Banking and finance

On 13 July 2017, the High-Level Expert Group ("HLEG") on Sustainable Finance published its interim report ("Interim Report") setting out concrete steps to create a financial system that supports sustainable investments. This Legal Insight is part of our dedicated newsletter series on the European Capital Markets Union ("CMU"). Background The growing awareness of environmental challenges and sustainability risks as well as the adoption of the UN 2030 Agenda and the conclusion of the Paris Climate Agreement by the EU in 2015 call for an EU strategy on sustainable finance. Establishing an EU strategy on sustainable finance is a priority action of the CMU. In December 2016, the HLEG was established to advise on the development of such an EU strategy. The recently published HLEG Interim Report was recently presented in a public hearing on sustainable finance on 18 July 2017. At the same time, the HLEG presented an online questionnaire on the Interim Report aimed at obtaining targeted feedback until 20 September 2017, which would be reflected in the final report of the HLEG scheduled for publication by the end of 2017.   read more... 

On 10 July 2017, the Commission announced the public consultation on the development of secondary markets for non-performing loans (NPLs) and distressed assets. Following the commencement of this public consultation, the Council introduced its Action Plan for NPLs. As of the end of 2016, the outstanding volume of NPLs in the EU was EUR 1 trillion. The Council considers a solution for NPLs paramount to boost bank profitability, remove a lock-up of capital and reduce the risks for the viability of banks with high NPL ratios. While the Council considers it the responsibility of each bank to manage its NPL portfolio, certain actions need to be taken to provide banks with a functioning framework to resolve their NPL issues. read more...

The EU Regulation on Insolvency Law 1346/2000 (EIR) was considered a milestone in the cross-border coordination of national insolvency proceedings. The recast of the EU Regulation on Insolvency Law 2015/848, applicable to insolvency proceedings opened after 26 June 2017, considers substantial developments in national insolvency laws. read more...

The Hungarian Parliament passed an act in June 2017 with the aim of improving Hungary's business competitiveness. Among other things, the amendment has changed the regulation of trusts and their management, hopefully for the better, since the past three years have shown that a lack of such experience still exists. The legal concept of trust was introduced into Hungarian law in 2014, when the new Civil Code entered into force. Contrary to expectations, however, potential market players were hesitant to launch their businesses, mainly due to crippling bureaucracy and the vague regulation of trusts. read more...

On 28 June 2017 the Austrian Parliament passed the government's legislative proposal on insolvency law (Insolvenzrechtsänderungsesetz 2017). After lengthy negotiations, the government finally agreed to shorten personal insolvency proceedings to a maximum five years and to abolish the minimum insolvency quota of 10 % under certain conditions. The amendments will be applicable as of 1 November 2017. read more...

Lex Agrokor – behind the scenes The hottest topic in Croatia right now is the Agrokor situation and the newly enacted Act on Compulsory Administration Procedure in Companies of Systemic Importance for the Republic of Croatia (Zakon o postupku izvanredne uprave u trgovačkim društvima od sistemskog značaja za Republiku Hrvatsku; the "Act"). The Act was immediately nicknamed "Lex Agrokor" because of what appears to be its main purpose. Besides pre-bankruptcy and bankruptcy procedures, the Act implemented a third new special reorganisation regime for a distressed Croatian company of systemic importance (the "Debtor"), ie a joint stock company (together with its Croatian affiliates where it holds more than 25 %) employing more than 5,000 employees and with balance sheet obligations exceeding some EUR 1 billion. read more...

On 4 May 2017, the European Commission published its proposal for an amendment of the European Market Infrastructure Regulation (EMIR). The Commission calls the proposed amendment a good example of "better regulation in practice" which is "essential to the creation of the Capital Markets Union (CMU)". The proposal follows a report adopted by the European Commission in November 2016. The EMIR was introduced in 2012 and aimed at more transparency in the over-the-counter (OTC) derivatives market while providing for a clearing obligation with respect to OTC derivatives, thereby aiming to reduce risks to the financial system. read more...

Policyholders of unit-linked life insurance products pay an agreed sum for the unit-linked insurance to the insurance company, as a regular premium, or in one lump sum. These payments cover the life insurance component as well as the investment, administrative costs, contracting fee and the commissions. The "total cost charged" ("TCC") is an indicator – calculated in line with the rules of Hungarian insurance regulations – showing all costs charged on life insurance policies having a savings element, reflected as a percentage value. The regulation of the TCC in Hungary has been amended effective 1 January 2017.

On 7 March 2017, the Hungarian parliament adopted a law that increases the minimum sale price of a residential property in the enforcement procedure from the current 70% of its market value to 100% (market value to be understood as the price set by the appraisal of the bailiff), provided that (i) the claim to be enforced stems from a consumer contract; (ii) the real property is the debtor's only real property; and (iii) the debtor resided in that real property for at least six months prior to the initiation of the enforcement procedure.  read more...

On 16 December 2016, the Council of the European Union announced agreement on its negotiating stance in relation to the proposed regulation amending the European Venture Capital Funds ("EuVECA") Regulation (Regulation (EU) No 345/2013) and the European Social Entrepreneurship Funds ("EuSEF") Regulation (Regulation (EU) No 346/2013), which is now at the European Parliament's ECON committee, scheduled to be voted on, on 22 March 2017. On 31 January 2017 the call for expression of interest for selecting a fund manager of the Pan-European Venture Capital Fund-of Funds closed; and tax incentives for venture capital and business angels are expected to be proposed in the course of 2017 to foster investment in SMEs and start-ups, close the funding gap and thereby remove obstacles to economic growth in Europe. read more...

On 28 October 2016, the European Commission decided to establish a High Level Expert Group on sustainable finance, one of the European Commission's primary objectives within the EU Capital Markets Union ("CMU"). This Legal Insight is the first part of our dedicated newsletter series on the CMU. We will provide regular updates on CMU-related topics.