1.If, when this Directive is published in the Official Journal of the European Communities, a credit institution has already incurred an exposure or exposures exceeding either the large exposure limit or the aggregate large exposure limit laid down in this Directive, the competent authorities shall require the credit institution concerned to take steps to have that exposure or those exposures brought within the limits laid down in this Directive.
2.The process of having such an exposure or exposures brought within authorized limits shall be devised, adopted, implemented and completed within the period which the competent authorities consider consistent with the principle of sound administration and fair competition. The competent authorities shall inform the Commission and the Banking Advisory Committee of the schedule for the general process adopted.
3.A credit institution may not take any measure which would cause the exposures referred to in paragraph 1 to exceed their level on the date of the publication of this Directive in the Official Journal of the European Communities.
4.The period applicable under paragraph 2 shall expire no later than 31 December 2001. Exposures with a longer maturity, for which the lending institution is bound to observe the contractual terms, may be continued until their maturity.
5.Until 31 December 1998, Member States may increase the limit laid down in Article 4 (1) to 40 % and the limit laid down in Article 4 (2) to 30 %. In such cases and subject to paragraphs 1 to 4, the time limit for bringing the exposures existing at the end of this period within the limits laid down in Article 4 shall expire on 31 December 2001.
6.In the case of credit institutions the own funds of which, as defined in Article 2 (1) of Directive 89/299/EEC, do not exceed ECU 7 million, and only in the case of such institutions, Member States may extend the time limits laid down in paragraph 5 by five years. Member States that avail themselves of the option provided for in this paragraph shall take steps to prevent distortions of competition and shall inform the Commission and the Banking Advisory Committee thereof.
7.In the cases referred to in paragraphs 5 and 6, an exposure may be considered a large exposure if its value is equal to or exceeds 15 % of own funds.
8.Until 31 December 2001 Member States may substitute a frequency of at least twice a year for the frequency of notification of large exposures referred to in the second indent of Article 3 (2).
9.Member States may fully or partially exempt from the application of Article 4 (1), (2) and (3) exposures incurred by a credit institution consisting of mortgage loans as defined in Article 11 (4) of Directive 89/647/EEC concluded within eight years of the date laid down in Article 8 (1) of this Directive, as well as property leasing transactions as defined in Article 11 (5) of Directive 89/647/EEC concluded within eight years of the date laid down in Article 8 (1) of this Directive, in both cases up to 50 % of the value of the property concerned.
10.Without prejudice to paragraph 4, Portugal may, until 31 December 1998, fully or partially exempt from the application of Article 4 (1) and (3) exposures incurred by a credit institution to Electricidade de Portugal (EDP) and Petrogal.