Notice No. 4/2021

Notice No. 4/2021
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Published in: DR, 2nd Series, No. 109, Part E, of 07-06-2021 Mod. 99999910/T – 01/14

Index
Text of the Notice
CHAPTER I General Provisions
Article 1. Object
Article 2. Subject Scope
CHAPTER II Branches
Article 3. Branch Typologies
Article 4. Exclusion
CHAPTER III Branch Extensions
Article 5. General Provisions
Article 6. Dependence
Article 7. Operations Permitted to Branch Extensions
CHAPTER IV Operation and Registration
Article 8. Space Sharing by Institutions
Article 9. Registration of Branches at the Bank of Portugal
CHAPTER V Transitional and Final Provisions
Article 10. Transitional Provision
Article 11. Revocation Provision
Article 12. Entry into Force
Annex I to the Notice

Text of the Notice

Article 66 of the General Regime of Credit Institutions and Financial Companies, approved by Decree-Law No. 298/92 of 31 December (RGICSF), establishes that credit institutions with headquarters in Portugal must register with the Bank of Portugal a set of elements including the location and date of creation of subsidiaries, branches, and agencies. An identical registration obligation applies to credit institutions authorized in a foreign country that have branches in Portugal, pursuant to Article 67 of the RGICSF, as well as to financial companies, payment institutions, and electronic money institutions, pursuant respectively to paragraph 2 of Article 194 of the RGICSF and to letter c) of paragraph 1 of Article 7, paragraph 1, as well as to paragraph 2 of Article 34 of the Regime

Notice No. 4/2021
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of Payment Services and Electronic Money, approved by Decree-Law No. 91/2018 of 12 November (RJSPME).

Technological innovations have enabled the performance of banking operations and other financial operations outside branches, through remote and real-time access, which has made it viable to create new forms of service provision, thereby altering the traditional relationship of customers with their respective branches.

Thus, it is important to regulate the registration of branches, providing a regulatory framework for these recent forms of service provision, clarifying the typologies of branches that can be established by institutions and establishing the elements that must be included in their respective registration.

In this context, a new form of service provision associated with branches is recognized, designated as "branch extension," characterized primarily by the existence of operational and functional dependence on a branch.

In the exercise of activity through branch extensions, permanent compliance with the regulations governing the marketing of banking products and services in retail markets, the legal duties established in matters of prevention of money laundering and terrorist financing, as well as the implementation and effectiveness of internal control mechanisms, must be ensured. Furthermore, compliance with the legal regime for the circulation of cash must be ensured.

For the purposes of exercising effective supervision by the Bank of Portugal regarding compliance with the aforementioned rules, it is fundamental that this supervisory authority has the necessary information to exercise its competencies. In this regard, it is established, namely, that information regarding the existence of branch extensions constitutes an element of the registration of the branches themselves.

On the other hand, considering the legislative and regulatory evolution in matters of information reporting obligations for supervisory purposes, particularly regarding financial statements, own funds, and own funds requirements, to be submitted by credit institutions to the competent supervisory authorities, namely under Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013, as well as under Commission Implementing Regulation (EU) No. 680/2014 of 16 April 2014, and in conformity with the provisions of Bank of Portugal Instruction No. 5/2017 of 3 April, regarding savings banks, financial companies, payment institutions, and electronic money institutions, Bank of Portugal Instruction No. 100/96 of 17 June is revoked.

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The draft of this Notice was subject to public consultation in accordance with legal provisions.

Thus, the Bank of Portugal determines, in the exercise of the competence attributed to it by Article 17 of its Organic Law, approved by Law No. 5/98 of 31 January, in its current wording, and under Articles 120, 121-A, and 123 of the RGICSF, in its current wording, and letter c) of paragraph 1 of Article 7 of the RJSPME, the following:

CHAPTER I
General Provisions

Article 1.
Object

1. This Notice regulates, for the purposes of letters a) and l) of Article 2-A, letter l) of Article 66, and letter d) of Article 67 of the RGICSF, letter c) of paragraph 1 of Article 7, and paragraph 2 of Article 34 of the RJSPME, the typologies of branches, as well as the framework applicable to branch extensions.
2. This Notice regulates the registration of branches, establishing the list of information to be sent for this purpose to the Bank of Portugal.

Article 2.
Subject Scope

This Notice is applicable to credit institutions, financial companies, payment institutions, and electronic money institutions with headquarters in Portugal or abroad, that have branches in Portuguese territory, hereinafter designated as Institutions or Institution.

CHAPTER II
Branches

Article 3.
Branch Typologies

Depending on the location of activity, the branch may assume the following typologies:
a) Fixed branch, when the activity is exercised in immovable property, namely in buildings, autonomous fractions, commercial spaces, or stands installed in immovable property; b) Mobile branch, when the activity is exercised in movable property, such as motor vehicles.

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Article 4.
Exclusion

Locations where banking operations and other financial operations are performed solely using automatic means, including notably distribution and note processing machines, are not considered branches or branch extensions for the purposes of complying with the legal duties applicable to this figure.

CHAPTER III
Branch Extensions

Article 5.
General Provisions

1. Branches may have extensions, designated as "branch extensions."
2. A branch extension is a business unit without autonomy relative to the branch to which it is associated, characterized notably by functional and operational dependence on that branch.
3. Each branch may establish, at most, five extensions.
4. A branch extension may only exist in relation to a fixed branch.
5. Depending on the location of activity, the branch extension may be qualified according to the following typologies:
   a) Fixed branch extension, when it exercises activity in immovable property, namely in buildings, autonomous fractions, commercial spaces, or stands installed in immovable property; b) Mobile branch extension, when it exercises activity in movable property, such as motor vehicles.
6. In each branch extension, information indicating that it is a branch extension, with identification of the name or firm of the Institution and the branch from which it is functionally and operationally dependent, as well as the products and services available at the branch extension, must be displayed in a clearly visible location on the exterior.

Article 6.
Dependence

1. The functional and operational dependence of the branch extension on a branch must be duly documented, and must be clear, transparent, and objective regarding the competencies and responsibilities of the branch and its respective extensions, namely the reporting and management lines.
2. The human resources assigned to the branch extension must have a contractual link to the Institution, be allocated to the associated branch, and have adequate knowledge and skills regarding the products and services available at that extension.

Article 7.
Operations Permitted to Branch Extensions

1. All operations performed at the branch on which they depend may be carried out at the branch extension.
2. Institutions must establish procedures that, in an adequate and systematic manner, allow for the identification of the operations available at the branch extension, their mode of execution, and under what terms validation or approval by the branch on which the extension depends occurs.
3. When acting through the branch extension, Institutions must ensure full compliance with the applicable legal and regulatory norms regarding the marketing of banking products and services, namely those concerning the complaints book, price lists, minimum banking services, advertising, as well as the legal and regulatory norms applicable to the prevention of money laundering and terrorist financing and mandatory security measures.
4. The commissioning associated with the provision of services and products at the branch extension may not exceed the commissioning applied at the branches.

CHAPTER IV
Operation and Registration

Article 8.
Space Sharing by Institutions

1. In the exercise of their activity through a branch or branch extension, whenever an Institution shares the same space with other Institutions, the public service area reserved for it must be distinct and separated from the public service areas assigned to other Institutions.

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2. Branches and branch extensions, in the space sharing referred to in the previous paragraph, must have technical, material, and advertising means assigned to their public service area in terms that guarantee the following:
   a) Exclusive use by the Institution itself; b) Clear identification of the acting Institution.
3. In space sharing, the Institution must ensure that the human resources assigned are subject, without restrictions, to their code of conduct and, depending on the type of contractual link, subject to the disciplinary power of the Institution or to conditions that allow the Institution to terminate the service provision.
4. If, within the scope of space sharing, institutions wish to resort to the sharing of technical, material, advertising, and human resources, they must communicate their intention to the Bank of Portugal, which may oppose it within 45 days from the date of this duly substantiated communication, if it verifies that unresolvable conflicts of interest arise from this sharing or if the institution fails to demonstrate that it can ensure the continuity of the exercise of activity in the event of cessation of the sharing of resources.
5. The communication referred to in the previous paragraph must be substantiated with elements that allow for the assessment of the existence of potential conflicts of interest, the adequacy of any mitigation mechanisms, and the guarantee of continuity in the exercise of activity.
6. The preceding paragraphs also apply to the activity of Institutions, through branches or branch extensions, in situations of space sharing with entities that develop non-financial activity.

Article 9.
Registration of Branches at the Bank of Portugal

1. Institutions must, within 30 days from the date of the event, register with the Bank of Portugal the following elements regarding branches:
   a) Branch typology in accordance with Article 3 of this Notice; b) Branch extensions, if any, including their respective typology, in accordance with Article 5, paragraphs 3 and 5 of this Notice, and the elements referred to in the following letters; c) Date of opening; d) Address or area of operation.

2. Within the scope of the registration request, Institutions report to the Bank of Portugal the information necessary for the supervision of branches and their respective branch extensions, namely their operating hours, itinerary, space sharing with other entities, financial or non-financial, if applicable, and, in the case of branch extensions, the list of operations to be performed and a detailed description of the functional and operational dependence on the branch on which they depend.

3. The information mentioned in the previous paragraph must be transmitted according to the model annexed to this Notice (Annex I), sent via PAR.

4. For the purposes of Article 66, letter o), and Article 71, paragraph 1 of the RGICSF and the provisions in paragraphs 2 and 3 of this article, any changes to the elements referred to in this article and in paragraph 4 of the previous article must be communicated to the Bank of Portugal within 30 days after the occurrence of the fact.

5. The Bank of Portugal may, for the purposes of the preceding paragraphs, request complementary information regarding branches and their respective branch extensions.

6. If a branch is transformed into a branch extension, the cancellation of the registration of the transformed branch must be requested, and the elements of the branch extension must be communicated in accordance with the preceding paragraphs for the purposes of their respective registration.

7. Whenever it becomes aware of facts demonstrating the lack of functional and operational dependence of the branch extension relative to the branch, the Bank of Portugal may require the Institution to regularize the situation or rectify the registration, for the purposes of Articles 66, 67, and following of the RGICSF.

CHAPTER V
Transitional and Final Provisions

Article 10.
Transitional Provision

1. Communications regarding branch extensions provided for in Article 9 must be made within 45 days after the entry into force of this Notice, and for the purposes of this initial communication, information regarding more than one branch extension may be aggregated, provided it contains all the elements contained in Annex I.
2. Institutions have a period of 3 years, from the date of entry into force of this Notice, to make changes to their current space-sharing model necessary to comply with the provisions of Article 8, and must present the communication referred to in paragraph 4 of this article with sufficient advance notice for the evaluation and decision on the respective request within that period.

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Article 11.
Revocation Provision

Bank of Portugal Instruction No. 100/96 of 17 June is revoked.

Article 12.
Entry into Force

This Notice enters into force on the day following its publication.

25 May 2021. - The Governor, Mário Centeno.

Annex to Notice No. 4/2021
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Annex I to the Notice
Transmission of the information provided for in paragraph 2 of Article 9 of this Notice

I. Operating Hours of the Branch Extension
Opening Time: Insert text.
Lunch Break (fill in when applicable):
Start: Insert text.
End: Insert text.
Closing Time: Insert text.
Operating Days (select applicable options):
☐ Monday ☐ Tuesday ☐ Wednesday ☐ Thursday ☐ Friday ☐ Saturday ☐ Sunday

II. Itinerary
(describe the complete itinerary – applicable only to mobile branch extensions) Insert text.

III. List of Operations to be Performed through the Branch Extension
(in list format)
Insert text.

IV. Detailed Description of the Functional and Operational Dependence Existing Between the Branch and the Branch Extension
Insert text.

V. Space Sharing with Other Entities
(indicate if there is space sharing with financial or non-financial entities and, in case of affirmative response, describe the terms) Insert text.

VI. Observations
Insert text.