The Banking Commission, which took over from the former Bank Supervision Commission set up in 1941, ensures that credit institutions comply with the applicable laws and regulations and sanctions any which fail to do so. The Commission also investigates operating conditions in credit institutions and monitors the soundness of their finances, as well as their compliance with the principles of good banking practice. The Banking Commission's scope covers all credit institutions established in metropolitan France, the overseas departments and territories and Monaco. Since the implementation of the single banking market on 1 January 1993, it also handles most of the supervision of branches of French credit institutions established in EU countries. In addition, the Banking Commission supervises bureaux de change and money market brokers. Since the Financial Activity Modernization Act of 2 July 1996 came into effect, the Commission also supervises investment service providers.
The Commission is a college of six members chaired by the Governor of the Banque de France. Its General Secretariat executes the instructions regarding all off-site monitoring (i.e. the continuous examination of accounting and prudential documents) and on-site supervision. Under the terms of an agreement between the two, the Banque de France provides the Commission with some of its staff members and resources.
The Banking Commission decides on the list of required documents and data, their format and the dates at which they must be submitted by the reporting institutions. It can also request further explanations and clarification. Its Secretary General is appointed by an Order issued by the Minister for the Economy and Finance following a proposal of the Governor of the Banque de France, who is also Chairman of the Banking Commission. It has administrative and legal powers to call credit institutions to order and impose sanctions by:
| – |
cautioning the management of institutions failing to comply with the principles of good business practice; |
| – |
issuing injunctions for institutions to take the necessary measures to restore or strengthen their finances or rectify management methods; |
| – |
and initiating legal proceedings when reporting institutions contravene a law or regulation, fail to comply with an injunction or heed a cautionary notice. |
These legal proceedings can be followed by disciplinary sanctions ranging from warnings to the withdrawal of an institution's authorization. The Commission may impose a pecuniary sanction instead of or in addition to these legal sanctions.
The Banking Commission may also appoint a provisional administrator and transfer the necessary powers for the latter to administer and manage the institution and, where necessary, suspend payments.
And finally, the Banking Commission may decide to appoint a liquidator for institutions that are no longer authorized to do business, as well as for firms that have been illegally conducting banking business.
