Forslag til EUROPA-PARLAMENTETS OG RÅDETS FORORDNING om ændring af forordning (EU) nr. 806/2014 for så vidt angår foranstaltninger til tidlig indgriben, betingelser for afvikling og finansiering af afviklingsforanstaltninger

EN EN
EUROPEAN
COMMISSION
Strasbourg, 18.4.2023
COM(2023) 226 final
2023/0111 (COD)
Proposal for a
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
amending Regulation (EU) No 806/2014 as regards early intervention measures,
conditions for resolution and funding of resolution action
(Text with EEA relevance)
{SEC(2023) 230 final} - {SWD(2023) 225 final} - {SWD(2023) 226 final}
Offentligt
KOM (2023) 0226 - Forslag til forordning
Europaudvalget 2023
EN 1 EN
EXPLANATORY MEMORANDUM
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
The proposed amendments to Directive 2014/59/EU1
(the Bank Recovery and Resolution
Directive or BRRD) are part of the crisis management and deposit insurance (CMDI)
legislative package that also includes amendments to Regulation (EU) No 806/20142
(the
Single Resolution Mechanism Regulation or SRMR) and to Directive 2014/49/EU3
(the
Deposit Guarantee Schemes Directive or DGSD).
The EU crisis management framework is well-established, however, previous episodes of
bank failures have shown that there is need for improvements. The aim of the CMDI reform is
to build on the objectives of the crisis management framework and to ensure a more
consistent approach to resolution, so that any bank in crisis can exit the market in an orderly
manner, while preserving financial stability, taxpayer money and ensuring depositor
confidence. In particular, the existing resolution framework for smaller and medium-sized
banks needs to be strengthened with respect to its design, implementation and, most
importantly, incentives for its application, so that it can be more credibly applied to those
banks.
Context of the proposal
In the aftermath of the global financial and sovereign debt crises, the EU took decisive
actions, in line with international calls for reform, to create a safer financial sector for the EU
single market. This included providing the tools and powers to handle the failure of any bank
in an orderly manner, while preserving financial stability, public finances and depositor
protection. The Banking Union was created in 2014 and is currently made up of two pillars: a
Single Supervisory Mechanism (SSM) and a Single Resolution Mechanism (SRM). However,
the Banking Union is still incomplete and is missing its third pillar: a European deposit
insurance scheme (EDIS)4
. The Commission’s proposal adopted on 24 November 2015 to
establish EDIS5
is still pending.
The Banking Union is supported by a Single Rulebook which, in what concerns the CMDI, is
made up of three EU legal acts adopted in 2014: the BRRD, the SRMR and the DGSD. The
BRRD defines the powers, rules and procedures for the recovery and resolution of banks,
including cross-border cooperation arrangements to tackle cross-border banking failures. The
SRMR creates the Single Resolution Board (SRB) and the Single Resolution Fund (SRF) and
defines powers, rules and procedures for the resolution of the entities established in the
1
Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a
framework for the recovery and resolution of credit institutions and investment firms and amending
Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC,
2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU)
No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190).
2
Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014
establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain
investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and
amending Regulation (EU) No 1093/2010 (OJ L 225, 30.7.2014, p. 1).
3
Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit
guarantee schemes (OJ L 173, 12.6.2014, p. 149).
4
Furthermore, there is still no agreement on a credible and robust mechanism for providing liquidity in
resolution in the Banking Union, in line with the standard set by international peers.
5
COM/2015/0586 final.
EN 2 EN
Banking Union, in the context of the single resolution mechanism. The DGSD ensures the
protection of depositors and sets-out the rules for the use of DGS funds. The BRRD and the
DGSD apply in all Member States while the SRMR applies in Member States participating in
the Banking Union.
The 2019 banking package, also known as the ‘risk reduction package’, revised the BRRD,
the SRMR, the Capital Requirements Regulation (CRR)6
and the Capital Requirements
Directive (CRD)7
. These revisions included measures delivering on the EU’s commitments
made in international fora8
to take further steps towards completing the Banking Union by
providing credible risk reduction measures to mitigate threats to financial stability.
In November 2020, the Eurogroup agreed on the creation and early introduction of a common
backstop to the SRF by the European Stability Mechanism (ESM)9
.
The crisis management and deposit insurance (CMDI) reform and the broader
implications for the Banking Union
Together with the CMDI reform, a complete Banking Union, including its third pillar, EDIS,
would offer a higher level of financial protection and confidence to EU’s households and
businesses, increase trust and strengthen financial stability as necessary conditions for growth,
prosperity and resilience in the Economic and Monetary Union and in the EU more generally.
The Capital Markets Union complements the Banking Union as both initiatives are essential
to finance the twin transitions (digital and green), step up the international role of the euro and
strengthen the EU’s open strategic autonomy and its competitiveness in a changing world,
particularly considering the current challenging economic and geopolitical environment10, 11
.
In June 2022, the Eurogroup did not agree to a more comprehensive work plan to complete
the Banking Union by including EDIS. Instead, the Eurogroup invited the Commission to
table more targeted legislative proposals for reforming the EU framework for bank crisis
management and national deposit insurance12
.
In parallel, the European Parliament, in its 2021 annual report on the Banking Union13
, also
stressed the importance of completing it with the establishment of EDIS and supported the
Commission in putting forward a legislative proposal on the CMDI review. While EDIS was
not explicitly endorsed by the Eurogroup, it would make the CMDI reform more robust and it
6
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 (OJ L 176, 27.6.2013, p. 1).
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, amending Directive
2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).
8
The Basel Committee on Banking Supervision and the Financial Stability Board (FSB). Financial
Stability Board (2014 updated version), Key Attributes of effective resolution regimes for financial
institutions and (2015), Principles on Loss-absorbing and Recapitalisation Capacity of Globally
Systemically Important Banks (G-SIBs) in Resolution, Total Loss-absorbing Capacity (TLAC) Term
Sheet.
9
Eurogroup (30 November 2020), Statement of the Eurogroup in inclusive format on the ESM reform
and the early introduction of the backstop to the Single Resolution Fund. The implementation would
take place over 2022-2024. However, the Agreement Amending the Treaty Establishing the European
Stability Mechanism is still pending ratification.
10
European Commission (2020), Commission Work Programme 2021, section 2.3, p. 5.
11
European Commission (2023), Long-term competitiveness of the EU: looking beyond 2030.
12
Eurogroup (16 June 2022), Eurogroup statement on the future of the Banking Union.
13
European Parliament (2022), Banking Union – annual report 2021; the European Parliament has issued
a report on the Banking Union every year starting 2015.
EN 3 EN
would deliver synergies and efficiency gains for the industry. Such a legislative package
would be part of the agenda for completing the Banking Union, as emphasised in President
von der Leyen’s Political Guidelines, which also recalled the importance of EDIS, and as
regularly supported by leaders14
.
The objectives of the crisis management and deposit insurance (CMDI) framework
The CMDI framework was designed to mitigate the risks and manage the failure of
institutions of any size, while achieving four overarching objectives:
(i) protect financial stability while avoiding contagion, thereby ensuring market
discipline and continuity of critical functions for society,
(ii) safeguard the functioning of the single market and provide a level playing field
across the EU;
(iii) minimise recourse to taxpayer money and weaken the bank-sovereign loop and
(iv) protect depositors and ensure consumer confidence.
The CMDI framework provides for a set of instruments that can be applied in the various
stages of the life cycle of banks in distress: recovery action supported by recovery plans
drafted by banks; early intervention measures; measures to prevent the failure of a bank;
resolution plans prepared by resolution authorities; and a resolution toolbox when the bank is
declared failing or likely to fail and it is deemed that the resolution of the bank (rather than its
liquidation) is in the public interest. Additionally, national insolvency procedures, which are
outside of the CMDI framework15
continue to apply for those failing banks that can be dealt
with under these national procedures, where they are more suitable (rather than resolution)
and do not harm public interest or endanger financial stability.
The CMDI framework is aimed at providing a combination of funding sources to manage
failures in an economically efficient manner, protecting financial stability and depositors and
maintaining market discipline, while reducing recourse to the public budget and ultimately the
cost to taxpayers. The cost of resolving the bank is first covered through the bank’s own
resources, i.e. allocated to the shareholders and creditors of the bank itself (constituting the
bank’s internal loss absorbing capacity), which also reduces moral hazard and improves
market discipline. If needed, it can be complemented by funds from deposit guarantee
schemes (DGS) and resolution financing arrangements (national resolution funds (RF) or the
SRF in the Banking Union). These funds are financed by contributions by all banks
irrespective of their size and business model. In the Banking Union, these rules were further
integrated by entrusting the SRB with managing and overseeing the SRF, which is funded by
contributions from the industry in the participating Member States of the Banking Union.
Depending on the tool applied to a bank in distress (e.g. preventive, precautionary, resolution
or alternative measures under national insolvency proceedings) and the specific details of the
14
Euro Summit Meeting (24 March 2023), Statement of the Euro Summit, meeting in inclusive format.
15
National insolvency proceedings are not harmonised. However, the decision by the resolution authority
whether to place a failing bank in resolution, which requires a comparison between resolution and
national insolvency proceedings (public interest assessment), is part of the CMDI framework. If a
resolution authority decides not to place a failing bank in resolution, the case is subsequently treated at
national level, where the assessment of the initiation of insolvency proceedings or of other types of
winding up proceedings takes place, according to the specific details of national insolvency regimes.
EN 4 EN
case, State aid16
control may be necessary for interventions by an RF/SRF, a DGS or public
funding from the State budget.
Reasons for the proposal
Notwithstanding the progress achieved since 2014, resolution has been rarely applied,
especially in the Banking Union. Areas for further strengthening and adjustment were
identified as regards the CMDI framework in terms of design, implementation and most
importantly, incentives for its application.
To date, many failing banks of a smaller or medium size have been dealt with under national
regimes often involving the use of taxpayer money (bailouts) instead of the industry-funded
safety nets, such as the SRF in the Banking Union that so far has been unused in resolution.
This goes against the intention of the framework as it was set-up after the global financial
crisis, which involved a major paradigm shift from bailout to bail-in. In this context, the
opportunity cost of the resolution financing arrangements financed by all banks is
considerable.
The resolution framework did not fully deliver on key overarching objectives, notably
facilitating the functioning of the EU single market in banking by ensuring a level playing
field, handling cross-border and domestic crises and minimising recourse to taxpayer money.
The reasons are mainly due to misaligned incentives in choosing the right tool to manage
failing banks, leading to the non-application of the harmonised resolution framework, in
favour of other avenues. This is due overall to the broad discretion in the public interest
assessment, difficulties in accessing funding in resolution without imposing losses on
depositors, and easier access to funding outside of resolution.Following this path raises risks
of fragmentation and suboptimal outcomes in managing banks’ failures, in particular those of
smaller and medium-sized banks.
The review of the CMDI framework and the interaction with national insolvency proceedings
should provide solutions to address these issues. It should also enable the framework to fully
achieve its objectives and be fit for purpose for all banks in the EU irrespective of their size,
business model and liability structure, even smaller and medium-sized banks, if required by
prevailing circumstances. The revision should aim at ensuring a consistent application of the
rules across Member States, delivering a better level playing field, while protecting financial
stability and depositors, preventing contagion and reducing recourse to taxpayer money. In
particular, the framework should be improved to facilitate the resolution of smaller and
medium-sized banks as initially expected, by mitigating the impacts on financial stability and
the real economy without recourse to public funding, and by fostering the confidence of their
depositors, consisting primarily of households and small and medium-sized enterprises
(SMEs). In terms of the magnitude of the changes envisaged, the CMDI review does not seek
to overhaul the current framework but rather to bring much needed improvements in several
key areas to make the framework work as intended for all banks.
Summary of the crisis management and deposit insurance (CMDI) reform elements
The amendments included in the CMDI package cover a range of policy aspects and
constitute a coherent response to the identified problems:
16
State aid rules are intrinsically linked with and complementary to the CMDI framework. These rules are
not subject to this review and this impact assessment. In order to ensure consistency between the two
frameworks, the Eurogroup invited the Commission in November 2020 to conduct a review of the State
aid framework for banks, and to complete it in parallel with the CMDI framework review, ensuring its
entry into force at the same time with the updated CMDI framework.
EN 5 EN
 expanding the scope of resolution by reviewing the public interest assessment,
when this achieves the objectives of the framework, e.g. protecting financial
stability, taxpayer money and depositor confidence better than national
insolvency proceedings;
 strengthening the funding in resolution by complementing the internal loss-
absorbing capacity of institutions, which remains the first line of defence, with
the use of DGS funds in resolution to help access resolution funds without
imposing losses on depositors where appropriate, subject to conditions and
safeguards;
 amending the ranking of claims in insolvency and ensuring a general depositor
preference with a single-tier depositor preference, with the aim of enabling the
use of DGS funds in measures other than payout of covered deposits;
 harmonising the least cost test for all types of DGS interventions outside
payout of covered deposits in insolvency to improve the level playing field and
ensure consistency of outcomes;
 clarifying the early intervention framework by removing overlaps between
early intervention and supervisory measures, providing legal certainty on the
applicable conditions and facilitating cooperation between competent and
resolution authorities;
 ensuring a timely triggering of resolution; and
 improving depositor protection (e.g. targeted improvements of DGSD
provisions on scope of protection and cross-border cooperation, harmonisation
of national options, and improvement of transparency on financial robustness
of DGSs).
• Consistency with existing policy provisions in the policy area
The proposal puts forward amendments to the existing legislation to render it fully consistent
with existing policy provisions in the area of bank crisis management and deposit insurance.
The review of the BRRD/SRMR and of the DGSD aims at improving the functioning of the
framework in a way that provides the tools to resolution authorities to be able to handle the
failure of any bank, irrespective of size and business model, in order to preserve financial
stability, protect depositors, and avoid recourse to taxpayer money.
• Consistency with other EU policies
The proposal builds on the reforms carried out in the aftermath of the financial crisis that led
to the creation of the Banking Union and the single rulebook for all EU banks.
The proposal helps strengthen the EU financial legislation adopted in the last decade to reduce
risks in the financial sector and ensure an orderly management of bank failures. The aim is to
make the banking system more robust and ultimately promote the sustainable financing of
economic activity in the EU. It is fully consistent with the EU's fundamental goals of
promoting financial stability, reducing taxpayers’ support in bank resolution and protecting
depositor confidence. These objectives are conducive to a high level of competitiveness and
consumer protection.
EN 6 EN
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The proposal amends an existing regulation, the SRMR, in particular as regards the improved
application of the tools that are already available in the bank resolution framework, clarifying
the conditions for resolution, facilitating access to safety nets the event of bank failure and
improving the clarity and consistency of funding rules. By establishing harmonised
requirements for applying the CMDI framework to banks in the Member States participating
in the SRM, the proposal considerably reduces the risk of divergent national rules in those
Member States, which could distort competition in the internal market.
Consequently, the legal basis for the proposal is the same as the legal basis of the original
legislative act, namely Article 114 TFEU. That provision allows for measures to be adopted
for the approximation of national provisions which have as their objective the establishment
and functioning of the internal market.
• Subsidiarity (for non-exclusive competence)
The legal basis falls within the internal market area, which is considered a shared competence,
as defined by Article 4 TFEU. Most of the actions considered represent updates and
amendments to existing EU law, and as such, they concern areas where the EU has already
exercised its competence and does not intend to cease exercising such competence.
Given that the objectives pursued by the proposed measures aim at supplementing already
existing EU legislation, they can be best achieved at EU level rather than by different national
initiatives. In particular, the rationale for a specific and harmonised EU resolution regime for
all banks in the EU was laid out at the inception of the framework in 2014. Its main features
reflect international guidance and the ‘Key Attributes of Effective Resolution Regimes for
Financial Institutions’ adopted by the Financial Stability Board in the aftermath of the 2008
global financial crisis.
The principle of subsidiarity is embedded in the existing resolution framework. Its objectives,
namely the harmonisation of the rules and processes for resolution, cannot be sufficiently
achieved by Member States. Rather, by reason of the effects of a failure of any institution in
the whole EU, they can be better achieved at EU level through EU action.
The intention of the existing resolution framework has always been to provide a common
toolbox to deal effectively with any bank failure, irrespective of its size, business model or
location, in an orderly way, where this is necessary to preserve financial stability of the EU,
the Member State or the region in which it operates, and to protect depositors without relying
on public funds.
The proposal amends certain provisions of the SRMR to improve the existing framework,
particularly when it comes to applying it to smaller and medium-sized banks, as otherwise it
may not reach its objectives.
Risks to financial stability, depositor confidence or the use of public finances in one Member
State may have far-reaching impacts on a cross-border basis and may ultimately contribute to
a fragmentation of the single market. The lack of action at EU level for less significant banks
and their perceived exclusion from a mutualised safety net would also potentially affect their
ability to access markets and attract depositors when compared with significant banks.
Furthermore, national solutions to tackle bank failures would worsen the bank-sovereign link
and undermine the idea behind the Banking Union of introducing a paradigm shift from bail-
out to bail-in.
EN 7 EN
Acting at EU level to reform the resolution framework will not prescribe the strategy that
should be taken when banks fail. The choice between an EU harmonised resolution
strategy/tool and the national liquidation strategy will remain at the discretion of the
resolution authority on the basis of the public interest assessment. This is tailored to each
specific failure case and not automatically driven by considerations such as the bank size, the
geographical outreach of its activities and the structure of the banking sector. In practice, this
makes the public interest assessment the subsidiarity test in the EU.
Thus, while a case-by-case basis needs to be used for assessing whether a bank undergoes
resolution or not, it is crucial that the possibility for all banks to undergo resolution is
preserved and that resolution authorities have the right incentives to opt for resolution, due to
the potentially systemic nature of all institutions, as already provided for in the SRMR.
Member States may still consider liquidation for the smaller or medium-sized banks under the
reformed framework. In this respect, national insolvency regimes (which are not harmonised)
remain in place when an insolvency procedure is deemed a better alternative to resolution.
The continuum of tools is preserved in this way, including those outside resolution, such as:
preventive and precautionary measures; resolution tools; alternative measures within national
insolvency proceedings and payout of covered deposits in the event of piecemeal liquidation.
Amending the SRMR is therefore considered the best option. It strikes the right balance
between harmonising rules and maintaining national flexibility, where relevant. The
amendments would further promote a uniform application of the resolution framework and
the convergence of practices of supervisory and resolution authorities, as well as ensure a
level playing field throughout the internal market for banking services. This is particularly
important in the banking sector where many institutions operate across the EU internal
market. National rules would not achieve these objectives.
• Proportionality
Under the principle of proportionality, the content and form of EU action should not exceed
what is necessary to achieve its objectives, consistent with the overall objectives of the
Treaties.
Proportionality has been an integral part of the impact assessment accompanying the proposal.
The proposed amendments have been individually assessed against the proportionality
objective. In addition, the lack of proportionality of the existing rules has been assessed in
several areas and specific options have been analysed aimed at reducing administrative
burden and compliance costs for smaller institutions, in particular by removing the obligation
to determine the minimum requirement for own funds and eligible liabilities (MREL) for
certain types of entities.
The conditions to access the resolution financing arrangements under the current framework
do not sufficiently account for distinctions on grounds of proportionality based on the
resolution strategy, size and/or business model. The ability of banks to fulfil the access
conditions to the resolution financing arrangement depends on the stock of bail-inable
instruments available in their balance sheets at the time of the intervention. However,
evidence suggests that some (smaller and medium-sized) banks in certain markets face
structural difficulties in building up the MREL. For those banks, considering their specific
liability structure (particularly those relying significantly on deposit funding), certain deposits
would need to be bailed-in in order to access the resolution financing arrangement, which may
raise concerns of financial stability and operational feasibility considering the economic and
social impact in several Member States. The proposed amendments (e.g. clear rules on
tailoring the MREL for transfer resolution strategies, introducing a single-tier depositor
EN 8 EN
preference and allowing DGS funds to bridge the gap to access the resolution financing
arrangement) would improve access to funding in resolution. They would also introduce more
proportionality for banks that would be resolved under transfer strategies, by allowing the
protection of deposits from bail-in where appropriate, and addressing effectively the problem
of funding of resolution without weakening the minimum bail-in conditions for accessing the
resolution financing arrangement.
• Choice of the instrument
It is proposed that the measures be implemented by amending the SRM Regulation through a
regulation. The proposed measures refer to or further develop already existing provisions
inbuilt in this legal instrument.
3. RESULTS OF EX POST EVALUATIONS, STAKEHOLDER
CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex post evaluations/fitness checks of existing legislation
The CMDI framework was designed to avert and manage the failure of institutions of any size
or business model. It was developed with the objectives of maintaining financial stability,
protecting depositors, minimising the use of public support, limiting moral hazard, and
improving the internal market for financial services. The evaluation concluded that, overall,
the CMDI framework should be improved in certain respects, such as better protection of
taxpayer money.
In particular, the evaluation shows that legal certainty and predictability in managing bank
failures remains insufficient. The decision of public authorities on whether to resort to
resolution or insolvency may differ considerably across Member States. In addition, safety
nets financed by the industry are not always effective and divergent access conditions to
funding in resolution and outside resolution persist. These affect incentives and create
opportunities for arbitrage when decisions are made on what crisis management tool to use.
Finally, depositor protection remains uneven and inconsistent across Member States in a
number of areas.
• Stakeholder consultations
The Commission conducted extensive exchanges through different consultation tools to reach
out to all stakeholders involved, in order to better understand how the framework performed
as well as the possible scope for improvements.
In 2020, the Commission launched a consultation on a combined inception impact assessment
and a roadmap aimed at providing a detailed analysis of actions to be taken at EU level and
the potential impact of different policy options on the economy, society and the environment.
In 2021, the Commission launched two consultations: a targeted and a public consultation to
seek stakeholder feedback on how the CMDI framework was applied and views on possible
modifications. The targeted consultation, comprising 39 general and specific technical
questions, was available in English only and open from 26 January to 20 April 2021. The
public consultation consisted of 10 general questions, available in all EU languages and ran
over the feedback period from 25 February to 20 May 2021.
In addition, the Commission hosted a high-level conference on 18 March 2021 gathering
representatives from all relevant stakeholders. The conference confirmed the importance of an
effective framework but also highlighted the current weaknesses.
EN 9 EN
Commission staff have also repeatedly consulted Member States on the EU implementation of
the CMDI framework and on possible revisions of the BRRD/SRMR and DGSD in the
context of the Commission Expert Group on Banking, Payments and Insurance. In parallel to
the discussions in the Expert Group, the issues addressed in this proposal were also covered in
meetings of the Council’s preparatory bodies, namely the Council Working Party on Financial
Services and the Banking Union and the High-Level Working Group on EDIS.
Furthermore, during the preparatory phase of the legislation, Commission staff also held
numerous meetings (physical and virtual) with representatives of the banking industry and
with other stakeholders.
The results of all the above-mentioned initiatives have fed into the preparation of this
proposal and the accompanying impact assessment. They have provided clear evidence of the
need to update and complete the current rules to best achieve the objectives of the framework.
Annex 2 of the impact assessment provides the summaries of these consultations and the
public conference.
• Collection and use of expertise
The Commission issued a call for advice to the European Banking Authority (EBA) on
funding in insolvency and resolution. The Commission sought targeted technical advice to: (i)
assess the reported difficulty for some smaller and medium-sized banks to issue sufficient
loss-absorbing financial instruments; (ii) examine the current requirements to access available
sources of funding in the current framework; and (iii) assess the quantitative impacts of
various possible policy options in the area of funding in resolution and insolvency and their
effectiveness in achieving the policy objectives. The EBA responded in October 202117
.
The Commission also benefited from the opinion provided by the Fit for Future Platform in
December 2021. The opinion highlighted the need to make the CMDI framework fit for
purpose for all banks, in a proportionate manner, taking into consideration the potential
impact on depositors’ confidence and on financial stability.
• Impact assessment18
The proposal has been subject to an extensive impact assessment taking into account the
feedback received from stakeholders and the need to address various interconnected issues
spanning three different legal texts.
The impact assessment considered a range of policy options to address the problems identified
in the design and implementation of the crisis management and deposit insurance framework.
Given the strong links between the crisis management toolbox and its funding, the impact
assessment considered packages of policy options that bundle together relevant design
features of the CMDI framework to ensure a comprehensive and consistent approach. Some
changes proposed – related to early intervention measures, the triggers to determine whether a
bank is failing or likely to fail, and the harmonisation of certain features of the DGSD – are
common across the option packages considered.
The different packages of options are mainly focused on analysing the spectrum of
possibilities to broaden credibly and effectively the scope of resolution as a function of the
level of ambition in making the funding more accessible. In particular, the policy options
consider facilitating the use of DGS funds in resolution, including serving as a bridge, under
17
EBA (22 October 2021), Call for advice regarding funding in resolution and insolvency.
18
Please see references to SWD(2023)226 (summary sheet of the IA) and SEC(2023)230 (the positive
opinion of the Regulatory Scrutiny Board).
EN 10 EN
the least-cost test safeguard, to improve the proportionality in accessing the resolution
financing arrangements for banks, particularly smaller and medium-sized banks, being subject
to transfer strategies with market exit. In addition, the policy options explore the possibility of
using DGS funds more effectively and efficiently under a harmonised least cost test for
measures other than the payout of covered deposits, seeking to improve the compatibility of
incentives for resolution authorities when selecting the most appropriate tool to manage a
crisis. Unlocking DGS funds for measures other than the payout of covered deposits depends
on where the DGS ranks in the hierarchy of claims. Therefore, the policy options also explore
different scenarios of harmonisation of depositor preference.
In light of these elements, the impact assessment explores three possible packages of policy
options that deliver outcomes with varying ranges of ambition. Each package strives to create
an incentive-based framework, by encouraging the application of resolution tools in a more
consistent manner, increasing legal certainty and predictability, levelling the playing field,
and facilitating access to common safety nets, all while maintaining some alternatives outside
resolution under national insolvency procedures. However, by design, the packages of options
achieve these objectives to a varying extent and their political feasibility differs.
The preferred option envisages ambitious improvements in the funding equation, opening the
possibility for the resolution scope to be substantially broadened to include more smaller and
medium-sized banks and a better alignment of incentives for deciding on the best crisis tool
for these institutions. It was considered more effective, efficient and coherent in achieving the
objectives of the framework relative to other options, including the baseline where no action
is taken. In particular, the removal of the super-preference for the DGS was identified as the
most effective means of ensuring that DGS funds can be used in resolution. The existence of a
super-preference for DGS claims is the main reason why the DGS funds can almost never be
used outside a payout of covered deposits in insolvency because of the impact it has on the
outcome of the least cost test (LCT) that privileges a payout. However, it was found that the
super-preference ends up protecting the financial means of the DGS and the banking sector
from possible replenishment by hindering any DGS intervention in resolution, without
bringing a better protection for covered deposits. Therefore, the removal of the DGS super-
preference is necessary to address the existing outcome of the LCT assessment that is skewed
towards payout and to provide adequate funding in resolution to make the resolution of
smaller and medium-sized banks through a transfer of business and market exit of the failed
bank feasible.
The impact assessment also included another option consisting of an ambitious reform of the
CMDI framework including EDIS, in the form of an intermediate, hybrid model, different
from the 2015 Commission proposal. This option acknowledges the importance of
establishing a common deposit insurance system for the robustness of the framework and the
completion of the Banking Union; however, it has been assessed as politically unfeasible at
this stage.
The proposal would entail costs for authorities and certain banks, depending on the extent to
which resolution would be expanded on the basis of case-by-case public interest assessments
and the specific circumstances of each case. Using the DGS funds and the RF/SRF would be
more cost-efficient in terms of financial means required to be used, however it may also
trigger replenishment needs through contributions from the industry. Overall, costs for
resolution authorities and banks would, however, be compensated by the benefits of enhanced
preparedness for a larger spectrum of banks, clarified incentives when deciding which crisis
tools to use, reduced recourse to taxpayer funds, and increased financial stability and
depositor confidence, all thanks to clearer rules and access to industry-funded safety nets. For
consumers and the public, the costs should be limited and clearly outweighed by the benefits,
EN 11 EN
particularly through increased depositor protection, financial stability and reduced use of
taxpayer money.
The Regulatory Scrutiny Board endorsed the impact assessment following a first negative
opinion. To address the comments raised by the Board, the impact assessment has been
extended to include additional explanations on: (i) the nature of the problems the review aims
to address and the general merits of resolution compared with insolvency proceedings to
protect financial stability, depositor confidence and minimise the recourse to taxpayers
money; (ii) clarifications on how the reform complies with the principle of subsidiarity; and
(iii) additional details on other aspects such as consistency with the review of State aid rules,
the interaction with the 2015 Commission proposal on EDIS, how the EBA’s advice has been
taken into account or the conditions in which DGS could intervene in resolution.
• Regulatory fitness and simplification
The review is mainly focused on the overall set-up and functioning of the crisis management
and deposit insurance framework, with particular attention being paid to smaller and medium
sized banks and a more equal treatment of depositors. The proposed reform is expected to
bring benefits with respect to the effectiveness of the framework and legal clarity.
The reform is technology-neutral and does not impact digital readiness.
• Fundamental rights
The EU is committed to high standards of protection for fundamental rights and is a signatory
to a broad set of conventions on human rights. In this context, the proposal complies with
these rights, as listed in the main UN conventions on human rights, the Charter of
Fundamental Rights of the European Union, which is an integral part of the EU Treaties and
the European Convention on Human Rights.
4. BUDGETARY IMPLICATIONS
The proposal does not have implications for the EU budget.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
The proposal requires Member States to transpose the amendments to the BRRD in their
national laws within 18 months from the entry into force of the amending Directive.
The proposal includes requirements for the EBA to issue standards in relation to certain
provisions of the framework and to report to the Commission on its effective implementation,
e.g. in relation to resolvability assessments conducted by resolution authorities or the
preparation for resolution execution.
The legislation will be subject to an evaluation 5 years after its implementation deadline in
order to assess how effective and efficient it has been in terms of achieving its objectives and
to decide whether new measures or amendments are needed.
6. DETAILED EXPLANATION OF THE SPECIFIC PROVISIONS OF THE
PROPOSAL
Early intervention measures and preparation for resolution
Article 13 is replaced by a new set of articles (Articles 13 to 13c) mirroring the BRRD
provisions on early intervention (Articles 27 to 29 BRRD), in order to provide the ECB with a
EN 12 EN
directly applicable legal basis for the exercise of those powers. As in BRRD, the escalation
mechanism between the different types of measures is clarified and it is specified that the
prior adoption of early intervention measures, or the meeting of the conditions for early
intervention, are not prerequisites to start the preparation for resolution or to exercise the
related powers.
SRMR already included provisions concerning the cooperation and exchange of information
between the Board and the ECB or national competent authorities (NCAs) when the financial
situation of a bank starts deteriorating. However, those provisions needed to be strengthened
to ensure better and more effective cooperation. The new Article 13c builds on the former
Article 13 and provides additional details on cooperation in the run-up to resolution,
concerning the type of information that should be exchanged, the situations in which the ECB
or the NCA need to exchange information and the type of arrangements that the Board may
put in place to prepare for resolution.
Early warning of failing or likely to fail
Article 13c includes an obligation for the ECB, or the NCA in relation to the less significant
cross-border groups under the Board’s direct remit, to notify sufficiently early the Board as
soon as it considers that there is a material risk that an institution or entity meets the
conditions for being assessed as failing or likely to fail, as laid down in Article 18(4). This
notification should include the reasons for the ECB/NCA’s assessment as well as an overview
of the alternative solutions that may prevent the failure of the institution or entity concerned
within a reasonable timeframe.
In recognition of the critical role that the timing of resolution action plays with respect to
preserving as much as possible the levels of capital, MREL and liquidity of the institution or
entity, and more generally, in ensuring that the necessary conditions are in place for the Board
to successfully execute the resolution strategy prepared for each institution or entity, the
Board is empowered to assess, in close cooperation with the ECB/NCA, what it considers to
be a reasonable timeframe for the purposes of looking for solutions of private or
administrative nature, able to prevent the failure. During this early warning period, the
ECB/NCA should continue exercising its competences, while liaising with the Board in line
with Article 13c. The ECB/NCA and the Board should monitor, in close cooperation, the
evolution of the situation of the institution or entity and the implementation of alternative
measures. In this context, the Board and the ECB/NCA should meet regularly, with a
frequency set by the Board.
If no appropriate alternative measure which would avert the failure is found or implemented
within this timeframe, the ECB/NCA should assess whether the institution or entity is failing
or likely to fail. Where the ECB/NCA concludes that the institution or entity is failing or
likely to fail, it should formally communicate this to the Board, following the procedure laid
down in Article 18(1). The Board may also make this assessment itself, in compliance with
the existing rules in Article 18(1), second subparagraph. The Board should then determine
whether the conditions for resolution are met. Where the public interest assessment results in
the need to resolve the institution or entity, the Board should adopt a resolution scheme. This
is in line with the recent case law of the Court of Justice of the EU related to a case taking
place in the Banking Union, according to which the ECB’s assessment is a preparatory
measure designed to allow the Board to take a decision regarding the resolution of a bank.
The Court further stated that the Board has the exclusive power to assess the conditions
EN 13 EN
required for the application of resolution action, subject to the endorsement of the resolution
scheme by the Commission and, where applicable, non-objection by the Council19
.
Public interest assessment (PIA)
The CMDI framework was designed to avert and manage the failure of institutions of any size
while protecting depositors and taxpayers. When a bank is considered failing or likely to fail
and there is a public interest in resolving it, the resolution authorities will intervene by using
the tools and powers granted by the BRRD/SRMR in absence of a private solution. In the
absence of a public interest for resolution, the bank failure should be handled through national
orderly winding up proceedings carried out by national authorities, potentially with financing
from the DGS or other funding sources, as appropriate.
In essence, the public interest assessment (PIA) compares resolution against insolvency, in
particular assessing how each scenario achieves the resolution objectives. The resolution
objectives against which the assessment is made include: (i) the impact on financial stability
(a wide-spread crisis may result in a different outcome of the PIA than an idiosyncratic
failure); (ii) the assessment of the impact on the bank’s critical functions; and (iii) the need to
limit the use of extraordinary public financial support. Under the current framework,
resolution can only be chosen where insolvency would not allow achieving the resolution
objectives to the same extent.
The SRMR leaves margin of discretion to the Board when carrying out the PIA, which leads
to divergent applications and interpretations that do not always fully reflect the logic and
intention of the legislation. In some cases, the PIA has been applied rather restrictively in the
Banking Union.
To minimise divergences and widen the application of the PIA, i.e. broadening the scope of
resolution, the proposal includes the following legislative amendments:
Amendments to the resolution objectives
The resolution objective requiring minimising the reliance on extraordinary public financial
support does not allow for a distinction between the use of national budget money and the use
of industry-funded safety nets (the SRF or DGSs). Therefore, this resolution objective is
amended to include a specific reference to support provided by the budget of a Member State,
to indicate that funding provided by industry-funded safety nets should be considered
preferable to funding supported by taxpayers’ money (Article 14(2)(c)). This is
complemented with a change in the procedural rules on PIA, requiring the Board to consider
and compare all extraordinary public financial support that can reasonably be expected to be
provided to the institution in resolution against those in the insolvency counterfactual. If
liquidation aid is expected in the insolvency counterfactual, this should lead to a positive PIA
outcome (Article 18(5), second subparagraph).
The resolution objective related to depositor protection is amended to clarify that resolution
should aim at protecting depositors, while minimising losses for deposit guarantee schemes.
This means that resolution should be preferred if insolvency would be more costly for the
DGS.
19
Order of 6 May 2019, ABLV Bank / ECB, T-281/18, EU:T:2019:296, paragraphs 34 to 36, and
Judgment of 6 May 2021, ABLV Bank / ECB, C-551/19 P and C-552/19 P, EU:C:2021:369, paragraphs
62 to 71.
EN 14 EN
Procedural changes to the comparison between resolution and national insolvency
proceedings
Under the current SRMR, the Board is expected to choose insolvency unless opting for
resolution would better achieve the resolution objectives. The current text of Article 18(5)
provides that resolution shall only be chosen when winding up the institution under normal
insolvency proceedings would not meet the resolution objectives to the same extent. To make
it possible to broaden the application of resolution, Article 18(5) is amended to clarify that
national insolvency proceedings should be selected as the preferred strategy only when they
achieve the framework’s objectives better than resolution (and not to the same extent). While
keeping insolvency as the default option, the amendment leads to an increase in the burden of
proof for resolution authorities in demonstrating that resolution is not in the public interest.
Nevertheless, the PIA will remain a case-by-case decision at the discretion of the resolution
authority.
Use of DGS in resolution
Under the current framework the decision on the use of DGS funds to finance resolution is
taken by the Board after consulting the DGS and the amount of the DGS contribution is
determined on the basis of the valuation of the losses that covered depositors would have
suffered have they not been shielded from suffering losses. To ensure that the enhanced
possibilities and strict conditions for the use of national DGS resources to finance transfer
strategies in resolution under the amended Article 109 BRRD are also applied consistently in
the Banking Union, Article 79 SRMR is amended to specify that the DGS to which the credit
institution is affiliated should be used for the purposes and under the conditions laid down in
Article 109 BRRD. In addition, the second and third subparagraphs of Article 79(5) SRMR,
which mirror the conditions under the current Article 109(5), second and third subparagraphs
BRRD, are deleted.
Given that within the Banking Union resolution decisions are taken by the Board while the
financing might be provided from national DGS resources, the reference to Article 109 BRRD
in the first paragraph of Article 79 SRMR also ensures that the enhanced role of the DGS
under BRRD should apply in the decision-making process for banks under the Board’s remit.
In particular, the calculation of the cost of repaying depositors for the purpose of limiting the
amount of the DGS contribution to resolution remains at national level under the
responsibility of the DGS based on the least cost test (LCT). The Board should determine the
amount of the contribution to be provided by the DGS only after consulting the DGS on the
results of this calculation and it should be bound by these results. Therefore, the Board should
not be able to determine a DGS contribution to a transaction which would be above the cost of
repaying depositors as calculated by the DGS according to the DGSD rules (no breaching of
the LCT), nor higher than what is needed to reach the access condition to the resolution
financing arrangement (8% total liabilities and own funds requirement).
Conditions for providing extraordinary public financial support
In order to ensure that public funds in the form of extraordinary public financial support are
not used to support institutions or entities that are not financially viable, it is necessary to
provide for strict conditions on when such support can be provided and what form it can take.
The existing rules provide for certain limitations but are not sufficiently precise. Provision of
extraordinary public financial support outside of resolution should be limited to cases of
precautionary recapitalisation, preventive measures of DGS aimed at preserving the financial
soundness and long-term viability of credit institutions, measures taken by DGS to preserve
the access of depositors and other forms of support granted in the context of winding up
proceedings. Providing extraordinary public financial support in any other situations outside
EN 15 EN
of resolution should not be permitted and should result in the receiving institution or entity
being considered as failing or likely fail.
Precautionary recapitalisation
Particular attention must be paid to the extraordinary public financial support granted in the
form of precautionary recapitalisation. It is necessary to lay down more clearly the
permissible forms of precautionary measures provided outside of resolution and aimed at
recapitalising the entity concerned. The measures granted should be temporary in nature
because they are supposed to address adverse consequences of external shocks and not used to
compensate for intrinsic weaknesses linked, for example, to an outdated business model. Use
of perpetual instruments, such as Common Equity Tier 1, should become exceptional and
possible only if other forms of capital instruments would not be adequate. Such change is
necessary to ensure that the support remains temporary in nature. Stronger and more explicit
requirements on determining in advance the duration and exit strategy for the precautionary
measures are also needed. The entity receiving support should be solvent at the time the
measures are applied, i.e. assessed by the competent authority as not being in breach and not
likely to breach the applicable capital requirements in the next 12 months. If the conditions
under which the support is granted are not adhered to, the entity receiving the support should
be considered as failing or likely to fail.
Amendments related to the minimum requirement for own funds and eligible liabilities
(MREL)
MREL for transfer strategies
As already provided under the current framework, the level of the MREL requirement should
reflect the preferred resolution strategy. The existing provision of Article 12d focuses on
MREL calibration for bail-in strategies (requirement for loss absorption and recapitalisation
amount, with detailed rules on how each should be adjusted, and on subordination
requirements mostly geared towards ensuring compliance with the minimum 8% TLOF
requirement). While acknowledging the possibility to use resolution tools other than bail-in,
the current BRRD does not regulate in detail MREL calibration for transfer strategies. In
practice, this leads to legal uncertainty and divergent methodologies applied by resolution
authorities when setting MREL for such strategies.
It is therefore necessary to provide a clearer legal basis for distinguishing MREL calibration
for transfer strategies from the one for bail-in, also for the sake of proportionality and
consistent application. In this respect, a new Article 12da is added which sets out the
principles which should be considered by the SRB when calibrating MREL for transfer
strategies - size, business model, risk profile, transferability analysis, marketability, whether
the strategy is asset transfer or share deal, complementary use of asset management vehicle
for assets which cannot be transferred, and the amount which DGS is expected to contribute
to finance the preferred strategy in resolution.
The amendments reinforce the principle that MREL should remain the first and main line of
defence for all banks, including for those that will be subject to a transfer strategy and market
exit, to ensure that losses are absorbed to the maximum extent possible by shareholders and
creditors.
Estimating the combined buffer requirement in case of prohibition of certain distributions
To address an existing gap in legal clarity of the current framework with respect to the power
to prohibit certain distributions in case of failure of an entity to meet the combined buffer
requirement in addition to its MREL, in particular where the entity is not subject to the
combined buffer requirement (under Article 104a of Directive 2013/36/EU) on the same basis
EN 16 EN
as its MREL, a new paragraph 7 is added to Article 10a to clarify that the power to prohibit
certain distributions should be applied on the basis of the estimation of the combined buffer
requirement resulting from the delegated act under Article 45c(4) that specifies the
methodology to be used by resolution authorities to estimate the combined buffer requirement
in such circumstances.
De minimis exemption from certain MREL requirements
Under the existing MREL rules in SRMR, structurally subordinated liabilities referred to in
Article 72b(2)(d)(iii) CRR are captured by the definition of ‘subordinated eligible
instruments’ used throughout Article 12c SRMR. However, liabilities that are permitted to be
eligible in CRR under the de minimis exemption in Article 72b(4) CRR do not qualify as
‘subordinated eligible instruments’ under the SRMR because paragraph 4 of Article 72b CRR
is explicitly excluded from the definition in Article 3(1)(49b) SRMR.
To correct this inconsistency and in line with the approach followed in BRRD, a new
paragraph 10 is added to Article 12c, allowing SRB to permit resolution entities to comply
with the MREL subordination requirements using senior liabilities when the conditions in
Article 72b(4) CRR are met.
To ensure alignment with the TLAC framework, resolution entities benefitting from the de
minimis exemption may not have their MREL subordination requirement adjusted downwards
by an amount equivalent to the 3.5% TREA allowance for TLAC pursuant to the second
sentence of the first subparagraph of Article 12c(4) BRRD.
Contributions and irrevocable payment commitments
To take into account the end of the initial period for the build-up of the Fund and the ensuing
reduction in the amount of regular ex ante contributions, technical amendments are made to
Articles 69 and 71 to disconnect the maximum amount of ex post contributions that may be
raised from the amount of the regular ex ante contributions, thus avoiding a disproportionately
low cap on ex post contributions, as well as to allow for a deferral of the collection of the
regular ex ante contributions in case the cost of an annual collection would not be
proportionate to the amount to be raised. The treatment of irrevocable payment commitments
is also clarified in Article 70, both as regards their use in resolution and as regards the
procedure to follow in case an institution or entity ceases to be subject to the obligation to pay
contributions.
In addition, to provide more transparency and certainty with respect to the share of
irrevocable payment commitments in the total amount of ex ante contributions to be raised, it
is clarified that the Board should determine such share on an annual basis, subject to the
applicable limits.
Other provisions
Amendments to resolution planning
The Board is required to identify measures to be taken with respect to group entities when
drafting group resolution plans. The intensity and level of detail of this work with respect to
subsidiaries that are not resolution entities may vary depending on the size and risk profile of
the institutions and entities concerned, the presence of critical functions and the group
resolution strategy. SRMR is thus amended with the introduction of a new subparagraph in
Article 8(10), which will allow resolution authorities to follow a simplified approach, where
appropriate, when carrying out this task.
EN 17 EN
Clarifications on Article 27(9)
The current provisions of Article 27(9) and (10) are unclear as to what are the condition and
the sequence of use of the SRF and alternative financing sources after the provision of initial
financing of up to the 5 % TLOF limit and after all unsecured, non-preferred liabilities, other
than eligible deposits, have been written down or converted in full. Therefore, paragraphs 9
and 10 of Article 27 are amended to provide legal clarity and additional flexibility to use the
SRF beyond the 5% TLOF.
Governance of the Board
To facilitate continuity and the build-up of institutional expertise, amendments are made to
Article 56 in order to establish the possibility for the Chair, the Vice-Chair and the permanent
Members of the Board to serve a second term in office, in the same capacity as their first
term. The procedure for the renewal of the Chair, Vice-Chair and Board Members has been
designed while taking into account the procedure applicable to the renewal of the
Chairpersons of the ESAs.
Other amendments are made to Article 43, 53 and 55 in order to grant a voting right to the
Vice-Chair and accommodate this voting right throughout SRMR. His or her appointment
follows the same procedure as this of the Chair and he or she is able to substitute the Chair in
its absence or reasonable impediment. A treatment different for the Vice-Chair than for other
members of the Board did not therefore seem justified.
Ranking of SRF claims
Article 22(6) provides that the Board should be able to recover any reasonable expenses
properly incurred in connection with the use of resolution tools and powers from the
institution under resolution as a preferred creditor. However, SRMR did not specify the
relative ranking of the Board to other preferred creditors. It was also unclear how this
provision could be operationalised, given that the ranking of claims in insolvency is
exclusively laid down in national laws governing normal insolvency proceedings (even if that
ranking is partially harmonised across the EU). The new paragraph 6 added to Article 76
clarifies that those claims of the Board should have, in each participating Member State, the
same ranking as the claims of the national resolution funds pursuant to the new Article 108(9)
BRRD (which should be above the claims of depositors and of DGSs).
Additionally, the SRF can be further used in resolution for the purposes identified in Article
76(1). So far, SRMR has not specified whether such use creates a claim in favour of the Board
and, if so, on the insolvency ranking of such claim. A new paragraph 5 is added in Article 76
specifying that, where the activity of the institution under resolution is partially transferred to
a bridge institution or a private purchaser with the support of the SRF, the Board should have
a claim against the residual entity. The existence of such claim should be assessed on a case-
by-case basis, depending on the resolution strategy and the way in which the SRF was
concretely used, but it should be connected to the use of the SRF to bear losses in lieu of
creditors, such as when the SRF is used to guarantee assets and liabilities transferred to a
recipient or to cover the difference between the transferred assets and liabilities. Where the
SRF is used to support the application of the bail-in tool as the primary resolution strategy
(Article 27(1), point (a)), in lieu of the write down and conversion of the liabilities of certain
creditors, this should not generate a claim against the institution under resolution, as it would
eliminate the purpose of the SRF’s contribution. Compensations paid due to the breach of the
‘no creditor worse off’ principle should likewise not generate a claim in favour of the Board.
EN 18 EN
Allocation of responsibilities
Article 7 established a division of tasks whereby the Board has direct responsibility for
entities under the direct responsibility of the ECB, for cross border less significant
institutions, and for entities for which there has been a decision, either on the initiative of the
Board, on this of a national competent authority, or on this of a Member State, that the Board
would exercise direct responsibility. NRAs would retain primary responsibility over all other
entities. However, although Article 7 was explicit on this division of tasks, the language of the
articles of the Regulation that dealt with the specific responsibilities concerned, such as
resolution planning, resolvability assessment, assessment of simplified obligations, MREL-
setting or adoption of resolution schemes, referred only to the Board and thus did not make it
fully clear that, in case of entities within their remit, the responsibility for the tasks mentioned
laid with the NRAs. This point is clarified in Article 7.
Similarly, the power for the Board to prohibit certain distributions where an entity within its
remit does not meet is combined buffer requirement in addition to its MREL was laid down in
the SRMR, but the exact procedure governing the exercise of this power was not specified. It
is now clarified in Article 10a(1) that the Board is able to instruct the relevant NRA to
exercise this power.
A number of cases has also been identified in which powers were granted to NRAs in the
BRRD but, in the absence of a mention in the SRMR, the modalities of their application in the
case of entities under the direct remit of the Board were unclear. To address this issue, it is
clarified in Article 12 that, for entities under its direct remit, the Board is responsible for
granting the permission to call, redeem, repay or repurchase eligible liabilities instruments
under Article 78a of Regulation (EU) No 575/2013. Article 8 is also amended to clarify that
the Board is able, where it deems it necessary, to instruct NRAs to require an institution or
entity to maintain detailed records of the financial contracts to which the institution is a party.
It is further clarified in Article 18(11) that the Board is able to instruct NRAs to exercise their
power to suspend some financial obligations following the determination that the institution
or entity is failing or likely to fail, pursuant to Article 33a of Directive 2014/59/EU.
Amendments to Article 18 also clarify the division of tasks between the ECB and the national
competent authorities as regards the failing or likely to fail assessment. In some situations,
namely cross-border less significant groups, less significant institutions and entities receiving
assistance from the SRF, and specific less significant institutions and entities for which it has
been decided, on the initiative of the Board, of a national competent authority or of a Member
State, that the Board will exercise direct responsibility, although the resolution scheme is
adopted by the Board, the supervision of the institution or entity, and thus the assessment of
whether an institution or entity is failing or likely to fail, is the responsibility of the national
competent authority. It is therefore specified that the assessment of whether an institution or
entity is failing or likely to fail is to be performed by the ECB for the significant institutions
and by the relevant national competent authority for the less significant institutions and
entities for which the Board adopts the resolution scheme.
Lastly, to reflect the establishment of the Single Resolution Mechanism, it is specified in
Article 31 that NRAs should consult the Board before they act in accordance with Article 86
of the BRRD, that provides that normal insolvency proceedings in relation to institutions and
entities within the scope of the BRRD shall not be commenced except at the initiative of the
resolution authority and that a decision placing an institution or an entity into normal
insolvency proceedings shall be taken only with the consent of the resolution authority.
EN 19 EN
Exchange of information
A number of amendments are made in order to facilitate access to information for the Board.
Articles 30 and 34 are amended to clarify that the information that the Board may request
from the ECB covers not only information available to it in its supervisory function but also
information collected in its central bank function. Pursuant to Article 8(4a) of Council
Regulation (EC) No 2533/9820
, the SRB should ensure the physical and logical protection of
confidential statistical information and should require authorisation to the ECB for the further
transmission that may be necessary for the execution of the tasks of the Board.
A new Article 30a is introduced allowing the SRB to obtain information held by the
centralised automated mechanisms established by Article 32a of Directive (EU) 2015/84921
,
which may prove to be relevant when carrying out the public interest assessment. The SRB
can only request information regarding the number of customers for which an entity is the
only or principal banking partner. The SRB should receive that information by way of the
authorities or public entities managing the centralised automated mechanisms, filtered of
personal data that is not relevant for the performance of SRB’s tasks.
Amendments are also added to bring the ESRB, the ESAs and the DGS under the scope of the
obligation to cooperate and share information with the SRB, including the possibility to
conclude memoranda of understanding on information-sharing with the Board.
Furthermore, Article 34 is amended to allow the Board to specify the procedure and the form
under which it requests information to be shared, as well as to specifically mention the ESM
as one of the entities with which cooperation and information exchange may take place.
Finally, Article 74 is amended to provide for an early warning from the Board to the ECB and
the Commission when it foresees a possible need to use the fiscal backstop, in order to allow
for the timely activation of such backstop.
Disclosures
The SRMR rules on the protection of institution-specific confidential information are quite
strict and could in the future hinder efforts towards further transparency regarding the banking
sector. To address this issue, Article 88 is amended to allow the Board to disclose information
that is not directly collected from institutions and entities within its remit but results from its
own analyses, assessments and determinations when this would not undermine the protection
of the public interest as regards financial, monetary or economic policy and that there is an
overriding public interest in the disclosure.
20
Council Regulation (EC) No 2533/98 of 23 November 1998 concerning the collection of statistical
information by the European Central Bank (OJ L 318, 27.11.1998, p.8).
21
Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the
prevention of the use of the financial system for the purposes of money laundering or terrorist
financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and
repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission
Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73).
EN 20 EN
2023/0111 (COD)
Proposal for a
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
amending Regulation (EU) No 806/2014 as regards early intervention measures,
conditions for resolution and funding of resolution action
(Text with EEA relevance)
THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular
Article 114 thereof,
Having regard to the proposal from the European Commission,
After transmission of the draft legislative act to the national parliaments,
Having regard to the opinion of the European Central Bank22
,
Having regard to the opinion of the European Economic and Social Committee23
,
Acting in accordance with the ordinary legislative procedure,
Whereas:
(1) The Union resolution framework for credit institutions and investment firms
(‘institutions’) was established in the aftermath of the 2008-2009 global financial
crisis and following the internationally endorsed Key Attributes of Effective
Resolution Regimes for Financial Institutions24
of the Financial Stability Board. The
Union resolution framework consists of Directive 2014/59/EU of the European
Parliament and of the Council25
and Regulation (EU) No 806/2014 of the European
Parliament and of the Council26
. Both acts apply to institutions established in the
Union, and to any other entity that falls under the scope of that Directive or that
Regulation (‘entities’). The Union resolution framework aims at dealing in an orderly
manner with the failure of institutions and entities by preserving institutions and
entities’ critical functions and avoiding threats to financial stability, and at the same
time protecting depositors and public funds. In addition, the Union resolution
22
OJ C , , p. .
23
OJ C , , p. .
24
Financial Stability Board, Key Attributes of Effective Resolution Regimes for Financial Institutions, 15
October 2014.
25
Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a
framework for the recovery and resolution of credit institutions and investment firms and amending
Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC,
2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU)
No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190).
26
Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014
establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain
investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and
amending Regulation (EU) No 1093/2010 (OJ L 225, 30.7.2014, p. 1).
EN 21 EN
framework intends to foster the development of the internal market in banking by
creating a harmonised regime to address cross-border crises in a coordinated way and
by avoiding level playing field issues.
(2) Several years into its implementation, the Union resolution framework as currently
applicable does not deliver as intended with respect to some of those objectives. In
particular, while institutions and entities have made significant progress towards
resolvability and have dedicated significant resources to that end, in particular through
the build-up of the loss absorption and recapitalisation capacity and the filling-up of
resolution financing arrangements, the Union resolution framework is seldom resorted
to. Failures of certain smaller and medium-sized institutions and entities are instead
mostly addressed through unharmonised national measures. Taxpayer money is used
rather than resolution financing arrangements. That situation appears to arise from
inadequate incentives. Those inadequate incentives result from the interplay of the
Union resolution framework with national rules, whereby the broad discretion in the
public interest assessment is not always exercised in a way that reflects how the Union
resolution framework was intended to apply. At the same time, the Union resolution
framework saw little use due to the risks for depositors of deposit-funded institutions
to bear losses to ensure that those institutions can access external funding in
resolution, in particular in the absence of other bail-inable liabilities. Finally, the fact
that there are less stringent rules on access to funding outside resolution than in
resolution has discouraged the application of the Union resolution framework in
favour of other solutions, which often entail the use of taxpayers’ money instead of the
own resources of the institution or entity or industry-funded safety nets. That situation
in turn generates risks of fragmentation, risks of suboptimal outcomes in managing
institutions and entities’ failures, in particular in the case of smaller and medium-sized
institutions and entities, and opportunity costs from unused financial resources. It is
therefore necessary to ensure a more effective and coherent application of the Union
resolution framework and to ensure that it can be applied whenever that is in the
public interest, including for smaller and medium-sized institutions primarily funded
through deposits and without sufficient other bail-inable liabilities.
(3) Pursuant to Article 4 of Regulation (EU) No 806/2014, Member States which have
established a close cooperation between the European Central Bank (ECB) and the
respective national competent authorities are to be considered participant Member
States for the purposes of that Regulation. However, Regulation (EU) No 806/2014
does not contain any details on the process for preparing the start of the close
cooperation on resolution-related tasks. It is therefore appropriate to lay down those
details.
(4) The intensity, and level of detail, of the resolution planning work needed with respect
to subsidiaries that have not been identified as resolution entities varies depending on
the size and risk profile of the institutions and entities concerned, the presence of
critical functions, and the group resolution strategy. The Single Resolution Board (the
‘Board’) should therefore be able to consider those factors when identifying the
measures to be taken in respect of such subsidiaries and follow a simplified approach
where appropriate.
(5) An institution or entity that is being wound up under national law, following a
determination that the institution or entity is failing or likely to fail and a conclusion
by the Board that its resolution is not in the public interest, is ultimately heading
towards market exit. That implies that a plan for actions to be taken in case of failure
is not needed, irrespective of whether the competent authority has already withdrawn
EN 22 EN
the authorisation of the institution or entity concerned. The same applies for a residual
institution under resolution after the transfer of assets, rights, and liabilities in the
context of a transfer strategy. It is therefore appropriate to specify that in those
situations, the adoption of resolution plans is not required.
(6) The Board may currently prohibit certain distributions where an institution or entity
fails to meet the combined buffer requirement when considered in addition to the
minimum requirement for own funds and eligible liabilities (‘MREL’). However, to
ensure legal certainty and alignment with the existing procedures for the
implementation of decisions taken by the Board, it is necessary to specify more clearly
the roles of the authorities involved in the process for prohibiting distributions. It is
therefore appropriate to lay down that the Board should address an instruction to
prohibit such distributions to the national resolution authority, which should
implement the Board’s decision. In addition, in certain situations, an institution or
entity might be required to comply with the MREL on a different basis than the basis
on which that institution or entity is required to comply with the combined buffer
requirement. That situation creates uncertainties as to the conditions for the exercise of
the Board’s powers to prohibit distributions and for the calculation of the Maximum
Distributable Amount related to MREL. It should therefore be laid down that, in those
cases, the Board should instruct national resolution authorities to prohibit certain
distributions based on the estimate of the combined buffer requirement resulting from
Commission Delegated Regulation (EU) 2021/111827
. To ensure transparency and
legal certainty, the Board should communicate the estimated combined buffer
requirement to the institution or entity, which should then publicly disclose that
estimated combined buffer requirement.
(7) Directive 2014/59/EU and Regulation (EU) No 575/2013 lay down powers to be
exercised by resolution authorities, some of which are not included in Regulation (EU)
No 806/2014. In the Single Resolution Mechanism, this can create uncertainty as to
who should exercise those powers and in what conditions they should be exercised. It
is therefore necessary to specify how national resolution authorities should exercise
certain powers set out only in Directive 2014/59/EU in relation to entities and groups
that fall under the direct responsibility of the Board. In those cases, the Board should
be able, where it deems necessary, to instruct national resolution authorities to exercise
those powers. In particular, the Board should be able to instruct national resolution
authorities to require an institution or entity to maintain detailed records of the
financial contracts to which the institution or entity is a party, or to apply the power to
suspend some financial obligations pursuant to Article 33a of Directive 2014/59/EU.
However, given that the permissions for the reduction of eligible liabilities instruments
laid down in Regulation (EU) No 575/2013 of the European Parliament and of the
Council28
, which is also applicable to institutions and entities and liabilities subject to
the MREL, do not require the application of national legislation, the Board should be
27
Commission Delegated Regulation (EU) 2021/1118 of 26 March 2021 supplementing Directive
2014/59/EU of the European Parliament and of the Council with regard to regulatory technical
standards specifying the methodology to be used by resolution authorities to estimate the requirement
referred to in Article 104a of Directive 2013/36/EU of the European Parliament and of the Council and
the combined buffer requirement for resolution entities at the resolution group consolidated level where
the resolution group is not subject to those requirements under that Directive (OJ L 241, 8.7.2021, p. 1).
28
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 (OJ L 176, 27.6.2013, p. 1).
EN 23 EN
able to grant those permissions to institutions or entities directly, without having to
instruct national resolution authorities to exercise that power.
(8) Regulation (EU) 2019/876 of the European Parliament and of the Council29
,
Regulation (EU) 2019/877 of the European Parliament and of the Council30
and
Directive (EU) 2019/879 of the European Parliament and of the Council31
implemented in Union law the international ‘Total Loss-absorbing Capacity (TLAC)
Term Sheet’, published by the Financial Stability Board on 9 November 2015 (the
‘TLAC standard’), for global systemically important banks, referred to in Union law
as global systemically important institutions (G-SIIs). Regulation (EU) 2019/877 and
Directive (EU) 2019/879 also amended the MREL set out in Directive 2014/59/EU
and in Regulation (EU) No 806/2014. It is necessary to align the provisions in
Regulation (EU) No 806/2014 on the MREL with the implementation of the TLAC
standard for G-SIIs with respect to certain liabilities that could be used to meet the part
of the MREL that should be met with own funds and other subordinated liabilities. In
particular, liabilities that rank pari passu with certain excluded liabilities should be
included in the own funds and subordinated eligible instruments of resolution entities
where the amount of those excluded liabilities on the balance sheet of the resolution
entity does not exceed 5% of the amount of the own funds and eligible liabilities of the
resolution entity and no risks related to the ‘no creditor worse off’ principle arise from
that inclusion.
(9) The rules for determining the MREL are mostly focused on setting the appropriate
level of the MREL with the assumption of the bail-in tool as the preferred resolution
strategy. However, Regulation (EU) No 806/2014 allows the Board to use other
resolution tools, namely those relying on the transfer of the business of the institution
under resolution to a private purchaser or to a bridge institution. It should therefore be
specified that, in case the resolution plan envisages the use of the sale of business tool
or of the bridge institution tool and the resolution entity’s exit from the market, the
Board should determine the level of the MREL for the resolution entity concerned on
the basis of the specificities of those resolution tools and of the different loss-
absorbing and recapitalisation needs those tools entail.
(10) The level of the MREL for resolution entities is the sum of the amount of the losses
expected in resolution and the recapitalisation amount that enables the resolution
entity to continue to comply with its conditions for authorisation and enabling it to
pursue its activities for an appropriate period. Certain preferred resolution strategies
entail the transfer of assets, rights and liabilities to a recipient and market exit, in
particular the sale of business tool. In those cases, the objectives pursued by the
recapitalisation component might not apply to the same extent as in the case of an
open-bank bail-in strategy, because the Board will not be required to ensure that the
29
Regulation (EU) 2019/876 of the European Parliament and of the Council of 20 May 2019 amending
Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements
for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central
counterparties, exposures to collective investment undertakings, large exposures, reporting and
disclosure requirements, and Regulation (EU) No 648/2012 (OJ L 150, 7.6.2019, p. 1).
30
Regulation (EU) 2019/877 of the European Parliament and of the Council of 20 May 2019 amending
Regulation (EU) No 806/2014 as regards the loss-absorbing and recapitalisation capacity of credit
institutions and investment firms (OJ L 150, 7.6.2019, p. 226).
31
Directive (EU) 2019/879 of the European Parliament and of the Council of 20 May 2019 amending
Directive 2014/59/EU as regards the loss-absorbing and recapitalisation capacity of credit institutions
and investment firms and Directive 98/26/EC (OJ L 150, 7.6.2019, p. 296).
EN 24 EN
resolution entity restores compliance with its own funds requirements after resolution
action. Nevertheless, the losses in such cases are expected to exceed the resolution
entity’s own funds requirements. It is therefore appropriate to lay down that the level
of the MREL of those resolution entities continues to include a recapitalisation amount
that is adjusted in a way which is proportionate to the resolution strategy.
(11) Where the resolution strategy envisages the use of resolution tools other than bail-in,
the recapitalisation needs of the entity concerned will generally be smaller after
resolution than in case of open bank bail-in. The calibration of the MREL in such a
case should take that aspect into account when estimating the recapitalisation
requirement. Therefore, when adjusting the level of the MREL for resolution entities
the resolution plan of which envisages the sale of business tool or the bridge institution
tool and its exit from the market, the Board should take into account the features of
those tools, including the expected perimeter of the transfer to the private purchaser or
to the bridge institution, the types of instruments to be transferred, the expected value
and marketability of those instruments, and the design of the preferred resolution
strategy, including the complementary use of the asset separation tool. Since the
resolution authority has to decide on a case by case basis on any possible use in
resolution of funds from the deposit guarantee scheme and since such decision cannot
be assumed with certainty ex ante, the Board should not consider the potential
contribution of the deposit guarantee scheme (in resolution when calibrating the level
of the MREL.
(12) It is necessary to ensure equal incentives to build sufficient amounts of MREL for
institutions and entities that would be subject to transfer strategies both in and outside
resolution. The setting of the level of the MREL for institutions and entities that may
be subject to measures in the context of national insolvency proceedings pursuant to
Article 11(5) of Directive 2014/49/EU of the European Parliament and of the
Council32
should therefore follow the same rules as those applicable to the setting of
the MREL for resolution entities whose preferred resolution strategy provides for the
sale of business or transfer to a bridge institution leading to its exit from the market.
(13) Pursuant to Article 4 of Council Regulation (EU) No 1024/201333
, the ECB is
competent to carry out supervisory tasks in relation to early intervention. It is
necessary to reduce the risks stemming from diverging transpositions into national
laws of the early intervention measures in Directive 2014/59/EU and to facilitate the
effective and consistent application by the ECB of its powers to take early intervention
measures. Those early intervention measures were created to enable competent
authorities to remedy the deterioration of the financial and economic situation of an
institution or entity and to reduce, to the extent possible, the risk and impact of a
possible resolution. However, due to a lack of certainty regarding the triggers for the
application of those early intervention measures and partial overlaps with supervisory
measures, early intervention measures have seldom been used. The provisions of
Directive 2014/59/EU concerning early intervention measures should therefore be
mirrored in Regulation (EU) No 806/2014, thereby ensuring a single and directly
applicable legal tool for the ECB, and the conditions for the application of those early
32
Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit
guarantee schemes (OJ L 173, 12.6.2014, p. 149).
33
Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European
Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287,
29.10.2013, p. 63).
EN 25 EN
intervention measures should be simplified and further specified. To dispel
uncertainties concerning the conditions and timing for the removal of the management
body and the appointment of temporary administrators, those measures should be
explicitly identified as early intervention measures and their application should be
subject to the same triggers. At the same time, the ECB should be required to select
the appropriate measures to address a specific situation in compliance with the
principle of proportionality. To enable the ECB to take into account reputational risks
or risks related to money laundering or information and communication technology,
the ECB should assess the conditions for the application of early intervention
measures not only on the basis of quantitative indicators, including capital or liquidity
requirements, level of leverage, non-performing loans or concentration of exposures,
but also on the basis of qualitative triggers.
(14) It is necessary to ensure that the Board is able to prepare for the possible resolution of
an institution or entity. The ECB or the relevant national competent authority should
therefore inform the Board of the deterioration of the financial condition of an
institution or entity sufficiently early, and the Board should have the necessary powers
for the implementation of preparatory measures. Importantly, to enable the Board to
react as swiftly as possible to a deterioration of the situation of an institution or entity,
the prior application of early intervention measures should not be a condition for the
Board to make arrangements for the marketing of the institution or entity or to request
information to update the resolution plan and prepare the valuation. To ensure a
consistent, coordinated, effective and timely reaction to the deterioration of the
financial situation of an institution or entity and to prepare properly for a possible
resolution, it is necessary to enhance the interaction and coordination between the
ECB, the national competent authorities and the Board. As soon as an institution or
entity meets the conditions for application of early intervention measures, the ECB,
the national competent authorities and the Board should increase their exchanges of
information, including provisional information, and monitor the financial situation of
the institution or entity jointly.
(15) It is necessary to ensure timely action and early coordination between the Board and
the ECB, or the relevant national competent authority, with respect to less significant
cross-border groups when an institution or entity is still a going concern but where
there is a material risk that that institution or entity may fail. The ECB or the relevant
national competent authority should therefore notify the Board as early as possible of
such risk. That notification should contain the reasons for the assessment of the ECB
or of the relevant national competent authority and an overview of the alternative
private sector measures, supervisory action or early intervention measures that are
available to prevent the failure of the institution or entity within a reasonable
timeframe. Such early notification should not prejudice the procedures to determine
whether the conditions for resolution are met. The prior notification by the ECB or by
the relevant national competent authority to the Board of a material risk that an
institution or entity is failing or likely to fail should not be a condition for a subsequent
determination that an institution or entity is actually failing or likely to fail. Moreover,
if at a later stage the institution or entity is assessed to be failing or likely to fail and
there are no alternative solutions to prevent such failure within a reasonable
timeframe, the Board has to take a decision whether to take resolution action. In such a
case, the timeliness of the decision to apply resolution action to an institution or entity
can be fundamental to the successful implementation of the resolution strategy, in
particular because an earlier intervention in the institution or entity can contribute to
ensuring sufficient levels of loss absorption capacity and liquidity to execute that
EN 26 EN
strategy. It is therefore appropriate to enable the Board to assess, in close cooperation
with the ECB or the relevant national competent authority, what constitutes a
reasonable timeframe to implement alternative measures to avoid the failure of the
institution or entity. To ensure a timely outcome and to enable the Board to prepare
properly for the potential resolution of the institution or entity, the Board and the ECB,
or the relevant national competent authority, should meet regularly, and the Board
should decide on the frequency of those meetings considering the circumstances of the
case.
(16) To cover material infringements of prudential requirements, it is necessary to further
specify the conditions for determining that parent undertakings, including holding
companies, are failing or likely to fail. An infringement of those requirements by a
parent undertaking should be material where the type and extent of such infringement
is comparable with an infringement that, if committed by a credit institution, would
have justified the withdrawal of the authorisation by the competent authority in
accordance with Article 18 of Directive 2013/36/EU.
(17) The resolution framework is meant to be applied to potentially any institution or
entity, irrespective of its size and business model, if the tools available under national
law are not adequate to manage its failure. To ensure such outcome, the criteria to
apply the public interest assessment to a failing institution or entity should be
specified.
(18) The assessment of whether the resolution of an institution or entity is in the public
interest should reflect the consideration that depositors are better protected when
deposit guarantee scheme funds are used more efficiently and the losses for those
funds are minimised. Therefore, in the public interest assessment, the resolution
objective of protecting depositors should be considered better achieved in resolution if
opting for insolvency would be more costly for the deposit guarantee scheme.
(19) The assessment of whether the resolution of an institution or entity is in the public
interest should also reflect, to the extent possible, the difference between, on the one
hand, funding provided through industry-funded safety nets (resolution financing
arrangements or deposit guarantee schemes) and, on the other hand, funding provided
by Member States from taxpayers’ money. Funding provided by Member States bears
a higher risk of moral hazard and a lower incentive for market discipline. Therefore,
when assessing the objective of minimising reliance on extraordinary public financial
support, the Board should find funding through the resolution financing arrangements
or the deposit guarantee scheme, preferable to funding through an equal amount of
resources from the budget of Member States.
(20) To ensure that the resolution objectives are attained in the most effective way, the
outcome of the public interest assessment should be negative only where the winding
up of the failing institution or entity under normal insolvency proceedings would
achieve the resolution objectives more effectively and not only to the same extent as
resolution.
(21) In light of the experience acquired in the implementation of Directive 2014/59/EU,
Regulation (EU) No 806/2014 and Directive 2014/49/EU, it is necessary to specify
further the conditions under which measures of a precautionary nature that qualify as
extraordinary public financial support may exceptionally be granted. To minimise
distortions of competition arising from differences in nature of deposit guarantee
schemes in the Union, interventions of such schemes in the context of preventive
measures complying with the requirements laid down in Directive 2014/49/EU that
EN 27 EN
qualify as extraordinary public financial support should exceptionally be allowed
where the beneficiary institution or entity does not meet any of the conditions for
being deemed as failing or likely to fail. It should be ensured that precautionary
measures are taken sufficiently early. The ECB currently bases its consideration that
an institution or entity is solvent, for the purposes of precautionary recapitalisation, on
a forward-looking assessment for the following 12 months of whether the institution or
entity can comply with the own funds requirements set out in Regulation (EU) No
575/2013 or in Regulation (EU) 2019/2033, and the additional own funds requirement
laid down in Directive 2013/36/EU or Directive (EU) 2019/2034. That practice should
be laid down in Regulation (EU) No 806/2014. Moreover, measures to provide relief
for impaired assets, including asset management vehicles or asset guarantee schemes,
can prove effective and efficient in addressing causes of possible financial distress
faced by institutions and entities and preventing their failure and could therefore
constitute relevant precautionary measures. It should therefore be specified that such
precautionary measures can take the form of impaired asset measures.
(22) To preserve market discipline, protect public funds and avoid distortions of
competition, precautionary measures should remain the exception and only be applied
to address serious disturbances in the market or to preserve financial stability.
Moreover, precautionary measures should not be used to address incurred or likely
losses. The most reliable instrument to identify incurred or likely to be incurred losses
is an asset quality review by the ECB, the European Supervisory Authority (European
Banking Authority) (EBA), established by Regulation (EU) No 1093/2010 of the
European Parliament and of the Council34
or national competent authorities. The ECB
and national competent authorities should use such a review to identify incurred or
likely to be incurred losses if such review can be carried out within a reasonable
timeframe. Where that is not possible, the ECB and national competent authorities
should identify incurred or likely to be incurred losses in the most reliable way
possible under the prevailing circumstances, based on on-site inspections where
appropriate.
(23) Precautionary recapitalisation is aimed at supporting viable institutions and entities
identified as likely to encounter temporary difficulties in the near future and to prevent
their situation from deteriorating further. To avoid that public subsidies are granted to
businesses that are already unprofitable when the support is granted, precautionary
measures granted in the form of acquisition of own funds instruments or other capital
instruments or through impaired asset measures should not exceed the amount
necessary to cover capital shortfalls as identified in the adverse scenario of a stress test
or equivalent exercise. To ensure that public financing is ultimately discontinued,
those precautionary measures should also be limited in time and contain a clear
timeline for their termination (exit strategy). Perpetual instruments, including
Common Equity Tier 1 capital, should only be used in exceptional circumstances and
be subject to certain quantitative limits because by their nature they are not well suited
for compliance with the condition of temporariness.
(24) Precautionary measures should be limited to the amount that the institution or entity
would need to maintain its solvency in case of an adverse scenario event as determined
in a stress test or equivalent exercise. In the case of precautionary measures in the
34
Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010
establishing a European Supervisory Authority (European Banking Authority), amending Decision No
716/2009/EC and repealing Commission Decision 2009/78/EC (OJ L 331, 15.12.2010, p. 12).
EN 28 EN
form of impaired asset measures, the receiving institution or entity should be able to
use that amount to cover losses on the transferred assets or in combination with an
acquisition of capital instruments, provided that the overall amount of the shortfall
identified is not exceeded. It is also necessary to ensure that such precautionary
measures in the form of impaired asset measures comply with existing State aid rules
and best practices, that they restore the institution or entity's long-term viability, that
State aid is limited to the minimum necessary and that distortions of competition are
avoided. For those reasons, the authorities concerned should, in case of precautionary
measures in the form of impaired asset measures, take into account the specific
guidance, including the AMC Blueprint35
and the Communication on Tackling Non-
Performing Loans36
. Those precautionary measures in the form of impaired asset
measures should also always be subject to the overriding condition of temporariness.
Public guarantees granted for a specified period in relation to the impaired assets of
the institution or entity concerned are expected to ensure better compliance with the
temporariness condition than transfers of such assets to a publicly supported entity. To
ensure the market exit of institutions and entities that prove not to be viable, despite
the support received, it is necessary to lay down that non-compliance by the institution
or entity concerned with the terms of the support measures specified at the time such
measures were granted is to result in the institution or entity concerned being
considered failing or likely to fail.
(25) It is important to ensure swift and timely resolution action by the Board where such
action involves the granting of State aid or Fund aid. It is therefore necessary to enable
the Board to adopt the resolution scheme concerned before the Commission has
assessed whether such aid is compatible with the internal market. However, to ensure
the good functioning of the internal market in such a scenario, resolution schemes
involving the granting of State aid or Fund aid should ultimately remain subject to the
Commission approving such aid. To enable the Commission to assess as early as
practicable whether the Fund aid is compatible with the single market, and to ensure a
smooth flow of information, it is also necessary to lay down that the Board and the
Commission should promptly share all information necessary regarding the possible
use of Fund aid and to provide for specific rules on when and what information the
Board should provide to the Commission in order to inform the Commission’s
assessment of Fund aid compatibility.
(26) The procedure governing the entry into resolution and the procedure governing the
decision to apply the write down and conversion powers are similar. It is therefore
appropriate to align the respective tasks of the Board and of either the ECB or the
national competent authority, as relevant, when, on the one hand, they assess whether
the conditions for the application of the write down and conversion powers are
present, and, on the other hand, when they assess the conditions for adopting a
resolution scheme.
(27) It is possible that resolution action is to be applied to a resolution entity that is the
head of a resolution group, while write down and conversion powers are to be applied
to another entity of the same group. Interdependencies between such entities,
including the existence of consolidated capital requirements to be restored and the
need to activate loss upstream and capital downstream mechanisms, may make it
challenging to assess the loss absorption and recapitalisation needs for each entity
35
COM(2018) 133 final.
36
COM(2020) 822 final.
EN 29 EN
separately, and thus to determine the necessary amounts to be written down and
converted for each entity. The procedure for the application of the power to write
down and convert capital instruments and eligible liabilities in those situations should
therefore be specified, whereby the Board should take such interdependencies into
account. For that purpose, where one entity meets the conditions for the application of
the write down and conversion power and another entity within the same group meets
at the same time the conditions for resolution, the Board should adopt a resolution
scheme covering both entities.
(28) To increase legal certainty, and in view of the potential relevance of liabilities which
may arise from future uncertain events, including the outcome of litigations pending at
the time of resolution, it is necessary to lay down which treatment those liabilities
should receive for the application of the bail-in tool. The guiding principles in that
respect should be those provided in the accounting rules, and particularly the
accounting rules laid down in the International Accounting Standard 37 as adopted by
Commission Regulation (EC) No 1126/200837
. On that basis, resolution authorities
should draw a distinction between provisions and contingent liabilities. Provisions are
liabilities that relate to a probable outflow of funds and which can be reliably
estimated. Contingent liabilities are not recognised as accounting liabilities as they
relate to an obligation which cannot be considered probable at the time of the estimate
or cannot be reliably estimated.
(29) Since provisions are accounting liabilities, it should be specified that such provisions
are to be treated the same way as other liabilities. Such provisions should be bail-
inable, unless they meet one of the specific criteria for being excluded from the scope
of the bail-in tool. Given the potential relevance of those provisions in resolution and
to ensure certainty in the application of the bail-in tool, it should be specified that
provisions are part of the bail-inable liabilities and that, as a result, the bail-in tool
applies to them.
(30) According to accounting principles, contingent liabilities cannot be recognised as
liabilities and should therefore not be bail-inable. It is however necessary to ensure
that a contingent liability that would arise from an event that is improbable or cannot
be reliably estimated at the time of resolution does not impair the effectiveness of the
resolution strategy and in particular of the bail-in tool. To achieve that objective, the
valuer should, as part of the valuation for the purposes of resolution, assess contingent
liabilities that are included in the balance sheet of the institution or entity under
resolution and quantify the potential value of those liabilities to the valuer’s best
abilities. To ensure that, after the resolution process, the institution or entity can
sustain sufficient market confidence for an appropriate amount of time, the valuer
should take into account that potential value when establishing the amount by which
bail-inable liabilities need to be written down or converted to restore the capital ratios
of the institution under resolution. In particular, the resolution authority should apply
its conversion powers to bail-inable liabilities to the extent necessary to ensure that the
recapitalisation of the institution under resolution is sufficient to cover potential losses
which may be caused by a liability that may arise because of an improbable event.
When assessing the amount to be written down or converted, the resolution authority
should carefully consider the impact of the potential loss on the institution under
37
Commission Regulation (EC) No 1126/2008 of 3 November 2008 adopting certain international
accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament
and of the Council (OJ L 320, 29.11.2008, p. 1).
EN 30 EN
resolution based on a number of factors, including the likelihood of the event
materialising, the time frame for its materialisation and the amount of the contingent
liability.
(31) In certain circumstances, after the Single Resolution Fund has provided a contribution
up to the maximum of 5 % of the institution or entity’s total liabilities including own
funds, the Board may use additional sources of funding to further support their
resolution action. It should be specified more clearly in which circumstances the
Single Resolution Fund may provide further support where all liabilities with a priority
ranking lower than deposits that are not mandatorily or discretionarily excluded from
bail-in have been written down or converted in full.
(32) The success of resolution hinges on timely access for the Board to relevant
information from the institutions and entities that fall under the responsibility of the
Board and from public institutions and authorities. Within that context, the Board
should be able to access information of a statistical nature which the ECB collected
under its central bank function, in addition to the information available to the ECB as a
supervisor within the framework of Regulation (EU) No 1024/2013. Pursuant to
Council Regulation (EC) No 2533/9838
, the Board should ensure the physical and
logical protection of confidential statistical information and should require
authorisation to the ECB for the further transmission that may be necessary for the
execution of the tasks of the Board. As information related to the number of customers
for which an institution or entity is the only or principal banking partner, which is held
by the centralised automated mechanisms set up pursuant to Directive (EU) 2015/849
of the European Parliament and of the Council39
, may be necessary to carry out the
public interest assessment, the Board should be able to receive that information on a
case-by-case basis. The exact timing of indirect access to information by the Board
should also be specified. In particular, when the relevant information is available to an
institution or authority which is obliged to cooperate with the Board when the Board
requests information, such institution or authority should provide that information to
the Board. If, at that time, the information is not available, irrespective of the reason
for this unavailability, the Board should be able to obtain that information from the
natural or legal person that has that information through the national resolution
authorities or directly, after having informed those national resolution authorities
thereof. It should also be possible for the Board to specify the procedure under, and
the form in which it should receive information from financial entities to ensure that
such information is the most suited to its needs, including virtual data rooms. In
addition, to ensure the broadest cooperation possible with all entities susceptible of
holding data relevant to the Board, and necessary for the performance of the tasks
conferred on it, and to avoid duplicating requests to institutions and entities, the public
institutions and authorities with which the Board should be able to cooperate, check
the availability of information and exchange information, should include the members
of the European System of Central Banks, the relevant DGSs, the European Systemic
Risk Board, the European Supervisory Authorities and the European Stability
38
Council Regulation (EC) No 2533/98 of 23 November 1998 concerning the collection of statistical
information by the European Central Bank (OJ L 318, 27.11.1998, p.8).
39
Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the
prevention of the use of the financial system for the purposes of money laundering or terrorist
financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and
repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission
Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73).
EN 31 EN
Mechanism. Finally, to ensure a timely intervention of financial arrangements
contracted for the Single Resolution Fund in case of need, the Board should inform the
Commission and the ECB as soon as it considers that it may be necessary to activate
such financial arrangements and provide the Commission and the ECB with all
information necessary for the performance of their tasks in respect of such financial
arrangements.
(33) Article 86(1) of Directive 2014/59/EU provides that normal insolvency proceedings in
relation to institutions and entities within the scope of that Directive are not to be
commenced except at the initiative of the resolution authority and that a decision
placing an institution or an entity into normal insolvency proceedings is to be taken
only with the consent of the resolution authority. That provision is not reflected in
Regulation (EU) No 806/2014. In line with the division of tasks specified in
Regulation (EU) No 806/2014, national resolution authorities should consult the Board
before they act in accordance with Article 86(1) of Directive 2014/59/EU for
institutions and entities that are under the direct responsibility of the Board.
(34) The selection criteria for the position of the Vice-Chair of the Board are the same as
those for the selection of the Chair and other full-time members of the Board. It is
therefore appropriate to provide also the Vice-Chair of the Board with the same voting
rights as those enjoyed by the Chair and the full-time members of the Board.
(35) In order to ensure institutional continuity and the build-up of institutional expertise,
the Chair, the Vice-Chair and the other full-time members of the Board should be
allowed to serve for two consecutive terms in their respective positions. It should
therefore be possible to renew their term of office for a five-year term, based on an
evaluation by the Commission of the discharge of their duties during the first term.
(36) To allow for a preliminary assessment by the Board in its plenary session of the draft
preliminary budget before the Chair presents its final draft, the period for the Chair to
put forward an initial proposal for the annual budget of the Board should be extended.
(37) After the initial build-up period of the Single Resolution Fund referred to in
Article 69(1) of Regulation (EU) No 806/2014, its available financial means may face
slight decreases below its target level, in particular resulting from an increase in
covered deposits. The amount of the ex-ante contributions likely to be called in those
circumstances is thus likely to be small. It may therefore be possible that, in some
years, the amount of those ex ante contributions is no longer commensurate to the cost
of the collection of those contributions. The Board should therefore be able to defer
the collection of the ex ante contributions for one or more years until the amount to be
collected reaches an amount that is proportionate to the cost of the collection process,
provided that such deferral does not materially affect the capacity of the Board to use
the Single Resolution Fund.
(38) Irrevocable payment commitments are one of the components of the available
financial means of the Single Resolution Fund. It is therefore necessary to specify the
circumstances in which those payment commitments may be called, and the applicable
procedure when terminating the commitments in case an institution or entity ceases to
be subject to the obligation to pay contributions to the Single Resolution Fund. In
addition, to provide more transparency and certainty with respect to the share of
irrevocable payment commitments in the total amount of ex ante contributions to be
raised, the Board should determine such share on an annual basis, subject to the
applicable limits.
EN 32 EN
(39) The maximum annual amount of extraordinary post contributions to the Single
Resolution Fund that are allowed to be called, is currently limited to three times the
amount of the ex ante contributions. After the initial build-up period referred to in
Article 69(1) of Regulation (EU) No 806/2014, such ex ante contributions will depend
only, in circumstances other than the use of the Single Resolution Fund, on variations
in the level of covered deposits and are therefore likely to become small. Basing the
maximum amount of extraordinary ex post contributions on ex ante contributions
could then have the effect of drastically limiting the possibility for the Single
Resolution Fund to raise ex post contributions, thereby reducing its capacity for action.
To avoid such an outcome, a different limit should be laid down and the maximum
amount of extraordinary ex post contributions allowed to be called should be set at
three times one-eighth of the target level of the Fund.
(40) The Single Resolution Fund can be used to support the application of the sale of
business tool or of the bridge institution tool, whereby a set of assets, rights, and
liabilities of the institution under resolution are transferred to a recipient. In that case,
the Board may have a claim against the residual institution or entity in its subsequent
winding up under normal insolvency proceedings. That may occur where the Single
Resolution Fund is used in connection to losses that creditors would otherwise have
borne, including under the form of guarantees to assets and liabilities, or coverage of
the difference between the transferred assets and liabilities. To ensure that the
shareholders and creditors left behind in the residual institution or entity effectively
absorb the losses of the institution under resolution and improve the possibility of
repayments in insolvency to the Board, those claims of the Board against the residual
institution or entity, and claims that arise from reasonable expenses properly incurred
by the Board, should benefit from the same priority ranking in insolvency as the
ranking of the claims of the national resolution financing arrangements in each
participating Member State, which should be higher than the priority ranking of
deposits and of deposit guarantee schemes. Since compensations paid to shareholders
and creditors from the Single Resolution Fund due to breaches of the ‘no creditor
worse off’ principle aim to compensate for the results of resolution action, those
compensations should not give rise to claims of the Board.
(41) Since some of the provisions of Regulation (EU) No 806/2014 concerning the role that
deposit guarantee schemes may play in resolution are similar to those of Directive
2014/59/EU, the amendments made to those provisions in Directive 2014/59/EU by
[OP please insert the number of the directive amending Directive 2014/59/EU] should
be mirrored in Regulation (EU) No 806/2014.
(42) Transparency is key to ensuring market integrity, market discipline, and the protection
of investors. To ensure that the Board is able to foster, and participate in, efforts
towards greater transparency, the Board should be allowed to disclose information that
result from its own analyses, assessments and determinations, including its
resolvability assessments, where such disclosure would not undermine the protection
of the public interest as regards financial, monetary or economic policy and where
there is an overriding public interest in the disclosure.
(43) Regulation (EU) No 806/2014 should therefore be amended accordingly.
(44) To ensure consistency, the amendments to Regulation (EU) No 806/2014 that are
similar to the amendments to Directive 2014/59/EU by … [OP, please insert the
number of the directive amending Directive 2014/59/EU] should be applied from the
same date as the date for the transposition of … [OP, please insert the number of the
EN 33 EN
directive amending Directive 2014/59/EU], which is … [OP please insert the date = 18
months from the date of entry into force of this amending Regulation]. However, there
is no reason to delay the application of those amendments to Regulation (EU)
No 806/2014 that relate exclusively to the functioning of the Single Resolution
Mechanism. Those amendments should therefore apply from … [OP please insert the
date = 1 month from the date of entry into force of this amending Regulation].
(45) Since the objectives of this Regulation, namely to improve the effectiveness and
efficiency of the recovery and resolution framework for institutions and entities,
cannot be sufficiently achieved by the Member States due to the risks that diverging
national approaches might entail for the integrity of the single market but can rather,
by amending rules that are already set at Union level, be better achieved at Union
level, the Union may adopt measures, in accordance with the principle of subsidiarity
as set out in Article 5 of the Treaty on the European Union. In accordance with the
principle of proportionality, as set out in that Article, this Regulation does not go
beyond what is necessary in order to achieve those objectives,
HAVE ADOPTED THIS REGULATION:
Article 1
Amendments to Regulation (EU) No 806/2014
Regulation (EU) No 806/2014 is amended as follows:
(1) Article 3(1) is amended as follows:
(a) point (24a) is replaced by the following:
‘(24a) ‘resolution entity’ means a legal person established in a participating
Member State, which the Board or the national resolution authority, in
accordance with Article 8 of this Regulation, has identified as an entity in
respect of which the resolution plan provides for resolution action;’;
(b) the following points (24d) and (24e) are inserted:
‘(24d) ‘non-EU G-SII’ means a non-EU G-SII as defined in Article 4(1),
point (134), of Regulation (EU) No 575/2013;
(24e) ‘G-SII entity’ means a G-SII entity as defined in Article 4(1), point
(136), of Regulation (EU) No 575/2013;’;
(c) point (49) is replaced by the following:
‘(49) ‘bail-inable liabilities’ means the liabilities, including those liabilities that
give rise to accounting provisions, and capital instruments that do not qualify
as Common Equity Tier 1, Additional Tier 1 or Tier 2 instruments of an entity
as referred to in Article 2 and that are not excluded from the scope of the bail-
in tool pursuant to Article 27(3);’;
(2) in Article 4, the following paragraph 1a is inserted:
‘1a. Member States shall inform the Board as soon as possible of their request to
enter into a close cooperation with the ECB pursuant to Article 7 of Regulation (EU)
No 1024/2013.
Following the notification made pursuant to Article 7 of Regulation (EU)
No 1024/2013 and before close cooperation is established, Member States shall
provide all information about the entities and groups established in their territory that
EN 34 EN
the Board may require to prepare for the tasks conferred on it by this Regulation and
the Agreement.’;
(3) Article 7 is amended as follows:
(a) in paragraph 3, fourth subparagraph, the first sentence is replaced by the
following:
‘When performing the tasks referred to in this paragraph, the national
resolution authorities shall apply the relevant provisions of this Regulation.
Any references to the Board in Article 5(2), Article 6(5), Article 8(6), (8), (12)
and (13), Article 10(1) to (10), Article 10a, Articles 11 to 14, Article 15(1), (2)
and (3), Article 16, Article 18(1), (1a), (2) and (6), Article 20, Article 21(1) to
(7), Article 21(8), second subparagraph, Article 21(9) and (10), Article 22(1),
(3) and (6), Articles 23 and 24, Article 25(3), Article 27(1) to (15), Article
27(16), second subparagraph, second sentence, third subparagraph, and fourth
subparagraph, first, third and fourth sentences, and Article 32, shall be read as
references to the national resolution authorities with regard to groups and
entities referred to in the first subparagraph of this paragraph.’;
(b) paragraph 5 is amended as follows:
(i) the words ‘Article 12(2)’ are replaced by the words ‘Article 12(3)’;
(ii) the following subparagraph is added:
‘After the notification referred to in the first subparagraph has taken
effect, participating Member States may decide that the responsibility for
performing the tasks related to entities and groups established in their
territory, other than those referred to in paragraph 2, shall be returned to
the national resolution authorities, in which case the first subparagraph
shall no longer apply. Member States that intend to make use of that
option shall notify the Board and the Commission thereof. That
notification shall take effect from the day of its publication in the Official
Journal of the European Union.’;
(4) Article 8 is amended as follows:
(a) in paragraph 2, the following subparagraph is added:
‘The Board may instruct the national resolution authorities to exercise the
powers referred to in Article 10(8) of Directive 2014/59/EU. The national
resolution authorities shall implement the instructions of the Board in
accordance with Article 29 of this Regulation.’;
(b) in paragraph 10, the following subparagraph is added:
‘The identification of the measures to be taken in respect of the subsidiaries
referred to in the first subparagraph, point (b), that are not resolution entities
may be subject to a simplified approach by the Board if such approach would
not negatively affect the resolvability of the group, taking into account the size
of the subsidiary, its risk profile, the absence of critical functions and the group
resolution strategy.’;
(c) the following paragraph 14 is added:
‘14. The Board shall not adopt resolution plans for the entities and groups
referred to in paragraph 1 where Article 22(5) applies or where the entity or
EN 35 EN
group is being wound up in accordance with the applicable national law
pursuant to Article 32b of Directive 2014/59/EU.’;
(5) Article 10 is amended as follows:
(a) in paragraph 4, fourth subparagraph, the words ‘first subparagraph’ are
replaced by the words ‘third subparagraph’;
(b) in paragraph 7, the words ‘addressed to the institution or the parent
undertaking’ are replaced by the words ‘addressed to the entity or the parent
undertaking’ and the words ‘impact on the institution’s business model’ are
replaced by the words ‘impact on the entity’s or the group’s business model’;
(c) paragraph 10 is amended as follows:
(i) in the second subparagraph, the word ‘institution’ is replaced by the
words ‘entity concerned’;
(ii) in the third subparagraph, the word ‘institution’ is replaced by the word
‘entity’;
(iii) the following subparagraph is added:
‘If the measures proposed by the entity concerned effectively reduce or
remove the impediments to resolvability, the Board shall take a decision,
after having consulted the ECB or the relevant national competent
authority and, where appropriate, the designated macro-prudential
authority. That decision shall indicate that the measures proposed
effectively reduce or remove the impediments to resolvability and shall
instruct the national resolution authorities to require the institution, the
parent undertaking, or any subsidiary of the group concerned, to
implement the measures proposed.’;
(6) Article 10a is amended as follows:
(a) in paragraph 1, the introductory wording is replaced by the following:
‘1. Where an entity is in a situation where it meets the combined buffer
requirement when considered in addition to each of the requirements referred
to in Article 141a(1), points (a), (b) and (c), of Directive 2013/36/EU, but fails
to meet the combined buffer requirement when considered in addition to the
requirements referred to in Articles 12d and 12e of this Regulation when
calculated in accordance with Article 12a(2), point (a), of this Regulation, the
Board shall have the power, in accordance with paragraphs 2 and 3 of this
Article, to instruct the national resolution authority to prohibit an entity from
distributing more than the Maximum Distributable Amount related to the
minimum requirement for own funds and eligible liabilities ("M-MDA"),
calculated in accordance with paragraph 4 of this Article, through any of the
following actions:’;
(b) the following paragraph 7 is added:
‘7. Where an entity is not subject to the combined buffer requirement on the
same basis as the basis on which it is required to comply with the requirements
referred to in Articles 12d and 12e, the Board shall apply paragraphs 1 to 6 of
this Article on the basis of the estimation of the combined buffer requirement
in accordance with Commission Delegated Regulation (EU) 2021/1118*.
Article 128, fourth paragraph, of Directive 2013/36/EU shall apply.
EN 36 EN
The Board shall include the estimated combined buffer requirement referred to
in the first subparagraph in the decision determining the requirements referred
to in Articles 12d and 12e of this Regulation. The entity shall make the
estimated combined buffer requirement publicly available together with the
information referred to in Article 45i(3) of Directive 2014/59/EU.
______________________________
* Commission Delegated Regulation (EU) 2021/1118 of 26 March 2021
supplementing Directive 2014/59/EU of the European Parliament and of the
Council with regard to regulatory technical standards specifying the
methodology to be used by resolution authorities to estimate the requirement
referred to in Article 104a of Directive 2013/36/EU of the European Parliament
and of the Council and the combined buffer requirement for resolution entities
at the resolution group consolidated level where the resolution group is not
subject to those requirements under that Directive (OJ L 241, 8.7.2021, p. 1).’;
(7) in Article 12, the following paragraph 8 is added:
‘8. The Board shall be responsible for granting the permissions referred to in
Articles 77(2) and 78a of Regulation (EU) No 575/2013 to the entities referred to in
paragraph 1 of this Article. The Board shall address its decision to the entity
concerned.’;
(8) in Article 12a, paragraph 1 is replaced by the following:
‘1. The Board and national resolution authorities shall ensure that the entities referred
to in Article 12(1) and (3) meet, at all times, the requirements for own funds and
eligible liabilities where required by and as determined by the Board in accordance
with this Article and Articles 12b to 12i.’;
(9) Article 12c is amended as follows:
(a) in paragraphs 4 and 5, the word ‘G-SIIs’ is replaced by the words ‘G-SII
entities’;
(b) in paragraph 7, introductory wording, the words ‘paragraph 3’ are replaced by
the words ‘paragraph 4’, and the word ‘G-SIIs’ is replaced by the words ‘G-SII
entities’;
(c) paragraph 8 is amended as follows:
(i) in the first subparagraph, the word ‘G-SIIs’ is replaced by the words ‘G-
SII entities’;
(ii) in the second subparagraph, point (c), the word ‘G-SII’ is replaced by the
words ‘G-SII entity’;
(d) the following paragraph 10 is added:
‘10. The Board may permit resolution entities to comply with the requirements
referred to in paragraphs 4, 5 and 7 using own funds or liabilities as referred to
in paragraphs 1 and 3 when all of the following conditions are met:
(a) for entities that are G-SII entities or resolution entities that are subject to
Article 12d(4) or (5), the Board has not reduced the requirement referred
to in paragraph 4 of this Article, pursuant to the first subparagraph of that
paragraph;
EN 37 EN
(b) the liabilities referred to in paragraph 1 of this Article that do not meet
the condition referred to in Article 72b(2), point (d), of Regulation (EU)
No 575/2013 comply with the conditions set out in Article 72b(4), points
(b) to (e), of that Regulation.’;
(10) in Article 12d, paragraph 3, eight subparagraph, and paragraph 6, eight
subparagraph, the words ‘critical economic functions’ are replaced by the words
‘critical functions’;
(11) the following Article 12da is inserted:
‘Article 12da
Determination of the minimum requirement for own funds and eligible
liabilities for transfer strategies leading to market exit
1. When applying Article 12d to a resolution entity whose preferred resolution
strategy envisages primarily the use of the sale of business tool or the bridge
institution tool and its exit from the market, the Board shall set the recapitalisation
amount provided in Article 12d(3) in a proportionate way on the basis of the
following criteria, as relevant:
(a) the resolution entity’s size, business model, funding model and risk profile, and
the depth of the market in which the resolution entity operates;
(b) the shares, other instruments of ownership, assets, rights or liabilities to be
transferred to a recipient as identified in the resolution plan, taking into
consideration:
(i) the core business lines and critical functions of the resolution entity;
(ii) the liabilities excluded from bail-in pursuant to Article 27(3);
(iii) the safeguards referred to in Articles 73 to 80 of Directive 2014/59/EU;
(c) the expected value and marketability of the shares, other instruments of
ownership, assets, rights or liabilities of the resolution entity referred to in
point (b), taking into account:
(i) any material impediments to resolvability, identified by the resolution
authority, that are directly related to the application of the sale of
business tool or the bridge institution tool;
(ii) the losses resulting from the assets, rights or liabilities left in the residual
institution;
(d) whether the preferred resolution strategy envisages the transfer of shares or
other instruments of ownership issued by the resolution entity, or of all or part
of the assets, rights and liabilities of the resolution entity;
(e) whether the preferred resolution strategy envisages the application of the asset
separation tool.
2. Where the resolution plan provides that the entity is to be wound up under normal
insolvency proceedings or other equivalent national procedures and envisages the use
of the deposit guarantee scheme pursuant to Article 11(5) of Directive 2014/49/EU,
the Board shall also take into account paragraph 1 of this Article when carrying out
the assessment referred to in Article 12d(2a), second subparagraph, of this
Regulation.
EN 38 EN
3. The application of paragraph 1 shall not result in an amount that is higher than the
amount resulting from the application of Article 12d(3).’;
(12) in Article 12e(1), the words ‘G-SII or part of a G-SII’ are replaced by the words ‘G-
SII entity’;
(13) Article 12g is amended as follows:
(a) paragraph 1 is amended as follows:
(i) the second subparagraph is replaced by the following:
‘The Board, after having consulted the competent authorities, including
the ECB, may decide to apply the requirement laid down in this Article
to an entity as referred to in Article 2, point (b), and to a financial
institution as referred to in Article 2, point (c), that is a subsidiary of a
resolution entity but is not itself a resolution entity.’;
(ii) in the third subparagraph, the words ‘first subparagraph’ are replaced by
the words ‘first and second subparagraphs’;
(b) the following paragraph 4 is added:
‘4. Where, in accordance with the global resolution strategy, subsidiaries
established in the Union, or a Union parent undertaking and its subsidiary
institutions, are not resolution entities and the members of the European
resolution college, where established pursuant to Article 89 of Directive
2014/59/EU, agree with that strategy, subsidiaries established in the Union or,
on a consolidated basis, the Union parent undertaking, shall comply with the
requirement of Article 12a(1) by issuing the instruments referred to in
paragraph 2, points (a) and (b), of this Article to any of the following:
(a) their ultimate parent undertaking established in a third country;
(b) the subsidiaries of that ultimate parent undertaking that are established in
the same third country;
(c) other entities under the conditions set out in paragraph 2, points (a)(i) and
(b)(ii), of this Article.’;
(14) Article 12k is amended as follows:
(a) in paragraph 1, first subparagraph, the first sentence is replaced by the
following:
‘By way of derogation from Article 12a(1), the Board shall determine
appropriate transitional periods for entities to comply with the requirements in
Articles 12f or 12g, or with the requirements that result from the application of
Article 12c(4), (5) or (7), as appropriate.’;
(b) in paragraph 3, point (a), the words ‘the Board or the national resolution
authority’ are replaced by the words ‘the Board’;
(c) in paragraph 4, the words ‘G-SII’ are replaced by the words ‘G-SII or a non-
EU G-SII’;
(d) in paragraphs 5 and 6, the words ‘the Board and the national resolution
authorities’ are replaced by the words ‘the Board’;
(15) Article 13 is replaced by the following:
EN 39 EN
‘Article 13
Early intervention measures
1. The ECB may apply early intervention measures where an entity as referred to in
Article 7(2)(a) meets any of the following conditions:
(a) the entity meets the conditions referred to in Article 102 of Directive
2013/36/EU or in Article 16(1) of Regulation (EU) No 1024/2013 and either of
the following applies:
(i) the entity has not taken the remedial actions required by the ECB,
including the measures referred to in Article 104 of Directive
2013/36/EU, Article 16(2) of Regulation (EU) No 1024/2013 or Article
49 of Directive (EU) 2019/2034;
(ii) the ECB deems that remedial actions other than early intervention
measures are insufficient to address the problems due inter alia to a rapid
and significant deterioration of the financial condition of the entity;
(b) the entity infringes or is likely to infringe in the 12 months following the
assessment of the ECB the requirements laid down in Title II of Directive
2014/65/EU, in Articles 3 to 7, 14 to 17, or 24, 25 and 26 of Regulation (EU)
No 600/2014, or in Articles 12f or 12g of this Regulation.
The ECB may determine that the condition referred to in the first subparagraph, point
(a)(ii), is met without having previously taken other remedial actions, including the
exercise of the powers referred to in Article 104 of Directive 2013/36/EU or in
Article 16(2) of Regulation (EU) No 1024/2013.
2. For the purposes of paragraph 1, early intervention measures shall include the
following:
(a) the requirement for the management body of the entity to do either of the
following:
(i) to implement one or more of the arrangements or measures set out in the
recovery plan;
(ii) to update the recovery plan in accordance with Article 5(2) of Directive
2014/59/EU where the circumstances that led to the early intervention are
different from the assumptions set out in the initial recovery plan and to
implement one or more of the arrangements or measures set out in the
updated recovery plan within a specific timeframe;
(b) the requirement for the management body of the entity to convene or, if the
management body fails to comply with that requirement, convene directly, a
meeting of shareholders of the entity, and in both cases set the agenda and
require certain decisions to be considered for adoption by the shareholders;
(c) the requirement for the management body of the entity to draw up a plan, in
accordance with the recovery plan where applicable, for negotiation on
restructuring of debt with some or all of its creditors;
(d) the requirement to change the legal structure of the institution;
(e) the requirement to remove or replace the senior management or management
body of the entity in its entirety or with regard to individuals, in accordance
with Article 13a;
EN 40 EN
(f) the appointment of one or more temporary administrators to the entity, in
accordance with Article 13b.
3. The ECB shall choose the appropriate early intervention measures based on what
is proportionate to the objectives pursued, having regard to the seriousness of the
infringement or likely infringement and the speed of the deterioration in the financial
situation of the entity, among other relevant information.
4. For each of the measures referred to in paragraph 2, the ECB shall set a deadline
that is appropriate for completion of that measure and that enables the ECB to
evaluate its effectiveness.
5. Where a group includes entities established in participating Member States as well
as in non-participating Member States, the ECB shall represent the national
competent authorities of the participating Member States for the purposes of
consultation and cooperation with non-participating Member States in accordance
with Article 30 of Directive 2014/59/EU.
Where a group includes entities established in participating Member States and
subsidiaries established, or significant branches located, in non-participating Member
States, the ECB shall communicate any decisions or measures referred to in Articles
13 to 13c relevant to the group to the competent authorities or the resolution
authorities of the non-participating Member States, as appropriate.’;
(16) the following Articles 13a, 13b and 13c are inserted:
‘Article 13a
Replacement of the senior management or management body
For the purposes of Article 13(2), point (e), the new senior management or
management body, or individual members of those bodies, shall be appointed in
accordance with Union and national law and be subject to the approval of the ECB.
Article 13b
Temporary administrator
1. For the purposes of Article 13(2), point (f), the ECB may, based on what is
proportionate in the circumstances, appoint any temporary administrator to do either
of the following:
(a) temporarily replace the management body of the entity;
(b) work temporarily with the management body of the entity.
The ECB shall specify its choice under points (a) or (b) at the time of appointment of
the temporary administrator.
For the purposes of the first subparagraph, point (b), the ECB shall further specify at
the time of the appointment of the temporary administrator the role, duties and
powers of that temporary administrator and any requirements for the management
body of the entity to consult or to obtain the consent of the temporary administrator
prior to taking specific decisions or actions.
The ECB shall make public the appointment of any temporary administrator, except
where the temporary administrator does not have the power to represent the entity.
Any temporary administrator shall fulfil the requirements set out in Article 91(1), (2)
and (3) of Directive 2013/36/EU. The assessment by the ECB of whether the
EN 41 EN
temporary administrator complies with those requirements shall be an integral part of
the decision to appoint that temporary administrator.
2. The ECB shall specify the powers of the temporary administrator at the time of his
or her appointment, based on what is proportionate in the circumstances. Such
powers may include some or all of the powers of the management body of the entity,
under the statutes of the entity and under national law, including the power to
exercise some or all of the administrative functions of the management body of the
entity. The powers of the temporary administrator in relation to the entity shall
comply with the applicable company law.
3. The ECB shall specify the role and functions of the temporary administrator at the
time of appointment. Such role and functions may include all of the following:
(a) ascertaining the financial position of the entity;
(b) managing the business or part of the business of the entity to preserve or
restore its financial position;
(c) taking measures to restore the sound and prudent management of the business
of the entity.
The ECB shall specify any limits on the role and functions of the temporary
administrator at the time of his or her appointment.
4. The ECB shall have the exclusive power to appoint and remove any temporary
administrator. The ECB may remove a temporary administrator at any time and for
any reason. The ECB may vary the terms of appointment of a temporary
administrator at any time subject to this Article.
5. The ECB may require that certain acts of a temporary administrator be subject to
the prior consent of the ECB. The ECB shall specify any such requirements at the
time of appointment of the temporary administrator or at the time of any variation of
the terms of appointment of the temporary administrator.
In any case, the temporary administrator may exercise the power to convene a
general meeting of the shareholders of the entity and to set the agenda of such a
meeting only with the prior consent of the ECB.
6. At the request of the ECB, the temporary administrator shall draw up reports on
the financial position of the entity and on the acts performed in the course of his or
her appointment, at intervals set by the ECB, and in any case at the end of his or her
mandate.
7. The temporary administrator shall be appointed for maximum 1 year. That period
may be exceptionally renewed if the conditions for appointing the temporary
administrator continue to be met. The ECB shall determine those conditions and shall
justify any renewal of the appointment of the temporary administrator to the
shareholders.
8. Subject to this Article, the appointment of a temporary administrator shall not
prejudice the rights of the shareholders laid down in Union or national company law.
9. A temporary administrator appointed pursuant to paragraphs 1 to 8 of this Article
shall not be deemed to be a shadow director or a de facto director under national law.
EN 42 EN
Article 13c
Preparation for resolution
1. For the entities and groups referred to in Article 7(2), and the entities and groups
referred to in Article 7(4), point (b), and Article 7(5) where the conditions for the
application of those provisions are met, the ECB or national competent authorities
shall notify the Board without delay of any of the following:
(a) any of the measures referred to in Article 16(2) of Regulation (EU)
No 1024/2013 or Article 104(1) of Directive 2013/36/EU they require an entity
or group to take;
(b) where supervisory activity shows that the conditions laid down in Article 13(1)
of this Regulation or Article 27(1) of Directive 2014/59/EU are met in relation
to an entity or group, the assessment that those conditions are met, irrespective
of any early intervention measure;
(c) the application of any of the early intervention measures referred to in Article
13 of this Regulation or Article 27 of Directive 2014/59/EU.
The Board shall notify the Commission of notification it has received pursuant to the
first subparagraph.
The ECB or the relevant national competent authority shall closely monitor, in
cooperation with the Board, the situation of the entities and groups referred to in the
first subparagraph and their compliance with the measures referred to in the first
subparagraph, point (a), that aim to address a deterioration in the situation of those
entities and groups and with the early intervention measures referred to in the first
subparagraph, point (c).
2. The ECB or the relevant national competent authority shall notify the Board as
early as possible where they consider that there is a material risk that one or more of
the circumstances referred to in Article 18(4) would apply in relation to an entity as
referred to in Article 7(2), or an entity as referred to in Article 7(4), point (b), and
Article 7(5) where the conditions for the application of those provisions are met.
That notification shall contain:
(a) the reasons for the notification;
(b) an overview of the measures which would prevent the failure of the entity
within a reasonable timeframe, their expected impact on the entity as regards
the circumstances referred to in Article 18(4) and the expected timeframe for
the implementation of those measures.
After having received the notification referred to in the first subparagraph, the Board
shall assess, in close cooperation with the ECB or the relevant national competent
authority, what constitutes a reasonable timeframe for the purposes of the assessment
of the condition referred to in Article 18(1), point (b), taking into account the speed
of the deterioration of the conditions of the entity, the need to implement effectively
the resolution strategy and any other relevant considerations. The Board shall
communicate that assessment to the ECB or to the relevant national competent
authority as early as possible.
Following the notification referred to in the first subparagraph, the ECB or the
relevant national competent authority and the Board shall, in close cooperation,
monitor the situation of the entity, the implementation of the any relevant measures
EN 43 EN
within their expected timeframe and any other relevant developments. For that
purpose, the Board and the ECB or the relevant national competent authority shall
meet regularly, with a frequency set by the Board considering the circumstances of
the case. The ECB or the relevant national competent authority and the Board shall
provide each other with any relevant information without delay.
The Board shall notify the Commission of any information it has received pursuant
to the first subparagraph.
3. The ECB or the relevant national competent authority shall provide the Board with
all the information requested by the Board that is necessary for all of the following:
(a) updating the resolution plan and preparing for the possible resolution of an
entity as referred to in Article 7(2), or an entity as referred to in Article 7(4),
point (b), and Article 7(5) where the conditions for the application of those
provisions are met;
(b) carrying out the valuation referred to in Article 20(1) to (15).
Where such information is not already available to the ECB or the national
competent authorities, the Board and the ECB and such national competent
authorities shall cooperate and coordinate to obtain that information. For that
purpose, the ECB and the national competent authorities shall have the power to
require the entity to provide such information, including through on-site inspections,
and to provide that information to the Board.
4. The Board shall have the power to market to potential purchasers, or make
arrangements for such marketing, the entity referred to in Article 7(2), or the entity
referred to in Article 7(4), point (b), and Article 7(5) where the conditions for the
application of those provisions are met or require the entity to do so, for the
following purposes:
(a) to prepare for the resolution of that entity, subject to the conditions specified in
Article 39(2) of Directive 2014/59/EU and the requirements of professional
secrecy laid down in Article 88 of this Regulation;
(b) to inform the assessment by the Board of the condition referred to in
Article 18(1), point (b), of this Regulation.
5. For the purposes of paragraph 4, the Board shall have the power to:
(a) request the entity concerned to put in place a digital platform for sharing the
information that is necessary for the marketing of that entity with potential
purchasers or with advisors and valuers engaged by the Board;
(b) require the relevant national resolution authority to draft a preliminary
resolution scheme for the entity concerned.
6. The determination that the conditions laid down in Article 13(1) of this Regulation
or Article 27(1) of Directive 2014/59/EU are met and the prior adoption of early
intervention measures are not necessary conditions for the Board to prepare for the
resolution of the entity or to exercise the powers referred to in the paragraphs 4 and 5
of this Article.
7. The Board shall inform the Commission, the ECB, the relevant national competent
authorities and the relevant national resolution authorities of any action taken
pursuant to paragraphs 4 and 5 without delay.
EN 44 EN
8. The ECB, the national competent authorities, the Board and the relevant national
resolution authorities shall closely cooperate:
(a) when considering taking the measures referred to in paragraph 1, first
subparagraph, point (a) that aim to address a deterioration in the situation of an
entity and group, and the measures referred to in paragraph 1, first
subparagraph, point (c);
(b) when considering taking any of the actions referred to in paragraphs 4 and 5;
(c) during the implementation of the actions referred to in points (a) and (b) of this
subparagraph.
The ECB, the national competent authorities, the Board and the relevant national
resolution authorities shall ensure that those measures and actions are consistent,
coordinated and effective.’;
(17) in Article 14(2), points (c) and (d) are replaced by the following:
‘(c) to protect public funds by minimising reliance on extraordinary public financial
support, in particular when provided from the budget of a Member State;
(d) to protect depositors while minimising losses for deposit guarantee schemes, and
to protect investors covered by Directive 97/9/EC;’;
(18) in Article 16, paragraph 2 is replaced by the following:
‘2. The Board shall take a resolution action in relation to a parent undertaking as
referred to in Article 2, point (b), where the conditions laid down in Article 18(1) are
met.
For those purposes, a parent undertaking as referred to Article 2, point (b), shall be
deemed to be failing or likely to fail in any of the following circumstances:
(a) the parent undertaking meets one or more of the conditions laid down in
Article 18(4), points (b), (c) or (d);
(b) the parent undertaking infringes materially, or there are objective elements that
show that the parent undertaking will, in the near future, infringe materially,
the applicable requirements laid down in Regulation (EU) No 575/2013 or in
the national provisions that transpose Directive 2013/36/EU.’;
(19) Article 18 is amended as follows:
(a) paragraphs 1, 1a, 2 and 3 are replaced by the following:
‘1. The Board shall adopt a resolution scheme pursuant to paragraph 6 in
relation to the entities referred to in Article 7(2), and to the entities referred to
in Article 7(4), point (b) and Article 7(5) where the conditions for the
application of those provisions are met, only when it has determined, in its
executive session, upon receiving a communication pursuant to the second
subparagraph or on its own initiative, that all of the following conditions are
met:
(a) the entity is failing or is likely to fail;
(b) having regard to the timing, the need to implement effectively the
resolution strategy and other relevant circumstances, there is no
reasonable prospect that any alternative private sector measure, including
measures by an IPS, supervisory action, early intervention measures, or
EN 45 EN
the write down or conversion of relevant capital instruments and eligible
liabilities as referred to in Article 21(1), taken in respect of the entity
would prevent the failure of the entity within a reasonable timeframe;
(c) a resolution action is necessary in the public interest pursuant to
paragraph 5.
The assessment of the condition referred to in the first subparagraph, point (a),
shall be made by the ECB for the entities referred to in Article 7(2), point (a),
or by the relevant national competent authority for the entities referred to in
Article 7(2), point (b), Article 7(3), second subparagraph, Article 7(4),
point (b) and Article 7(5), after having consulted the Board. The Board, in its
executive session, may make such an assessment only after having informed
the ECB or the relevant national competent authority of its intention to make
such an assessment and only if the ECB or the relevant national competent
authority, within three calendar days of receipt of that information, do not
make such an assessment themselves. The ECB or the relevant national
competent authority shall, without delay, provide the Board with any relevant
information that the Board requests to inform its assessment, before or after
being informed by the Board of its intention to make the assessment of the
condition referred to in the first subparagraph, point (a).
Where the ECB or the relevant national competent authority has assessed that
the condition referred to in the first subparagraph, point (a), is met in relation to
an entity as referred to in the first subparagraph, they shall communicate that
assessment to the Commission and to the Board without delay.
The assessment of the condition referred to in the first subparagraph, point (b),
met shall be made by the Board, in its executive session and in close
cooperation with the ECB or the relevant national competent authority. The
ECB or the relevant national competent authority shall, without delay, provide
the Board with any relevant information that the Board requests to inform its
assessment. The ECB or the relevant national competent authority may also
inform the Board that it considers the condition laid down in the first
subparagraph, point (b), to be met.
1a. The Board may adopt a resolution scheme in accordance with paragraph 1
in relation to a central body and all credit institutions permanently affiliated to
it that are part of the same resolution group where the central body and all
credit institutions permanently affiliated to it, or the resolution group to which
they belong, comply as a whole with the conditions laid down in paragraph 1,
first subparagraph.
2. Without prejudice to cases where the ECB has decided to exercise directly
supervisory tasks relating to credit institutions pursuant to Article 6(5),
point (b) of Regulation (EU) No 1024/2013, in the event of receipt of a
communication pursuant to paragraph 1 in relation to an entity or group as
referred to in Article 7(3), the Board shall communicate its assessment as
referred to paragraph 1, fourth subparagraph, to the ECB or the relevant
national competent authority without delay.
3. The previous adoption of a measure pursuant to Article 16 of Regulation
(EU) No 1024/2013, to Article 27 of Directive 2014/59/EU, to Article 13 of
EN 46 EN
this Regulation or to Article 104 of Directive 2013/36/EU shall not be a
condition for taking a resolution action.’;
(b) paragraph 4 is amended as follows:
(i) in the first subparagraph, point (d) is replaced by the following:
‘(d) extraordinary public financial support is required except where such
support is granted in one of the forms referred to in Article 18a(1)’;
(ii) the second and third subparagraphs are deleted;
(c) paragraph 5 is replaced by the following:
‘5. For the purposes of paragraph 1, point (c), a resolution action shall be
treated as in the public interest where that resolution action is necessary for the
achievement of, and is proportionate to, one or more of the resolution
objectives referred to in Article 14 and where winding up of the institution
under normal insolvency proceedings would not meet those resolution
objectives more effectively.
When carrying out the assessment referred to in the first subparagraph, the
Board, based on the information available to it at the time of that assessment,
shall consider and compare all extraordinary public financial support that can
reasonably be expected to be granted to the entity, both in the event of
resolution and in the event of winding up in accordance with the applicable
national law.’;
(d) in paragraph 7, the second subparagraph is replaced by the following:
‘Within 24 hours from the transmission of the resolution scheme by the Board,
the Commission shall endorse the resolution scheme or object to it, either with
regard to the discretionary aspects of the resolution scheme in the cases not
covered in the third subparagraph of this paragraph or with regard to the
proposed use of State aid or Fund aid that is not considered compatible with the
internal market.’;
(e) the following paragraph 11 is added:
‘11. Where the conditions referred to in paragraph 1, points (a) and (b), are
met, the Board may instruct the national resolution authorities to exercise the
powers under national law transposing Article 33a of Directive 2014/59/EU, in
accordance with the conditions laid down in national law. The national
resolution authorities shall implement the instructions of the Board in
accordance with Article 29.’;
(20) the following Article 18a is inserted:
‘Article 18a
Extraordinary public financial support
1. Extraordinary public financial support outside of resolution action may be granted
to an entity as referred to in Article 2 only in one of the following cases and provided
that the extraordinary public financial support complies with the conditions and
requirements established in the Union State aid framework:
(a) where, to remedy a serious disturbance in the economy of a Member State or to
preserve financial stability, the extraordinary public financial support takes any
of the following forms:
EN 47 EN
(i) a State guarantee to back liquidity facilities provided by central banks in
accordance with the central banks’ conditions;
(ii) a State guarantee of newly issued liabilities;
(iii) an acquisition of own funds instruments other than Common Equity Tier
1 instruments or of other capital instruments, or a use of impaired assets
measures at prices, duration, and terms that do not confer an undue
advantage upon the institution or entity concerned, provided that none of
the circumstances referred to in Article 18(4), points (a), (b) or (c), or
Article 21(1) are present at the time the public support is granted.
(b) where the extraordinary public financial support takes the form of an
intervention by a deposit guarantee scheme to preserve the financial soundness
and long-term viability of the credit institution in compliance with the
conditions set out in Articles 11a and 11b of Directive 2014/49/EU, provided
that none or of the circumstances referred to in Article 18(4) are present;
(c) where the extraordinary public financial support takes the form of an
intervention by a deposit guarantee scheme in the context of the winding up of
an institution pursuant to Article 32b of Directive 2014/59/EU and in
accordance with the conditions set out in Article 11(5) of Directive
2014/49/EU;
(d) where the extraordinary public financial support takes the form of State aid
within the meaning of Article 107(1) TFEU granted in the context of the
winding up of the institution or entity pursuant to Article 32b of Directive
2014/59/EU, other than the support granted by a deposit guarantee scheme
pursuant to Article 11(5) of Directive 2014/49/EU.
2. The support measures referred to in paragraph 1, point (a), shall fulfil all of the
following conditions:
(a) the measures are confined to solvent entities, as confirmed by the ECB or by
the relevant national competent authority;
(b) the measures are of a precautionary and temporary nature and are based on a
pre-defined exit strategy approved by the ECB or the relevant national
competent authority, including a clearly specified termination date, sale date or
repayment schedule for any of the measures provided;
(c) the measures are proportionate to remedy the consequences of the serious
disturbance or to preserve financial stability;
(d) the measures are not used to offset losses that the entity has incurred or is
likely to incur in the near future.
For the purposes of the first subparagraph, point (a), an entity shall be deemed to be
solvent where the ECB or the relevant national competent authority have concluded
that no breach has occurred, or is likely to occur in the 12 following months, of any
of the requirements referred to in Article 92(1) of Regulation (EU) No 575/2013,
Article 104a of Directive 2013/36/EU, Article 11(1) of Regulation (EU) 2019/2033,
Article 40 of Directive (EU) 2019/2034 or the relevant applicable requirements under
national or Union law.
For the purposes of the first subparagraph, point (d), the relevant competent authority
shall quantify the losses that the entity has incurred or is likely to incur. That
EN 48 EN
quantification shall be based, as a minimum, on the institution’s balance sheet,
provided that the balance sheet complies with the applicable accounting rules and
standards, as confirmed by an independent external auditor, and, where available, on
asset quality reviews conducted by the ECB, EBA or national authorities or, where
appropriate, on on-site inspections conducted by the ECB or the relevant national
competent authority.
The support measures referred to in paragraph 1, point (a)(iii), shall be limited to
measures that have been assessed by the ECB or the national competent authority as
necessary to maintain the solvency of the entity by addressing its capital shortfall
established in the adverse scenario of national, Union or SSM-wide stress tests or
equivalent exercises conducted by the ECB, EBA or national authorities, where
applicable, confirmed by the ECB or the relevant competent authority.
By way of derogation from paragraph 1, point (a)(iii), acquisition of Common Equity
Tier 1 instruments shall be exceptionally permitted where the nature of the shortfall
identified is such that the acquisition of any other own funds instruments or other
capital instruments would not make it possible for the entity concerned to address its
capital shortfall established in the adverse scenario in the relevant stress test or
equivalent exercise. The amount of acquired Common Equity Tier 1 instruments
shall not exceed 2% of the total risk exposure amount of the institution or entity
concerned calculated in accordance with Article 92(3) of Regulation (EU) No
575/2013.
In case any of the support measures referred to in paragraph 1, point (a), is not
redeemed, repaid or otherwise terminated in accordance with the terms of the exit
strategy established at the time of granting such measure, the ECB or the relevant
national competent authority shall conclude that the condition laid down in
Article 18(1), point (a), is met in relation to the institution or entity which has
received those support measures and shall communicate that assessment to the
Commission and to the Board, in accordance with Article 18(1), third
subparagraph.’;
(21) Article 19 is amended as follows:
(a) paragraph 1 is replaced by the following:
‘1. Where resolution action involves the granting of State aid pursuant to
Article 107(1) TFEU or of Fund aid in accordance with paragraph 3 of this
Article, the resolution scheme referred to in Article 18(6) of this Regulation
shall not enter into force until such time when the Commission adopts a
positive or conditional decision, or a decision not to raise objections,
concerning the compatibility of the use of such aid with the internal market.
The Commission shall take the decision concerning the compatibility of the use
of State aid or of Fund aid with the internal market at the latest when it
endorses or objects to the resolution scheme pursuant to Article 18(7), second
subparagraph, or when the period of 24 hours referred to in Article 18(7), fifth
subparagraph, expires, whichever is earlier.
In performing the tasks conferred on them by Article 18 of this Regulation,
Union institutions shall have in place structural arrangements that ensure
operational independence and avoid conflicts of interest that could arise
between the functions entrusted with the performance of those tasks and other
EN 49 EN
functions and shall make public in an appropriate manner all relevant
information on their internal organisation in this regard.’;
(b) paragraph 3 is replaced by the following:
‘3. As soon as the Board considers that it may be necessary to use the Fund, it
shall informally, promptly, and in a confidential manner contact the
Commission to discuss the possible use of the Fund, including legal and
economic aspects related to its use. Once the Board is sufficiently certain that
the resolution scheme envisaged will entail the use of Fund aid, the Board shall
formally notify the Commission of the proposed use of the Fund. That
notification shall contain all the information that the Commission needs to
make its assessments pursuant to this paragraph, and that the Board has in its
possession or which the Board has the power to obtain in accordance with this
Regulation.
Upon receiving the notification referred to in the first subparagraph, the
Commission shall assess whether the use of the Fund would distort, or threaten
to distort, competition by favouring the beneficiary or any other undertaking so
as, insofar as it would affect trade between Member States, to be incompatible
with the internal market. The Commission shall apply to the use of the Fund
the criteria established for the application of State aid rules as enshrined in
Article 107 TFEU. The Board shall provide the Commission with the
information in its possession, or which the Board has the power to obtain in
accordance with this Regulation, and that the Commission deems to be
necessary to carry out that assessment.
When making its assessment, the Commission shall be guided by all the
relevant regulations adopted under Article 109 TFEU, all related and relevant
communications and guidance of the Commission, and all measures adopted by
the Commission in application of the rules of the Treaties relating to State aid
as are in force at the time the assessment is to be made. Those measures shall
be applied as if references to the Member State responsible for notifying the
aid were references to the Board, and with any other necessary modifications.
The Commission shall decide on the compatibility of the use of the Fund with
the internal market and address that decision to the Board and to the national
resolution authorities of the Member State or Member States concerned. That
decision may be contingent on conditions, commitments or undertakings in
respect of the beneficiary and it shall take into account the need for timely
execution of resolution action by the Board.
The decision may also lay down obligations on the Board, the national
resolution authorities in the participating Member State or Member States
concerned or the beneficiary to enable compliance with it to be monitored. This
may include requirements for the appointment of a trustee or other independent
person to assist in monitoring. A trustee or other independent person may
perform such functions as may be specified in the Commission decision.
Any decision pursuant to this paragraph shall be published in the Official
Journal of the European Union.
The Commission may issue a negative decision, addressed to the Board, where
it decides that the proposed use of the Fund would be incompatible with the
internal market and cannot be implemented in the form proposed by the Board.
EN 50 EN
On receipt of such a decision the Board shall reconsider its resolution scheme
and prepare a revised resolution scheme.’;
(c) paragraph 10 is replaced by the following:
‘10. By way of derogation from paragraph 3, the Council may, on an
application of a Member State or the Board, within 7 days of such application
being made, unanimously decide that the use of the Fund is to be considered
compatible with the internal market, where such a decision is justified by
exceptional circumstances. The Commission shall take a decision on the case
where the Council has not decided within those 7 days.’;
(22) Article 20 is amended as follows:
(a) paragraph 1 is replaced by the following:
‘1. Before determining whether the conditions for resolution, or the conditions
for write down or conversion of capital instruments and eligible liabilities as
referred to in Article 21(1) are met, the Board shall ensure that a fair, prudent
and realistic valuation of the assets and liabilities of an entity as referred to in
Article 2 is carried out by a person that is independent from any public
authority, including the Board and the national resolution authority, and from
the entity concerned.’;
(b) the following paragraph 8a is inserted:
‘8a. Where necessary to inform the decisions referred to paragraph 5, points (c)
and (d), the valuer shall complement the information in paragraph 7, point (c),
with an estimate of the value of the off-balance sheet assets and liabilities,
including contingent liabilities and assets.’;
(c) in paragraph 18, the following point (d) is added:
‘(d) when determining the losses that the deposit guarantee scheme would have
incurred had the institution been wound up under normal insolvency
proceedings, apply the criteria and methodology referred to in Article 11e of
Directive 2014/49/EU and in any delegated act adopted pursuant to that
Article.’;
(23) Article 21 is amended as follows:
(a) paragraph 1 is amended as follows:
(i) the first subparagraph is amended as follows:
— the introductory wording is replaced by the following:
‘1. The Board, acting under the procedure laid down in Article 18,
shall exercise the power to write down or convert relevant capital
instruments, and eligible liabilities as referred to in paragraph 7a, in
relation to the entities and groups referred to in Article 7(2), and to
the entities and groups referred to in Article 7(4), point (b), and
Article7(5) where the conditions for the application of those
provisions are met, only where it determines, in its executive
session, on receiving a communication pursuant to the second
subparagraph or on its own initiative, that one or more of the
following conditions are met:’;
— point (e) is replaced by the following:
EN 51 EN
‘(e) extraordinary public financial support is required by the entity
or group, except where that support is granted in one of the forms
referred to in Article 18a(1).’;
(ii) the second subparagraph is replaced by the following:
‘The assessment of the conditions referred to in the first subparagraph,
points (a) to (d), shall be made by the ECB for entities referred to in
Article 7(2)(a), or by the relevant national competent authority for
entities referred to in Article 7(2)(b), (4)(b) and (5), and by the Board, in
its executive session, in accordance with the allocation of tasks pursuant
to the procedure laid down in Article 18(1) and (2).’;
(b) paragraph 2 is deleted;
(c) in paragraph 3, point (b) is replaced by the following:
‘(b) having regard to timing, the need to implement effectively the write down
and conversion powers or the resolution strategy for the resolution group and
other relevant circumstances, there is no reasonable prospect that any action,
including alternative private sector measures, supervisory action or early
intervention measures, other than the write-down or conversion of relevant
capital instruments, and eligible liabilities as referred to in paragraph 7a, would
prevent the failure of that entity or group within a reasonable timeframe.’;
(d) paragraph 9 is replaced by the following:
‘9. Where one or more of the conditions referred to in paragraph 1 are met in
relation to an entity referred to in that paragraph, and the conditions referred to
in Article 18(1) are also met in relation to that entity or to an entity belonging
to the same group, the procedure laid down in Article 18(6), (7) and (8) shall
apply.’;
(24) Article 27 is amended as follows:
(a) paragraph 7 is replaced by the following:
‘7. The Fund may make a contribution as referred to in paragraph 6 only where
all of the following conditions are met:
(a) a contribution to loss absorption and recapitalisation equal to an amount
not less than 8 % of the total liabilities including own funds of the
institution under resolution, measured in accordance with the valuation
provided for in Article 20(1) to (15), has been made by shareholders, the
holders of relevant capital instruments and other bail-inable liabilities
through reduction, write-down, or conversion pursuant to Article 48(1) of
Directive 2014/59/EU and Article 21(10) of this Regulation, and by the
deposit guarantee scheme pursuant to Article 79 of this Regulation and
Article 109 of Directive 2014/59/EU where relevant;
(b) the contribution from the Fund does not exceed 5 % of the total liabilities
including own funds of the institution under resolution, measured in
accordance with the valuation provided for in Article 20(1) to (15).’;
(b) paragraphs 9 and 10 are replaced by the following:
EN 52 EN
‘9. The Fund may make a contribution from resources which have been raised
through ex-ante contributions as referred to in Article 70 and which have not
yet been used, provided that all of the following conditions are met:
(a) the Fund has made a contribution pursuant to paragraph 6 and the 5 %
limit referred to in paragraph 7, point (b), has been reached;
(b) all liabilities ranking lower than deposits, and not excluded from bail-in
pursuant to paragraphs 3 and 5, have been written down or converted in
full.
10. In extraordinary circumstances, as an alternative or in addition to the
contribution of the Fund referred to in paragraph 9, where the conditions laid
down in paragraph 9 are met, the Board may seek further funding from
alternative financing sources.’;
(c) in paragraph 13, the second subparagraph is replaced by the following:
‘The assessment referred to in the first subparagraph shall establish the amount
by which bail-inable liabilities need to be written down or converted:
(a) to restore the Common Equity Tier 1 capital ratio of the institution under
resolution, or, where applicable, establish the ratio of the bridge
institution, taking into account any contribution of capital by the Fund
made pursuant to Article 76(1), point (d);
(b) to sustain sufficient market confidence in the institution under resolution
or the bridge institution, taking into account the need to cover contingent
liabilities, and enable the institution under resolution to continue to meet,
for at least 1 year, the conditions for authorisation andto continue to carry
out the activities for which it is authorised under Directive 2013/36/EU
or Directive 2014/65/EU.’;
(25) Article 30 is amended as follows:
(a) the title is replaced by the following:
‘Obligation to cooperate and information exchange’;
(b) the following paragraphs 2a, 2b and 2c are inserted:
‘2a. The Board, the ESRB, the EBA, ESMA and EIOPA shall cooperate
closely and provide each other with all information necessary for the
performance of their respective tasks.
2b. The ECB and other members of the European System of Central Banks
(ESCB) shall cooperate closely with the Board and provide it with all
information necessary for the performance of the Board’s tasks, including
information collected by them in accordance with their statute. Article 88(6)
shall apply to the exchanges concerned.
2c. The designated authorities referred to in Article 2(1), point (18), of
Directive 2014/49/EU shall cooperate closely with the Board and provide it
with all information necessary to the performance of its tasks.’;
(c) paragraph 6 is replaced by the following:
‘6. The Board shall endeavour to cooperate closely with any public financial
assistance facility, including the European Financial Stability Facility (EFSF)
EN 53 EN
and the European Stability Mechanism (ESM), in particular in all of the
following situations:
(a) in the extraordinary circumstances referred to in Article 27(9) and where
such a facility has granted, or is likely to grant, direct or indirect financial
assistance to entities established in a participating Member State;
(b) where the Board has contracted for the Fund a financial arrangement
pursuant to Article 74.’;
(d) paragraph 7 is replaced by the following:
‘7. Where necessary, the Board shall conclude a memorandum of
understanding with the ECB and other members of the ESCB, the national
resolution authorities and the national competent authorities describing in
general terms how they will cooperate under paragraphs 2, 2a, 2b and 4 of this
Article and under Article 74, second paragraph, in the performance of their
respective tasks under Union law. The memorandum shall be reviewed on a
regular basis and shall be published subject to the requirements of professional
secrecy.’;
(26) the following Article 30a is inserted:
‘Article 30a
Information held by centralised automated mechanism
1. The authorities operating the centralised automated mechanisms established by
Article 32a of Directive (EU) 2015/849 of the European Parliament and of the
Council** shall provide the Board, upon its request, with information related to the
number of customers for which an entity as referred to in Article 2 is the only or
principal banking partner.
2. The Board shall request the information referred to in paragraph 1 only on a case-
by-case basis and where necessary for the purpose of performing its tasks under this
Regulation.
3. The Board may share the information obtained pursuant to the first paragraph with
national resolution authorities in the context of the performance of their respective
tasks under this Regulation.
______________________________
** Directive (EU) 2015/849 of the European Parliament and of the Council of 20
May 2015 on the prevention of the use of the financial system for the purposes of
money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of
the European Parliament and of the Council, and repealing Directive 2005/60/EC of
the European Parliament and of the Council and Commission Directive 2006/70/EC
(OJ L 141, 5.6.2015, p. 73).’;
(27) in Article 31, the following paragraph 3 is added:
‘3. For the entities and groups referred to in Article 7(2), and for the entities and
groups referred to in Article 7(4), point (b) and Article 7(5) where the conditions for
the application of those provisions are met, national resolution authorities shall
consult the Board before acting under Article 86 of Directive 2014/59/EU.’;
(28) in Article 32(1), the first subparagraph is replaced by the following:
EN 54 EN
‘Where a group includes entities established in participating Member States as well
as in in non-participating Member States or third countries, without prejudice to any
approval by the Council or the Commission required under this Regulation, the
Board shall represent the national resolution authorities of the participating Member
States for the purposes of consultation and cooperation with non-participating
Member States or third countries in accordance with Articles 7, 8, 12, 13, 16, 18,
45h, 55, and 88 to 92 of Directive 2014/59/EU.’;
(29) Article 34 is amended as follows:
(a) in paragraph 1, the introductory wording is replaced by the following:
‘The Board may, making full use of all of the information which is already
available to the ECB, including information collected by the members of the
ESCB in accordance with their statute, or of all the information available to the
national competent authorities, to the ESRB, the EBA, ESMA or EIOPA,
require, through the national resolution authorities or directly, after having
informed those authorities, the following legal or natural persons to provide it
with all the information necessary, in accordance with the procedure requested
by the Board and in the form requested by the Board, to perform its tasks:’;
(b) paragraphs 5 and 6 are replaced by the following:
‘5. The Board, the ECB, the members of the ESCB, the national competent
authorities, the ESRB, the EBA, ESMA, EIOPA and the national resolution
authorities may draw up memoranda of understanding setting out a procedure
governing the exchange of information. The exchange of information between
the Board, the ECB and other members of the ESCB, the national competent
authorities, the ESRB, the EBA, ESMA, EIOPA and the national resolution
authorities shall not be deemed to infringe the requirements of professional
secrecy.
6. National competent authorities, the ECB, members of the ESCB, the ESRB,
the EBA, ESMA, EIOPA, and the national resolution authorities shall
cooperate with the Board to verify whether some or all of the information
requested is already available at the time the request is made. Where such
information is available, the national competent authorities, the ECB and other
members of the ESCB, the ESRB, the EBA, ESMA, EIOPA, or the national
resolution authorities shall provide that information to the Board.’;
(30) in Article 43(1), the following point (aa) is inserted:
‘(aa) the Vice-Chair appointed in accordance with Article 56;’;
(31) in Article 50(1), point (n) is replaced by the following:
‘(n) appoint an Accounting Officer and an Internal Auditor, subject to the Staff
Regulations and the Conditions of Employment, who shall be functionally
independent in the performance of their duties;’;
(32) Article 53 is amended as follows:
(a) in paragraph 1, the first sentence is replaced by the following:
‘The Board in its executive session shall be composed of the Chair, the Vice-
Chair and the four members referred to in Article 43(1), point (b).’;
EN 55 EN
(b) in paragraph 5, the words ‘Article 43(1)(a) and (b)’ are replaced by the words
‘Article 43(1), points (a), (aa) and (b)’.;
(33) in Article 55, paragraphs 1 and 2 are replaced by the following:
‘1. When deliberating on an individual entity or a group established in only one
participating Member State, if all members referred to in Article 53(1) and (3) are not
able to reach a joint agreement by consensus within a deadline set by the Chair, the
Chair, the Vice-Chair and the members referred to in Article 43(1), point (b), shall
take a decision by a simple majority.
2. When deliberating on a cross-border group, if all members referred to in Article
53(1) and (4) are not able to reach a joint agreement by consensus within a deadline
set by the Chair, the Chair, the Vice-Chair and the members referred to in Article
43(1), point (b), shall take a decision by a simple majority.’;
(34) Article 56 is amended as follows:
(a) in paragraph 2, point (d) is replaced by the following:
‘(d) the establishment of a preliminary draft budget and a draft budget of the
Board, in accordance with Article 61, and the implementation of the budget of
the Board, in accordance with Article 63;’;
(b) in paragraph 5, the first subparagraph is replaced by the following:
‘The term of office of the Chair, of the Vice-Chair and of the members referred
to in Article 43(1), point (b), shall be five years. That term shall be renewable
once.
A person who has served two terms of office as the Chair, the Vice-Chair or a
member referred to in Article 43(1), point (b), shall not be eligible for
appointment to any of the other two positions.’;
(c) in paragraph 6, first subparagraph, the following sentence is added:
‘The Commission may arrange the names on the shortlist in the order reflecting
the Commission’s assessment of the suitability of each candidate in light of the
criteria referred to in paragraph 4 of this Article.’;
(d) the following paragraph 6a is inserted:
‘6a. In the 9 months preceding the end of the first term of office of the Chair,
of the Vice-Chair and of the members referred to in Article 43(1), point (b), the
Commission shall evaluate the results achieved in the first term of office and
shall decide whether to put forward a proposal for renewal of the term based on
the results of that evaluation.
The Council, acting on a proposal from the Commission, shall adopt an
implementing decision to renew the term of office of the Chair, of the Vice-
Chair and of the members referred to in Article 43(1), point (b). The Council
shall act by qualified majority.’;
(e) in paragraph 7, the last sentence is replaced by the following:
‘The Chair, the Vice-Chair, and the members referred to in Article 43(1),
point (b) shall remain in office until their successors are appointed and have
taken up their duties in accordance with the Council decision referred to in
paragraph 6 of this Article.’;
EN 56 EN
(35) Article 61 is replaced by the following:
‘Article 61
Establishment of the budget
1. By 31 March each year, the Chair shall draw up a preliminary draft budget of the
Board, including a statement of estimates of the Board’s revenue and expenditure for
the following year, together with the establishment plan, for the following year and
submit it to the Board in its plenary session.
The Board in its plenary session shall, where necessary, adjust the preliminary draft
budget of the Board together with the draft establishment plan.
2. On the basis of the preliminary draft budget as adopted by the Board in its plenary
session, the Chair shall draw up a draft budget of the Board and submit it to the
Board in its plenary session for adoption.
By 30 November each year, the Board in its plenary session shall adjust the draft
budget submitted by the Chair, where necessary, and adopt the final budget of the
Board together with the establishment plan.’;
(36) in Article 69, paragraph 4 is replaced by the following:
‘4. If, after the initial period referred to in paragraph 1, the available financial means
fall below the target level specified in that paragraph, the regular contributions
calculated in accordance with Article 70 shall be raised until the target level is
reached. The Board may defer the collection of the regular contributions raised in
accordance with Article 70 for 1 or more years to ensure that the amount to be
collected reaches an amount that is proportionate to the costs of the collection
process, provided that such deferral does not materially affect the capacity of the
Board to use the Fund pursuant to Section 3. After the target level has been reached
for the first time and where the available financial means have subsequently been
reduced to less than two-thirds of the target level, those contributions shall be set at a
level allowing for reaching the target level within 6 years.’;
(37) Article 70 is amended as follows:
(a) paragraph 3 is replaced by the following:
‘3. The available financial means to be taken into account in order to reach the
target level specified in Article 69 may include irrevocable payment
commitments which are fully backed by collateral of low-risk assets
unencumbered by any third-party rights, at the free disposal of and earmarked
for the exclusive use by the Board for the purposes specified in Article 76(1).
The share of those irrevocable payment commitments shall not exceed 50 % of
the total amount of contributions raised in accordance with this Article. Within
that limit, the Board shall determine annually the share of irrevocable payment
commitments in the total amount of contributions to be raised in accordance
with this Article.’;
(b) the following paragraph 3a is inserted:
‘3a. The Board shall call the irrevocable payment commitments made pursuant
to paragraph 3 of this Article when the use of the Fund is needed pursuant to
Article 76.
EN 57 EN
Where an institution or entity stops being within the scope of Article 2 and is
no longer subject to the obligation to pay contributions in accordance with
paragraph 1 of this Article, the Board shall call the irrevocable payment
commitments made pursuant to paragraph 3 and still due. If the contribution
linked to the irrevocable payment commitment is duly paid at first call, the
Board shall cancel the commitment and return the collateral. If the contribution
is not duly paid at first call, the Board shall seize the collateral and cancel the
commitment.’;
(38) in Article 71(1), the second subparagraph is replaced by the following:
‘The total amount of extraordinary ex-post contributions per year shall not exceed
three times 12,5 % of the target level.’;
(39) in Article 74, the following paragraph is inserted:
‘The Board shall inform the Commission and the ECB as soon as it considers that it
may be necessary to activate financial arrangements contracted for the Fund in
accordance with this Article, and shall provide the Commission and the ECB with all
information necessary for the performance of their tasks in respect of such financial
arrangements.’;
(40) Article 76 is amended as follows:
(a) paragraph 3 is replaced by the following:
‘3. Where the Board determines that the use of the Fund for the purposes
referred to in paragraph 1 is likely to result in part of the losses of an entity
referred to in Article 2 being passed on to the Fund, the principles governing
the use of the Fund set out in Article 27 shall apply.’;
(b) the following paragraphs 5 and 6 are added:
‘5. Where the resolution tools referred to in Article 22(2), point (a) or (b), are
used to transfer only part of the assets, rights or liabilities of the institution
under resolution, the Board shall have a claim against the residual entity for
any expense and loss incurred by the Fund as a result of any contributions
made to resolution pursuant to paragraphs 1 and 2 of this Article in connection
to losses which creditors would have otherwise borne.
6. The claims of the Board referred to paragraph 5 of this Article and in Article
22(6) shall, in each participating Member State, have the same priority ranking
as the claims of the national resolution financing arrangements in the national
law of that Member State governing normal insolvency proceedings pursuant
to Article 108(9) of Directive 2014/59/EU.’;
(41) Article 79 is amended as follows:
(a) paragraphs 1, 2 and 3 are replaced by the following:
‘1. Participating Member States shall ensure that when the Board takes
resolution action with respect to a credit institution, provided that such action
ensures that depositors continue to have access to their deposits, to prevent
depositors from bearing losses, the deposit guarantee scheme to which that
credit institution is affiliated shall contribute for the purposes and under the
conditions laid down in Article 109 of Directive 2014/59/EU.
EN 58 EN
2. The Board shall determine the amount of the contribution of the deposit
guarantee scheme in accordance with paragraph 1 after having consulted the
deposit guarantee scheme, and where necessary the designated authority within
the meaning of Article 2(1), point (18), of Directive 2014/49/EU, on the
estimated cost of repaying depositors pursuant to Article 11e of Directive
2014/49/EU and in compliance with the conditions referred to in Article 20 of
this Regulation.
3. The Board shall notify its decision as referred to in the first subparagraph to
the designated authority within the meaning of Article 2(1), point (18), of
Directive 2014/49/EU and to the deposit guarantee scheme to which the
institution is affiliated. The deposit guarantee scheme shall implement that
decision without delay.’;
(b) in paragraph 5, the second and third subparagraph are deleted;
(42) in Article 85(3), the words ‘referred to in’ are replaced by the words ‘adopted under’;
(43) in Article 88, the following paragraph 7 is added:
‘7. This Article shall not prevent the Board from disclosing its analyses or
assessments, including when they are based on information provided by the entities
referred to in Article 2 or other authorities as referred to in paragraph 6 of this
Article, when the Board assesses that the disclosure would not undermine the
protection of the public interest as regards financial, monetary or economic policy
and that there is a public interest in disclosing which overrides any other interests
referred to in paragraph 5 of this Article. Such disclosure shall be considered to be
made by the Board in the exercise of its functions under this Regulation for the
purposes of paragraph 1 of this Article.’.
Article 2
Entry into force and application
This Regulation shall enter into force on the twentieth day following that of its publication in
the Official Journal of the European Union.
It shall apply from … [OP please insert the date = 18 months from the date of entry into force
of this amending Regulation].
However, Article 1, points (1)(a), points (2) and, (3), point (4)(a), point (5)(a), (b) and (c)(i)
and (ii), point (6)(a), point (7), point (13)(a)(i) and (b), point (14)(a), (b) and (d), point (19)(d)
and (e), point (21), point (23)(a)(i), first indent, (b) and (d), points (25) to (35), and points
(39), (42) and (43), shall apply from … [OP please insert the date = 1 month from the date of
entry into force of this amending Regulation].
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Strasbourg,
For the European Parliament For the Council
The President The President