1. LEGAL ASPECTS OF FINANCE Lecture 7
Case 7
Matti Rudanko

2. Case 7: Credit Loss Liability of Bank Director
Tasks:
- see next slides

3. Possible Tasks and Questions 1
Account for the relevant (solvency) provisions in banking legislation and their applicability to this case.
Give a report on the general damages liability of a bank director and members of the Board of Directors of a Bank.
Try to solve the question of liability for damages in this case. Please pay attention to the general preconditions of liability (the existence of damage, causal relationship between acts of the responsible person and damage, and negligence).
Legal Aspects of Finance 7

4. Liability for Damages of a Bank Director
Topics and Issues
Regulation of Credit Institutions (on Solvency; ”Prudential Supervision”)
EU:
The CRD IV package which transposes – via a Regulation and a Directive – the new global standards on bank capital (commonly known as the Basel III agreement) into the EU legal framework, entered into force on 17 July 2013
Finland: Act on Credit Institutions 2007
Basel (I, II and III):
Liability for Damages of a Bank Director
Liability for damages in general
Here: contractual damages?
The position of a bank director: employee
Employment Contracts Act (55/2001)
Infringements of solvency regulation
e.g. sufficient collateral requirement in the previous Finnish Savings Bank Act
”Business Judgment Rule”
Indications for possible liability
Business economics based decisions (negligence?)
The interest of the company
Legal Aspects of Finance 7

5. Legal Basis Legal Aspects of Finance 7
Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC
Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012
Act on Credit Institutions (121/2007); In English only the repealed Act (1607/1993, )
Legal Aspects of Finance 7

6. Links to Legislation, European
Directive text: Regulation text:
Legal Aspects of Finance 7

7. Links to Legislation, Finnish
(Savings Bank Act) (Act on Credit Institutions) (Employment Contracts Act; Ch. 12:Damages) (Tort Liability Act)
Legal Aspects of Finance 7

8. Slide sets: - 8 and 8a: Damages Liability
Case 7: Slides
Slide sets:
- 8 and 8a: Damages Liability