance

The Ordinance applies to credit institutions, investment firms, and financing companies (sociétés de financement, which are French-specific institutions qualifying as financial institutions within the meaning of the CRR) with the exception of:

  • Certain governance aspects, that apply only to institutions deemed systemically important ("systemic importance" for such purposes is to be defined by way of secondary legislation); and
  • Some requirements that apply to credit institutions and some investment firms only, e.g., capital buffer requirements will apply to investment firms depending on the scope of the MiFID investment services that they are licensed to perform.

Enhanced Corporate Governance Rules

Management Structure. Under French company law, entities in the form of a société anonyme with a board of directors may choose between two options: either the chairman of the board of directors is also the company's chief executive or the chairman and the chief executive are two separate persons.

Under a position recently issued by the ACPR (Position no. 2014-P-02 dated January 29, 2014), the roles of chairman and chief executive of credit institutions should not be combined, unless justified by the institution and authorized by the ACPR.

With respect to limits on appointments to officer and director positions, stricter rules than those provided under French company law now apply to systemically important credit institutions and financing companies. Senior managers and members of boards of directors or any other body performing similar equivalent duties may not hold more than one single position as chief executive or equivalent and two directorships or equivalent, or four directorships or equivalent.

The ACPR may authorize directors or equivalent to hold one additional non-executive directorship.

Internal Control. The senior personnel management body must approve and periodically review the strategies and policies for taking up, managing, monitoring, and mitigating the risks the institution is or might be exposed to, including those generated by the macroeconomic environment in which it operates.

Specialized Committees. In addition to the remuneration committee that is already required for systemically important credit institutions and investment firms, such institutions, together with financing companies, will also be required to set up a nomination committee and a risk committee. Both committees are to be composed of non-executive members of the management body with the required level of expertise to perform the duties that fall on each committee. Where the ACPR is in charge of consolidated supervision of the group to which the relevant institution pertains, the institution is to decide whether to set up the committees at the level of the institution or at the consolidated level.

The role of the risk committee is to advise the board of directors or equivalent on the global strategy of the institution and its willingness to take risks. The committee is tasked with reviewing whether the price of products and services provided are consistent with the risk profile of the institution and if the remuneration would not lead to excessive risk-taking.

The role of the nomination committee is to periodically review the composition and performance of the board as well as the knowledge, skills, and experience of the individual members of the board and to identify potential candidates for board appointment. The nomination committee is also tasked with putting in place a policy promoting gender diversity on the board.

Enhanced Capital Requirements Supervision

The Ordinance introduces capital buffers applicable to credit institutions and investment firms that are authorized to provide the MiFID investment services of dealing on own account, underwriting of financial instruments, and placing of financial instruments on a firm commitment basis as follows:

  • The capital conservation buffer set at 2.5 percent under the CRR;
  • The countercyclical buffer, on the basis of a rate to be determined by the French authority responsible for macro-prudential policy (Haut Conseil de Stabilité Financière);
  • The systemic risk buffer;
  • The global systemic institutions buffer, the list of which will be set by the ACPR; and
  • The other systemic institutions buffer.

Strengthened Regulatory Authority Available to the ACPR

Instrumental in the enlarged role of the ACPR should be the procedures to be set up by credit institutions, investments firms, and their outsourcees to allow the reporting of regulatory capital violations, whether potential or proven, to the ACPR.

Whistleblowing Procedure. The staff of credit institutions and investment firms and the staff of their external services providers may (this is not an obligation) report to the ACPR any violations of the CRR or capital requirements regulation taken on its basis. The ACPR will then collect the receipt of reports on breaches in circumstances that protect the identity of reporting employees and the confidentiality of reported data. Reporting should have no negative impact on the career or remuneration of reporting employees.

Exchange of Information and Cooperation Among Supervisory Authorities. The ACPR will exchange with the other supervisory authorities information on a number of respects to assist with the supervision of credit institutions or investments firms passported into France.

The authority of the ACPR had already been significantly strengthened by the ACPR to include, inter alia, the power to oppose the appointment of members of the management body if they no longer fulfill the skill to perform and dismiss their duties, and resolutions powers.

Where the solvency or liquidity of the supervised institution may be compromised or if information received or requested by the ACPR reveals that the ACPR is liable to be in breach of requirements set out under the CRR, the ACPR now has the additional authority to:

  • Ban certain activities such as the receipt of deposits;
  • Require the transfer of certain activities;
  • Limit the number of branches of the supervised institution;
  • Limit or prohibit the payment of dividends or other distributions in connection with Core Equity Tier 1 and remuneration of staff, except where this limit or prohibition would qualify as an event of default.

Sanctions. Pursuant to the Ordinance, the Enforcement Committee of the ACPR may levy the following sanctions in the case of breach of capital requirements regulation:

  • In respect of a mixed financial holding company, a mixed parent company of a financing company that failed to submit to an inspection from the ACPR, or to defer to an injunction from the ACPR, a pecuniary sanction of up to €1 million;
  • A pecuniary sanction of up to 10 percent of the total annual net turnover of the institution in the preceding financial year; where the undertaking to be sanctioned is the subsidiary of a parent undertaking, the relevant figure to be taken into account is the gross income resulting from the consolidated financial statements of the ultimate parent undertaking in the preceding financial year, or up to twice the amount of the benefit derived from the breach where such benefit may be determined;
  • In addition to issuing a warning, a reprimand, a partial prohibition from performing certain transactions, or a partial or total withdrawal of license, a credit institution, investment firm, financing company, mixed financial holding company, or mixed parent company of a financing company may be given a pecuniary sanction of up to 10 percent of the annual net turnover;
  • In the case of natural persons incurring direct and personal liability in the breach, senior managers, or members of the management body or equivalent, a temporary ban not exceeding 10 years and/or a fine of up to €5 million, or up to twice the amount of the benefit derived from the breach where such benefit may be determined.

Timing for Entry Into Force

Entry into force of the Ordinance is phased in as follows:

  • Governance rules entered into force on January 1, 2014;
  • New regulatory powers conferred on, and sanctions that may be levied by, the ACPR take immediate effect;
  • Country-by-country reporting with respect to name(s), nature of activities, geographical location, turnover, and number of employees on a full time equivalent basis will be required for credit institutions, holding financial companies, and mixed holding financial companies and investment firms as from July 1, 2014; on July 1, 2014 at the latest, globally systemically important institutions will be required to disclose profit or loss before tax, tax on profit or loss, and public subsidies received to the EU Commission alone;
  • Provisions relating to liquidity will enter into force when relevant guidance is issued by the European Banking Authority;
  • Capital buffers will enter into force in circumstances to be set by way of secondary legislation and at the latest on January 1, 2019.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions