FOUR BILLS FOR BANKS DELAYED IN PARLIAMENT TILL AFTER THE HOLIDAYS - CYPRUS IN INFRINGEMENT PROCEEDINGS - Filenews 16/7 by Eleftheria Paizanou
With a delay of seven months from the expiry of the deadline set by the European Union (EU) for the harmonization of Cyprus with the European Directive on the banking framework and four months after the sending of a letter of formal notice by the Commission, the Government submitted - at the beginning of July - the relevant legislative package to the Parliament.
Due to the long delay in the promotion of the four bills in Parliament, the Government appealed to the Parliament to consider them as a matter of priority. As everything shows, the package of bills will be discussed in September, as the Parliament adjourned yesterday its work for the summer season.
EU member states had to incorporate the Directive into national law by January 11, 2026 at the latest, while the bills were sent to the Parliament in early July 2026...
The delay in harmonization resulted in the Commission sending the first European "firman" last March. The Cypriot authorities received the letter of formal notice on 27 March. This means that the formal infringement procedure against Cyprus is activated.
The risk remains
According to the Ministry of Finance, the Commission is now more demanding in terms of meeting the schedules, dealing more strictly with violations of the harmonization deadlines.
In fact, even if a Member State complies in the meantime and harmonizes with the Directive, it is possible that the EU will not withdraw an appeal that it may have registered with the Court of Justice of the EU against a state, due to the non-timely transposition of the EU Directive into the domestic legal order.
What do the bills provide?
The four bills address supervisory powers, sanctions, branches of third-country institutions, as well as environmental, social and governance-related risks.
This European Directive revises the European banking framework, strengthens the supervisory powers of the Authorities and explicitly integrates environmental and social risks, as well as governance (ESG) risks, into the operation of banks.
The rules for branches of banks from third countries are also improved, with the aim of further harmonising the banking supervision framework and deepening the internal banking market.
In detail, the legislation provides for the following:
◗ The first bill provides for the requirement of an O-SII buffer, the determination of the systemic risk buffer and the imposition of administrative sanctions, periodic penalties and other administrative measures by the Central Bank, as the Designated Authority.
◗ The second bill includes the approval of financial holding companies and mixed financial holding companies by the Central Bank, provided that it acts as a consolidating supervisor or as the competent authority of the Member State of establishment.
It also includes the prudential supervision of branches of third-country institutions, the authorisation of a branch of a third-country institution and regulatory requirements, the supervision of branches of third-country institutions, the acquisition or disposal of a significant holding, mergers and divisions, as well as administrative sanctions by the Central Bank.
◗ The third bill includes provisions concerning the approval of financial holding companies and mixed financial holding companies by the Hellenic Capital Market Commission, provided that it acts as a consolidating supervisory authority or as the competent authority of the Member State of establishment.
It also includes the technical criteria for the organisation and risk management of CIFs, the governance arrangements, as well as the administrative sanctions and other administrative measures imposed by the Hellenic Capital Market Commission.
◗ The fourth bill concerns the board of directors of a CIF, a financial holding company or a mixed financial holding company, the assessment of the suitability of its members and the governance arrangements.
According to the explanatory memorandum, the first and third bills have included additional provisions, following EU suggestions and completeness checks for the transposition and amendment of the Directives concerning exempted entities, financial holding companies, remuneration, supervisory measures and powers, as well as capital preservation measures.
With a delay of seven months from the expiry of the deadline set by the European Union (EU) for the harmonization of Cyprus with the European Directive on the banking framework and four months after the sending of a letter of formal notice by the Commission, the Government submitted - at the beginning of July - the relevant legislative package to the Parliament.
Due to the long delay in the promotion of the four bills in Parliament, the Government appealed to the Parliament to consider them as a matter of priority. As everything shows, the package of bills will be discussed in September, as the Parliament adjourned yesterday its work for the summer season.
EU member states had to incorporate the Directive into national law by January 11, 2026 at the latest, while the bills were sent to the Parliament in early July 2026...
The delay in harmonization resulted in the Commission sending the first European "firman" last March. The Cypriot authorities received the letter of formal notice on 27 March. This means that the formal infringement procedure against Cyprus is activated.
The risk remains
According to the Ministry of Finance, the Commission is now more demanding in terms of meeting the schedules, dealing more strictly with violations of the harmonization deadlines.
In fact, even if a Member State complies in the meantime and harmonizes with the Directive, it is possible that the EU will not withdraw an appeal that it may have registered with the Court of Justice of the EU against a state, due to the non-timely transposition of the EU Directive into the domestic legal order.
What do the bills provide?
The four bills address supervisory powers, sanctions, branches of third-country institutions, as well as environmental, social and governance-related risks.
This European Directive revises the European banking framework, strengthens the supervisory powers of the Authorities and explicitly integrates environmental and social risks, as well as governance (ESG) risks, into the operation of banks.
The rules for branches of banks from third countries are also improved, with the aim of further harmonising the banking supervision framework and deepening the internal banking market.
In detail, the legislation provides for the following:
◗ The first bill provides for the requirement of an O-SII buffer, the determination of the systemic risk buffer and the imposition of administrative sanctions, periodic penalties and other administrative measures by the Central Bank, as the Designated Authority.
◗ The second bill includes the approval of financial holding companies and mixed financial holding companies by the Central Bank, provided that it acts as a consolidating supervisor or as the competent authority of the Member State of establishment.
It also includes the prudential supervision of branches of third-country institutions, the authorisation of a branch of a third-country institution and regulatory requirements, the supervision of branches of third-country institutions, the acquisition or disposal of a significant holding, mergers and divisions, as well as administrative sanctions by the Central Bank.
◗ The third bill includes provisions concerning the approval of financial holding companies and mixed financial holding companies by the Hellenic Capital Market Commission, provided that it acts as a consolidating supervisory authority or as the competent authority of the Member State of establishment.
It also includes the technical criteria for the organisation and risk management of CIFs, the governance arrangements, as well as the administrative sanctions and other administrative measures imposed by the Hellenic Capital Market Commission.
◗ The fourth bill concerns the board of directors of a CIF, a financial holding company or a mixed financial holding company, the assessment of the suitability of its members and the governance arrangements.
According to the explanatory memorandum, the first and third bills have included additional provisions, following EU suggestions and completeness checks for the transposition and amendment of the Directives concerning exempted entities, financial holding companies, remuneration, supervisory measures and powers, as well as capital preservation measures.
