Loans, credits and guarantees to managers, shareholders and related persons

NBB_2017_21 – July 7, 2017 Circular – Page 1/4 boulevard de Berlaimont 14 – BE-1000 Brussels tel. +32 2 221 22 20 – fax +32 2 221 3104 company number: 0203.201.340 RPR Brussels www.bnb.be Circular Brussels, July 7, 2017 Reference: NBB_2017_21 your contact person:
Merel Pieters tel. +32 2 221 40 05 – fax +32 2 221 31 04 merel.pieters@nbb.be Loans, credits and guarantees to managers, shareholders and related persons Scope Belgian credit institutions and their branches, Belgian investment firms and their branches, branches in Belgium of credit institutions from third countries.
Belgian insurance or reinsurance undertakings (with the exception of small Belgian insurance undertakings referred to in Article 275 or local undertakings referred to in Article 294 of the Solvency II Law) and their branches, branches established in Belgium of insurance or reinsurance undertakings governed by the law of third countries, Belgian insurance holding companies and Belgian mixed financial holding companies that head an insurance and reinsurance group within the meaning of Articles 338 and 343 of the Solvency II Law subject to the control of the Bank. Summary / Objectives This circular specifies the legal provisions regarding loans, credits and guarantees granted by credit institutions, insurance undertakings and investment firms to their managers, shareholders and related persons. It also clarifies the procedures according to which institutions must fulfill their legal reporting obligations to the supervisory authority.

Circular – Page 2/4 NBB_2017_21 – July 7, 2017 Madam, Sir,
Article 72 of the Banking Law1 and Article 93 of the Solvency II Law2 provide for a regime for loans, credits and guarantees granted by a credit institution or an insurance undertaking3:
1° to members of their legal administrative body and to members of the management committee or, in the absence of a management committee, to persons participating in their effective management, as well as to the effective managers of their branches; 2° to persons referred to in Article 9, paragraph 1, of the Banking Law, and in Article 23, paragraph 1, of the Solvency II Law, i.e., to natural or legal persons holding a qualifying holding, to members of their various bodies and to persons participating in their effective management; 3° to undertakings or institutions in which the persons of the first category mentioned above hold a qualifying holding or exercise a function referred to in 1°, with the exception of undertakings or institutions controlled by the credit institution or the insurance undertaking or its parent undertaking; 4° to persons related to the persons referred to in 1°, i.e., spouses, partners considered under their national law as the equivalent of a spouse, and first-degree relatives4. In accordance with paragraph 1 of the aforementioned Articles 72 and 93, credit institutions and insurance undertakings may only grant, directly or indirectly, loans, credits or guarantees to the aforementioned persons, undertakings or institutions under the conditions, up to the amounts and subject to the conditions applicable to their clientele. Credit institutions and insurance undertakings may not use another undertaking within the group to conclude transactions without complying with the requirements of Article 72 of the Banking Law and Article 93 of the Solvency II Law. These rules cannot be circumvented by concluding the transaction via another group entity that does not fall within the scope of this circular. By "conditions applicable to clientele", one must understand the conditions in force for clients in a similar situation with respect to the credit institution or insurance undertaking. Thus, a director or manager may, if they meet the conditions set by the credit institution or insurance undertaking to be considered a loyal client, benefit from the preferential interest rate possibly granted to this type of client; however, they may not benefit from the preferential rate applicable to staff. When these transactions are not concluded under normal market conditions, the supervisory authority may, by virtue of the law, require that the agreed conditions be adjusted to the date on which these transactions took effect. Failing this, the members of the legal administrative body who made the decision are jointly and severally liable to the institution for the difference. The supervisory authority recommends that credit institutions and insurance undertakings establish a code of conduct precisely stipulating the nature of loans that may be granted to persons, undertakings and institutions referred to in Article 72, § 1, 1° to 4°, of the Banking Law and Article 93, § 1, paragraph 1, 1° to 4°. Furthermore, decision-making and control
procedures designed to ensure independent judgment and avoid conflicts of interest must be established in writing and made available to the supervisory authority and auditors. 1 Law of April 25, 2014 on the status and supervision of credit institutions and investment firms. 2 Law of March 13, 2016 on the status and supervision of insurance or reinsurance undertakings. 3 Under the term "insurance undertaking", "insurance or reinsurance undertaking" should be understood. 4 See the definition in Article 3, 27 °/1 of the Banking Law.

NBB_2017_21 – July 7, 2017 Circular – Page 3/4 Credit institutions and insurance undertakings are legally obliged to report granted loans, credits and guarantees to their legal administrative body and to the supervisory authority. However, this reporting is not required when the total amount of loans, credits and guarantees granted to a given person, undertaking or institution does not exceed 100,000 euros. The overall ceiling applicable per person, undertaking or institution is 100,000 euros. It should be noted that transactions must, regardless of their amount, always be concluded under normal market conditions. Notification to the supervisory authority To report transactions to the supervisory authority, credit institutions and insurance undertakings use the tables attached in the annex. These tables must be completed annually based on the situation as of December 31. Credit institutions must communicate them to the supervisory authority before the end of February of the following year. Insurance undertakings must communicate these tables concurrently with the update of the governance memorandum, ensuring compliance with the deadlines set out in circular eCorporate 2016/40. Reporting must cover all loans, credits and guarantees outstanding during the past calendar year as soon as the overall threshold of 100,000 euros is exceeded. Transactions with a maturity of less than one year that are no longer outstanding as of December 31 must therefore also be included in the tables. Instructions for entering data into the tables

Column 1 is used for the identification of the direct beneficiary of the loan, credit or guarantee. The name of the indirectly concerned management person (referred to in Articles 72, § 1, 1°, of the Banking Law and 93, § 1, paragraph 1, 1°, of the Solvency II Law) must also be mentioned (in column 1) when the loan, credit or guarantee has been granted either to an undertaking or institution in which the concerned management person holds a qualifying holding or exercises a function referred to in Articles 72, § 1, 1°, and 93, § 1, paragraph 1, 1°, or to a person related to that management person. Natural persons will be identified by their family name followed by their first name(s). Legal persons will be identified by their corporate name and legal form, and for legal persons under Belgian law, by their company number.
The nature of the loan, credit or guarantee (e.g., mortgage credit, consumer credit, etc.) must be mentioned in column 2, using a separate line for each transaction. When the credit opening file includes several underlying credits, each of these underlying credits must be indicated as a separate line.
The initial grant date must be indicated in column 3. This is the date of the initial decision to grant the loan, credit or guarantee in question. If the loan term is extended, the initial grant date remains the same (only the extension is then to be indicated in column 5). If a loan, credit or guarantee is repaid and replaced by a new loan, credit or guarantee, a new line must then be added with the "initial grant date" being the date on which the new loan, credit or guarantee was granted.
The adjustments referred to in column 4 include all modifications made during this period to the conditions and terms of the transaction (increase, reduction, cancellation, modification of conditions, etc.)5.
In column 5 (left side), the outstanding credit at the end of the period must be indicated. This refers, for example, to the total amount of cash credit or the open outstanding amount of the mortgage credit at the end of the period. If applicable, any amount still available (at the end of the period) is to be indicated in column 5 (right side).
5 Modifications resulting from the execution of the contractual conditions and terms of the transaction (e.g., periodic repayments of the borrowed capital) are therefore not to be reported in this column 5.

Circular – Page 4/4 NBB_2017_21 – July 7, 2017

In column 6, the interest rate applicable at the end of the period must be indicated.
In column 7, the remaining term until the end of the period must be indicated.
In column 8 (payments foreseen in accordance with contractual conditions), one must answer "yes" or "no", taking into account only material elements.
Branches
The regime of Article 72 of the Banking Law and Article 93 of the Solvency II Law is also applicable in the context of branches.

Foreign branches of Belgian credit institutions and insurance undertakings
Loans, credits and guarantees appearing in the accounting records of a foreign branch of a Belgian credit institution or insurance undertaking and granted to persons, undertakings or institutions referred to in Article 72, § 1, 1° to 4° of the Banking Law and Article 93, § 1, paragraph 1, 1° to 4°, of the Solvency II Law also fall under the aforementioned provisions.
Branches in Belgium of credit institutions and insurance undertakings from third countries
Loans, credits and guarantees appearing in the accounting records of a Belgian branch of a credit institution or insurance undertaking from a third country and granted to persons, undertakings or institutions referred to in Article 72, § 1, 1° to 4°, of the Banking Law and Article 93, § 1, paragraph 1, 1° to 4°, of the Solvency II Law also fall under this regime, it being understood that in accordance with Article 335, 4°, of the Banking Law and Article 587, 3°, of the Solvency II Law, the managers of the branch must also be considered as members of the legal administrative body. Investment firms The provisions set out above are, in accordance with Article 535 of the Banking Law, also applicable to loans, credits and guarantees granted by investment firms, it being understood that for these institutions, a ceiling of 25,000 euros applies for the notification obligation. Investment firms may only grant loans or credits within the limits provided for in Article 534 of the Banking Law. Insurance holding companies and Belgian mixed financial holding companies heading an insurance and reinsurance group All the above requirements also apply, in accordance with Article 443, paragraph 1, of the Solvency II Law, to Belgian insurance holding companies and Belgian mixed financial holding companies that head an insurance and reinsurance group within the meaning of Articles 338 and 343 of the Solvency II Law subject to the control of the Bank. This circular cancels and replaces circular D1 94/5 of November 28, 1994. A copy of this circular is sent to the auditor of your institution or undertaking. Please accept, Madam, Sir, the assurance of my distinguished consideration. Jan Smets Governor
Annex: Reporting table