2016R1075 — EN — 08.07.2016 — 000.001

This text is meant purely as a documentation tool and has no legal effect. The Union's institutions do not assume any liability for its contents. The authentic versions of the relevant acts, including their preambles, are those published in the Official Journal of the European Union and available in EUR-Lex. Those official texts are directly accessible through the links embedded in this document

►B COMMISSION DELEGATED REGULATION (EU) 2016/1075 of 23 March 2016 supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the content of recovery plans, resolution plans and group resolution plans, the minimum criteria that the competent authority is to assess as regards recovery plans and group recovery plans, the conditions for group financial support, the requirements for independent valuers, the contractual recognition of write-down and conversion powers, the procedures and contents of notification requirements and of notice of suspension and the operational functioning of the resolution colleges (Text with EEA relevance) (OJ L 184 8.7.2016, p. 1)





Corrected by:









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COMMISSION DELEGATED REGULATION (EU) 2016/1075

of 23 March 2016

supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the content of recovery plans, resolution plans and group resolution plans, the minimum criteria that the competent authority is to assess as regards recovery plans and group recovery plans, the conditions for group financial support, the requirements for independent valuers, the contractual recognition of write-down and conversion powers, the procedures and contents of notification requirements and of notice of suspension and the operational functioning of the resolution colleges

▼B

(Text with EEA relevance)







CHAPTER I

COMMON PROVISIONS AND RECOVERY PLANS







SECTION I

Common provisions

Article 1

Subject matter

This Regulation further specifies:

(1) the information to be contained in an individual recovery plan and, in accordance with paragraphs 5 and 6 of Article 7 of Directive 2014/59/EU, in a group recovery plan;

(2) the minimum criteria that the competent authority is to assess with regard to both individual and group recovery plans, in accordance with paragraph 8 of Article 6 of Directive 2014/59/EU;

(3) the contents of resolution plans required for institutions that are not part of a group subject to consolidated supervision pursuant to Articles 111 and 112 of Directive 2013/36/EU, and the contents of resolution plans required for groups, in accordance, respectively, with Articles 10 and 13 of Directive 2014/59/EU;

(4) the matters and criteria to be examined for the assessment of the resolvability of institutions or groups, provided for, respectively in paragraph 4 of Article 15, and paragraph 2 of Article 16 of the Directive 2014/59/EU;

(5) the conditions set out in points (a), (c), (e) and (i) of Article 23(1) of Directive 2014/59/EU with regard to financial support by a group entity in accordance with Article 19 of that Directive;

(6) the circumstances in which a person is independent from the resolution authority and the institution or entity referred to in point (b), (c) or (d) of paragraph 1 of Article 1 of Directive 2014/59/EU for the purposes of paragraph 1 of Article 36 of that Directive and of Article 74 thereof;

(7) the list of liabilities to which the exclusion from the obligation to include the contractual term referred to in paragraph 1 of Article 55 of Directive 2014/59/EU applies and the contents of the contractual term required in that paragraph;

(8) the procedures and contents relating to the notifications referred to in paragraph 1, 2 and 3 of Article 81 of Directive 2014/59/EU and to the notice of suspension referred to in Article 83 of that Directive;

(9) detailed rules on setting up and operational functioning of the resolution colleges for the performance of the tasks referred to in paragraph 1 of Article 88 of Directive 2014/59/EU.

Points (1), (2), (3) and (4) above are subject to the application of any simplified obligations determined in accordance with Article 4 of Directive 2014/59/EU.

Article 2

Definitions

For the purposes of this Regulation, the following definitions apply:

(1) ‘individual recovery plan’ means any of the following: (a) a recovery plan drawn up in accordance with Article 5(1) of Directive 2014/59/EU by an institution that is not part of a group subject to consolidated supervision pursuant to Articles 111 and 112 of Directive 2013/36/EU; (b) a recovery plan drawn up in accordance with Article 7(2) of Directive 2014/59/EU by a subsidiary of an EU parent undertaking;

(2) ‘resolution strategy’ means a set of resolution actions provided for in a resolution plan or group resolution plan;

(3) ‘preferred resolution strategy’ a resolution strategy capable of best achieving the resolution objectives set out in Article 31 of Directive 2014/59/EU given the structure and the business model of the institution or group, and the resolution regimes applicable to legal entities in a group;

(4) ‘qualifying eligible liabilities’ means eligible liabilities which satisfy the conditions set forth in Article 45(4) of Directive 2014/59/EU in order to be included in the amount of own funds and eligible liabilities referred to in Article 45(1) of that Directive;

(5) ‘single point of entry (SPE)’ means a resolution strategy involving the application of resolution powers by a single resolution authority at the level of a single parent undertaking or of a single institution subject to consolidated supervision;

(6) ‘multiple point of entry (MPE)’ means a resolution strategy involving the application of resolution powers by two or more resolution authorities to regional or functional subgroups or entities of a group;

(7) ‘control’ means control as defined in point (37) of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council ( 1 );

(8) ‘qualifying holding’ means a qualifying holding as defined in point (36) of Article 4(1) of Regulation (EU) No 575/2013.







SECTION II

Content of recovery plans

Article 3

Information to be included in a recovery plan

A recovery plan shall include at least the following items:

(1) a summary of the key elements of the recovery plan, in accordance with Article 4;

(2) information on governance, in accordance with Article 5;

(3) a strategic analysis, in accordance with Articles 6 to 12;

(4) a communication and disclosure plan, in accordance with Article 14;

(5) an analysis of preparatory measures, in accordance with Article 15.

Article 4

Summary of the key elements of the recovery plan

1. The summary of the key elements of the recovery plan shall cover summaries of each of the following:

(a) the recovery plan's information on governance;

(b) the recovery plan's strategic analysis, including a summary of overall recovery capacity referred to in Article 12(3);

(c) any material changes to the institution, group or recovery plan since the previous version of the recovery plan submitted to the competent authority;

(d) the recovery plan's communication and disclosure plan;

(e) the preparatory measures set out in the recovery plan.

2. For the purposes of Sections II and III of Chapter I of this Regulation, material change means any change which could impact the ability of an institution or of an EU parent undertaking or one or more of its subsidiaries to implement a recovery plan or to implement one or more recovery options contained in a recovery plan.

Article 5

Governance

The information on governance shall contain at least a detailed description of the following matters:

(1) how the recovery plan was developed, including at least: (a) the role and function of persons responsible for preparing, implementing and updating each section of the plan; (b) the identity of the person who has overall responsibility for keeping the recovery plan up-to-date and a description of the process to be used for updating the recovery plan to respond to any material changes affecting the institution or group or their environment; (c) a description of how the plan is integrated in the corporate governance of the institution or group and in the overall risk management framework; (d) if the considered entity is part of a group, a description of the measures and arrangements taken within the group to ensure the coordination and consistency of recovery options at the level of the group and of individual subsidiaries;

(2) the policies and procedures governing approval of the recovery plan, including at least: (a) a statement whether the recovery plan has been reviewed by an internal audit function, external auditor or risk committee; (b) confirmation that the recovery plan has been assessed and approved by the management body of the institution or EU parent undertaking responsible for submitting the plan;

(3) the conditions and procedures necessary to ensure the timely implementation of recovery options, including, at least: (a) a description of the internal escalation and decision-making process that applies when the indicators have been met, to consider and determine which recovery option may need to be applied in reaction to the situation of financial stress that has materialised, including at least: (i) the role and function of persons involved in this process, including a description of their responsibilities, or, where a committee is involved in the process, the role, the responsibilities and function of committee members; (ii) the procedures that need to be followed; (iii) the time limit for the decision on taking recovery options and when and how the relevant competent authorities will be informed of the fact that the indicators have been met; (b) a detailed description of the indicators, reflecting possible vulnerabilities, weaknesses or threats to, as a minimum, the capital position, liquidity situation, profitability and risk profile of the entity or entities covered in the recovery plan;

(4) the plan's consistency with the general risk management framework of the institution or group, including a description of the relevant benchmarks (early warning signals) used as part of the institution's or group's regular internal risk management process, where these benchmarks are useful to inform the management that the indicators could potentially be reached;

(5) management information systems, including a description of arrangements in place to ensure that the information necessary to implement the recovery options is available for decision-making in stressed conditions in a reliable and timely way.

Article 6

Strategic analysis

1. The strategic analysis shall identify core business lines and critical functions and set out the key steps to maintaining those core business lines and critical functions in a situation of financial stress.

2. The strategic analysis shall include at least the following subsections:

(a) a description of the entity or entities covered by the recovery plan, as set out in Article 7;

(b) a description of recovery options, as set out in Articles 8 to 12.

Article 7

The description of entities covered by the recovery plan

1. The subsection of the strategic analysis describing the entity or entities covered by the recovery plan shall comprise the following information:

(a) a general characterisation of the entity or entities covered by the recovery plan, including: (i) a description of their overall global business and risk strategy; (ii) their business model and business plan, including a list of the main jurisdictions in which they are active, including through a legal entity or a branch meeting the conditions set out in paragraph 2; (iii) their core business lines and critical functions; (iv) the process and metrics for identifying their core business lines and critical functions;

(b) a mapping of the core business lines and critical functions to the legal entities and branches meeting the conditions set out in paragraph 2;

(c) a detailed description of the legal and financial structures of the entity or entities covered by the plan, including an explanation of intra-group interconnectedness with respect to any legal entities or branches meeting the conditions set out in paragraph 2 and in particular a description of the following: (i) all existing material intra-group exposures and funding relationships, capital flows within the entity or entities covered by the recovery plan, intra-group guarantees that are in place and intra-group guarantees that are expected to be in place when recovery action is required; (ii) legal interconnectedness, which shall cover material legally binding agreements between entities of a group including, for example, the existence of domination agreements and profit and loss transfer agreements; (iii) operational interconnectedness, which concerns functions that are centralised in one legal entity or branch and are important for the functioning of other legal entities, branches or the group, in particular centralised information technology functions, treasury functions, risk functions or administrative functions; (iv) any existing group financial support agreements concluded in accordance with Article 19 of Directive 2014/59/EU including the parties to the agreement, the form of the financial support and the conditions associated with the provision of the financial support;

(d) a description of external interconnectedness including at least: (i) significant exposures and liabilities to main counterparties; (ii) significant financial products and services which are provided by the entity or entities covered by the recovery plan to other financial market participants; (iii) significant services which third parties provide to the entity or entities covered by the recovery plan;

2. For the purposes of points (b) and (c) of paragraph 1, the reference to legal entities or branches shall be understood as a reference to legal entities or branches which:

(a) substantially contribute to the profit of the entity or entities covered by the recovery plan or to their funding, or hold an important share of their assets, liabilities or capital;

(b) perform key commercial activities;

(c) centrally perform key operational, risk or administrative functions;

(d) bear substantial risks that could, in a worst-case scenario, jeopardise the viability of the institution or group;

(e) could not be disposed of or liquidated without likely triggering a major risk for the institution or group as a whole;

(f) are important for the financial stability of at least one of the Member States in which they have their registered offices or operate.

Article 8

Recovery options

1. The subsection on recovery options shall include a list of all recovery options and a description of each option, as set out in Articles 9 to 12.

2. The subsection on recovery options shall set out a range of recovery options designed to respond to financial stress scenarios and which could reasonably be expected to contribute to maintaining or restoring the viability and financial position of the entity or entities covered by the recovery plan.

3. Each recovery option shall be described in a way that enables the competent authority to assess its impact and feasibility.

4. Recovery options shall include measures which are extraordinary in nature as well as measures that could also be taken in the course of the normal business of the entity or entities covered by the recovery plan.

5. Recovery options shall not be excluded for the sole reason that they would require a change to the current nature of the business of that entity or those entities.

Article 9

Actions, arrangements and measures under recovery options

1. Each recovery option shall indicate at least the following:

(a) a range of capital and liquidity actions required to maintain or restore the viability and financial position of the entity or entities covered by the recovery plan which have as their primary aim ensuring the viability of critical functions and core business lines;

(b) arrangements and measures the primary aim of which is to conserve or restore the institution's own funds or the group's consolidated own funds through external recapitalisations and internal measures to improve the capital position of the entity or entities covered by the recovery plan;

(c) arrangements and measures to ensure that the entity or entities covered by the recovery plan have adequate access to contingency funding sources to ensure that they can carry on their operations and meet their obligations as they fall due;

(d) arrangements and measures to reduce risk and leverage, or to restructure business lines including, where appropriate, an analysis of possible material divestment of assets, legal entities, or business lines;

(e) arrangements and measures the primary aim of which is to achieve a voluntary restructuring of liabilities, without triggering an event of default, termination, downgrade or similar.

For the purposes of point (c), the measures shall include external measures and, where appropriate, measures that aim at reorganising the available liquidity within the group. The contingency funding sources shall include potential liquidity sources, an assessment of available collateral and an assessment of the possibility to transfer liquidity across group entities and business lines.

2. Where a recovery option does not include the actions, arrangements or measures set out in points (a) to (e) of paragraph 1, the subsection on recovery options shall contain a demonstration that those actions, arrangements or measures have been adequately considered by the institution, the Union parent undertaking or the subsidiary which drew up and submitted the plan.

Article 10

Impact assessment

Each recovery option shall contain an impact assessment that shall include, in particular, a detailed description of the processes for determining the value and marketability of the core business lines, operations and assets of the entity or entities to which the recovery option relates, and at least the following elements:

(1) a financial and operational impact assessment which sets out the expected impact on solvency, liquidity, funding positions, profitability and operations of the entity or entities covered by the recovery plan; where relevant, the assessment shall clearly identify the different entities of the group which may be affected by the option or involved in its implementation;

(2) an assessment of external impact and systemic consequences which sets out the expected impact on critical functions performed by the entity or entities, covered by the recovery plan, and the impact on shareholders, on customers, in particular depositors and retail investors, on counterparties and, where applicable, on the rest of the group;

(3) the valuation assumptions and all other assumptions made for the purpose of the assessments in points (1) and (2), including assumptions about the marketability of assets or the behaviour of other financial institutions.

Article 11

Feasibility assessment

1. Each recovery option shall contain a feasibility assessment, which shall include at least:

(a) an assessment of the risk associated with the recovery option, drawing on any experience of executing the recovery option or an equivalent measure;

(b) a detailed analysis and description of any material impediment to the effective and timely execution of the plan and a description of whether and how such impediments could be overcome;

(c) where applicable, an analysis of potential impediments to the effective implementation of the recovery option which result from the structure of the group or of intra-group arrangements, including whether there are substantial practical or legal impediments to the prompt transfer of own funds or the repayment of liabilities or assets within the group;

(d) solutions to the potential impediments identified in points (b) and (c).

2. For the purposes of paragraph 1, a material impediment shall include any factor that could potentially negatively affect the timely execution of the recovery option including, in particular, legal, operational, business, financial, and reputational risks such as any risk of a credit rating downgrade.

Article 12

Continuity of operations

1. Each recovery option shall contain an assessment of how the continuity of operations will be ensured when implementing that option.

2. That assessment shall include an analysis of internal operations (for example, information technology systems, suppliers and human resources operations) and of the access of the entity or entities covered by the recovery plan to market infrastructure (for example, clearing and settlement facilities and payment systems). In particular, the assessment of operational contingency shall take into account:

(a) any arrangements and measures necessary to maintain continuous access to relevant financial markets infrastructure;

(b) any arrangements and measures necessary to maintain the continuous functioning of the operational processes of the entity or entities covered by the recovery plan, including infrastructure and IT services;

(c) the expected time frame for the implementation and effectiveness of the recovery option;

(d) the effectiveness of the recovery option, and the adequacy of indicators in a range of scenarios of financial stress which assesses the impact of each of these scenarios on the entity or entities covered by the recovery plan, in particular on their capital, liquidity, profitability, risk profile and operations.

3. That assessment shall identify the recovery option which could be appropriate in a specific scenario, the potential impact of the recovery option, its feasibility, including the potential impediments to its implementation, and the time frame required for its implementation.

On the basis of this information, the assessment shall describe the overall recovery capacity of the entity or entities covered by the recovery plan, being the extent to which the recovery options allow that entity or those entities to recover in a range of scenarios of severe macroeconomic and financial stress.

Article 13

Cross references

Where information set out in Article 7 has been submitted to resolution authorities pursuant to Article 11 of Directive 2014/59/EU, competent authorities may choose to accept cross references to that information as sufficient for meeting the requirement in Article 7 if they do not compromise the completeness and quality of the recovery plan, as required by Section III of Chapter I of this Regulation.

Article 14

Communication and disclosure plan

1. The communication and disclosure plan shall cover the following matters in detail:

(a) internal communication, in particular to staff, works councils or other staff representatives;

(b) external communication, in particular to shareholders and other investors, competent authorities, counterparties, financial markets, financial market infrastructure, depositors and the public, as appropriate;

(c) effective proposals for managing any potential negative market reactions.

2. A recovery plan shall include, at least, an analysis of how the communication and disclosure plan would be implemented when one or more of the arrangements or measures set out in the recovery plan are implemented.

3. The communication and disclosure plan shall adequately consider any specific communication needs for individual recovery options.

Article 15

Preparatory measures

1. A recovery plan shall include an analysis of any preparatory measures that the entity or entities covered by it have taken or which are necessary to facilitate the implementation of the recovery plan or to improve its effectiveness together with a timeline for implementing those measures.

2. Such preparatory measures shall include any measures necessary to overcome impediments to the effective implementation of recovery options which have been identified in the recovery plan.







SECTION III

Assessment of recovery plans

Article 16

Completeness of recovery plans

The competent authority shall assess the extent to which a recovery plan satisfies the requirements set out in Article 5 or Article 7 of Directive 2014/59/EU, respectively, and shall review the completeness of the plan based on the following:

(1) whether the plan covers all the information listed in Section A of the Annex to Directive 2014/59/EU as further specified in Chapter I, Section I of this Regulation;

(2) whether the plan provides information that is up to date, also with respect to any material changes to the entity or entities, in particular changes to their legal or organisational structure or their business or financial situation since the last submission of the plan, in accordance with Article 5(2) of Directive 2014/59/EU;

(3) where applicable, whether the plan includes an analysis of how and when the entity or entities covered by the plan may apply, in the conditions addressed by the plan, for the use of central bank facilities and identify those assets which would be expected to qualify as collateral;

(4) whether the plan adequately reflects an appropriate range of scenarios of severe macroeconomic and financial stress relevant to the specific conditions of the entity or entities that the plan covers, taking into account the guidelines issued by the EBA in accordance with Article 5(7) of Directive 2014/59/EU that further specify the range of scenarios to be used in recovery plans, by making every effort to comply with them in line with Article 16(3) of Regulation (EU) No 1093/2010;

(5) whether the plan contains a framework of indicators which identifies the points at which appropriate actions referred to in the plan may be taken;

(6) whether the information referred to in points (1) to (5) is provided in relation to the group as a whole;

(7) whether the plan includes, where applicable, arrangements for intra-group financial support adopted pursuant to an agreement for group financial support that has been concluded in accordance with Chapter III of Directive 2014/59/EU;

(8) whether for each of the scenarios of severe macroeconomic and financial stress which is reflected in the plan in accordance with Article 7(6) of Directive 2014/59/EU, the plan identifies whether there are: (a) obstacles to implementing recovery measures within the group, including at the level of individual entities covered by the plan; (b) substantial practical or legal impediments to the prompt transfer of own funds or the repayment of liabilities or assets within the group.

Article 17

Quality of recovery plans

In assessing the requirements and criteria set out in Article 5 and Article 7 of Directive 2014/59/EU, as applicable, the competent authority shall review the quality of a recovery plan based on the following:

(1) the clarity of the plan is considered to be established if: (a) the plan is self-explanatory and is drafted in clear and understandable language; (b) definitions and descriptions are clear and consistent throughout the plan; (c) assumptions and valuations made within the plan are explained; (d) references to documents not contained in the plan and any annexes supplement the plan in a way which substantially contributes to identifying options to maintain or restore the financial strength and viability of the entity or entities that it covers;

(2) the relevance of information contained in the plan is considered to be established if such information focuses on identifying options to maintain or restore the financial strength and viability of the institution or group;

(3) the comprehensiveness of the recovery plan is considered to be established if, taking into account in particular the nature of the business of the entity or entities covered by the plan and their size and interconnectedness to other institutions and groups and to the financial system in general: (a) the plan provides a sufficient level of detail concerning the information required to be included in recovery plans pursuant to Articles 5 and 7 of Directive 2014/59/EU; (b) the plan contains a sufficiently wide range of recovery options and indicators, taking into account the guidelines issued by the EBA in accordance with Article 9(2) of Directive 2014/59/EU that further specify the indicators to be included in recovery plans, by making every effort to comply with them in line with Article 16(3) of Regulation (EU) No 1093/2010;

(4) the internal consistency of the plan is considered to be established: (a) in the case of an individual recovery plan, if there is internal consistency of the plan itself; (b) in the case of a group recovery plan, if there is internal consistency of the group plan itself; (c) where plans have been required for subsidiaries on an individual basis pursuant to Article 7(2) of Directive 2014/59/EU, there is internal consistency between these plans and the group recovery plan.

Article 18

Implementation of the arrangements proposed in the recovery plans

1. When assessing the extent to which the recovery plan satisfies the criterion set out in point (a) of Article 6(2) of Directive 2014/59/EU, the competent authority shall review the following:

(a) the level of integration and consistency of the plan with the general corporate governance and the internal processes of the entity or entities to which the plan applies and its/their risk management framework;

(b) whether the plan contains a sufficient number of plausible and viable recovery options which make it reasonably likely that the institution or group would be able to counter different scenarios of financial distress quickly and effectively;

(c) whether recovery options included in the plan set out actions which effectively address the scenarios of severe macroeconomic and financial stress reflected in accordance with Article 5(6) of Directive 2014/59/EU;

(d) whether the timeline for implementing the options is realistic and is taken into account in the procedures designed to ensure implementation of recovery actions;

(e) the level of the institution's or group's preparedness to redress the situation of financial stress, as determined in particular by assessing whether the preparatory measures necessary have been adequately identified and, where appropriate, those measures have been implemented or a plan to implement them has been prepared;

(f) the adequacy of the range of scenarios of severe macroeconomic and financial stress against which the plan has been tested;

(g) the adequacy of the processes for testing the plan against the scenarios referred to in point (f) and the extent to which the analysis of recovery options and indicators in each scenario is verified by that testing;

(h) whether the assumptions and valuations made within the plan and each recovery option are realistic and plausible.

2. The plausibility of each recovery option set out in the plan as referred to in point (b) of paragraph 1 shall be assessed taking into account all of the following elements:

(a) the extent to which its implementation is within the institution's or group's control and the extent to which it would rely on action by third parties;

(b) whether the plan includes a sufficiently wide range of recovery options and appropriate indicators, conditions and procedures to ensure timely implementation of these options;

(c) the extent to which the plan considers reasonably foreseeable impacts of the implementation of the proposed recovery option on the institution or group;

(d) whether the plan and in particular the recovery options would be likely to maintain the viability of the institution or group and restore its financial soundness;

(e) if applicable, the extent to which the institution or group, or competitors with similar characteristics, have managed a previous episode of financial stress with similar characteristics to the scenario being considered by using the recovery options described, in particular as regards timely implementation of recovery options and, in the case of a group recovery plan, the coordination of recovery options within the group.

Article 19

Recovery options

When assessing the extent to which the recovery plan satisfies the criterion set out in point (b) of Article 6(2) of Directive 2014/59/EU, the competent authority shall review the following:

(1) whether it is reasonably likely that the plan and individual recovery options can be implemented in a timely and effective manner even in situations of severe macroeconomic or financial stress;

(2) whether it is reasonably likely that the plan and particular recovery options can be implemented to an extent which sufficiently achieves their objectives without any significant adverse effect on the financial system;

(3) whether the range of recovery options sufficiently reduces the risk that obstacles to implementing those options or adverse systemic effects arise due to the recovery actions of other institutions or groups being taken at the same time;

(4) the extent to which the recovery options may conflict with those of institutions or groups which have similar vulnerabilities, for example due to their similar business models, strategies or scope of activity, if the options were implemented at the same time;

(5) the extent to which the implementation of recovery options by several institutions or groups at the same time is likely to negatively affect the impact and feasibility of those options.

Article 20

Specific requirements for group recovery plans

When assessing the extent to which a group recovery plan satisfies the criteria set out in Article 7(4) and (6) of Directive 2014/59/EU, the competent authority shall review the following:

(1) the extent to which the plan can stabilise the group as a whole and any institution of the group, in particular taking into account: (a) the availability of recovery options at the group level to restore where necessary the financial position of a subsidiary, without disturbing the group's financial soundness; (b) whether, following the implementation of a particular recovery option, the group as a whole, and any institution within the group which would be intended to continue to carry on business under that recovery option, would still have a viable business model; (c) the extent to which arrangements included in the plan ensure the coordination and consistency of measures to be taken at the level of the parent undertaking or of an institution subject to consolidated supervision pursuant to Chapter 3 of Title VII of Directive 2013/36/EU, or at the level of individual institutions, respectively. The extent to which governance processes included in the plan take into account the governance structure of individual subsidiaries and any relevant legal restrictions shall be reviewed in particular;

(2) the extent to which the plan provides solutions to overcome any obstacles to the implementation of recovery measures within the group which are identified in relation to a scenario provided for in Article 5(6) of Directive 2014/59/EU; if the obstacles cannot be overcome, the extent to which alternative recovery measures could achieve the same objectives;

(3) the extent to which the plan provides solutions to overcome any substantial practical or legal impediments to a prompt transfer of own funds or the repayment of liabilities or assets within the group which are identified; if the impediments cannot be overcome, the extent to which alternative recovery options could achieve the same objectives.

Article 21

Nature of the entity or entities being assessed

When assessing the overall credibility of a recovery plan in accordance with Articles 18, 19 and 20, the competent authority shall take into account the nature of the business of the entity or entities covered by the plan, their size and their interconnectedness to other institutions and groups and to the financial system in general.







CHAPTER II

RESOLUTION PLANS







SECTION I

Content of resolution plans

Article 22

Categories of information to be included in resolution plans

A resolution plan shall contain at least the elements laid down in points (1) to (8) of this Article, including all information required under Articles 10 and 12 of Directive 2014/59/EU and any additional information necessary to enable the delivery of the resolution strategy:

(1) a summary of the plan, including a description of the institution or group and a summary of items referred to in points (2) to (8);

(2) a description of the resolution strategy considered in the plan, including: (a) identification of the different resolution actions foreseen under the plan; (b) identification of the legal entity or entities to which resolution actions would be applied; (c) identification of any critical functions or core business lines which will be maintained and any which are expected to be separated from other functions; (d) an estimation of the time frame for executing each material aspect of the plan, as required pursuant to point (d) of Article 10(7) of Directive 2014/59/EU; (e) a detailed description of any variants of the preferred resolution strategy considered to address circumstances in which the preferred strategy cannot be implemented; (f) a description of the decision-making process for implementing the resolution strategy, including the time frame required for decisions; (g) for group resolution plans, arrangements for cooperation and coordination between resolution and other relevant authorities of Member States in which group entities are located or have significant branches and relevant authorities of third countries in which group entities are located, in lines with the written arrangements and procedure as set out in Chapter VI, Section I;

(3) a description of the information, and the arrangements for the provision of this information, necessary in order to effectively implement the resolution strategy, including at least: (a) a description of the information, and processes for ensuring availability in an appropriate timescale of that information required for the purposes of valuation, in particular pursuant to Articles 36 and 49 of Directive 2014/59/EU, and market ability, in particular pursuant to the marketing requirements for the sale of business and bridge bank tools; (b) a mapping of critical functions and core business lines to legal entities which identifies in particular the critical functions and core business lines carried out by entities subject to resolution actions and the critical functions or core business lines spread across legal entities which would be separated by implementation of the resolution strategy; (c) a description of the arrangements for the sharing of information between resolution authorities and other relevant authorities, including where relevant authorities in other Member States or in third countries, in accordance with Article 90 of Directive 2014/59/EU; (d) a detailed description of arrangements for ensuring that information pursuant to Article 11 of Directive 2014/59/EU is up to date and available to resolution authorities when required;

(4) a description of arrangements to ensure operational continuity of access to critical functions during resolution, including at least the description of: (a) critical shared systems and operations which need to be continued to maintain continuity of critical functions and arrangements for ensuring the contractual and operational robustness of their provision in resolution; (b) internal and external interdependencies which are critical to the maintenance of operational continuity; (c) arrangements for ensuring any access to payment systems or other financial infrastructures necessary to maintain critical functions, including an assessment of the portability of client positions;

(5) a description of the financing requirements and financing sources necessary for the implementation of the resolution strategy foreseen in the plan, including at least: (a) the description of financing, funding and liquidity requirements implied by the resolution strategy; (b) the description of potential sources of resolution funding, including the terms of financing, preconditions for their use, the timing of their availability, the entities to which they may provide financing, and any collateral requirements; (c) where relevant, a description and analysis of how and when an institution or group may apply, in the conditions addressed by the resolution plan, for the use of central bank facilities (other than emergency liquidity assistance or other assistance on non-standard terms) in resolution, including identification of available collateral; (d) for groups, the description of any principles agreed for sharing responsibility for financing between sources of funding in different jurisdictions, including between sources of funding in different Member States pursuant to point (f) of Article 12(3) of Directive 2014/59/EU;

(6) plans for communication with critical stakeholder groups, including at least: (a) the management, owners, and staff of the institution or group including procedures for consultation with staff and, where applicable, dialogue with social partners in the resolution process, and an assessment of the impact of the plan on employees; (b) customers, media and the general public; (c) depositors, shareholders, bondholders, counterparties, financial market infrastructures, and other affected market participants; (d) any administrative or judicial bodies from whom approval or authorisation critical to implementing the resolution strategy is required; (e) any advisors required to implement the resolution strategy;

(7) the conclusions of the assessment of resolvability, including at least: (a) whether or not the institution or group is currently resolvable; (b) a summary of the conclusions of the liquidation assessment required in point (a) of Article 23(1); (c) a detailed description of any impediments to resolvability identified, and of any measures proposed by the institution or group or required by the resolution authority to address or remove those impediments; (d) a quantified assessment of any change to minimum requirements for eligible liabilities, or the appropriate location of eligible liabilities, that is required to remove or address impediments to resolvability, taking into account the criteria specified in Article 45(6) of Directive 2014/59/EU and further specified in the delegated acts adopted pursuant to Article 45(2) of Directive 2014/59/EU;

(8) any opinion expressed by the institution or group in relation to the resolution plan.







SECTION II

Assessment of resolvability

Article 23

Stages of assessment

1. Resolution authorities shall assess resolvability based on the following consecutive stages:

(a) assessment of the feasibility and credibility of the liquidation of the institution or group under normal insolvency proceedings in accordance with Article 24;

(b) selection of a preferred resolution strategy for assessment in accordance with Article 25;

(c) assessment of the feasibility of the selected resolution strategy in accordance with Articles 26 to 31;

(d) assessment of the credibility of the selected resolution strategy in accordance with Article 32.

2. Where the resolution authority considers that it is clear that institutions or groups pose similar risks to the financial system or that the circumstances in which their liquidation is unlikely to be feasible are similar, that resolution authority may conduct the assessment of the feasibility and credibility of the liquidation of those institutions or groups in a similar or identical manner.

The types of institutions referred to in the first subparagraph may in particular be determined in accordance with the criteria referred to in Article 98(1)(j) of Directive 2013/36/EU.

3. Where a resolution authority concludes that it may not be feasible or credible to wind up the institution or group entities under normal insolvency proceedings, or that resolution action may otherwise be necessary in the public interest because winding up under normal insolvency proceedings would not meet the resolution objectives to the same extent, it shall identify a preferred resolution strategy which is appropriate for the institution or group on the basis of information provided by the institution or group pursuant to Article 11 of Directive 2014/59/EU and the criteria set out in this Regulation. To the extent necessary, it shall also identify variant strategies to address circumstances in which the strategy would not be feasible or credible.

4. The assessments of the feasibility and credibility of the preferred resolution strategy shall include assessment of any variant strategies proposed as part of that strategy.

5. Resolution authorities shall request from the institution or group in accordance with Article 11 of Directive 2014/59/EU such additional information as is necessary to carry out the assessments of the preferred and variant strategies.

6. Where appropriate, a resolution authority shall revise the preferred resolution strategy or consider alternative strategies on the basis of a completed assessment of feasibility and of the credibility of a preferred resolution strategy referred to in paragraph 4.

7. Where a resolution authority revises the preferred resolution strategy it shall assess the feasibility and the credibility of that revised preferred resolution strategy in accordance with Articles 26 and 27 respectively.

Article 24

Feasibility and credibility of liquidation under normal insolvency proceedings

1. Resolution authorities shall assess the feasibility and credibility of liquidation of the institution or group under normal insolvency proceedings, as well as the impact that liquidation would have in the reliance on extraordinary public financial support as compared to resolution.

2. When assessing the credibility of liquidation, resolution authorities shall consider the likely impact of the liquidation of the institution or group on the financial systems of any Member State or of the Union to ensure the continuity of access to critical functions carried out by the institution or group and achieving the resolution objectives of Article 31 of Directive 2014/59/EU. For this purpose, resolution authorities shall take into account the functions performed by the institution or group and assess whether liquidation would be likely to have a material adverse impact on any of the following:

(a) financial market functioning and market confidence;

(b) financial market infrastructures, in particular: (i) whether the sudden cessation of activities would constrain the normal functioning of financial market infrastructures in a manner which negatively impacts the financial system as a whole; (ii) whether and to what extent financial market infrastructures could serve as contagion channels in the liquidation process;

(c) other financial institutions, in particular: (i) whether liquidation would raise the funding costs of or reduce the availability of funding to other financial institutions in a manner which presents a risk to financial stability; (ii) the risk of direct and indirect contagion and macroeconomic feedback effects;

(d) the real economy and in particular the availability of critical financial services.

3. If the resolution authority concludes that liquidation is credible, it shall assess the feasibility of liquidation.

4. For this purpose resolution authorities shall consider whether the institution's or group's systems are able to provide the information required by the relevant deposit guarantee schemes for the purposes of providing payment to covered deposits in the amounts and time frames specified in Directive 2014/49/EU of the European Parliament and of the Council ( 2 ), or where relevant in accordance with equivalent third country deposit guarantee schemes, including on covered deposit balances.

Resolution authorities shall also assess whether the institution or the group has the capability required to support the deposit guarantee schemes' operations, in particular by distinguishing between covered and non-covered balances on deposit accounts.

Article 25

Identification of a resolution strategy

1. Resolution authorities shall assess whether a candidate resolution strategy is appropriate to achieve the resolution objectives given the structure and business model of the institution or group, and the resolution regimes applicable to legal entities in a group. A resolution action may be taken in the public interest if it is necessary for the achievement of and is proportionate to one or more of the resolution objectives and winding up of the institution under normal insolvency proceedings would not meet those resolution objectives to the same extent.

2. In particular for groups, resolution authorities shall assess whether it would be more appropriate to apply a single point of entry or a multiple point of entry strategy.

3. For these purposes resolution authorities shall consider at least the following matters:

(a) what resolution tools would be used under the preferred resolution strategy and whether those resolution tools are available for legal entities to which the resolution strategy proposes to apply them;

(b) the amount of qualifying eligible liabilities under the proposed resolution strategy, the risk of not contributing to loss absorption or recapitalisation, and the legal entities issuing those qualifying eligible liabilities, taking into account that: (i) single point of entry is more likely to be appropriate if sufficient externally issued eligible liabilities, or liabilities expected to contribute to loss absorption and recapitalisation under the proposed resolution strategy are issued by the top parent or group holding company; (ii) multiple point of entry is more likely to be appropriate if the group's eligible liabilities or liabilities expected to contribute to loss absorption and recapitalisation under the proposed resolution strategy are issued by more than one entity or regional or functional subgroup in the group which would be resolved;

(c) the contractual or other arrangements in place for losses to be transferred between legal entities in a group;

(d) the operational structure and business model of the institution or group, and in particular whether it is highly integrated or has a decentralised structure with a high degree of separation between different parts of the institution or group, taking into account that: (i) single point of entry is more likely to be appropriate if a group operates in a highly integrated manner, including by having centralised liquidity management, risk management, treasury functions, or IT and other critical shared services; (ii) multiple point of entry is more likely to be appropriate if a group's operations are divided into two or more clearly identifiable subgroups, each of which is financially, legally or operationally independent from other parts of the group, and any critical operational dependencies on other parts of the group are based on robust arrangements that ensure their continued operation in the event of resolution;

(e) the enforceability of resolution tools which would be applied, in particular in third countries;

(f) whether the resolution strategy requires supporting action by other authorities, in particular in third countries, or requires such authorities to refrain from independent resolution actions; and whether any such actions are feasible and credible for those authorities.

4. Resolution authorities shall assess whether variants of the resolution strategy are necessary to address scenarios or circumstances where the resolution strategy cannot be feasibly and credibly implemented.

5. Resolution authorities shall consider the extent to which any variant strategy is likely to achieve the resolution objectives and in particular ensure the continuity of critical functions.

Measures to remove impediments to variants of the resolution strategy shall only be implemented if they do not impair the feasible and credible implementation of the preferred resolution strategy.

Article 26

Assessment of feasibility of a resolution strategy

1. Resolution authorities shall assess whether it is feasible to apply the selected resolution strategy effectively in an appropriate time frame and shall identify potential impediments to the implementation of the selected resolution strategy.

2. Resolution authorities shall consider impediments to the short-term stabilisation of the institution or group. Resolution authorities shall also consider any foreseeable impediments to a business reorganisation which is required pursuant to Article 52 of Directive 2014/59/EU or otherwise likely to be required if the resolution strategy envisages all or part of the institution or group being restored to long-term viability.

3. Impediments shall be classified in at least the following categories:

(a) structure and operations;

(b) financial resources;

(c) information;

(d) cross-border issues;

(e) legal issues.

Article 27

Assessment of feasibility: structure and operations

Resolution authorities shall consider at least the following issues in assessing whether there are potential impediments to resolution related to the structure and operations of the institution or group:

(1) matters addressed in points 1 to 7, 16, 18 and 19 of Section C of the Annex to Directive 2014/59/EU;

(2) dependencies of material entities and core business lines on infrastructure, information technology, treasury or finance functions, employees or other critical shared services;

(3) whether governance, control, and risk management arrangements are consistent with any planned changes to the structure of the institution or group;

(4) whether the legal and franchise structure of the institution or group is consistent with any planned changes to the business structure of the institution or group;

(5) whether appropriate resolution tools are available with respect to each legal entity as required to deliver the resolution strategy.

Article 28

Assessment of feasibility: financial resources

Resolution authorities shall consider at least the following issues in assessing whether there are potential impediments to resolution related to financial resources:

(1) matters addressed in points 13, 14, 15 and 17 of Section C of the Annex to Directive 2014/59/EU;

(2) the need to identify and quantify the amount of any liabilities which are likely under the preferred resolution strategy not to contributing to loss absorption or recapitalisation, considering at a minimum the following factors: (i) maturity; (ii) subordination ranking; (iii) the types of holders of the instrument, or the instrument's transferability; (iv) legal impediments to loss absorbency such as lack of recognition of resolution tools under foreign law or existence of set-off rights; (v) other factors creating risk that the liabilities would be exempted from absorbing losses in resolution; (vi) the amount and issuing legal entities of qualifying eligible liabilities or other liabilities which would absorb losses;

(3) the size of funding needs in the run-up to and during resolution, the availability of sources of funding, and impediments to the transfer of funds as required within the institution or group;

(4) whether appropriate arrangements are specified for losses to be transferred to legal entities to which resolution tools would be applied from other group companies, including where relevant an assessment of the amount and loss-absorbency of intragroup funding.

Article 29

Assessment of feasibility: information

Resolution authorities shall consider at least the following issues in assessing whether there are potential impediments to resolution related to information:

(1) matters addressed in points 8 to 12 of Section C of the Annex to Directive 2014/59/EU;

(2) the capability of the institution or group to provide information on the amount, and location within the group, of assets which would be expected to qualify as collateral for central bank facilities;

(3) the capability of the institution or group to provide information to carry out a valuation to determine the amount of write-down or recapitalisation required.

Article 30

Assessment of feasibility: cross-border issues

Resolution authorities shall consider at least the following issues in assessing whether there are potential impediments to resolution related to cross-border issues:

(1) matters addressed in point 20 of Section C of the Annex to Directive 2014/59/EU;

(2) existence of adequate processes for coordination and communication and assurances on actions to be taken between home and host authorities, including in third countries, to enable delivery of the resolution strategy;

(3) whether law in relevant home and host jurisdictions overrides contractual termination rights in financial contracts that are triggered solely by the failure and resolution of an affiliated company.

Article 31

Assessment of feasibility: other potential impediments

The following legal issues shall be considered in assessing potential impediments to resolution:

(1) whether requirements for regulatory approvals or authorisations necessary to deliver the resolution strategy can be met in a timely manner;

(2) whether significant contractual documentation permits termination of contracts on entry into resolution;

(3) whether contractual obligations which cannot be disapplied by the resolution authority prohibit any transfer of assets and/or liabilities envisaged in the resolution strategy.

Article 32

Assessment of credibility of a resolution strategy

1. After assessing the feasibility of the selected resolution strategy, resolution authorities shall assess its credibility, taking into consideration the likely impact of resolution on the financial systems and real economies of any Member State or of the Union, with a view to ensuring the continuity of critical functions carried out by the institution or group. The assessment shall include evaluation of matters addressed in points 21 to 28 of Section C of the Annex to Directive 2014/59/EU.

2. In conducting this assessment, resolution authorities shall consider the likely impact of the implementation of the resolution strategy on the financial systems of any Member State or of the Union. For this purpose, resolution authorities shall take into account the functions performed by the institution or group and assess whether implementation of the resolution strategy would be likely to have a material adverse impact on any of the following:

(a) financial market functioning, and in particular market confidence;

(b) financial market infrastructures, and in particular: (i) whether the sudden cessation of activities would constrain the normal functioning of financial market infrastructures in a manner which negatively impacts the financial system as a whole; (ii) whether and to what extent financial market infrastructures could serve as contagion channels in the liquidation process;

(c) other financial institutions, and in particular: (i) whether liquidation would raise the funding costs of or reduce the availability of funding to other financial institutions in a manner which presents a risk to financial stability; (ii) the risk of direct and indirect contagion and macroeconomic feedback effects;

(d) the real economy and in particular on the availability of financial services.







CHAPTER III

INTRA GROUP FINANCIAL SUPPORT

Article 33

Prospect to redress financial difficulties

1. The condition of a reasonable prospect that the support provided significantly redresses the financial difficulties of the group entity receiving the financial support (‘receiving entity’) shall be considered as being met, where such prospect of redress is supported by the following elements:

(a) the capital and liquidity needs of the receiving entity identified by a description of the capital and liquidity situation of the receiving entity and a projection of its capital and liquidity needs are covered for a sufficient period of time, taking into account all other relevant financial sources from which those needs could be met, the timescale required to redress the financial difficulties and the term of the support;

(b) the analysis of the financial situation and of the internal and external causes for the financial difficulties, in particular of the business model and the risk management of the receiving entity, and of past, present and expected market conditions does not contradict the prospect of redress;

(c) an action plan describing measures for the redress of the financial situation of the receiving entity, including where necessary a revision of its business model and risk management;

(d) the underlying assumptions in the descriptions and projections mentioned in points (a), (b) and (c) are coherent and plausible and take into account the stressed condition of the receiving entity, the current market conditions and potential adverse developments.

2. When assessing the condition referred to in paragraph 1, the competent authority referred to in Article 25(2) of Directive 2014/59/EU shall take into account information and assessments provided by the competent authority responsible for the receiving entity.

Article 34

Terms of the support

1. The terms, including consideration, for providing the financial support shall be deemed to be in compliance with Article 19(7) of Directive 2014/59/EU, if the following conditions are met:

(a) the terms adequately reflect: (i) the default risk of the receiving entity; (ii) the seniority of the claim; (iii) the expected loss for the group entity providing the support (‘providing entity’) in the event of a default of the receiving entity; (iv) in case of a loan or committed facility, the maturity profile, based on a full disclosure of all relevant and up-to-date information by the receiving entity and further information available to the providing entity;

(b) the terms reflect the best interest of the providing entity in accordance with Article 19(7) of Directive 2014/59/EU and the relation of benefits, risks and costs taken into account when determining the best interest, including direct or indirect benefits that may accrue to the providing entity as a result of the provision of financial support and of the benefits for the group from this provision.

For the purposes of point (a)(iv), an anticipated temporary impact on market prices arising from events external to the group does not need to be taken into account, if a plausible projection of the market situation supports the assumption that the extent of this impact and its duration do not jeopardise the ability of the receiving entity to meet all of its liabilities as they fall due.

2. The assessment of the conditions referred to in points (a) and (b) of paragraph 1 shall be based on a comparative analysis of the default risk of the receiving entity for each of the cases if the support is or is not provided.

The analysis of the default risk shall be based on the elements set out in Article 33. This analysis is without prejudice to considering, for the purpose of the assessment of the relation of benefits, risks and costs on a case-by-case basis and at the discretion of the competent authority responsible for the providing entity, further elements that the providing entity would consider in a credit assessment when deciding on granting a loan on the basis of all information available to the providing entity.

3. The assessment shall include potential damage to franchise, refinancing and reputation and benefits from an efficient use and fungibility of the group's capital resources and its refinancing conditions.

To the extent possible, the benefits and costs taken into account in determining the best interest shall be quantified in monetary terms. In addition, the discount granted to the receiving entity compared to market terms shall be quantified, including in relation to haircuts on collateral or interest rates.

4. When assessing the best interest, any binding commitments in the financial support agreement sustaining the assumptions on the future business model and risk management of the receiving entity shall be taken into account.

5. The competent authority shall take into account information and assessments provided by the competent authority responsible for the receiving entity.

Article 35

Liquidity and solvency of the providing entity

1. Subject to the condition specified in point (g) of Article 23(1) of Directive 2014/59/EU, the provision of the financial support shall be considered not to jeopardise the liquidity or solvency of the providing entity if, following the provision of the financial support:

(a) the assets of the providing entity can be reasonably expected to be at all times higher than its liabilities;

(b) the providing entity can be reasonably expected to comply with the following: (i) to be able to pay all of its liabilities as they fall due; (ii) not to infringe the requirements on solvency and liquidity under Directive 2013/36/EU and Regulation (EU) No 575/2013 in a way that would justify the withdrawal of the authorisation by the competent authority.

2. The assessment shall take into account the default risk of the receiving entity and the loss for the providing entity resulting from the default of the receiving entity also having regard to a potential adverse development. The assessment shall comply with the appropriate prudential requirements of proper risk management for the providing entity.

Article 36

Resolvability of the providing entity

1. The provision of the financial support shall be considered not to undermine the resolvability of the providing entity, if the provision of the financial support does not make the implementation of the resolution strategy for the providing entity as set out in the resolution plan substantively less feasible or less credible, in accordance with the assessment under Articles 15 and 16 of Directive 2014/59/EU.

That assessment shall take into account in particular the impact of the provision of the financial support on:

(a) the potential absorption of losses within the group after the resolution conditions have been met;

(b) the interconnectedness of the providing entity with the receiving entity;

(c) the risk of contagion within the group;

(d) the group's complexity increased by the provision of the financial support;

(e) the capital and liquidity situation of the providing entity.

2. If providing entities are not fully informed about a preferred resolution strategy, they shall perform the assessment referred to in paragraph 1 on the basis of the information available to them about the resolution plan.

3. The competent authorities and resolution authorities responsible for the providing entity shall cooperate closely in determining the impact of the group financial support on the resolvability of the providing entity.







CHAPTER IV

INDEPENDENCE OF VALUERS

Article 37

Definitions

For the purposes of this Chapter, the following definitions apply:

(1) ‘appointing authority’ means the legal or natural person responsible for selecting and appointing the independent valuer for the purposes of conducting the valuation referred to in Article 36(1) or Article 74(1) of Directive 2014/59/EU;

(2) ‘relevant entity’ means an institution or an entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU whose assets and liabilities are to be valued pursuant to Article 36 or 74 of Directive 2014/59/EU;

(3) ‘relevant public authority’ means the appointing authority, the resolution authority or the authorities referred to in points (a) to (h) of Article 83(2) of Directive 2014/59/EU, and the first authority referred to in point (i) of Article 83(2) of Directive 2014/59/EU.

Article 38

Elements of independence

A legal or natural person may be appointed as a valuer. The valuer shall be deemed to be independent from any relevant public authority and the relevant entity where all the following conditions are met:

(1) the valuer possesses the qualifications, experience, ability, knowledge and resources required and can carry out the valuation effectively without undue reliance on any relevant public authority or the relevant entity in accordance with Article 39;

(2) the valuer is legally separated from the relevant public authorities and the relevant entity in accordance with Article 40;

(3) the valuer has no material common or conflicting interest within the meaning of Article 41.

Article 39

Qualifications, experience, ability, knowledge and resources

1. The independent valuer shall possess the necessary qualifications, experience, ability and knowledge in all matters considered relevant by the appointing authority.

2. The independent valuer shall hold, or have access to, such human and technical resources as the appointing authority considers appropriate to carry out the valuation. The assessment of adequacy of resources shall take into account the nature, size and complexity of the valuation to be performed.

3. In relation to the conduct of the valuation the independent valuer shall not:

(a) seek nor take instructions or guidance from any relevant public authority or the relevant entity;

(b) seek nor accept financial or other advantages from any relevant public authority or the relevant entity.

4. Paragraph 3 shall not prevent:

(a) the provision of instructions, guidance, premises, technical equipment or other forms of support where, in the assessment of the appointing authority, or such other authority as may be empowered to conduct this task in the Member State concerned, this is considered necessary for achieving the goals of the valuation;

(b) the payment to the independent valuer of such remuneration and expenses as are reasonable in connection with the conduct of the valuation.

Article 40

Structural separation

1. The independent valuer shall be a person separate from any relevant public authority, including the resolution authority, and the relevant entity.

2. For the purposes of paragraph 1, the following requirements shall apply:

(a) in relation to natural persons, the independent valuer shall not be an employee or contractor of any relevant public authority or the relevant entity;

(b) in relation to legal persons, the independent valuer shall not belong to the same group of companies as any relevant public authority or the relevant entity.

Article 41

Material common or conflicting interests

1. The independent valuer shall not have an actual or potential material interest in common or in conflict with any relevant public authority or the relevant entity.

2. For the purposes of paragraph 1 an actual or potential interest shall be deemed material whenever, in the assessment of the appointing authority or such other authority as may be empowered to perform this task in the Member State concerned, it could influence, or be reasonably perceived to influence, the independent valuer's judgement in carrying out the valuation.

3. For the purposes of paragraph 1 interests in common or in conflict with at least the following parties shall be relevant:

(a) the senior management and the members of the management body of the relevant entity;

(b) the legal or natural persons who control or have a qualifying holding in the relevant entity;

(c) the creditors identified by the appointing authority, or such other authority as may be empowered to perform this task in the Member State concerned, to be significant on the basis of the information available to the appointing authority or such other authority as may be empowered to perform this task in the Member State concerned;

(d) each group entity.

4. For the purposes of paragraph 1 at least the following matters shall be relevant:

(a) the provision by the independent valuer of services, including the past provision of services, to the relevant entity and the persons referred to in paragraph 3, and in particular the link between those services and the elements relevant for the valuation;

(b) personal and financial relationships between the independent valuer and the relevant entity and the persons referred to in paragraph 3;

(c) investments or other material financial interests of the independent valuer;

(d) in relation to legal persons, any structural separation or other arrangements that shall be put in place to address any threats to independence such as self-review, self-interest, advocacy, familiarity, trust or intimidation, including arrangements to differentiate between those staff members who may be involved in the valuation and other staff members.

5. Without prejudice to paragraphs 3 and 4, a person shall be deemed to have an actual material interest in common or in conflict with the relevant entity where the independent valuer, in the year preceding the date on which that person's eligibility to act as independent valuer is assessed, has completed a statutory audit of the relevant entity pursuant to Directive 2006/46/EC of the European Parliament and of the Council ( 3 ).

6. Any person considered for the position of independent valuer, or appointed as an independent valuer shall:

(a) maintain, in accordance with any applicable codes of ethics and professional standards, policies and procedures to identify any actual or potential interest which may be considered to constitute a material interest in accordance with paragraph 2;

(b) without delay notify the appointing authority or such other authority as may be empowered to perform the task referred to in paragraph 2 in the Member State concerned of any actual or potential interest which the independent valuer considers may, in the assessment of the authority, be considered to amount to a material interest in accordance with paragraph 2;

(c) take appropriate steps to ensure that none of the staff or other persons involved in carrying out the valuation have any material interest of a kind as referred to in paragraph 2.







CHAPTER V

RESOLUTION







SECTION I

Contractual recognition and conversion powers

Article 42

Definitions

For the purposes of this Chapter V, Section I, the following definitions apply:

(1) ‘material amendment’ means, in relation to a relevant agreement, as defined in point 2 of this Article, entered into before the date of application of the national provisions transposing Section 5 of Chapter IV of Title IV of Directive 2014/59/EU, an amendment, including an automatic amendment, made after that date and affecting the substantive rights and obligations of a party to a relevant agreement; amendments which do not affect the substantive rights and obligations of a party to a relevant agreement include a change to the contact details of a signatory or the addressee for the service of documents, typographical changes to correct drafting errors or automatic adjustments of interest rates;

(2) ‘relevant agreement’ means any agreement, including the terms of a capital instrument, creating a liability to which Article 55(1) of Directive 2014/59/EU applies.

Article 43

Liabilities to which the exclusion from the obligation to include the contractual term referred to in Article 55(1) of Directive 2014/59/EU applies

1. For the purposes of point (a) of the first subparagraph of Article 55(1) of Directive 2014/59/EU, a secured liability shall not be considered as an excluded liability where, at the time at which it is created, it is:

(a) not fully secured;

(b) fully secured but governed by contractual terms that do not oblige the debtor to maintain the liability fully collateralised on a continuous basis in compliance with regulatory requirements of Union law or of a third country law achieving effects that can be deemed equivalent to Union law.

2. For purposes of point (d) of the first subparagraph of Article 55(1) of Directive 2014/59/EU, liabilities issued or entered into after the date of application of the provisions adopted by Member States for the transposition of Section 5 of Chapter IV of Title IV of Directive 2014/59/EU in a Member State shall comprise:

(a) liabilities created after that date, regardless of whether they are created under relevant agreements entered into before that date, including under master or framework agreements between the contracting parties governing multiple liabilities;

(b) liabilities created before or after that date under relevant agreements entered into before that date and which are subject to a material amendment;

(c) liabilities under debt instruments issued after that date;

(d) liabilities under debt instruments issued before or after that date under relevant agreements entered into before that date and which are subject to a material amendment.

3. For the purposes of the second subparagraph of Article 55(1) of Directive 2014/59/EU, a resolution authority shall determine that the requirement to include a contractual term in a relevant agreement shall not apply where it is satisfied that the law of the third country concerned or a binding agreement concluded with that third country provides for an administrative or judicial procedure which:

(a) at the request of the resolution authority, or at the initiative of the third country administrative or judicial authority whose law governs the liability or instrument, enables such duly empowered third country administrative or judicial authority, within a period which the resolution authority determines will not compromise the effective application of the write-down and conversion powers by that authority to do either of the following: (i) recognise and give effect to the exercise of the write-down and conversion powers by the resolution authority; (ii) support through the application of relevant powers the exercise of the write-down and conversion powers by the resolution authority;

(b) provides that the grounds on which a third country administrative or judicial authority may refuse to recognise or support the exercise of the write-down and conversion powers pursuant to point (a) are clearly stated and are limited to one or more of the following exceptional cases: (i) the recognition or support of the exercise of the write-down and conversion powers by the resolution authority would have adverse effects on financial stability in the third country concerned; (ii) the recognition or support of the exercise of the write-down and conversion powers by the resolution authority would result in third country creditors, in particular depositors located and payable in that third country, being treated less favourably than creditors, and depositors located or payable in the Union, with similar rights under applicable Union law; (iii) recognition or support would have material financial implications for the third country concerned; (iv) recognition or support of the exercise of write-down and conversion powers by the resolution authority would have effects contrary to the public order of the third country concerned.

4. For the purposes of the application of the second subparagraph of Article 55(1) of Directive 2014/59/EU, the resolution authority shall assess that the grounds referred to in paragraph 3(b) would not prevent the recognition or support of the exercise of the write-down and conversion powers in all circumstances where such powers are applied.

Article 44

Contents of the contractual term required by Article 55(1) of Directive 2014/59/EU

Contractual term in a relevant agreement shall include the following:

(1) the acknowledgement and acceptance by the counterparty of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU, that the liability may be subject to the exercise of write-down and conversion powers by a resolution authority;

(2) a description of the write-down and conversion powers of each resolution authority in accordance with the national law transposing Section 5 of Chapter IV of Title IV of Directive 2014/59/EU or, where applicable, under Regulation (EU) No 806/2014 of the European Parliament and of the Council ( 4 ), in particular the powers set out in points (e), (f), (g) and (j) of Article 63(1) of Directive 2014/59/EU;

(3) the acknowledgement and acceptance by the counterparty of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU: (a) that it is bound by the effect of an application of the powers referred to in point (b), including: (i) any reduction in the principal amount or outstanding amount due, including any accrued but unpaid interest, in respect of the liability of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU under the relevant agreement; (ii) the conversion of that liability into ordinary shares or other instruments of ownership; (b) that the terms of the relevant agreement may be varied as necessary to give effect to the exercise by a resolution authority of its write-down and conversion powers and such variations will be binding on the counterparty of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU; (c) that ordinary shares or other instruments of ownership may be issued to or conferred on the counterparty of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU, as a result of the exercise of the write-down and conversion powers;

(4) the acknowledgement and acceptance by the counterparty of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU, that the contractual term is exhaustive on the matters described therein to the exclusion of any other agreements, arrangements or understandings between the counterparties relating to the subject matter of the relevant agreement.







SECTION II

Notifications and notice of suspension

Article 45

General requirements for notifications

(1) Notifications submitted under Articles 81(1), (2), (3) and 83(2) of Directive 2014/59/EU shall be in writing and transmitted by adequate and safe electronic means.

(2) The relevant authorities referred to in paragraphs 1, 2 and 3 of Article 81 of Directive 2014/59/EU and in Article 83(2) shall specify the contact details for submitting a notification and make these publicly available.

(3) Before sending a notification, the sender may make contacts orally with the relevant authorities referred to in paragraphs 1, 2 and 3 of Article 81 of Directive 2014/59/EU to inform them that a notification is being submitted.

(4) For the purpose of notifications referred to in points (a), (b), (c), (d), (h) and (j) of Article 81(3) of Directive 2014/59/EU and in points (a), (b), (f) and (h) of Article 83(2) thereof, competent authorities and resolution authorities shall use the language in common use for cooperation with the consolidating supervisor and the group level resolution authority.

(5) The relevant authorities referred to in paragraphs 1, 2 and 3 of Article 81 of Directive 2014/59/EU and in Article 83(2) thereof shall acknowledge receipt of the notification to the sender specifying the date and time of receipt as recorded by the recipient and the contact details of the staff handling the notification.

Article 46

Notification by the management body to a competent authority

(1) The notifications submitted by the management body of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU to a competent authority, shall include:

(a) the name, the address of the registered office and, where available, the legal entity identifier of the institution or entity sending the notification;

(b) the name and address of the registered office of the immediate and ultimate parent undertaking of that institution or entity, where relevant;

(c) the relevant information and analyses that the management body took into account when performing the assessment for determining that the conditions under Article 32(4) of Directive 2014/59/EU have been met;

(d) a copy of the management body's written resolution confirming its assessment that the institution or the entity is failing or likely to fail;

(e) any additional information that the management body considers relevant to its assessment.

(2) The notification pursuant to Article 81(1) of Directive 2014/59/EU shall be communicated immediately to the competent authority following the decision by the management body that an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of that Directive is failing or likely to fail.

Article 47

Communication of the competent authority to the resolution authority of the received notification

Upon receipt of the notification referred to in Article 46, the competent authority shall immediately send the following information to the resolution authority:

(1) a copy of the notification received including all the information referred to in Article 46(1);

(2) the details of crisis prevention measures or actions referred to in Article 104 of Directive 2013/36/EU that the competent authority has taken or requires the institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU to take, where relevant;

(3) any additional supporting documents the competent authority deems necessary for the resolution authority to be able to take an informed decision.

Article 48

Notification of assessment that an institution meets the conditions for resolution set out in points (a) and (b) of Article 32(1) of Directive 2014/59/EU

1. The notification of a competent authority or resolution authority for the purposes of Article 81(3) of Directive 2014/59/EU shall include:

(a) the name of the institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU to which the notification relates;

(b) the information set out in points (a) and (b) of Article 46(1);

(c) a summary of the assessment required in points (a) and (b) of Article 32(1) of Directive 2014/59/EU.

2. The notification shall be made without delay following a determination that the conditions referred to in points (a) and (b) of Article 32(1) of Directive 2014/59/EU have been met.

3. The competent authority shall, without delay, provide the resolution authority with any additional information that the resolution authority may request in order to complete its assessment.

Article 49

Notice

1. The notice referred to in paragraph 4 of Article 83 of Directive 2014/59/EU to be published by the resolution authority, shall include:

(a) the name, the address of the registered office and, where available, the legal entity identifier of the institution or of the entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU under resolution;

(b) the name and address of the registered office of the immediate and ultimate parent undertaking of that institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU, where relevant;

(c) a list of the names of other group entities and related branches in respect of which resolution actions exercise their effects, including, to the extent possible, information on branches located in third countries;

(d) a summary of the relevant resolution actions that are taken, the dates from which those resolution actions take effect and in particular their effects on retail customers and which includes the following: (i) information on the access to deposits according to Directive 2014/49/EU on deposit guarantee schemes held at the institution affected by the resolution action; (ii) information on the access to other clients' assets or funds within the meaning of point (e) of Article 31(2) of Directive 2014/59/EU, held at the institution affected by the resolution action; (iii) information on the contractual payment or delivery obligations subject to suspension under Article 69 of Directive 2014/59/EU, including the commencement and expiration of the suspension period, where applicable; (iv) information on the secured creditors of the institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU under resolution subject to restrictions on the enforcement of security interest including the commencement and expiration of that restriction period in accordance with Article 70 of Directive 2014/59/EU, where applicable; (v) information on the contractual parties affected by the temporary suspension of termination rights including the commencement and expiration of the suspension period under Article 71 of Directive 2014/59/EU, where applicable;

(e) the confirmation of the ordinary course of contractual commitments, including repayment schedules, not subject to suspensions under Articles 69, 70 and 71 of Directive 2014/59/EU;

(f) the point of contact within the institution where customers and creditors can seek further information and updates on the institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU and its operations.

2. The notice shall be published as soon as reasonably practical after taking a resolution action.







CHAPTER VI

RESOLUTION COLLEGES







SECTION I

Operational organisation of resolution colleges

Article 50

Mapping and identification of resolution college members and possible observers

1. For the purposes of identifying the members and potential observers of the resolution college, the group-level resolution authority shall conduct the mapping of group entities referred to in Article 1(1) of Directive 2014/59/EU, taking into account the mapping of that group as performed by the consolidating supervisor in accordance with Article 2 of Commission Delegated Regulation (EU) 2016/98 ( 5 ) and Article 2 of Commission Implementing Regulation (EU) 2016/99 ( 6 ).

2. Upon finalisation of the mapping referred to in paragraph 1, the group-level resolution authority shall communicate the list of members and potential observers to the resolution college.

3. The group-level resolution authority shall review and update the mapping of group entities and the list of members and potential observers at least annually. It shall also review and update the mapping and the list of members and potential observers following any material change to the legal or organisational structure of the group or to its business.

4. When assessing whether to establish a resolution college in accordance with Article 88(6) of Directive 2014/59/EU, the group-level resolution authority shall also consider whether that other group or college operates in accordance with this Regulation.

Article 51

Third country resolution authorities as observers in the resolution college

1. Upon receipt of a relevant request from a third country resolution authority as referred to in Article 88(3) of Directive 2014/59/EU, the group-level resolution authority shall communicate the request to the resolution college.

2. The communication shall be accompanied by all of the following:

(a) the opinion of the group-level resolution authority, also having regard to point (b), on the equivalence of the confidentiality and professional secrecy regime applicable to the candidate observer;

(b) the terms and conditions of observers' participation in the resolution college that shall be included in the written arrangements and procedures as proposed by the group-level resolution authority;

(c) the view of the group-level resolution authority as to the significance of the relevant branch, if the candidate is a third-country resolution authority for a branch;

(d) the setting of a time limit, upon the expiration of which consent shall be assumed: within that time limit any disagreeing resolution college member referred to in Article 88(2)(b), (c) or (d) of Directive 2014/59/EU may express its fully reasoned objection to the opinion of the group-level resolution authority referred to in point (a) of this paragraph.

3. When an objection is expressed, the group-level resolution authority shall take it into account before making its final decision. For that purpose, it may also request the explicit views of the members of the college referred to Article 88(2)(b), (c) and (d) of Directive 2014/59/EU and take into account the majority of the views thereon.

4. When the group-level resolution authority makes the decision to invite the resolution authority of the third country, it shall send an invitation to the candidate observer. The invitation shall be accompanied by the terms and conditions of participation as an observer set out in the written arrangements. The candidate receiving the invitation shall be considered an observer upon acceptance of the invitation, which shall be deemed as acceptance of the terms and conditions of participation.

5. Following acceptance, the group-level resolution authority shall transmit an updated outcome of the mapping referred in Article 50 to the resolution college.

Article 52

Communication with the Union parent undertaking

1. The group-level resolution authority shall ensure regular interaction and cooperation with the Union parent undertaking to enhance the efficient and effective functioning of the resolution college.

2. The group-level resolution authority shall communicate to the Union parent undertaking the establishment of the resolution college and a list of its members and observers, as well as any change to the members and observers of the resolution college.

Article 53

Establishment and update of contact lists

1. The group-level resolution authority shall maintain and share with the resolution college members and observers contact details of nominated persons from each member and observer for the purpose of performing resolution college tasks.

The contact details should also include out-of-hours contact details to be used for emergency situations and in particular for the purpose of deciding on the need to establish and agree on a group resolution scheme.

2. The group-level resolution authority shall ensure that it receives from all college members and observers contact details of the relevant contact persons and is informed without undue delay on all relevant changes.

Article 54

Elements of written arrangements and procedures for the functioning of the resolution college

1. The written arrangements and procedures pursuant to Article 88(5)(a) of Directive 2014/59/EU shall include at least the following elements:

(a) a description of the group, the Union parent undertaking, the subsidiaries and significant branches;

(b) the identification of the college members and observers;

(c) a description of the general resolution college framework for cooperation between authorities and coordination of activities and tasks.

2. The general framework for cooperation and coordination shall include all of the following:

(a) a description of the different resolution college substructures for the performance of different tasks, where relevant. For that purpose, in particular with regard to college members concluding joint decisions, the group-level resolution authority shall consider the need of organising the resolution college in various substructures;

(b) an identification of the college members and observers participating in specific college activities. For that purpose, the group-level resolution authority shall ensure that the various college substructures, including substructures involving observers, shall not result in constraining or pre-empting the process of the joint decision-making in particular with regard to those members of the college who are required to conclude joint decisions in accordance with the relevant provisions of Directive 2014/59/EU;

(c) a description of the framework, the terms and conditions of the participation of the observers in the resolution college, including terms and conditions of their involvement in the various dialogues and processes of the college as well as their rights and obligations with regard to exchanging information having regard to Articles 90 and 98 of Directive 2014/59/EU. The group-level resolution authority shall ensure that the general framework and terms and conditions of the observers' participation are not more favourable than the framework, terms and conditions set out for college members in accordance with this Regulation and the relevant written arrangements of the particular college;

(d) a description of cooperation and coordination arrangements in emergency situations, especially of systemic nature, which may pose threats to the viability of any of the group entities;

(e) a description of the processes to be followed, when joint decision is not required but the formation of a common understanding within the resolution college or within any of its substructures appears necessary;

(f) a description of the arrangements for exchanging information including the relevant scope, frequency and communication channels having regard to Articles 90 and 98 of Directive 2014/59/EU and to the role of the group-level resolution authority as the coordinator for collecting and disseminating information amongst college members and observers;

(g) a description of relevant information to be shared with resolution college members and observers in particular in relation to resolution planning, resolvability assessment and other tasks referred to in Article 88(1) of Directive 2014/59/EU also having regard to Articles 90 and 98 of Directive 2014/59/EU and to the role of the group-level resolution authority;

(h) a description of the arrangements for the treatment of confidential information having regard to Articles 90 and 98 of Directive 2014/59/EU;

(i) a description of procedures for hosting regular and ad hoc physical meetings;

(j) a description of the method for coordinating the input to be provided independently by the resolution authorities to the supervisory college or to the consolidating supervisor, where required by legislation or on an own initiative basis;

(k) a description of the method for communicating the input referred to in point (j), in particular a description of the relevant role of the group-level resolution authority in communicating that input to the consolidating supervisor;

(l) a description of the communication policy with the consolidating supervisor, the competent authorities in the relevant Member States, the Union parent undertaking and the entities of the group referred to in Article 58;

(m) any other agreement concerning the functioning of the resolution college; and

(n) any provisions covering discontinuance arrangements.

Article 55

Establishment and update of written arrangements and procedures for the functioning of the resolution college

1. The group-level resolution authority shall prepare its proposal for the written arrangements and procedures for the functioning of the resolution college in accordance with Article 54.

2. The group-level resolution authority shall communicate its proposal to the members of the resolution college for consultation, inviting them to provide their opinion and indicating the time-line for the submission of those opinions.

3. The group-level resolution authority shall take into account the opinions of the members of the resolution college and reason its decision when not taking them into account.

4. Upon finalisation the