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31989L0647

Council Directive 89/647/EEC of 18 December 1989 on a solvency ratio for credit institutions

Official Journal L 386 , 30/12/1989 P. 0014 - 0022 Finnish special edition: Chapter 6 Volume 3 P. 0039  Swedish special edition: Chapter 6 Volume 3 P. 0039

COUNCIL DIRECTIVE of 18 December 1989 on a solvency ratio for credit institutions (89/647/EEC) THE COUNCIL OF THE EUROPEAN COMMUNITIES,  Having regard to the Treaty establishing the European Economie Community, and in particular the first and third sentences of Article 57 (2) thereof,  Having regard to the proposal from the Commission (1),  In cooperation with the European Parliament (2),  Having regard to the opinion of the Economic and Social Committee (3),  Whereas this Directive is the outcome of work carried out by the Banking Advisory Committee, which, pursuant to Article 6 (4) of Council Directive 77/780/EEC of 12 December 1977 on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of  credit institutions (4), as last amended by Directive 89/646/EEC (5), is responsible for making suggestions to the Commission with a view to coordinating the coefficients applicable in the Member States;  Whereas the establishment of an appropriate solvency ratio plays a central role in the supervision of credit institutions;  Whereas a ratio which weights assets and off-balance-sheet items according to the degree of credit risk is a particularly useful measure of solvency;  Whereas the development of common standards for own funds in relation to assets and off-balance-sheet items exposed to credit risk is, accordingly, an essential aspect of the harmonization necessary for the achievement of the mutual recognition of  supervision techniques and thus the completion of the internal banking market;  Whereas, in that respect, this Directive must be considered in conjunction with other specific instruments also harmonizing the fundamental techniques of the supervision of credit institutions;  Whereas this Directive must also be seen as complementary to Directive 89/646/EEC, which lays out the broader framework of which this Directive is an integral part;   Whereas, in a common banking market, institutions are required to enter into direct competition with one another and whereas the adoption of common solvency standards in the form of a minimum ratio will prevent distortions of competition and strengthen the Community banking system;  Whereas this Directive provides for different weightings to be given to guarantees issued by different financial institutions; whereas the Commission accordingly undertakes to examine whether the Directive taken as a whole significantly distorts  competition between credit institutions and insurance companies and, in the light of that examination, to consider whether any remedial measures are justified;  Whereas the minimum ratio provided for in this Directive reinforces the capital of credit institutions in the Community; whereas a level of 8 % has been adopted following a statistical survey of capital requirements in force at the beginning of 1988;  Whereas measurement of and allowance for interest-rate, foreign-exchange and other market risks are also of great importance in the supervision of credit institutions; whereas the Commission will accordingly, in cooperation with the competent  authorities of the Member States and all other bodies working towards similar ends, continue to study the techniques available; whereas it will then make appropriate proposals for the further harmonization of supervision rules relating to those risks;  whereas in so doing it will keep a special watch on the possible interaction between the various banking risks and consequently pay particular attention to the consistency of the various proposals;  Whereas, in making proposals for rules for the supervision of investment services and the adequacy of the capital of entities operating in that area, the Commission will ensure that equivalent requirements are applied in respect of the level of own  funds, if the same type of business is transacted and identical risks are assumed;  Whereas the specific accounting technique to be used for the calculation of solvency ratios must take account of the provisions of Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and consolidated accounts of banks and other  financial institutions (6), which incorporates certain adaptations of the provisions of Council Directive 83/349/EEC (7), as amended by the Act of Accession of Spain and Portugal; whereas, pending transposition of the provisions of those Directives into  the national laws of the Member States, the use of a specific accounting technique for  the calculation of solvency ratios should be left to the discretion of the Member States;  Whereas the application of a 20 % weighting to credit institutions' holdings of mortgage bonds may unsettle a national financial market on which such instruments play a preponderant role; whereas, in this case, provisional measures are taken to apply a  10 % risk weighting;  Whereas technical modifications to the detailed rules laid down in this Directive may from time to time be necessary to take account of new developments in the banking sector; whereas the Commission will accordingly make such modifications as are  necessary, after consulting the Banking Advisory Committee, within the limits of the implementing powers conferred on the Commission by the provisions of the Treaty; whereas that Committee will act as a ´Regulatory' Committee, according to the rules of  procedure laid down in Article 2, procedure III, variant (b), of Council Decision 87/373/EEC of 13 July 1987 laying down the procedures for the exercise of implementing powers conferred on the Commission (8),  HAS ADOPTED THIS DIRECTIVE:   Scope and definitions Article 1 1.  This Directive shall apply to credit institutions as defined the first indent of Article 1 of Directive 77/780/EEC.  2.  Notwithstanding paragraph 1, the Member States need not apply this Directive to credit institutions listed in Article 2 (2) of Directive 77/780/EEC.  3.  A credit institution which, as defined in Article 2 (4) (a) of Directive 77/780/EEC, is affiliated to a central body in the same Member State, may be exempted from the provisions of this Directive, provided that all such affiliated credit  institutions and their central bodies are included in consolidated solvency ratios in accordance with this Directive.  4.  Exceptionally, and pending further harmonization of the prudential rules relating to credit, interest-rate and market risks, the Member States may exclude from the scope of this Directive any credit institution specializing in the inter-bank and  public-debt markets and fulfilling, together with the central bank, the institutional function of banking-system liquidity regulator, provided that:  - the sum of its asset and off-balance-sheet items included in the 50 % and 100 % weightings, calculated in accordance with Article 6, must not normally exceed  10 % of total assets and off-balance-sheet items and shall not in any event exceed 15 % before application of the weightings,  - its main activity consists of acting as intermediary between the central bank of its Member State and the banking system,  - the competent authority applies adequate systems of supervision and control of its credit, interest-rate and market risks.  The Member States shall inform the Commission of the exemptions granted, in order to ensure that they do not result in distortions of competititon. Within three years of the adoption of this Directive, the Commission shall submit to the Council a report  together, where necessary, with any proposals it may consider appropriate.  Article 2 1.  For the purposes of this Directive:  - ´competent authorities' shall mean the authorities defined in the fifth indent of Article 1 of Council Directive 83/350/EEC,  - ´Zone A' shall comprise all the Member States and all other countries which are full members of the Organization for Economic Cooperation and Development (OECD) and those countries which have concluded special lending arrangements with the International Monetary Fund (IMF) associated with the Fund's General Arrangements to Borrow (GAB),  - ´Zone B' shall comprise all countries not in Zone A,  - ´Zone A credit institutions' shall mean all credit institutions authorized in the Member States, in acccordance with Article 3 of Directive 77/780/EEC, including their branches in third countries, and all private and public undertakings covered by the  definition in the first indent of Article 1 of Directive 77/780/EEC and authorized in other Zone A countries, including their branches,  - ´Zone B credit institutions' shall mean all private and public undertakings authorized outside Zone A covered by the definition in the first indent of Article 1 of Directive 77/780/EEC, including their branches within the Community,  - ´non-bank sector' shall mean all borrowers other than credit institutions as defined in the fourth and fifth indents, central governments and central banks, regional governments and local authorities, the European Communities, the European Investment  Bank and multilateral development banks as defined in the seventh indent,  - ´multilateral development banks' shall mean the International Bank for Reconstruction and Development, the International Finance Corporation, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the Council of Europe Resettlement Fund, the Nordic Investment Bank and the Caribbean Development Bank,  - ´full-risk', ´medium-risk', ´medium/low-risk' and ´low-risk' off-balance-sheet items shall mean the items described in Article 6 (2) and listed in Annex I.  2.  For the purposes of Article 6 (1) (b), the competent authorities may include within the concept of regional governments and local authorities non-commercial administrative bodies responsible to regional governments or local authorities, and those  non-commercial undertakings owned by central governments, regional governments, local authorities or authorities which, in the view of the competent authorities, exercise the same responsibilities as regional and local authorities.  Article 3 General principles 1.  The solvency ratio referred to in paragraphs 2 to 7 expresses own funds, as defined in Article 4, as a proportion of total assets and off-balance-sheet items, risk-adjusted in accordance with Article 5.  2.  The solvency ratios of credit institutions which are neither parent undertakings as defined in Article 1 of Directive 83/349/EEC nor subsidiaries of such undertakings shall be calculated on an individual basis.  3.  The solvency ratios of credit institutions which are parent undertakings shall be calculated on a consolidated basis in accordance with the methods laid down in this Directive and in Directives 83/350/EEC and 86/635/EEC (9).  4.  The competent authorities responsible for authorizing and supervising a parent undertaking which is a credit institution may also require the calculation of a subconsolidated or unconsolidated ratio in respect of that parent undertaking and of any  of its subsidiaries which are subject to authorization and supervision by them. Where such monitoring of the satisfactory allocation of capital within a banking group is not carried out, other measures must be taken to attain that end.  5.  Where the subsidiary of a parent undertaking has been authorized and is situated in another Member State, the competent authorities which granted that authorization shall require the calculation of a subconsolidated or unconsolidated ratio.  6.  Notwithstanding paragraph 5, the competent authorities responsible for authorizing the subsidiary of a parent undertaking situated in another Member State may, by way of a bilateral agreement, delegate their responsibility for supervising solvency  to the competent authorities which have authorized and which supervise the parent undertaking  so that they assume responsibility for supervising the subsidiary in accordance with this Directive. The Commission shall be kept informed of the existence and content of such agreements. It shall forward such information to the other authorities and to  the Banking Advisory Committee.  7.  Without prejudice to credit institutions' compliance with the requirements of paragraphs 2 to 6, the competent authorities shall ensure that ratios are calculated not less than twice each year, either by credit institutions themselves, which shall  communicate the results and any component data required to the competent authorities, or by the competent authorities, using data supplied by the credit institutions.  8.  The valuation of assets and off-balance-sheet items shall be effected in accordance with Directive 86/635/EEC. Pending implementation of the provisions of that Directive, valuation shall be left to the discretion of the Member States.  Article 4 The numerator: own funds Own funds as defined in Directive 89/299/EEC (10) shall form the numerator of the solvency ratio.  Article 5 The denominator: risk-adjusted assets and off-balance-sheet items 1.  Degrees of credit risk, expressed as percentage weightings, shall be assigned to asset items in accordance with Articles 6 and 7, and exceptionally Articles 8 and 11. The balance-sheet value of each asset shall then be multiplied by the relevant  weighting to produce a risk-adjusted value.  2.  In the case of the off-balance-sheet items listed in Annex I, a two-stage calculation as precribed in Article 6 (2) shall be used.  3.  In the case of the interest-rate- and foreign- exchange-related off-balance-sheet items referred to in Article 6 (3), the potential costs of replacing contracts in the event of counterparty default shall be calculated by means of one of the two methods set out in Annex II. Those costs shall be  multiplied by the relevant counterparty weigthings in Article 6 (1), except that the 100 % weightings as provided for there shall be replaced by 50 % weightings to produce risk-adjusted values.  4.  The total of the risk-adjusted values of the assets and off-balance-sheet items mentioned in paragraphs 2 and 3 shall be the denominator of the solvency ratio.   Article 6 Risk weightings 1.  The following weightings shall be applied to the various categories of asset items, altough the competent authorities may fix higher weightings as they see fit:  (a) Zero weighting 1.  cash in hand and equivalent items;  2.  asset items constituting claims on Zone A central governments and central banks;  3.  asset items constituting claims on the European Communities;  4.  asset items constituting claims carrying the explicit guarantees of Zone A central governments and central banks;  5.  asset items constituting claims on Zone B central governments and central banks, denominated and funded in the national currencies of the borrowers;  6.  asset items constituting claims carrying the explicit guarantees of Zone B central governments and central banks, denominated and funded in the national currency common to the guarantor and the borrower;  7.  asset items secured, to the satisfaction of the competent authorities, by collateral in the form of Zone A central government or central bank securities, or securities issued by the European Communities, or by cash deposits placed with the lending  institution or by certificates of deposit or similar instruments issued by and lodged with the latter;  (b) 20 % weighting 1.  asset items constituting claims on the European Investment Bank (EIB);  2.  asset items constituting claims on multilateral development banks;  3.  asset items constituting claims carrying the explicit guarantee of the European Investment Bank (EIB);  4.  asset items constituting claims carrying the explicit guarantees of multilateral development banks;  5.  asset items constituting claims on Zone A regional governments or local authorities, subject to Article 7;  6.  asset items constituting claims carrying the explicit guarantees of Zone A regional governments or local authorities, subject to Article 7;  7.  asset items constituting claims on Zone A credit institutions but not constituting such institutions' own funds as defined in Directive 89/299/EEC;   8.  asset items constituting claims, with a maturity of one year or less, on Zone B credit institutions, other than securities issued by such institutions which are recognized as components of their own funds;   9.  asset items carrying the explicit guarantees of Zone A credit institutions;  10.  asset items constituting claims with a maturity of one year or less, carrying the explicit guarantees of Zone B credit institutions;  11.  asset items secured, to the satisfaction of the competent authorities, by collateral in the form of securities issued by the EIB or by multilateral development banks;  12.  cash items in the process of collection;  (c) 50 % weighting 1.  loans fully and completely secured, to the satisfaction of the competent authorities, by mortgages on residential property which is or will be occupied or let by the borrower;  2.  prepayments and accrued income: these assets shall be subject to the weighting corresponding to the counterparty where a credit institution is able to determine it in accordance with Directive 86/635/EEC. Otherwise, where it is unable to determine  the contraparty, it shall apply a flat-rate weighting of 50 %;  (d) 100 % weighting 1.  asset items constituting claims on Zone B central governments and central banks except where denominated and funded in the national currency of the borrower;  2.  asset items constituting claims on Zone B regional governments or local authorities;  3.  asset items constituting claims with a maturity of more than one year on Zone B credit institutions;  4.  asset items constituting claims on the Zone A or Zone B non-bank sectors;  5.  tangible assets within the meaning of assets as listed in Article 4 (10) of Directive 86/635/EEC;  6.  holdings of shares, participations and other components of the own funds of other credit institutions which are not deducted from the own funds of the lending institutions;  7.  all other assets except where deducted from own funds.  2.  The following treatment shall apply to off-balance-sheet items other than those covered in paragraph 3. They shall first be grouped according to the risk groupings set out in Annex I. The full value of the full-risk items shall be taken into  account, 50 % of the value of the medium-risk items and 20 % of the medium/low-risk items, while the value of low-risk items shall be set at zero. The second stage shall be to multiply the off-balance-sheet values, adjusted as described above, by the weightings attributable to the relevant counterparties, in accordance with the treatment of asset items prescribed in paragraph 1 and Article 7. In the  case of asset sale and repurchase agreements and outright forward purchases, the weightings shall be those attaching to the assets in question and not to the counterparties to the transactions.  3.  The methods set out in Annex II shall be applied to the interest-rate and foreign-exchange risks listed in Annex III.  4.  Where off-balance-sheet items carry explicit guarantees, they shall be weighted as if they had been incurred on behalf of the guarantor rather than the counterparty. Where the potential exposure arising from off-balance-sheet transactions is fully  and completely secured, to the satisfaction of the competent authorities, by any of the asset items recognized as collateral in paragraph 1 (a) (7) or (b) (11), weightings of 0 % or 20 % shall apply, depending on the collateral in question.  5.  Where asset and off-balance-sheet items are given a lower weighting because of the existence of explicit guarantees or collateral acceptable to the competent authorities, the lower weighting shall apply only to that part which is guaranteed or which  is fully covered by the collateral.  Article 7 1.  Notwithstanding the requirements of Article 6 (1) (b), the Member States may fix a weighting of 0 % for their own regional governments and local authorities if there is no difference in risk between claims on the latter and claims on their  central governments because of the revenue-raising powers of the regional governments and local authorities and the existence of specific institutional arrangements the effect of which is to reduce the chances of default by the latter. A zero weighting  fixed in accordance with these criteria shall apply to claims on and off-balance-sheet items incurred on behalf of the regional governments and local authorities in question and claims on others and off-balance-sheet items incurred on behalf of others  and guaranteed by those regional governments and local authorities.  2.  The Member States shall notify the Commission if they believe a zero weighting to be justified according to the criteria laid down in paragraph 1. The Commission shall circulate that information. Other Member States may offer the credit institutions  under the supervision of their competent authorities the possibility of applying a zero weighting where they undertake business with the regional governments or local authorities in question or where they hold claims guaranteed by the latter.  Article 8 1.  The Member States may apply a weighting of 20 % to asset items which are secured, to the satisfaction of the competent authorities concerned, by collateral in the form of securities issued by Zone A regional governments or local  authorities, by deposits placed with Zone A credit institutions other than the lending institution, or by certificates of deposit of similar instruments issued by those credit institutions.  2.  The Member States may apply a weighting of 10 % to claims on institutions specializing in the inter-bank and public-debt markets in their home Member States and subject to close supervision by the competent authorities where those asset items are  fully and completely secured, to the satisfaction of the competent authorities of the home Member States, by a combination of asset items mentioned in Article 6 (1) (a) and (b) recognized by the latter as constituting adequate collateral.  3.  The Member States shall notify the Commission of any provisions adopted pursuant to paragraphs 1 and 2 and of the grounds for such provisions. The Commission shall forward that information to the Member States. The Commission shall periodically  examine the implications of those provisions in order to ensure that they do not result in any distortions of competition. Within three years of the adoption of this Directive, the Commission shall submit to the Council a report together, where necessary, with any proposals it may consider appropriate.  Article 9 1.  The technical adaptations to be made to this Directive in the following areas shall be adopted in accordance with the procedure laid down in paragraph 2:  - a temporary reduction in the minimum ratio prescribed in Article 10 or the weightings prescribed in Article 6 in order to take account of specific circumstances,  - the definition of ´Zone A' in Article 2,  - the definition of ´multilateral development banks' in Article 2,  - amendment of the definitions of the assets listed in Article 6 in order to take account of developments on financial markets,  - the lists and classification of off-balance-sheet items in Annexes I and III and their treatment in the calculation of the ratio as decribed in Articles 5, 6 and 7 and Annex II,  - clarification of the definitions in order to ensure uniform application of this Directive throughout the Community,  - clarification of the definitions in order to take account in the implementation of this Directive of developments on financial markets,  - the alignment of terminology on and the framing of definitions in accordance with subsequent acts on credit institutions and related matters.  2.  The Commission shall be assisted by a committee composed of representatives of the Member States and chaired by a representative of the Commission.  The Commission representative shall submit to the committee a draft of the measures to be taken. The committee shall deliver its opinion on the draft within a time limit which the chairman may lay down according to the urgency of the matter. The opinion  shall be delivered by the majority laid down in Article 148 (2) of the Treaty in the case of decisions which the Council is required to adopt on a proposal from the Commission. The votes of the representatives of the Member States in the committee shall  be weighted in the manner set out in that Article. The chairman shall not vote.  The Commission shall adopt the measures envisaged if they are in accordance with the opinion of the committee.  If the measures envisaged are not in accordance with the opinion of the committee, or if no opinion is delivered, the Commission shall, without delay, submit to the Council a proposal concerning the measures to be taken. The Council shall act by a  qualified majority.  If the Council does not act within three months of the referral to it the Commission shall adopt the measures proposed, unless the Council has decided against those measures by a simple majority.  Article 10 1.  With effect from 1 January 1993 credit institutions shall be required permanently to maintain the ratio defined in Article 3 at a level of at least 8 %.  2.  Notwithstanding paragraph 1, the competent authorities may prescribe higher minimum ratios as they consider appropriate.  3.  If the ratio falls below 8 % the competent authorities shall ensure that the credit institution in question takes appropriate measures to restore the ratio to the agreed minimum as quickly as possible.  Article 11 1.  A credit institution the minimum ratio of which has not reached the 8 % prescribed in Article 10 (1) by the date prescribed in Article 12 (1) must gradually approach that level by successive stages. It may not allow the ratio to fall  below the level reached before that objective has been attained. Any fluctuation should be temporary and the competent authorities should be apprised of the reasons for it.  2.  For not more than five years after the date prescribed in Article 10 (1) the Member States may fix a weighting of 10 % for the bonds defined in Article 22 (4) of Council Directive 85/611/EEC on the coordination of laws, regulations and  administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (11), as amended by Directive 88/220/EEC (12), and maintain it for credit institutions when and if they consider it necessary, to avoid grave  disturbances in the operation of their markets. Such exceptions shall be reported to the Commission.  3.  For not more than seven years after 1 January 1993, Article 10 (1) shall not apply to the Agricultural Bank of Greece. However, the latter must approach the level prescribed in Article 10 (1) by successive stages according to the method described in  paragraph 1.  4.  By derogation from Article 6 (1) (c) (1), until 1 January 1996 Germany, Denmark and Greece may apply a weighting of 50 % to assets which are entirely and completely secured to the satisfaction of the competent authorities concerned, by mortgages on completed residential property, on offices or on  multi-purpose commercial premises, situated within the territories of those three Member States provided that the sum borrowed does not exceed 60 % of the value of the property in question, calculated on the basis of rigorous assessment criteria laid  down in statutory or regulatory provisions.  5.  Member States may apply a 50 % weighting to property leasing transactions concluded within ten years of the date laid down in Article 12 (1) and concerning assets for business use situated in the country of the head office and governed by statutory  provisions whereby the lessor retains full ownership of the rented asset until the tenant exercises his option to purchase.  Article 12 1.  The Member States shall adopt the measures necessary for them to comply with the provisions of this Directive by 1 January 1991 at the latest.  2.  The Member States shall communicate to the Commission the texts of the main laws, regulations and administrative provisions which they adopt in the field covered by this Directive.  Article 13 This Directive is addressed to the Member States.   Done at Brussels, 18 December 1989.  For the Council The President P. BÉRÉGOVOY   (1) OJ No C 135, 25. 5. 1988, p. 2. (2) OJ No C 96, 17. 4. 1984, p. 86 and OJ No C 304, 4. 12. 1984. (3) OJ No C 337, 31. 12. 1988, p. 8. (4) OJ No L 322, 17. 12. 1977, p. 30. (5) See page 1 of this Official Journal.(6) OJ No L 372, 31. 12. 1986, p. 1. (7) OJ No L 193, 18. 7. 1983, p. 18.(8) OJ No L 197, 18. 7. 1987, p. 33.(9) OJ No L 372, 31. 12. 1986, p. 1.(10) OJ No L 124, 5. 5. 1989, p. 16.(11) OJ No L 375, 31. 12. 1985, p. 3. (12) OJ No L 100, 19. 4. 1988, p. 31.   ANNEX I   CLASSIFICATION OF OFF-BALANCE-SHEET ITEMS  Full risk - Guarantees having the character of credit substitutes,  - Acceptances,  - Endorsements on bills not bearing the name of another credit institution,  - Transactions with recourse,  - Irrevocable standby letters of credit having the character of credit substitutes,  - Asset sale and repurchase agreements as defined in Articles 12 (1) and (2) of Directive 86/635/EEC, if these agreements are treated as off-balance-sheet items pending application of Directive 86/635/EEC,  - Assets purchased under outright forward purchase agreements,  - Forward forward deposits,  - The unpaid portion of partly-paid shares and securities,  - Other items also carrying full risk.  Medium risk - Documentary credits issued and confirmed (see also medium/low risk),  - Warranties and indemnities (including tender, performance, customs and tax bonds) and guarantees not having the character of credit substitutes,  - Asset sale and repurchase agreements as defined in Article 12 (3) and (5) of Directive 86/635/EEC,  - Irrevocable standby letters of credit not having the character of credit substitutes,  - Undrawn credit facilities (agreements to lend, purchase securities, provide guarantees or acceptance facilities) with an original maturity of more than one year,  - Note issuance facilities (NIFs) and revolving underwriting facilities (RUFs),  - Other items also carrying medium risk.  Medium/low risk - Documentary credits in which underlying shipment acts as collateral and other self-liquidating transactions,  - Other items also carrying medium/low risk.  Low risk - Undrawn credit facilities (agreements to lend, purchase securities, provide guarantees or acceptance facilities) with an original maturity of up to and including one year or which may be cancelled unconditionally at any time without notice,  - Other items also carrying low risk.  The Member States undertake to inform the Commission as soon as they have agreed to include a new off-balance-sheet item in any of the last indents under each category of risk. Such items will be definitively classified at Community level once the  procedure laid down in Article 9 has been completed.    ANNEX II   THE TREATMENT OF OFF-BALANCE-SHEET ITEMS CONCERNING INTEREST AND FOREIGN- EXCHANGE RATES  Subject to the consent of their supervisory authorities, credit institutions may choose one of the methods set out below to measure the risks associated with the  transactions listed in Annex III. Interest-rate and foreign-exchange contracts traded on recognized exchanges where they are subject to daily margin requirements and foreign-exchange contracts with an original maturity of 14 calendar days or less are  excluded.  Where there is a separate bilateral contract for novation, recognized by the national supervisory authorities, between a credit institution and its counterparty under which any obligation to each other to deliver payments in their common currency on a  given date are automatically amalgamated with other similar obligations due on the same date, the single net amount fixed by such novation is weighted, rather than the gross amounts involved.  Method 1: the ´marking to market' approach Step (a): by attaching current market values to contracts (marking to market) the current replacement cost of all contracts with positive values is obtained.  Step (b): to obtain a figure for potential future credit exposure (¹), the notional principal amounts or values underlying an institution's aggregate books are multiplied by the following percentages:  Residual maturity Interest-rate contracts Foreign-exchange contracts One year or less 0,  % 1 % More than one year 0,5 % 5 % Step (c): the sum of current replacement cost and potential future credit exposure is multiplied by the risk weightings allocated to the relevant counterparties in Article 6.  Method 2: the ´original exposure' approach Step (a): the notional principal amount of each instrument is multiplied by the percentages given below:  Original maturity (¹) Interest-rate contracts Foreign-exchange contracts One year or less 0,5 % 2 % More than one year but not exceeding two years 1,5 % 5 % Additional allowance for each additional year 1,5 % 3 % (¹) In the case of interest-rate contracts, credit institutions may, subject to the consent of their supervisory authorities, choose either original or residual maturity.  Step (b): the original exposure thus obtained is multiplied by the risk weightings allocated to the relevant counterparties in Article 6.    (1) Except in the case of single-currency ´floating/floatinginterest rate swaps' in which only the current replacement cost will be calculated.   ANNEX III   TYPES OF OFF-BALANCE-SHEET ITEMS CONCERNING INTEREST RATES AND FOREIGN EXCHANGE  Interest-rate contracts - Single-currency interest rate swaps,  - Basis swaps,  - Forward-rate agreements,  - Interest-rate futures,  - Interest-rate options purchased,  - Other contracts of a similar nature.  Foreign-exchange contracts - Cross-currency interest-rate swaps,  - Forward foreign-exchange contracts,  - Currency futures,  - Currency options purchased,  - Other contracts of a similar nature.


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31999L0094

Directive 1999/94/EC of the European Parliament and of the Council of 13 December 1999 relating to the availability of consumer information on fuel economy and CO2 emissions in respect of the marketing of new passenger cars

Official Journal L 012 , 18/01/2000 P. 0016 - 0023

DIRECTIVE 1999/94/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCILof 13 December 1999relating to the availability of consumer information on fuel economy and CO2 emissions in respect of the marketing of new passenger carsTHE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty establishing the European Community, and in particular Article 175(1) thereof,Having regard to the proposal from the Commission(1),Having regard to the opinion of the Economic and Social Committee(2),Acting in accordance with the procedure laid down in Article 251 of the Treaty(3),(1) Whereas Article 174 of the Treaty requires prudent and rational utilisation of natural resources; whereas the rational use of energy is one of the principal means by which this objective can be achieved and environmental pollution reduced;(2) Whereas the ultimate objective of the UN Framework Convention on Climate Change is to achieve stabilisation of greenhouse gas concentrations in the atmosphere at a level that prevents dangerous anthropogenic interference with the climate system;(3) Whereas under the Kyoto Protocol to the United Nations Framework Convention on Climate Change agreed at the December 1997 Kyoto Conference, the Community has accepted the target of reducing its emissions during the period 2008 to 2012 in respect of a basket of greenhouse gases by 8 % relative to 1990 levels;(4) Whereas in recognition of the importance of passenger cars as a source of CO2 emissions, the Commission has proposed a Community strategy to reduce CO2 emissions from passenger cars and to improve fuel economy; whereas in its Conclusions of 25 June 1996 the Council welcomed the Commission's approach;(5) Whereas information plays a key role in the operation of market forces; whereas the provision of accurate, relevant and comparable information on the specific fuel consumption and CO2 emissions of passenger cars may influence consumer choice in favour of those cars which use less fuel and thereby emit less CO2, thereby encouraging manufacturers to take steps to reduce the fuel consumption of the cars that they manufacture;(6) Whereas the presence of labels on used cars at the point of sale could influence buyers of new passenger cars towards low consumption cars, since this characteristic will be taken into account when the car is re-sold; whereas it is therefore appropriate, in connection with the first review of this Directive, to consider enlarging the scope to used cars covered by Commission Directive 93/116/EC of 17 December 1993 adapting to technical progress Council Directive 80/1268/EEC relating to the fuel consumption of motor vehicles(4);(7) Whereas it is therefore necessary to develop a fuel economy label for all new passenger cars displayed at the point of sale;(8) Whereas a fuel economy label should contain information on fuel consumption and specific emissions of CO2 that have been determined in accordance with the harmonised standards and methods laid down in Council Directive 80/1268/EEC of 16 December 1980 relating to the carbon dioxide emissions and fuel consumption of motor vehicles(5);(9) Whereas it is necessary that supplementary standardised information on the fuel consumption and specific CO2 emissions of all versions on the new car market is available in a suitable form both at the point of sale and from a designated body in each Member State; whereas such information may be useful to consumers who formulate their purchase decision before entering the showroom or who choose not to use the services of a dealer or visit a showroom when purchasing a passenger car;(10) Whereas it is important that potential customers are made aware, at the point of sale, of the most fuel efficient passenger car models available through that point of sale;(11) Whereas all promotional literature, and, as appropriate, all other promotional material, used in the marketing of new passenger cars, should contain data on the relevant fuel consumption and CO2 emissions for the passenger car models to which it pertains,HAVE ADOPTED THIS DIRECTIVE:Article 1The purpose of this Directive is to ensure that information relating to the fuel economy and CO2 emissions of new passenger cars offered for sale or lease in the Community is made available to consumers in order to enable consumers to make an informed choice.Article 2For the purposes of this Directive:1. "passenger car" means any motor vehicle of category M1, as defined in Annex II to Directive 70/156/EEC(6) and which falls under the scope of Directive 80/1268/EEC. It does not include vehicles falling under the scope of Directive 92/61/EEC(7) and special purpose vehicles as defined in the second indent of Article 4(1)(a) of Directive 70/156/EEC;2. "new passenger car" means any passenger car which has not previously been sold to a person who bought it for a purpose other than that of selling or supplying it;3. "certificate of conformity" means the certificate referred to in Article 6 of Directive 70/156/EEC;4. "point of sale" means a location, such as a car showroom or forecourt, where new passenger cars are displayed or offered for sale or lease to potential customers. Trade fairs where new passenger cars are presented to the public are included in this definition;5. "official fuel consumption" means the fuel consumption type-approved by the approval authority in accordance with the provisions of Directive 80/1268/EEC and mentioned in Annex VIII of Directive 70/156/EEC and attached to the EC vehicle type-approval certificate or in the certificate of conformity. Where several variants and/or versions are grouped under one model, the value to be given for fuel consumption of that model shall be based on the variant and/or version with the highest official fuel consumption within that group;6. "official specific emissions of CO2" for a given passenger car means those measured in accordance with the provisions of Directive 80/1268/EEC and mentioned in Annex VIII of Directive 70/156/EEC and attached to the EC vehicle type-approval certificate or in the certificate of conformity. Where several variants and/or versions are grouped under one model, the values to be given for CO2 of that model shall be based on the variant and/or version with the highest official CO2 emissions within that group;7. "fuel economy label" means a label which contains consumer information regarding the official fuel consumption and the official specific emissions of CO2 of the car to which the label is attached;8. "fuel economy guide" means a compilation of the official fuel consumption data and official specific emissions of CO2 for each motel available on the new car market;9. "promotional literature" means all printed matter used in the marketing, advertising and promotion of vehicles to the general public. It includes, as a minimum, technical manuals, brochures, advertisements in newspapers, magazines and trade press and posters;10. "make" means the trade name of the manufacturer and is that which appears on the certificate of conformity and the type-approval documentation;11. "model" means the commercial description of the make, type, and, if available and appropriate, variant and version of a passenger car;12. "type", "variant" and "version" mean the differentiated vehicles of a given make that are declared by the manufacturer, as described in Annex II.B to Directive 70/156/EEC, and uniquely identified by type, variant and version alphanumeric characters.Article 3The Member States shall ensure that a label on fuel economy and CO2 emissions, which is in accordance with the requirements described in Annex I, is attached to or displayed, in a clearly visible manner, near each new passenger car model at the point of sale.Article 4Without prejudice to the establishment by the Commission of an Internet guide at Community level, the Member States shall ensure that a guide on fuel economy and CO2 emissions is produced in consultation with manufacturers on at least an annual basis in accordance with the requirements of Annex II. The guide shall be portable, compact and available free of charge to consumers upon request both at the point of sale and also from a designated body within each Member State.The authority or authorities referred to in Article 8 may cooperate in the preparation of the guide.Article 5The Member States shall ensure that, for each make of car, a poster (or alternatively, a display) is exhibited with a list of the official fuel consumption data and the official specific CO2 emissions data of all new passenger car models displayed or offered for sale or lease at or through that point of sale. This data shall be displayed in a prominent position and in accordance with the format in Annex III.Article 6The Member States shall ensure that all promotional literature contains the official fuel consumption and the official specific CO2 emission data of the passenger car models to which it refers in accordance with the requirements of Annex IV.Member States shall, as appropriate, provide for promotional material other than the promotional literature referred to above to indicate the official CO2 emission data and the official fuel consumption data of the specific car model to which it refers.Article 7The Member States shall ensure that the presence on labels, guides, posters or promotional literature and material referred to in Articles 3, 4, 5 and 6 of other marks, symbols or inscriptions relating to fuel consumption or CO2 emissions which do not comply with the requirements of this Directive is prohibited, if their display might cause confusion to potential consumers of new passenger cars.Article 8The Member States shall notify the Commission of the competent authority or authorities responsible for the implementation and functioning of the consumer information scheme described in this Directive.Article 9Any amendments which are necessary in order to adapt the Annexes to this Directive shall be adopted by the Commission in accordance with the procedure set out in Article 10 and following consultation with consumer organisations and other interested parties.In order to assist this adaptation process, each Member State shall transmit to the Commission, by 31 December 2003, a report on the effectiveness of the provisions of this Directive, covering the period from 18 January 2001 until 31 December 2002. The format of this report shall be established in accordance with the procedure set out in Article 10 not later than 18 January 2001.Furthermore, the Commission shall, in accordance with the procedure laid down in Article 10, take measures aiming at:(a) further specifying the format of the label referred to in Article 3 by amending Annex I;(b) further specifying the requirements concerning the guide referred to in Article 4 with a view to classifying new car models thus enabling a listing of the models according to CO2 emissions and fuel consumption in specified classes including a class for a listing of the most fuel efficient new car models;(c) establishing recommendations in order to enable the application of the principles of the provisions on promotional literature referred to in the first paragraph of Article 6 to other media and material.Article 10CommitteeThe Commission shall be assisted by a committee composed of the representatives of the Member States and chaired by a representative of the Commission.The representative of the Commission shall submit to the committee a draft of the measures to be taken. The committee shall deliver its opinion on that draft within a time limit which the chairman may lay down according to the urgency of the matter. The opinion shall be delivered by the majority laid down in Article 205 of the Treaty in the case of decisions which the Council is required to adopt on a proposal from the Commission. The votes of the representatives of the Member States within the committee shall be weighted in the manner laid down in that Article. The chairman shall not vote.The Commission shall adopt the measures envisaged if they are in accordance with the opinion of the committee.If the measures envisaged are not in accordance with the opinion of the committee, or if no opinion is delivered, the Commission shall, without delay, submit to the Council a proposal relating to the measures to be taken. The Council shall act by a qualified majority.If, on the expiry of a period of three months from the date of referral to the Council, the Council has not acted, the proposed measures shall be adopted by the Commission.Article 11Member States shall determine the penalties applicable to breaches of the national provisions adopted pursuant to this Directive. The penalties shall be effective, proportionate and dissuasive.Article 121. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 18 January 2001. They shall forthwith inform the Commission thereof.When Member States adopt these provisions, they shall contain a reference to this Directive or shall be accompanied by such reference at the time of their official publication. The procedure for such reference shall be adopted by Member States.2. Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.Article 13This Directive shall enter into force on the day of its publication in the Official Journal of the European Communities.Article 14This Directive is addressed to the Member States.Done at Brussels, 13 December 1999.For the European ParliamentThe PresidentN. FONTAINEFor the CouncilThe PresidentS. HASSI(1) OJ C 305, 3.10.1998, p. 2 and OJ C 83, 25.3.1999, p. 1.(2) OJ C 40, 15.2.1999, p. 45.(3) Opinion of the European Parliament of 17 December 1998 (OJ C 98, 9.4.1999, p. 252), Council Common Position of 23 February 1999 (OJ C 123, 4.5.1999, p. 1) and Decision of the European Parliament of 4 November 1999 (not yet published in the Official Journal).(4) OJ L 329, 30.12.1993, p. 39.(5) OJ L 375, 31.12.1980, p. 36. Directive as last amended by Commission Directive 93/116/EC.(6) Council Directive 70/156/EEC of 6 February 1970 on the approximation of the laws of the Member States relating to the type-approval of motor vehicles and their trailers (OJ L 42, 23.2.1970, p. 1). Directive as last amended by European Parliament and Council Directive 98/91/EC (OJ L 11, 16.1.1999, p. 25).(7) Council Directive 92/61/EEC of 30 June 1992 relating to the type-approval of two or three-wheel motor vehicles (OJ L 225, 10.8.1992, p. 72). Directive as amended by the 1994 Act of Accession.ANNEX IDESCRIPTION OF THE LABEL ON FUEL ECONOMY AND CO2 EMISSIONSThe Member States must ensure, as a minimum, that all fuel economy labels in their territory:1. comply to a standardised format in order to allow greater recognition by consumers;2. are of a size of 297 mm × 210 mm (A4);3. contain a reference to the model and fuel type of the passenger car to which they are attached;4. contain the numerical value of the official fuel consumption and the official specific emissions of CO2. The value of the official fuel consumption is expressed in either litres per 100 kilometres (l/100 km), or an appropriate combination of these and is quoted to one decimal place. The official specific emissions of CO2 are quoted to the nearest whole number in grams per kilometre (g/km).Such values can be expressed in different units (gallons and miles) to the extent compatible with the provisions of Directive 80/181/EEC(1).5. contain the following text regarding the availability of the guide on fuel consumption and CO2 emissions: "A guide on fuel economy and CO2 emissions which contains data for all new passenger car models is available at any point of sale free of charge"6. contain the following text: "In addition to the fuel efficiency of a car, driving behaviour as well as other non-technical factors play a role in determining a car's fuel consumption and CO2 emissions. CO2 is the main greenhouse gas responsible for global warming"(1) Council Directive 80/181/EEC of 20 December 1979 on the approximation of the laws of the Member States relating to units of measurement and on the repeal of Directive 71/354/EEC (OJ L 39, 15.2.1980, p. 40). Directive as last amended by Directive 89/617/EEC (OJ L 357, 7.12.1989, p. 28).ANNEX IIDESCRIPTION OF THE GUIDE ON FUEL ECONOMY AND CO2 EMISSIONSThe Member States must ensure that the guide on fuel economy and CO2 emissions contains, as a minimum, the following information:1. a listing of all new passenger car models available for purchase within the Member States on a yearly basis, grouped by makes in alphabetic order. If in a Member State the guide is updated more than once a year, then the guide should contain a listing of all new passenger car models available on the date of the publication of this update;2. for each model that appears in the guide, the fuel type, the numerical value of the official fuel consumption and the official specific emissions of CO2. The value of the official fuel consumption is expressed in either litres per 100 kilometres (l/100 km) or kilometres per litre (km/l), or an appropriate combination of these, and is quoted to one decimal place. The official specific emissions of CO2 are quoted to the nearest whole number in grams per kilometre (g/km).Such values can be expressed in different units (gallons and miles) to the extent compatible with the provisions of Directive 80/181/EEC;3. a prominent listing of the 10 most fuel-efficient new passenger car models ranked in order of increasing specific emissions of CO2 for each fuel type. The listing must contain the model, the numerical value of the official fuel consumption and the official specific emissions of CO2;4. advice to motorists that correct use and regular maintenance of the vehicle and driving behaviour, such as avoiding aggressive driving, travelling at lower speeds, anticipation braking, correctly inflating tyres, reducing periods of idling, not carrying excessive weight, improve the fuel consumption and reduce the CO2 emissions of their passenger car;5. an explanation of the effects of greenhouse gas emissions, potential climate change and the relevance of motor cars as well as a reference to the different fuel options available to the consumer and their environmental implications based on the latest scientific evidence and legislative requirements;6. a reference to the Community's target for the average emissions of CO2 from new passenger cars and the date of which the target should be achieved;7. a reference to the Commission's guide on fuel economy and CO2 emissions on the Internet, when available.ANNEX IIIDESCRIPTION OF THE POSTER TO BE DISPLAYED AT THE POINT OF SALEThe Member States must ensure that the poster(s) meets, as a minimum, the following requirements:1. the poster is a minimum size of 70 cm × 50 cm;2. the information in the poster is easy to read;3. the passenger car models are grouped and listed separately according to fuel type (e.g. petrol or diesel). Within each fuel type, models are ranked in order of increasing CO2 emissions, with the model with the lowest official fuel consumption being placed at the top of the list;4. for each passenger car model in the list the make, the numerical value of the official fuel consumption and the official specific emissions of CO2 are given. The value of the official fuel consumption is expressed in either litres per 100 kilometers (l/100 km), kilometers per litre (km/l), or an appropriate combination of these, and is quoted to one decimal place. The official specific emissions of CO2 are quoted to the nearest whole number in grams per kilometre (g/km).Such values may be expressed in different units (gallons and miles) to the extent compatible with the provisions of Directive 80/181/EEC.A suggested format is shown below:>PIC FILE= "L_2000012EN.002202.EPS">5. the poster contains the following text regarding the availability of the guide on fuel economy and CO2 emissions: "A guide on fuel economy and CO2 emissions which contains data for all new passenger car models is available at any point of sale free of charge;"6. the poster contains the following text: "In addition to the fuel efficiency of a car, driving behaviour as well as other non-technical factors play a role in determining a car's fuel consumption and CO2 emissions. CO2 is the main greenhouse gas responsible for global warming;"7. the poster will be completely updated at least every six months. Between two updates, new cars will be added to the bottom of the list.ANNEX IVTHE PROVISION OF DATA ON FUEL CONSUMPTION AND CO2 EMISSIONS IN PROMOTIONAL LITERATUREThe Member States must ensure that all promotional literature contains the official fuel consumption and official specific CO2 emissions data of the vehicles to which it refers. This information should, as a minimum, meet the following requirements:1. be easy to read and no less prominent than the main part of the information provided in the promotional literature;2. be easy to understand even on superficial contact;3. officiel fuel consumption data should be provided for all different car models to which the promotional material covers. If more than one model is specified then either the official fuel consumption data for all the models specified is included or the range between the worst and best fuel consumption is stated. Fuel consumption is expressed in either litres per 100 kilometers (l/100 km), kilometers per litre (km/l) or an appropriate combination of these. All numerical data are quoted to one decimal place.Such values may be expressed in different units (gallons and miles) to the extent compatible with the provisions of Directive 80/181/EEC.If the promotional literature only contains referance to the make, and not to any particular model, then fuel consumption data need not be provided.


Avis juridique important

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31989L0458

Council Directive 89/458/EEC of 18 July 1989 amending with regard to European emission standards for cars below 1,4 litres, Directive 70/220/EEC on the approximation of the laws of the Member States relating to measures to be taken against air pollution by emissions from motor vehicles

Official Journal L 226 , 03/08/1989 P. 0001 - 0003 Finnish special edition: Chapter 13 Volume 19 P. 0059  Swedish special edition: Chapter 13 Volume 19 P. 0059

COUNCIL DIRECTIVE of 18 July 1989 amending with regard to European emission standards for cars below 1,4 litres, Directive 70/220/EEC on the approximation of the laws of the Member States relating to measures to be taken against air pollution by  emissions from motor vehicles (89/458/EEC) THE COUNCIL OF THE EUROPEAN COMMUNITIES,  Having regard to the Treaty establishing the European Economic Community, and in particular Article 100 a thereof,  Having regard to the proposal from the Commission (1),  In cooperation with the European Parliament (2),  Having regard to the opinion of the Economic and Social Committee (3),  Whereas it is important to adopt measures with the aim of progressively establishing the internal market over a period expiring on 31 December 1992; whereas the internal market shall comprise an area without internal frontiers in which the free movement  of goods, persons, services and capital is ensured;  Whereas the first programme of action of the European Communities on the protection of the environment, approved by the Council on 22 November 1973, called for account to be taken of the latest scientific advances in combating atmospheric pollution  caused by gases emitted from motor vehicles and for Directives adopted previously to be amended accordingly;   Whereas the third programme of action provides for additional efforts to be made to reduce considerably the present level of emissions of pollutants from motor vehicles;  Whereas Directive 70/220/EEC (4) as last amended by Directive 88/436/EEC (5) lays down the limit values for carbon monoxide and unburnt hydrocarbon emissions from such engines; whereas these limit values were first reduced by Directive 74/290/EEC (6)  and supplemented, in accordance with Directive 77/102/EEC (7), by limit values for permissible emissions of nitrogen oxides; whereas the limit values for these three pollutants were successively reduced by Directives 78/665/EEC (8), 83/351/EEC (9) and  88/76/EEC (10) and limit values for particulate pollutant emissions from diesel engines introduced by Directive 88/436/EEC;  Whereas the work undertaken by the Commission in that sphere has shown that the Community has available, or is currently perfecting, technologies which allow a further reduction of the limit values in question for all engine sizes;  Whereas a particular effort should be made to promote clean technologies as regards motor vehicles in the context of the research programme for the development of new technologies;  ¹ ¹ ¹ ¹ ¹ ¹ Whereas in order to allow the European environment to benefit to the maximum from these provisions and at the same time ensure the unity of the market, it appears necessary to implement more stringent European standards based on total harmonization  which are at least as severe as those in the United States of America and as those voted by the European Parliament; whereas these limit values are based on the current test procedures, laid down in Directive 70/220/EEC, and will need to be reconsidered  when supplemented by a test representing driving conditions in extra-urban areas;  Whereas in view of the major role played by pollutant emissions from motor vehicles and their contribution to the gases responsible for the greenhouse effect, their emissions of CO2 in particular must be stabilized and subsequently reduced in line with  the decision of the Governing Council of the United Nations Environment Programme (UNEP) Governing Council of 24 May 1989, and in particular point 11 (d) thereof,  HAS ADOPTED THIS DIRECTIVE:    Article 1 Annex I of Directive 70/220/EEC is hereby amended as follows:  1.  In item 5.2.1.1.4., the bottom line of the table is replaced by the following:  ´C< 1,400   19   5,    -'.  2.  In item 7.1.1.1., the bottom line of the table is replaced by the following:  ´C< 1,400   22   5,8   -'.  Article 2 1.  From 1 January 1990 no Member State may, on grounds relating to air pollution by emission from an engine having a capacity of less than 1 400 cm=:  - refuse to grant EEC type approval, to issue the document referred to in the last indent of Article 10 (1) of Directive 70/156/EEC (11) as last amended by Directive 87/403/EEC (12) or to grant national type approval for a type of motor vehicle,  or - prohibit the initial entry into services of motor vehicles,  where emissions from this type of motor vehicle or from such vehicles meet the provisions of Directive 70/220/EEC, as amended by this Directive.   2.  From 1 July 1992, in respect of types of vehicle equipped with an engine having a capacity of less than 1 400 cm=, Member States:  - may no longer issue the document provided for in the last indent of Article 10 (1) of Directive 70/156/EEC for a type of motor vehicle,  - shall refuse national type approval for a type of motor vehicle,  the emissions from which do not meet the requirements of the Annexes to Directive 70/220/EEC, as amended by this Directive.  3.  From 31 December 1992, in respect of vehicles equipped with an engine having a capacity of less than 1 400 cm=, Member States shall prohibit the initial entry into service of vehicles the emissions from which do not meet the requirements of the  Annexes to Directive 70/220/EEC, as amended by this Directive.  Article 3 Member States may make provision for tax incentives for the vehicles covered by this Directive. Such incentives shall meet the provisions of the Treaty as well as the following conditions:  - they shall apply to all domestic car production and to vehicles imported for marketing in a Member State and fitted with equipment allowing the European standards to be met in 1992 to be satisfied ahead of time,  - they shall cease upon the date set in Article 2 (3) for the compulsory entry into force of the emission values for new vehicles,  - they shall be of a value, for each type of vehicle, substantially lower than the actual cost of the equipment fitted to meet the values set and of its fitting on the vehicle.  The Commission shall be informed of any plans to introduce or amend the tax incentives referred to in the first subparagraph in sufficient time to allow it to submit comments.  Article 4 Member States shall bring into force the laws, regulations and administrative provisions necessary in order to comply with this Directive before 1 January 1990. They shall forthwith inform the Commission thereof.  Article 5 Before the end of 1990, the Council shall, acting by a qualified majority on a proposal from the Commission decide to - also align, for vehicles equipped with an engine having a capacity equal to or more than 1 400 cm=, the dates and standards set in this Directive on the basis of an improved European test procedure including an extra-urban driving sequence,  - incorporate into this improved European test procedure the limit values laid down in this Directive for vehicles equipped with an engine having a capacity of less than 1 400 cm=.  Article 6 Acting by a qualified majority on a proposal from the Commission, which will take account of the results of the work in progress on the greenhouse effect, the Council shall decide on measures designed to limit CO2 emissions from motor vehicles.  Article 7 This Directive is addressed to the Member States.   Done at Brussels, 18 July 1989.  For the Council The President R. DUMAS  (1) OJ No C 56, 27. 2. 1988, p. 9 and OJ No C 134, 31. 5. 1989, p. 8. (2) OJ No C 262, 10. 10. 1988, p. 89 and OJ No C 120, 16. 5. 1989. (3) OJ No C 208, 8. 8. 1988, p. 7.(4) OJ No L 76, 6. 4. 1970, p. 1.(5) OJ No L 214, 6. 8. 1988, p. 1.(6) OJ No L 159, 15. 6. 1974, p. 61.(7) OJ No L 32, 3. 2. 1977, p. 32.(8) OJ No L 223, 14. 8. 1978, p. 48.(9) OJ No L 197, 20. 7. 1983, p. 1. (10) OJ No L 36, 9. 2. 1988, p. 1.(11) OJ No L 42, 23. 2. 1970, p. 1. (12) OJ No L 220, 8. 8. 1987, p. 44.