The European Community (EC) banking legislation covers all credit institutions that receive deposits and similar repayable funds and that also grant credits, unless there is specific provision for an exemption. This fundamental principle was established in the Council’s First Banking Directive of 1977.1 The trend since that date has been to reduce the number of exempted institutions. The motivation, as put forward in the recitals to the First Banking Directive, was a mixture of prudential and competitive considerations: