Opinion of the European Central Bank of 4 November 2015 on the institutional framework for resolution of institutions (CON/2015/42)
Date: 2015-11-04
Institutions: European Central Bank
Subjects: Belgium, central bank, financial institution, financial intervention, financial stability, financial supervision, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 4 November 2015 

on the institutional framework for resolution of institutions 

(CON/2015/42) 

Introduction and legal basis 

On 24 September 2015, the European Central Bank (ECB) received a request from the Governor of the 

Nationale Bank van België/Banque Nationale de Belgique (NBB), on behalf of the Minister for Finance, for 

an opinion on a draft law relating to various financial provisions, creating an administrative service with an 

autonomous  accounting  ‘social  activities’  and  containing  a  provision  with  regard  to  equality  between 

women and men (hereinafter the ‘draft law’). The ECB has been asked to deliver an opinion within one 

month  in  order  to  enable  the  Belgian  government  to  take  the  ECB  opinion  into  consideration  before 

submitting the draft law to the parliament.  

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  and  the  third  and  sixth  indents  of  Article  2(1)  of  Council 

Decision 98/415/EC  of  29  June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities  regarding  draft  legislative  provisions1,  since  the  draft  law  relates  to  the  NBB  and  rules 

applicable to financial institutions insofar as they materially influence the stability  of financial institutions 

and  markets.  In  accordance  with  the  first  sentence  of  Article 17.5  of  the  Rules  of  Procedure  of  the 

European Central Bank, the Governing Council has adopted this opinion. 

1.  

Purpose of the draft law 

1.1   The Law of 24 April 2014 relating to the status and supervision of credit institutions (hereinafter the 
‘Law on banking’), which was the subject of a previous ECB opinion2, anticipated the adoption of 
Directive 2014/59/EU of the European Parliament and of the Council3, in designating NBB as the 

national  resolution  authority and  introducing  resolution mechanisms for  institutions that  are  under 

resolution under Directive 2014/59/EU. 

1  
2  
3  

OJ L 189, 3.7.1998, p. 42.  
Opinion CON/2014/17. All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 

Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for 
the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, 
and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC,  2007/36/EC,  2011/35/EU,  2012/30/EU  and 
2013/36/EU,  and  Regulations  (EU)  No  1093/2010  and  (EU)  No  648/2012,  of  the  European  Parliament  and  of  the 
Council (OJ L 173, 12.6.2014, p. 190).  

 
 
 
 
                                                 
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1.2  The draft law aims first to adapt the Law on banking to Directive 2014/59/EU (the final text of which 

slightly differs from the draft on the basis of which the Law on banking was drafted) as well as to 
Regulation  (EU)  No  806/2014  of  the  European  Parliament  and  of  the  Council4.  In  particular,  the 

draft law reflects the delineation of the respective resolution powers of the Single Resolution Board 

and the NBB, the former being competent for credit institutions incorporated under Belgian law that 

are  considered  to  be  significant  in  accordance  with  Article  6(4)  of  Council  Regulation 
(EU) No 1024/20135  or 

the  ECB  has  decided 

in  accordance  with 

in  relation 

to  which 

Article 6(5)(b) of the same Regulation to exercise directly all of the relevant supervisory powers.  

1.3  The draft law also allows the NBB to waive the obligation to draft a resolution plan for an institution 

subject to the NBB’s competence which participates in an institutional protection scheme or  for a 

credit institution which participates in a federation of credit institutions. The resolution authority may 

also  deviate  from  the  specific  obligations  stipulated  in  Directive  2014/59/EU  as  regards  the 

resolution  plan,  taking  into  account  the  nature  of  the  institution’s  or  group’s  business,  its 

shareholding  structure,  its  legal  form,  its  risk  profile,  size  and  legal  status,  interconnectedness  to 

other institutions or to the financial system in general.  

1.4  Furthermore,  the  draft  law  stipulates  that  the  reduction  or  conversion  into  equity  of  a  liability  to 

which  the  bail-in  tool  has  been  applied  does  not  benefit  co-debtors  or  third  parties  that  have 

provided a personal guarantee or collateral security in respect of the bailed-in liability. In the same 

vein,  the  reduction  or  conversion  into  equity  of  the  liability  of  a  credit  institution  governed  by  the 

laws of another Member State to which a bail-in tool has been applied does not benefit co-debtors 

or third parties that have provided a personal guarantee or collateral security governed by Belgian 

law.  The  explanatory  memorandum  to  the  draft  law  explains  that  these  clarifications  are  needed 

now in the Law on banking; the royal decree providing for the technical specifications of the bail-in 

tool  will  only  enter  into  force  on  1  January  2016.  In  the  meantime,  a  guarantee  issued  under 

Belgian law to a credit institution located in a country that has already adopted legislation regarding 

bail-ins  may  already  trigger  questions  as  regards  the  impact  of  such  bail-in  on  the  obligations  of 

third  party  guarantors.  As  clarified  in  the  explanatory  memorandum,  this  situation  applies,  in 

particular,  as  regards  the  guarantee  granted  by  France,  Belgium  and  Luxembourg  in  connection 

with certain debts of Dexia Crédit Local SA. Following the example of German insolvency law and 

German  legislation  implementing  Directive  2014/59/EU,  which  is  referred  to  in  the  explanatory 

memorandum,  the  draft  law  would  therefore  provide  that  the  bail-in  of  liabilities  of  an  institution 

under resolution does not entail a corresponding benefit in respect of the obligations of third-party 

guarantors. The parties may however opt out of this principle set down in the draft law by expressly 

agreeing  that  a  guarantee  or  financial  collateral  would  not  be  protected  against  a  bail-in.  As  a 

consequence  of  the  approach  chosen  by  the  Belgian  authorities,  subsequent  claims  brought  by 

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Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform 
rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of 
a  Single  Resolution  Mechanism  and  a  Single  Resolution  Fund  and  amending  Regulation  (EU)  No 1093/2010 
(OJ L 225, 30.7.2014, p. 1). 

Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank 
concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). 

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third parties against the failing credit institution, whether by means of subrogation or in some other 

manner, would be governed by the effects of the bail-in under Belgian law and would no longer be 

capable  of  being  exercised,  to  the  extent  that  the  debt  had  been  written  off,  or  might  need  to  be 

assigned against the securities into which the debt had been converted. To achieve a similar result 

when the bail-in is governed by a foreign law, such bail-in would be considered, under the draft law, 

as  an  exception  inherent  to  the  debtor  (as  opposed  to  an  exception  inherent  to  the  debt  itself) 

within the meaning of Article 2036 of the Belgian Civil Code, such that the effects of the guarantee 

or collateral provided by third parties would be lasting, irrespective of the potential extinction of the 

bailed-in liability (or part of it) under the applicable foreign law.   

1.5  The draft law amends the Organic Statute of the NBB in order to: (a) adapt the composition of the 
Resolution  College,  which  was  the  subject  of  a  previous  ECB  opinion6,  so  that  the  chair  of  the 

Financial Services and Markets Authority now has a merely consultative role; and (b) fine-tune the 

conflict of interest and incompatibility rules of the NBB decision-making bodies. In particular, so far 

as concerns restrictions on taking up employment with private entities, the draft law stipulates that 

the  cooling-off  period  of  one  year  for  the  NBB’s  governor,  deputy  governor  and  board  members 

applies  to  all  institutions  ‘subject  to  the  supervisory  power  of  the  NBB  as  well  as  any  other 

institutions  incorporated  under  Belgian  or  foreign  law  established  in  Belgium,  or  subsidiaries  of 

such institutions and which are subject to the ECB’s supervisory power’. Reference is made to the 

same set of institutions in order to define the incompatibility rules applicable to the regents and the 

majority of the censors of the NBB.  

1.6  Finally,  the  draft  law  abolishes  the  task  previously  entrusted  to  the  NBB  to  manage  the  deposit 

guarantee scheme, which will now be discharged by the Treasury.  

2.   General observations 

The  ECB  welcomes  the  draft  law,  as  it  strengthens  the  tools  and  procedures  available  to  the  national 

authorities  for  effective  preventive  measures,  early  intervention  in  institutions  and,  if  necessary,  the 

effective resolution of institutions, in line with the common framework of intervention powers and rules laid 

down in the BRRD.   

3.   Conflict of interest and incompatibility rules 

3.1   As  regards  the  restrictions  on  taking  up  employment  with  private  entities,  the  ECB  notes  in 

particular the expansion of the list of institutions for which cooling-off periods must be observed, to 

include  credit  institutions  now  supervised  by  the  ECB.  The  ECB  welcomes  this  provision,  which 

takes into account the role the NBB plays as a national competent authority (NCA) in assisting the 

ECB in the tasks conferred upon the ECB pursuant to Council Regulation (EU) No 1024/2013. This 

should be interpreted without prejudice to the Code of Conduct of the members of the Supervisory 

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Opinion CON/2015/2.  

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Board  of  the  ECB,  which  includes  in  its  scope  any  credit  institution  supervised  by  the  ECB  and 

provides  for  the  possibility  of  extending  the  cooling-off  periods  up  to  a  maximum  of  two  years  for 
Supervisory Board members.7  

Concerning the intention to extend the incompatibility provisions as regards mandates in a financial 

institution subject to NBB/ECB supervision to  a majority of the censors, the ECB would see merit in 

examining whether a uniform regime for all censors would not be preferable. 

3.2   Resolution procedures 

The ECB notes the specific provisions introduced in the Law on banking, in order to ensure that co-

debtors and third parties that have provided personal guarantees or collateral security in respect of 

bailed-in  liabilities  are  not  discharged  of  their  respective  obligations  towards  the  creditors  of  the 

bailed-in liabilities. It would be appropriate to make clear in the draft law that the parties may opt 

out of this arrangement, as explained in the explanatory memorandum. In the same vein and in line 

with Article 53 of Directive 2014/59/EU, it would also be advisable to specify clearly in the draft law 

or the royal decree implementing the Law on banking that no subsequent claims may be brought 

by third parties by way of recourse against the institution under resolution (for example, by way of 

exercising a guarantor’s subrogation rights), except in respect of the securities into which the debt 

has been converted, if any.   

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 4 November 2015. 

[signed] 

The President of the ECB 

Mario DRAGHI  

7  

See  Article 8.4  of  the  Code  of  Conduct  for  the  members of  the  Supervisory  Board  of  the  European  Central  Bank. 
Available on the ECB’s website at www.ecb.europa.eu. 

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