Banking Act (Cap. 371), article 15

15. (1) A credit institution shall not - (a) grant any credit facility against the security of its own shares or against any other securities issued by the credit institution itself or against any shares or any other securities of another body corporate in which the credit institution has control; (b) grant or permit to be outstanding credit facilities or extend other banking s ervices, under terms and conditions more favourable than the credit institution would have otherwise applied - (i) to any one of its directors or their spouses whether jointly or several ly, as well as with third parties: Provided that, in any case where unsecured credit facilities are granted, these shall not in the aggregate exceed the sum of twenty-three thousand, two hundred and ninety-three euro and seventy-three cents (€23,293.73); (ii) to any person in whom or in which the credit institution or any one or more of its directors is interested as a director, partner, manager, agent or member or to any person of whom or of which any one or more of the credit institution's directors is a guarantor; (iii) to any body of persons in which the credit institution or any one or more of its directors jointly or severally maintains control, not being itself a credit institution or the parent undertaking of the credit institution, a subsidiary of this parent undertaking or a subsidiary of the credit institution; and where the competent authority has reason to 46 CAP. 371.] BANKING believe that such favourable terms and conditions have been applied, it shall have the power to require the credit institution to rectify the position and if the credit institution fails to take the necessary action to rectify the position as required, the competent authority shall take such measures as it deems appropriate until the position is rectified; (c) grant to or permit to be outstanding in respect of any officer other than a dir ector, or any employee, unsecured credit facilities which in the aggregate exceed twelve months’ emolument of such officer or employee: Provided that the competent authority may by Banking Rule extend the restrictions listed in paragraphs (a), ( b) and ( c) or any of them to other officers, employees or shareholders of credit institutions or to other categories of persons in such manner and to such extent as may be specified; (d) without the consent of the competent authority acquire or hold shares in another company which is not a credit institution, which e xceeds five per centum of that company's issued share capital or any other subsequent acquisition which exceeds the per centum amount approved by the competent authority; (e) purchase, acquire or otherwise hold any immovable property or any right thereon except as may be reasonably necessary for the purpose of conducting its business or housing or providing amenities for its staff: Provided that this paragraph shall not prevent a credit institution - (i) from letting part of any building which is used for the purpose of conducting its business; or (ii) from securing a debt on any immovable property and, in the event of def ault in payment of such debt, from acquiring or holding such property, for realisation within twelve months, or any longer period as may be determined by the competent authority; (iii) in other instances from acquiring immovable property with the prior approval of the competent authority the original cost of which property shall not in the aggregate exceed five per centum of the credit institution’s own funds. (2) In sub-article (1)( b) and ( c) the expression "unsecured credit facilities" shall mean credit facilities made without se curity or, in respect of any credit fac ility made with security, any p art thereof which at any time exceeds the market value of the asset s constituting that security, or where the competent authority is satisfied that there is no established market value, on the bas is of a valuation approved by the competent authority itself. BANKING [CAP. 371. 47 Supervision on a consolidated basis. Added by: XVII. 2002.172. Amended by: XX. 2007.85.