Updated 13/04/2024
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Version from: 09/01/2024
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Article 23 - Administrative penalties and other administrative measures

Article 23

Administrative penalties and other administrative measures

1.  

Without prejudice to the right of Member States to provide for criminal penalties, Member States shall lay down rules establishing appropriate administrative penalties and other administrative measures that apply at least in the following situations:

(a) 

a credit institution has acquired a permission for a covered bond programme by means of false statements or other irregular means;

(b) 

a credit institution no longer fulfils the conditions under which permission for a covered bond programme was given;

(c) 

a credit institution issues covered bonds without obtaining the permission in accordance with the provisions of national law transposing Article 19;

(d) 

a credit institution issuing covered bonds fails to meet the requirements set out in the provisions of national law transposing Article 4;

(e) 

a credit institution issues covered bonds that do not comply with the requirements set out in the provisions of national law transposing Article 5;

(f) 

a credit institution issues covered bonds that are not collateralised in accordance with the provisions of national law transposing Article 6;

(g) 

a credit institution issues covered bonds that are collateralised by assets located outside the Union in breach of the requirements laid down in the provisions of national law transposing Article 7;

(h) 

a credit institution collateralises covered bonds in an intragroup pooled covered bond structure in breach of the requirements laid down in the provisions of national law transposing Article 8;

(i) 

a credit institution issuing covered bonds fails to fulfil the conditions for joint funding laid down in the provisions of national law transposing Article 9;

(j) 

a credit institution issuing covered bonds fails to meet the requirements of composition of the cover pool laid down in the provisions of national law transposing Article 10;

(k) 

a credit institution issuing covered bonds fails to meet the requirements regarding derivative contracts in the cover pool laid down in the provisions of national law transposing Article 11;

(l) 

a credit institution issuing covered bonds fails to comply with the requirements of the segregation of cover assets in accordance with the provisions of national law transposing Article 12;

(m) 

a credit institution issuing covered bonds fails to report information or provides incomplete or inaccurate information in breach of the provisions of national law transposing Article 14;

(n) 

a credit institution issuing covered bonds repeatedly or persistently fails to maintain a cover pool liquidity buffer in breach of the provisions of national law transposing Article 16;

(o) 

a credit institution that issues covered bonds with extendable maturity structures fails to fulfil the conditions for extendable maturity structures laid down in the provisions of national law transposing Article 17;

(p) 

a credit institution issuing covered bonds fails to report information or provides incomplete or inaccurate information on its obligations in breach of the provisions of national law transposing Article 21(2).

Member States may decide not to provide for administrative penalties or other administrative measures for breaches which are subject to criminal penalties under their national law. In such cases, Member States shall communicate the relevant criminal law provisions to the Commission.

2.  

The penalties and measures referred to in paragraph 1 shall be effective, proportionate and dissuasive and shall include at least the following:

(a) 

a withdrawal of permission for a covered bond programme;

(b) 

a public statement which indicates the identity of the natural or legal person and the nature of the breach in accordance with Article 24;

(c) 

an order requiring the natural or legal person to cease the conduct and to desist from a repetition of that conduct;

(d) 

administrative pecuniary penalties.

3.  
Member States shall also ensure that the penalties and measures referred to in paragraph 1 are effectively implemented.
4.  

Member States shall ensure that, when determining the type of administrative penalties or other administrative measures and the amount of administrative pecuniary penalties, the competent authorities designated pursuant to Article 18(2) take into account all the following circumstances, where relevant:

(a) 

the gravity and the duration of the breach;

(b) 

the degree of responsibility of the natural or legal person responsible for the breach;

(c) 

the financial strength of the natural or legal person responsible for the breach, including by reference to the total turnover of the legal person or the annual income of the natural person;

(d) 

the importance of profits gained or losses avoided because of the breach by the natural or legal person responsible for the breach, insofar as those profits or losses can be determined;

(e) 

the losses caused to third parties by the breach, insofar as those losses can be determined;

(f) 

the level of cooperation by the natural or legal person responsible for the breach with the competent authorities designated pursuant to Article 18(2);

(g) 

any previous breaches by the natural or legal person responsible for the breach;

(h) 

any actual or potential systemic consequences of the breach.

5.  
Where the provisions referred to in paragraph 1 apply to legal persons, Member States shall also ensure that the competent authorities designated pursuant to Article 18(2) apply the administrative penalties and other administrative measures set out in paragraph 2 of this Article to members of the management body and to other individuals who under national law are responsible for the breach.
6.  
Member States shall ensure that before taking any decision imposing administrative penalties or other administrative measures as set out in paragraph 2, the competent authorities designated pursuant to Article 18(2) give the natural or legal person concerned the opportunity to be heard. Exceptions to the right to be heard may apply for the adoption of those other administrative measures where urgent action is necessary to prevent significant losses to third parties or significant damage to the financial system. In such cases, the person concerned shall be given the opportunity to be heard as soon as possible after the adoption of the administrative measure and, where necessary, that measure shall be revised.
7.  
Member States shall ensure that any decision imposing administrative penalties or other administrative measures as set out in paragraph 2 is properly reasoned and is subject to a right of appeal.