Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2014/59/EU on loss-absorbing and recapitalisation capacity of credit institutions and investment firms and amending Directive 98/26/EC, Directive 2002/47/EC, Directive 2012/30/EU, Directive 2011/35/EU, Directive 2005/56/EC, Directive 2004/25/EC and Directive 2007/36/EC
Date: 2016-11-23
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: aid for restructuring, company in difficulties, credit institution, economic recession, economic stabilisation, financial aid, financial intervention, financial solvency, investment company, monetary crisis

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   EUROPEAN COMMISSION  Brussels, 23.11.2016  COM(2016) 852 final 2016/0362 (COD)   Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2014/59/EU on loss-absorbing and recapitalisation capacity of credit institutions and investment firms and amending Directive 98/26/EC,  Directive 2002/47/EC, Directive 2012/30/EU, Directive 2011/35/EU, Directive 2005/56/EC, Directive 2004/25/EC and Directive 2007/36/EC (Text with EEA relevance) {SWD(2016) 377} {SWD(2016) 378}  
 
EXPLANATORY MEMORANDUM 

1. 

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CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

The  proposed  amendments  to  Directive  2014/59/EU  (the  Bank  Recovery  and  Resolution 
Directive  or  BRRD)  are  part  of  a  legislative  package  that  includes  also  amendments  to 
Regulation  (EU)  No  575/2013  (the  Capital  Requirements  Regulation  or  CRR),  to  Directive 
2013/36/EU (the Capital Requirements Directive or CRD) and to Regulation (EU) 806/2014 
(the Single Resolution Mechanism Regulation or SRMR). 

Over  the  past  years  the  EU  implemented  a  substantial  reform  of  the  financial  services 
regulatory  framework  to  enhance  the  resilience  of  financial  institutions  in  the  EU,  largely 
based  on  global  standards  agreed  with  the  EU’s  international  partners.  In  particular,  the 
reform package included Regulation (EU) No 575/2013 (the Capital Requirements Regulation 
or  CRR)  and  Directive  2013/36/EU  (the  Capital  Requirements  Directive  or  CRD),  on 
prudential  requirements for and supervision of institutions, Directive 2014/59/EU (the Bank 
Recovery and Resolution Directive or BRRD), on recovery and resolution of institutions and 
Regulation (EU) No 806/2014 on the Single Resolution Mechanism (SRM). 

These measures were taken in response to the financial crisis that unfolded in 2007-2008.The 
absence  of  adequate  crisis  management  and  resolution  frameworks  forced  governments 
around  the  world  to  rescue  banks  following  the  financial  crisis.    The  subsequent  impact  on 
public  finances  as  well  as  the  undesirable  incentive  of  socialising  the  costs  of  bank  failure 
have  underscored  that  a  different  approach  is  needed  to  manage  bank  crises  and  protect 
financial stability.  

Within  the  Union  and  in  line  with  the  significant  steps  that  have  been  agreed  and  taken  at 
international level, Directive 2014/59/EU (Bank Recovery and Resolution Directive (BRRD)1 
and Regulation (EU) No 806/2014 (Single Resolution Mechanism Regulation (SRMR)2 have 
established a robust bank resolution framework to effectively manage bank crises and reduce 
their  negative  impact  on  financial  stability  and  public  finances.  A  cornerstone  of  the  new 
resolution framework is the “bail-in” which consists of writing down debt or converting debt 
claims  or  other liabilities  into  equity  according  to  a  pre-defined  hierarchy.    The  tool  can  be 
used to absorb losses of and internally recapitalise an institution that is failing or likely to fail, 
so that its viability is restored.  Therefore, shareholders and other creditors will have to bear 
the burden of an institution's failure instead of taxpayers.  In contrast to other jurisdictions, the 
Union bank recovery and resolution framework has already mandated resolution authorities to 
set for each credit institution or investment firm ('institution') a minimum requirement for own 
funds  and  eligible  liabilities  ('MREL'),  which  consist  of  highly  bail-inable  liabilities  to  be 
used to absorb losses and recapitalise institutions in case of failures. The delegated legislation 

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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,  OJ  L  173, 
12.6.2014, p. 190 
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 

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concerning the practical implementation of this requirement has been adopted recently by the 
Commission3. 

At the global level, the Financial Stability Board (FSB) has published on 9 November 2015 
the  Total  Loss-absorbing  Capacity  (TLAC)  Term  Sheet  ('the  TLAC  standard')  that  was 
adopted  a  week  later  at  the  G20  summit  in  Turkey4.  The  TLAC  standard  requires  global 
systemically  important  banks  ('G-SIBs'),  referred  to  as  global  systemically  important 
institutions  ('G-SIIs')  in  the  Union  legislation,  to  hold  a  sufficient  amount  of  highly  loss 
absorbing  (bail-inable)  liabilities  to  ensure  smooth  and  fast  absorption  of  losses  and 
recapitalisation in resolution.  In its Communication of 24 November 20155, the Commission 
committed to  bring forward a legislative proposal by the end of this year so that the TLAC 
standard  can  be  implemented  by  the  agreed  deadline  of  2019.  In  addition,  the  Commission 
committed to review the existing MREL rules with the view to provide full consistency with 
the  internationally  agreed  TLAC  standard  by  considering  the  findings  of  a  report  that  the 
European Banking Authority (EBA) is required to provide to the Commission under Article 
45(19) of the BRRD. An interim version of that report has already been published by the EBA 
on 19 July 20166 and the final report is expected to be submitted in the course of December 
2016. 

While  the  general  BRRD  framework  remains  valid  and  sound,  the  main  objective  of  this 
proposal is to implement the TLAC standard and to integrate the TLAC requirement into the 
general  MREL  rules  by  avoiding  duplication  by  applying  two  parallel  requirements.  
Although  TLAC  and  MREL  pursue  the  same  regulatory  objective,  there  are,  nevertheless, 
some differences between them in the way they are constructed.  The scope of application of 
MREL covers not only G-SIIs, but the entire Union banking industry.  Differently from the 
TLAC  standard,  which  contains  a  harmonised  minimum  level,  the  level  of  MREL  is 
determined  by  resolution  authorities  on  the  basis  of  a  case-by-case  institution  specific 
assessment.    Finally,  the  minimum  TLAC  requirement  should  be  met  in  principle  with 
subordinated  debt  instruments,  while  for  the  purposes  of  MREL,  subordination  of  debt 
instruments could be required by resolution authorities on a case-by-case basis to the extent it 
is  needed  to  ensure  that  in  a  given  case  bailed  in  creditors  are  not  treated  worse  than  in  a 
hypothetical insolvency scenario (which is a scenario that is counterfactual to resolution). In 
order  to  achieve  a  simple  and  transparent  framework  providing  legal  certainty  and 
consistency,  the  Commission  is  proposing  to  integrate  the  TLAC  standard  into  the  existing 
MREL rules and ensure that both requirements are met with largely similar instruments. This 

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Commission  Delegated  Regulation  (EU)  2016/1450  of  23  May  2016  supplementing  Directive 
2014/59/EU  of  the  European  Parliament  and  of  the  Council  with  regard  to  regulatory  technical 
standards specifying the criteria relating to the methodology for setting the minimum requirement for 
own funds and eligible liabilities, OJ L 237, 3.9.2016, p. 1  
FSB,  Principles on Loss-absorbing and Recapitalisation Capacity of Globally Systemically Important 
Banks (G-SIBs) in Resolution, Total Loss-absorbing Capacity (TLAC) Term sheet, 9.11.2015   
Communication from the Commission to the European Parliament, the Council, the European Central 
Bank, the European Economic and Social Committee and the Committee of the Regions, "Towards the 
completion of the Banking Union", 24.11.2015, COM(2015) 587 final. 
https://www.eba.europa.eu/documents/10180/1360107/EBA+Interim+report+on+MREL 

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approach  requires  introducing  limited  adjustments  to  the  existing  MREL  rules  ensuring 
technical consistency with the structure of any requirements for G-SIIs. 

In  particular,  further  appropriate  technical  amendments  to  the  existing  rules  on  MREL  are 
needed to align them with the TLAC standard as regards inter alia the denominators used for 
measuring loss-absorbing capacity, the interaction with capital buffer requirements, disclosure 
of risks to investors and their application in relation to different resolution strategies. While 
implementing the TLAC standard for G-SIIs, the Commission's approach will not materially 
affect  the  burden  of  institutions  which  are  not  G-SIIs  to  comply  with  the  provisions  on 
MREL. 

Operationally, the harmonised minimum level of the TLAC standard will be introduced in the 
Union through amendments to the Capital Requirements Regulation and Directive (CRR and 
CRD)7 while the institution specific add-on for G-SIIs and the institution specific MREL for 
non-G-SIIs will be dealt with through targeted amendments to the BRRD and SRMR.  This 
proposal  covers  specifically  the  targeted  amendments  to  the  BRRD  related  to  the 
implementation of the TLAC standard in the Union. As such, this proposal is part of a wider 
review  package  of  the  Union  financial  legislation  aiming  at  reducing  risks  in  the  financial 
sector (CRR/CRD review) and rendering it more resilient. 

In  addition,  based  on  views  expressed  by  many  respondents  to  the  call  for  evidence  to 
stakeholders published in September 20158, this proposal amends the BRRD with the view to 
ease  compliance  costs  of  banks  where  their  liabilities  are  governed  by  the  laws  of  third 
countries.  The  current  requirement  has  proven  difficult  to  comply  with  in  practice  thus 
bringing  limited  added  value  to  the  resolvability  of  banks.  It  is  thus  necessary  to  introduce 
more flexibility in the contractual relationships of Union banks with third country entities by 
allowing resolution authorities to waive, subject to certain strict safeguards, the obligation to 
insert contractual clauses with the aim of recognising in third countries the effects of the bail-
in of liabilities governed by the law of these third countries. In practice, the current rules are 
very difficult to enforce. 

Furthermore, at the invitation of the ECOFIN in its conclusions of 17 June 2016, this proposal 
amends the BRRD as regards the application by resolution authorities of moratorium tools in 
the course of resolution, i.e. powers to suspend the executions of bank commitments towards 
third  parties.  Harmonisation  of  such  powers  should  contribute  to  the  stabilisation  by  the 
relevant authorities of an institution in the period before, and possibly after, resolution.  

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Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on 
prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 
648/2012,  OJ  L  176,  27.6.2013,  p.1;  Directive  2013/36/EU  of  the  European  Parliament  and  of  the 
Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of 
credit  institutions  and  investment  firms,  amending  Directive  2002/87/EC  and  repealing  Directives 
2006/48/EC and 2006/49/EC, OJ L 176, 27.6.2013, p. 338   
http://ec.europa.eu/finance/consultations/2015/financial-regulatory-framework-review/docs/summary-
of-responses_en.pdf , Summary of contributions to the ‘Call for Evidence’ 

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• 

Consistency with existing policy provisions in the policy area 

The existing Union bank resolution framework already requires all European banks to hold a 
sufficient  amount  of  highly  loss  absorbing  (bail-inable)  liabilities.  By  aligning  the  existing 
requirement  for  G-SIIs  with  the  global  TLAC  standard,  the  proposal  will  improve  and 
facilitate the application of the existing rules. The proposal is, therefore, consistent with the 
overall objective of the Union bank resolution framework to reduce taxpayers' support in bank 
resolution. 

• 

Consistency with other Union policies 

The proposal is part of a wider review of the Union financial legislation (CRR/CRD review) 
aiming at reducing risks in the financial sector while promoting sustainable financing of the 
economic  activity.  It  is  fully  consistent  with  the  EU's  fundamental  goals  of  promoting 
financial stability, reducing taxpayers' support in bank resolution as well as contributing to a 
sustainable financing of the economy. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  proposed  Directive  amends  an  existing  directive,  the  BRRD.  The  legal  basis  for  the 
proposal is the same as the legal basis of the BRRD, which is Article 114 of the TFEU. That 
provision allows the adoption of measures for the approximation of national provisions which 
have as their object the establishment and functioning of the internal market. 

The  proposal  harmonises  national  laws  on  recovery  and  resolution  of  credit  institutions  and 
investment firms, in particular as regards their loss-absorbing and recapitalisation capacity in 
resolution,  to  the  extent  necessary  to  ensure  that  Member  States  and  Union  banks  have  the 
same tools and capacity to address bank failures in line with the agreed international standards 
(TLAC standard).  

By  establishing  harmonised  requirements  for  banks  in  the  Internal  Market,  the  proposal 
reduces  considerably  the  risk  of  divergent  national  rules  in  the  Member  States  on  loss-
absorbing  and  recapitalisation  capacity  in  resolution,  which  could  distort  competition  in  the 
internal market. The proposal has, therefore, as its object the establishment and functioning of 
the internal market. 

Article 114 of the TFEU is, therefore, the appropriate legal base. 

• 

Subsidiarity (for non-exclusive competence)  

Under the principle of subsidiarity set out in Article 5.3 of the TEU, in areas which do not fall 
within its exclusive competence, the Union should act only if and in so far as the objectives of 
the  proposed  action  cannot  be  sufficiently  achieved  by  the  Member  States,  either  at  central 
level  or  at  regional  and  local  level,  but  can  rather,  by  reason  of  the  scale  or  effects  of  the 
proposed action, be better achieved at Union level. 

The Union and its Member States are committed to implement international standards. In the 
absence of any Union action, Member States would have needed to implement themselves the 
global  TLAC  standard  in  their  own  jurisdictions  without  the  possibility  of  amending  the 
existing framework that stem from the BRRD and SRMR. As a result,  in view of important 

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differences between the TLAC standard and existing framework as well as possibly diverging 
interpretations of the TLAC term sheet by the national regulators, banks, in particular G-SIIs, 
would have been subject to two parallel requirements (with the TLAC minimum requirement 
itself  being  applied  differently  from  one  Member  State  to  another),  which  would  imply 
additional costs for both banks and public authorities (supervision and resolution authorities). 
Union  action  is,  therefore,  desirable  to  implement  in  a  harmonised  way  the  global  TLAC 
standard  in  the  Union  and  to  align  the  existing  framework  with  that  standard  in  order  to 
alleviate  as  much  as  possible  the  compliance  costs  of  banks  and  public  authorities  while 
ensuring an effective resolution in case of bank failures. 

• 

Proportionality 

Under  the  principle  of  proportionality,  the  content  and  form  of  Union  action  should  not 
exceed what is necessary to achieve its objectives, consistent with the overall objectives of the 
Treaties. 

While  implementing  TLAC  for  global  G-SIIs,  the  proposal  would  not  materially  affect  the 
burden  of  banks  to  comply  with  the  existing  rules  on  loss  absorbing  and  recapitalisation 
capacity  since  the  proposal  does  not  extend  the  application  of  the  TLAC  minimum  level 
beyond  G-SIIs.  In  addition,  the  proposal  limits  to  a  large  extent  the  costs  of  banks,  in 
particular G-SIIs, for compliance with the TLAC standard by aligning the existing rules to the 
extent possible with that standard. Finally, the proposal does not extend the application of the 
TLAC minimum level beyond G-SIIs. On the contrary, for non-GSIIs, the proposal maintains 
the existing overall principle that the quality and level of the requirement on loss absorbing 
and recapitalisation should be tailored by resolution authorities for each specific bank based 
on its risk, size, interconnectedness and the chosen resolution strategy. As regards G-SIIs that 
are subject to the TLAC minimum level, before requiring any institution specific add-on, the 
proposal  demands  resolution  authorities  to  assess  whether  any  such  add-on  is  necessary, 
proportionate  and  justified.  The  provisions  of  the  proposal  are,  therefore,  proportionate  to 
what is necessary to achieve its objectives. 

3. 

RESULTS OF IMPACT ASSESSMENTS 

Impact assessment 

Being  part  of  a  wider  review  package  of  the  Union  financial  legislation  aiming  at  reducing 
risks in the financial sector (CRR/CRD review), the proposal has been subject to an extensive 
impact assessment. The draft impact assessment report was submitted on 7 September 2016 to 
the Commission's Regulatory Scrutiny Board9.The Board issued a negative opinion on [date]. 
After strengthening the evidence base for certain elements of the review package, the Board 
issued a positive opinion on 27 September 2016. 

In line with its "Better Regulation" policy, the Commission conducted an impact assessment 
of  several  policy  alternatives.  Policy  options  were  assessed  against  the  key  objectives  of 
enhancing  loss  absorbing  and  recapitalisation  capacity  of  banks  in  resolution  and  legal 
certainty  and  coherence  of  the  resolution  framework.  The  assessment  was  done  by 
considering  the  effectiveness  of  achieving  the  objectives  above  and  the  cost  efficiency  of 
implementing different policy options.  

As regards the implementation of the TLAC standard in the Union, three policy options have 
been considered in the impact assessment. Under the first option, the BRRD would continue 

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[Link to Impact Assessment and to its summary] 

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to apply in its current form. Under the second option, the TLAC standard for G-SIIs would be 
integrated in the existing resolution framework, while that framework would be amended as 
appropriate  to  ensure  full  compatibility  with  the  TLAC  standard.  The  third  policy  option 
proposed to extend, additionally, the scope of the TLAC minimum level to other systemically 
important  institutions  in  the  Union  (O-SIIs)  than  G-SIIs.  The  impact  assessment  concluded 
that  the  second  policy  option  achieves  the  relevant  policy  objectives  the  best.  In  particular, 
contrary to  the first option, it provides a harmonized implementation  of the TLAC standard 
for  all  Union  G-SIIs  by  reducing  their  costs  of  complying  with  potentially  two  different 
requirements  (the  TLAC  standard  and  the  existing  BRRD)  while  providing  for  a  consistent 
interpretation of the TLAC term sheet in the EU. This option will increase the resolvability of 
G-SIIs  in  the  Union  and  prevent  contagion  effects  stemming  from  G-SIIs  cross-holdings 
through specific rules of the TLAC standard that are not currently provided in the BRRD (i.e. 
minimum  TLAC  level  in  the  form  of  subordinated  debt  instruments,  deduction  of  cross-
holdings  of  TLAC  eligible  instruments  held  by  G-SIIs).  This  option  will  ensure  that  the 
TLAC standard is implemented in the Union, which would reinforce the expectation on other 
jurisdictions  to  do  the  same  with  the  view  of  strengthening  the  resolvability  of  G-SIBs 
worldwide. On the other hand, this policy option is preferable to the third option because it 
will not have the disadvantage of extending the minimum TLAC level to banks other than G-
SIIs (O-SIIs), for which that level of minimum TLAC requirement may not appear to be well 
calibrated in view of their high diversity in terms of size, business model, interconnectedness 
and systemic importance.  

The  Impact  Assessment  showed  that  compliance  with  Article  55  of  BRRD,  which  requires 
contractual recognition of bail-in in contracts subject to the law of a third country raises two 
types of difficulties. First, certain third country counterparties refuse to include a contractual 
clause recognising a Union bail-in power in financial contracts concluded with Union banks.  
This in some cases forces Union banks to not enter into a contract at all in order to comply 
with  Article  55  BRRD.    In  extreme  cases  this  could  entail  that  a  certain  portion  of  their 
business would need to be discontinued (e.g. trade finance). Second, even where third country 
counterparties  are  prepared  to  accept  bail-in  related  clauses  in  their  contracts  with  Union 
banks, local supervisors may, in some cases, prevent it.  In this case the only way for banks to 
comply with Article 55 BRRD would be to either contravene the rules imposed by the local 
supervisor  or  exit  the  relevant  part  of  their  business.  To  address  this  issue  it  was  deemed 
necessary  to  amend  this  rule.  The  chosen  policy  option  provides  for  the  possibility  for 
resolution authorities to waive the requirement as long as this does not materially affect the 
loss absorption and recapitalisation capacity of the banks in question. 

As for the power to suspend payment obligations (moratorium) the importance of such a tool 
especially  in  the  phase  leading  to  resolution  was  underlined  in  the  impact  assessment.  A 
moratorium allows freezing the flow of payments for a short period of time, which facilitates 
the quantification of available assets and liabilities. Such a tool is very useful both in a pre-
resolution  context  (and  more  specifically  in  the  context  of  early  intervention)  and  during 
resolution.  The  Impact  Assessment  also  analysed  the  potential  advantages  of  a  further 
harmonisation of the available tools. In this context it outlines that, while the BRRD already 
contains  provisions  allowing  the  suspension  of  payment  obligations,  these  have  been 
implemented  in  very  different  ways  at  national  level  and  may  not  provide  a  sufficiently 
consistent  application  with  respect  to  important  elements  such  as  the  scope,  phase  of 
application, trigger conditions and duration of the suspension. On this basis, it is proposed to 
introduce  two  additional  moratorium  tools  for  activation  in  the  early  intervention  and 
resolution  phase,  respectively.  The  conditions  for  triggering  the  moratorium,  as  well  as  the 
duration  and  the  scope  of  application  are  precisely  determined  to  ensure  consistent 
implementation at national level. 

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Fundamental rights 

This proposal complies with the fundamental rights and observes the principles recognised in 
particular by the Charter of Fundamental Rights of the European Union, notably the rights to 
property  and  the  freedom  to  conduct  a  business,  and  has  to  be  applied  in  accordance  with 
those rights and principles. In particular, this Directive ensures that interference with property 
rights  of  bank  creditors  should  not  be  disproportionate.  Affected  creditors  should  not  incur 
greater losses than those which they would have incurred if the institution had been wound up 
under normal insolvency proceedings at the time that the resolution decision is taken. 

4. 

BUDGETARY IMPLICATIONS 

The proposal does not have implications for the Union budget.   

5. 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The  proposal  requires  Member  States  to  transpose  the  amendments  to  the  BRRD  in  their 
national laws within twelve months  from the entry  into force of the amended Directive and 
requires  banks  to  comply  with  the  amended  rules  within  six  months  from  the  date  of 
transposition  of  the  proposal.  Banks  will  be  required  to  report  the  levels  of  their  eligible 
instruments to the relevant authorities on a regular basis. The EBA is required to report to the 
Commission twice a year from the transposition date on the way the rules on loss absorbing 
and recapitalisation capacity for banks are implemented and applied across the Union. 

Detailed explanation of the specific provisions of the proposal 

As explained above, the amendments to the CRR, that are part of the same legislative package 
will include the rules on the TLAC minimum requirement for G-SIIs while this proposal deals 
with the institution specific add-on for G-SIIs and the general requirements applicable to all 
Union  banks.  This  proposal  introduces  a  number  of  targeted  amendments  to  the  existing 
BRRD.  

Amendments to Articles 2, 12 and 13 of the BRRD 

The TLAC standard and the BRRD recognise both Single Point of Entry ('SPE') and Multiple 
Point  of  Entry  ('MPE')  resolution  strategies.  Under  the  SPE  strategy,  only  one  group  entity 
(usually the parent)  is resolved  whereas  other group  entities (usually  operating subsidiaries) 
are not put in resolution, but upstream their losses to the entity to be resolved. Under the MPE 
strategy, more than one entity may be resolved. A clear identification of entities to be resolved 
('resolution entities') and subsidiaries that belong to them ('resolution groups') is important to 
apply effectively the desired resolution strategy. Moreover, this identification is also relevant 
for determining the level of application of the rules on loss absorbing capacity that financial 
firms should comply with. For this reason, amendments to Article 2 of the BRRD introduce 
the concepts of 'resolution entity' and 'resolution group'. Amendments to Articles 12 and 13 
concerning  group  resolution  planning  explicitly  require  resolution  authorities  to  identify  the 
resolution entities and resolution groups within a financial group and consider appropriately 
the  implications  of  any  planned  resolution  action  within  the  group  to  ensure  an  effective 
group resolution. 

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Amendments to Article 45 of the BRRD 

Article 45 is repealed and replaced with the following new provisions: Articles 45, 45a, 45b, 
45c, 45d, 45e, 45f, 45g, 45h, 45i and 45k. 

Currently, the institution specific MREL is measured as a percentage of the total liabilities of 
the  institution.  The  amended  Article  45  aligns  the  measurement  metrics  of  the  MREL  with 
those of the minimum requirement for G-SIIs as provided in the TLAC standard ('the TLAC 
minimum  requirement').  The  institution  specific MREL  should,  therefore,  be  expressed  as  a 
percentage of the total risk exposure amount and of the leverage ratio exposure measure of the 
relevant institution. 

Article  45a  keeps  the  existing  exemption  from  the  MREL  for  mortgage  credit  institutions 
under the condition that national insolvency or similar procedures allow for an effective loss 
absorption  by  creditors  that  meets  the  resolution  objectives.  It  also  clarifies  that  institutions 
that are exempted from the MREL should not be part of the overall consolidated requirement 
at the level of the resolution group. 

Article 45b specifies the eligibility criteria for the instruments and items that could count for 
meeting the MREL by aligning them closely with the eligibility criteria provided in the TLAC 
standard for the TLAC minimum requirement. These criteria are, therefore, identical with the 
exception of the following.  

As  regards  the  scope  of  the  instruments  covered,  certain  debt  instruments  with  derivative-
linked  features,  such  as  structured  notes  are  eligible  for  meeting  the  MREL  because  they 
could be sufficiently loss absorbing in resolution. Structured notes are debt obligations with 
an embedded derivative component. Their return is adjusted to the performance of reference 
assets such as  single equity, equity indices, funds, interest rates, commodities or  currencies. 
Article  45b  clarifies  that  structured  notes  are  eligible  for  the  MREL  to  the  extent  that  they 
have a fixed principal amount repayable at maturity while only an additional return is linked 
to a derivative and depends on the performance of a reference asset. The rationale for this is 
that the fixed principal amount is known in advance at the time of the issuance, its value is 
stable  throughout  the  lifecycle  of  the  structured  note  and  could  be  easily  bailed-in  in 
resolution. 

Under  the  TLAC  standard,  the  TLAC  minimum  requirement  should  be  met  using  largely 
subordinated  debt  instruments  that  rank  in  insolvency  below  senior  liabilities  explicitly 
excluded from the minimum TLAC requirement, such as covered deposits, derivatives, tax or 
other  public  law  related  liabilities.  To  meet  the  institution  specific  MREL,  subordination  of 
eligible  debt  instruments  could  currently  be  required  by resolution  authorities  on  a  case-by-
case  basis.  The  new  provisions  of  Article  45b  further  specify  that  subordination  could  be 
required to the extent it is needed to facilitate the application of the bail-in tool, in particular 
when there are clear indications that bailed-in creditors are likely to bear losses in resolution 
that  would  exceed  their  potential  losses  in  insolvency  and  only  to  the  extent  necessary  to 
cover the portion of the losses above likely insolvency losses. Any subordination requested by 
resolution  authorities  for  the  institution-specific  MREL  should  be  without  prejudice  to  the 
possibility  to  partly  meet  the  TLAC  minimum  requirement  with  non-subordinated  debt 
instruments  in  accordance  with  Regulation  (EU)  No  575/2013  and  in  line  with  the  TLAC 
standard. 

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Article  45c  specifies  the  conditions  for  determining  the  MREL  for  all  entities.  The  MREL 
should  allow  banks  to  absorb  losses  expected  in  resolution  and  recapitalise  the  bank  post-
resolution. The resolution authorities shall duly justify the level of the MREL imposed based 
on the chosen resolution strategy. As such, that level should not exceed the sum of the amount 
of  losses  expected  in  resolution  that  correspond  to  the  institutions'  own  funds  requirements 
and  the  recapitalisation  amount  that  allows  the  entity  post-resolution  to  meet  its  own  funds 
requirements  necessary  for  being  authorised  to  pursue  its  activities  under  the  chosen 
resolution strategy. The MREL should be expressed as a percentage of the total risk exposure 
and leverage ratio measures, and institutions should meet simultaneously the levels resulting 
from the two measurements.  

As  regards  G-SIIs,  Article  45d  specify  that  an  institution-specific  add-on  to  the  TLAC 
minimum  level  as  provided  in  the  TLAC  standard  could  be  imposed  only  where  that 
minimum  is  not  sufficient  to  absorb  losses  and  recapitalise  a  G-SII  under  the  chosen 
resolution strategy.  

As in the proposal amending the CRD, this proposal introduces in Article 45e the concept of 
'guidance'  in  the  BRRD.  This  allows  resolution  authorities  to  require  institutions  to  meet 
higher  levels  of  MREL  while  addressing  in  a  more  flexible  manner  any  breaches  of  those 
levels,  in  particular  by  alleviating  the  automatic  effects  of  such  breaches  in  the  form  of 
limitations to the Maximum Distributable Amounts (MDAs). In particular, Article 45e allows 
resolution  authorities  to  require  institutions  to  meet  additional  amounts  to  cover  losses  in 
resolution that are higher than those expected under a standard resolution scenario (i.e. above 
the level of the existing own funds requirements) and ensure a sufficient market confidence in 
the  entity  post-resolution  (i.e.  on  top  of  the  required  recapitalisation  amount).  Article  45e 
specifies,  nevertheless,  that  for  the  loss  absorption  part  of  the  requirement,  the  level  of  the 
guidance should not exceed the level of the 'capital guidance' when such guidance is requested 
by  supervisory  authorities  under  supervisory  stress  testing  to  cater  for  losses  above  normal 
requirements.  For  the  recapitalisation  part,  the  level  of  the  guidance  to  ensure  market 
confidence should allow institutions post resolution to meet their authorisation requirements 
for  an  appropriate  period  of  time.  This  market  confidence  buffer  should  not  exceed  the 
combined buffer requirement under Directive 2013/36/EU unless a higher level is necessary 
to  ensure  that  that,  following  the  event  of  resolution,  the  entity  continues  to  meet  the 
conditions for its authorisation for an appropriate period.  

Articles 45f and 45g deal with the level of application of the MREL. As regards institutions 
that  qualify  as  resolution  entities,  the  MREL  applies  to  them  at  the  consolidated  resolution 
group  level  only.  This  means  that  resolution  entities  will  be  obliged  to  issue  eligible  (debt) 
instruments  to  external  third  party  creditors  that  would  be  bailed-in  should  the  resolution 
entity  (i.e.  resolution  group)  enter  resolution.  As  regards  other  entities  of  the  group,  the 
proposal introduces the concept of an 'internal' MREL in line with a similar concept brought 
forward  by  the  TLAC  standard.  This  means  that  other  resolution  group  entities  which 
themselves are not resolution entities should issue eligible (debt) instruments internally within 
the  resolution  group,  i.e.  such  instruments  should  be  bought  by  resolution  entities.  Where  a 
resolution group entity which itself is not a resolution entity reaches the point of non-viability, 
such instruments are written down or converted into equity and losses of that entity are then 
up-streamed  to  the  resolution  entity.  The  main  advantage  of  the  internal  MREL  is  that  it 
allows recapitalising a resolution group entity (with critical functions) without placing it into 
formal  resolution,  which  could  potentially  have  disruptive  effects  on  the  market.  The 
application  of  this  requirement  should  nevertheless  comply  with  the  chosen  resolution 

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strategy, in particular it should not change the ownership relationship between the entity and 
its  resolution  group  after  its  recapitalisation.  The  proposal  also  specifies  that,  under  certain 
safeguards, the internal MREL could be replaced with collateralised guarantees between the 
resolution  entity  and  other  resolution  group  entities  that  could  be  triggered  under  the 
equivalent  timing  conditions  that  the  instruments  eligible  for  the  internal  MREL.  The 
proposed safeguards include, in particular, the agreement of the relevant resolution authorities 
to replace the internal MREL and collateralisation of the guarantee given by resolution entity 
to  its  subsidiary  with  highly  liquid  collateral  with  minimal  credit  and  market  risk.  The 
proposal  keeps  as  well  the  existing possibility  offered  to  resolution  authorities  of  resolution 
entity's  subsidiaries  to  fully  waive  the  MREL  applicable  to  those  subsidiaries  if  both  the 
resolution entity and its subsidiaries are established in the same Member State. 

Article  45h  provides  for  a  procedure  to  determine  the  MREL  for  a  resolution  group.  The 
authorities responsible for setting the level of the requirement are the resolution authority of 
the resolution entity, the group level resolution authority (resolution authority of the ultimate 
parent)  and  resolution  authorities  of  other  resolution  group  entities.  Any  disputes  between 
authorities are subject to the powers of the EBA under the EBA Regulation.  

Amendments to Articles 17, 18 and Article 45k 

These amendments deal with the breaches of the MREL. Article 45k lists the powers available 
to resolution authorities in the event of breaches of the MREL. Since a breach of the MREL 
could  constitute  an  impediment  to  institution  or  group  resolvability,  Articles  17  and  18 
shortens the existing procedure to remove impediments to resolvability to address expediently 
any breaches of the MREL. It also introduces new powers for resolution authorities to require 
modifications  in  the  maturity  profiles  of  eligible  instruments  and  plans  from  institutions  to 
restore the level of the MREL. 

Amendments to Article 55 

Amendments to Article 55 BRRD would entail an application of the requirement provided in 
that  Article  by  the  resolution  authority  in  a  proportionate  manner.    The  resolution  authority 
can exclude the obligation of institutions to include bail-in recognition clauses in agreements 
or instruments governed by third country laws by means of a waiver if it determines that this 
would  not  impede  the  resolvability  of  the  bank,  and  that  it  is  legally,  contractually  or 
economically  impracticable  for  banks  to  include  the  bail-in  recognition  clauses  for  certain 
liabilities.  In  these  cases,  those  liabilities  should  not  count  for  the  MREL  and  should  rank 
senior to liabilities eligible for the MREL to minimise the risk of breaking the No-Creditor-
Worse-Off (NCWO) principle. In this regard, the proposal will not weaken the bail-in.  

Amendments to Article 59 and 60 

Amendments  to  Article  59  and  60  ensure  that  instruments  eligible  for  the  internal  MREL 
other than capital instruments (debt instruments) could also be written down or converted into 
equity where the resolution group entity which itself is not a resolution entity that issues them 
reaches the point of non-viability. 

EN 

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Amendments  to  Article  27,  new  Article  29a  and  amendments  to  Article  63  on 
moratorium 

The amendment to Article 27 provides for a new moratorium tool to be employed in the pre-
resolution phase, and specifically as an early intervention power.  

The newly added Article 29a outlines the conditions for application of the early intervention 
moratorium. The provision indicates that such power can be activated when it is necessary to 
determine  whether  early  intervention  measures    are  necessary  or  whether  the  institution  is 
failing or likely to fail. It specifies the scope of the suspension power and its duration – which 
cannot exceed five working days. 

The  amendment  to  Article  63  introduces  among  the  general  resolution powers  the power  to 
suspend payments when this is needed for the effective application of one or more resolution 
tools or for the purposes of the valuation pursuant to Article 36. It specifies the scope of the 
suspension power and its duration,which cannot exceed five working days. 

Other provisions 

Several  amendments  are  proposed  to  ensure  appropriate  supervisory  reporting  and  public 
disclosure of the requirement. 

Several  amendments  concern  the  regulatory  architecture  and  decision  making  in  the 
application  of  the  requirement  to  third  country  institutions  established  in  the  Union.  Other 
amendments  bring  certain  clarifications  as  regards  the  treatment  under  BRRD  and  other 
Union legislation of central counterparties ('CCPs') following the adoption of a proposal for a 
specific recovery and resolution framework for CCPs, such as the treatment of CCPs with a 
banking licence. Targeted amendments to the relevant Company Laws Directives have been 
proposed to ensure an effective resolution of CCPs. 

Member  States  are  required  to  transpose  this  proposal  in  their  national  laws  within  twelve 
months from the date of its entry into force. The institutions concerned are required to comply 
with  the  new  provisions  within  six  months  from  the  date  of  transposition.  The  EBA  is 
required  to  report  to  the  Commission  twice  a  year  on  the  way  the  requirements  are 
implemented and applied across the Union. 

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2016/0362 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Directive 2014/59/EU on loss-absorbing and recapitalisation capacity of credit 
institutions and investment firms and amending Directive 98/26/EC,  Directive 
2002/47/EC, Directive 2012/30/EU, Directive 2011/35/EU, Directive 2005/56/EC, 
Directive 2004/25/EC and Directive 2007/36/EC 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 114 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Central Bank10  
Having regard to the opinion of the European Economic and Social Committee11,  

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

10 
11 
12 

13 

The  Financial  Stability  Board  (FSB)  published  the  Total  Loss-Absorbing  Capacity 
(TLAC) Term Sheet ('TLAC standard') on 9 November 2015, which was endorsed by 
the  G-20  in  November  2015.  The  TLAC  standard  requires  global  systemically 
important  banks  ('G-SIBs'),  referred  to  as  global  systemically  important  institutions 
('G-SIIs') in the Union framework, to hold a sufficient minimum amount of highly loss 
absorbing  (bailin-able)  liabilities  to  ensure  smooth  and  fast  absorption  of  losses  and 
recapitalisation  in  resolution.    In  its  Communication  of  24  November  201512,  the 
Commission committed to bring forward a legislative proposal by the end of 2016 that 
would  enable  the  TLAC  standard  to  be  implemented  by  the  internationally  agreed 
deadline of 2019. 

The implementation of the TLAC standard in the Union needs to take account of the 
existing  institution-specific  minimum  requirement  for  own  funds  and  eligible 
liabilities ('MREL') applicable to all Union credit institutions and investment firms as 
laid down in Directive 2014/59/EU of the European Parliament and of the Council13. 
As  TLAC  and  MREL  pursue  the  same  objective  of  ensuring  that  Union  institutions 

OJ C , , p. . 
OJ C , , p. . 
Communication from the Commission to the European Parliament, the Council, the European Central 
Bank, the European Economic and Social Committee and the Committee of the Regions, "Towards the 
completion of the Banking Union", 24.11.2015, COM(2015) 587 final 
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,  OJ  L  173, 
12.6.2014, p. 190 

EN 

13 

   EN 

                                                 
the 

two 

loss  absorbing  capacity, 

have  sufficient 
requirements  should  be 
complementary  elements  of  a  common  framework.  Operationally,  the  harmonised 
minimum  level  of  the  TLAC  standard  for  G-SIIs  ('TLAC  minimum  requirement') 
should be introduced in Union legislation through amendments to Regulation (EU) No 
575/201314, while the institution-specific add-on for G-SIIs and the institution-specific 
requirement  for  non-G-SIIs,  referred  to  as  minimum  requirement  for  own  funds  and 
eligible  liabilities,  should  be  addressed  through  targeted  amendments  to  Directive 
2014/59/EU  and  Regulation  (EU)  No  806/201415.  The  relevant  provisions  of  this 
Directive as regards loss absorbing and recapitalisation capacity of institutions should 
be  applied  together  with  those  in  the  aforementioned  pieces  of  legislation  and  in 
Directive 2013/36/EU16 in a consistent way. 

(3) 

(4) 

The absence of harmonised Union rules in respect of the implementation of the TLAC 
standard  in  the  Union  would  create  additional  costs  and  legal  uncertainty  for 
institutions  and  make  the  application  of  the  bail-in  tool  for  cross-border  institutions 
more  difficult.  That  absence  of  harmonised  Union  rules  also  results  in  competitive 
distortions on the internal market given that the costs for institutions to comply with 
the existing requirements and the TLAC standard may differ considerably across the 
Union.  It  is  therefore  necessary  to  remove  those  obstacles  to  the  functioning  of  the 
internal market and to avoid distortions of competition resulting from the absence of 
harmonised  Union  rules  in  respect  of  the  implementation  of  the  TLAC  standard. 
Consequently, the appropriate legal basis for this Directive is Article 114 of the Treaty 
on the Functioning of the European Union (TFEU), as interpreted in accordance with 
the case law of the Court of Justice of the European Union. 

In  line  with  the  TLAC  standard,  Directive  2014/59/EU  should  continue  to  recognise 
the  Single  Point  of  Entry  (SPE)  as  well  as  the  Multiple  Point  of  Entry  (MPE) 
resolution strategy. Under the SPE strategy, only one group entity, usually the parent 
undertaking,  is  resolved  whereas  other  group  entities,  usually  operating  subsidiaries, 
are  not  put  in  resolution,  but  upstream  their  losses  and  recapitalisation  needs  to  the 
entity  to  be  resolved.  Under  the  MPE  strategy,  more  than  one  group  entity  may  be 
resolved.  A  clear  identification  of  entities  to  be  resolved  ('resolution  entities')  and 
subsidiaries that belong to them ('resolution groups') is important to apply the desired 
resolution strategy effectively. That identification is also relevant for determining the 
level  of  application  of  the  rules  on  loss  absorbing  and  recapitalisation  capacity  that 
financial  firms  should  apply.  It  is  therefore  necessary  to  introduce  the  concepts  of 
'resolution  entity'  and  'resolution  group'  and  to  amend  Directive  2014/59/EU 
concerning  group  resolution  planning  in  order  to  explicitly  require  resolution 
authorities to identify the resolution entities and resolution groups within a group and 
to  consider  the  implications  of  any  planned  resolution  action  within  the  group 
appropriately to ensure an effective group resolution. 

14 

15 

16 

Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on 
prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 
648/2012, OJ L 176, 27.6.2013, p.1 
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 
Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the 
activity of credit institutions and the prudential supervision of credit institutions and investment firms, 
amending  Directive  2002/87/EC  and  repealing  Directives  2006/48/EC  and  2006/49/EC,  OJ  L  176, 
27.6.2013, p. 338 

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(5)  Member  States  should  ensure  that  institutions  have  sufficient  loss  absorbing  and 
recapitalisation  capacity  to  ensure  smooth  and  fast  absorption  of  losses  and 
recapitalisation  in  resolution  with  a  minimum  impact  on  financial  stability  and 
taxpayers.  That  should  be  achieved  through  compliance  by  institutions  with  an 
institution-specific  minimum  requirement  for  own  funds  and  eligible  liabilities 
('MREL') as provided in Directive 2014/59/EU. 

(6) 

(7) 

(8) 

(9) 

In  order  to  align  denominators  that  measure  the  loss  absorbing  and  recapitalisation 
capacity of institutions with those provided in the TLAC standard, the MREL should 
be  expressed  as  a  percentage  of  the  total  risk  exposure  amount  and  of  the  leverage 
ratio exposure measure of the relevant institution. 

Eligibility  criteria  for  bail-inable  liabilities  for  the  MREL  should  be  closely  aligned 
with  those  laid  down  in  Regulation  (EU)  No  575/2013  for  the  TLAC  minimum 
requirement, in line with the complementary adjustments and requirements introduced 
in this Directive. In particular, certain debt instruments with an embedded derivative 
component, such as certain structured notes, should be eligible to meet the MREL to 
the extent that they have a fixed principal amount repayable at maturity while only an 
additional  return  is  linked  to  a  derivative  and  depends  on  the  performance  of  a 
reference  asset.  In  view  of  their  fixed  principal  amount,  those  instruments  should  be 
highly loss-absorbing and easily bail-inable in resolution. 

The scope of liabilities to meet the MREL includes, in principle, all liabilities resulting 
from  claims  arising  from  unsecured  non-preferred  creditors  (non-subordinated 
liabilities)  unless  they  do  not  meet  specific  eligibility  criteria  provided  in  this 
Directive. To enhance the resolvability of institutions through an effective use of the 
bail-in tool, resolution authorities should be able to require that the MREL is met with 
subordinated  liabilities,  in  particular  when  there  are  clear  indications  that  bailed-in 
creditors are likely to bear losses in resolution that would exceed their potential losses 
in insolvency. The requirement to meet MREL with subordinated liabilities should be 
requested only for a level necessary to prevent that losses of creditors in resolution are 
above losses that they would otherwise incur  under insolvency. Any subordination of 
debt instruments requested by resolution authorities for the MREL should be without 
prejudice to the possibility to partly meet the TLAC minimum requirement with non-
subordinated  debt  instruments  in  accordance  with  Regulation  (EU)  No  575/2013  as 
permitted by the TLAC standard. 

The  MREL  should  allow  institutions  to  absorb  losses  expected  in  resolution  and 
recapitalise  the  institution  post-resolution.  The  resolution  authorities  should,  on  the 
basis of the resolution strategy chosen by them, duly justify the imposed level of the 
MREL in particular as regards the need and the level of the requirement referred to in 
Article  104a  of  Directive  2013/36/EU  in  the  recapitalisation  amount.  As  such,  that 
level should be composed of the sum of  the amount of losses  expected in  resolution 
that  correspond  to  the  institution's  own  funds  requirements  and  the  recapitalisation 
amount that allows the institution post-resolution to meet its own funds requirements 
necessary  for  being  authorised  to  pursue  its  activities  under  the  chosen  resolution 
strategy. The MREL should be expressed as a percentage of the total risk exposure and 
leverage  ratio  measures,  and  institutions  should  meet  simultaneously  the  levels 
resulting from the two measurements. The resolution authority should be able to adjust 
the recapitalisation amounts in cases duly justified to adequately reflect also increased 
risks  that  affect  resolvability  arising  from  the  resolution  group’s  business  model, 
funding  profile  and  overall  risk  profile  and  therefore  in  such  limited  circumstances 

EN 

15 

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require that the recapitalisation amounts referred to in the first subparagraph of Article 
45c(3) and (4) are exceeded. 

(10)  To  enhance  their  resolvability,  resolution  authorities  should  be  able  to  impose  an 
institution-specific MREL on  G-SIIs in  addition to  the TLAC  minimum requirement 
laid down in Regulation (EU) No 575/2013. That institution-specific MREL may only 
be imposed where the TLAC minimum requirement is not sufficient to absorb losses 
and recapitalise a G-SII under the chosen resolution strategy.  

(11)  When setting the level of MREL, resolution authorities should consider the degree of 
systemic relevance of an institution and the potential adverse impact of its failure on 
the financial stability. They should take into account the need for a level playing field 
between G-SIIs and other comparable institutions with systemic relevance within the 
Union.  Thus  MREL  of  institutions  that  are  not  identified  as  G-SIIs  but  the  systemic 
relevance within the Union of which is comparable to the systemic relevance of G-SIIs 
should  not  diverge  disproportionately  from  the  level  and  composition  of  MREL 
generally set for G-SIIs.. 

(12)  Similarly to powers conferred to competent authorities by  Directive 2013/36/EU, this 
Directive  should  allow  resolution  authorities  to  require  institutions  to  meet  higher 
levels  of  MREL  while  addressing  in  a  more  flexible  manner  any  breaches  of  those 
levels, in particular by alleviating the automatic effects of those breaches in the form 
of limitations to the Maximum Distributable Amounts (MDAs). Resolution authorities 
should  be  able  to  give  guidance  to  institutions  to  meet  additional  amounts  to  cover 
losses  in  resolution  that  are  above  the  level  of  the  own  funds  requirements  as  laid 
down  in  Regulation  (EU)  No  575/2013  and  Directive  2013/36/EU,  and/or  to  ensure 
sufficient  market  confidence  in  the  institution  post-resolution.  To  ensure  consistency 
with  Directive  2013/36/EU,  guidance  to  cover  additional  losses  may  only  be  given 
where  the  'capital  guidance'  has  been  requested  by  the  competent  supervisory 
authorities in accordance with Directive 2013/36/EU and should not exceed the level 
requested in that guidance. For the recapitalisation amount, the level requested in the 
guidance to ensure market confidence should enable the institution to continue to meet 
the  conditions  for  authorisation  for  an  appropriate  period  of  time,  including  by 
allowing  the  institution to  cover  the costs  related  to  the  restructuring  of  its  activities 
following  resolution.  The  market  confidence  buffer  should  not  exceed  the  combined 
capital  buffer  requirement  under  Directive  2013/36/EU  unless  a  higher  level  is 
necessary to ensure that, following the event of resolution, the entity continues to meet 
the conditions for its authorisation for an appropriate period of time. Where an entity 
consistently  fails  to  have  additional  own  funds  and  eligible  liabilities  as  expected 
under the guidance, the resolution authority should be able to require that the amount 
of the MREL be increased to cover the amount of the guidance. For the purposes of 
considering whether there is a consistent failure, the resolution authority should take 
into account the entity's reporting on the MREL as required by this Directive. 

(13) 

In  line  with  Regulation  No  575/2013,  institutions  that  qualify  as  resolution  entities 
should only be subject to the MREL at the consolidated resolution group level. That 
means that resolution entities should be obliged to issue eligible instruments and items 
to meet the MREL to external third party creditors that would be bailed-in should the 
resolution entity enter resolution.  

(14) 

Institutions that are not resolution entities should comply with the MREL at individual 
level.  Loss  absorption  and  recapitalisation  needs  of  those  institutions  should  be 
generally  provided  by  their  respective  resolution  entities  through  the  acquisition  by 

EN 

16 

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resolution  entities  of  eligible  liabilities  issued  by  those  institutions  and  their  write-
down or conversion into instruments of ownership at the point where those institutions 
are  no  longer  viable.  As  such,  the  MREL  applicable  to  institutions  that  are  not 
resolution  entities  should  be  applied  together  and  consistently  with  the  requirements 
applicable to resolution entities. That should allow resolution authorities to resolve a 
resolution  group  without  placing  certain  of  its  subsidiary  entities  in  resolution,  thus 
avoiding potentially disruptive effects on the market. Subject to the agreement of the 
resolution authorities of the resolution entity and of its subsidiary, it should be possible 
to  replace  the  issuance  of  eligible  liabilities  to  resolution  entities  with  collateralised 
guarantees  between  the  resolution  entity  and  its  subsidiaries,  that  can  be  triggered 
when the timing conditions equivalent to those allowing the write down or conversion 
of eligible liabilities are met. The resolution authorities of subsidiaries of a resolution 
entity  should  also  be  able  to  fully  waive  the  application  of  the  MREL  applicable  to 
institutions  that  are  not  resolution  entities  if  both  the  resolution  entity  and  its 
subsidiaries are established in the same Member State. The application of the MREL 
to institutions that are not resolution entities should comply with the chosen resolution 
strategy,  in  particular  it  should  not  change  the  ownership  relationship  between 
institutions and their resolution group after those institutions have been recapitalised. 

(15)  To  ensure  appropriate  levels  of  the  MREL  for  resolution  purposes,  the  authorities 
responsible for setting the level of the MREL should be the resolution authority of the 
resolution entity, the group-level resolution authority, that is the resolution authority of 
the  ultimate  parent  undertaking,  and  resolution  authorities  of  other  entities  of  the 
resolution group. Any disputes between authorities should be subject to the powers of 
the European Banking Authority (EBA) under Regulation (EU) No 1093/2010 of the 
European  Parliament  and  of  the  Council17  subject  to  the  conditions  and  limitations 
provided in this Directive. 

(16)  Any  breaches  of  the  TLAC  minimum  requirement  and  of  the  MREL  should  be 
appropriately addressed and remedied by competent and resolution authorities. Given 
that  a  breach  of  those  requirements  could  constitute  an  impediment  to  institution  or 
group  resolvability,  the  existing  procedures  to  remove  impediments  to  resolvability 
should  be  shortened  to  address  any  breaches  of  the  requirements  expediently. 
Resolution authorities should also be able to require institutions to modify the maturity 
profiles  of  eligible  instruments  and  items  and  to  prepare  and  implement  plans  to 
restore the level of those requirements. 

(17)  To  ensure  a  transparent  application  of  the  MREL,  institutions  should  report  to  their 
competent and resolution authorities and disclose regularly to the public the levels of 
eligible  liabilities  and  the  composition  of  those  liabilities,  including  their  maturity 
profile and ranking in normal insolvency proceedings. There should be consistency in 
the  frequency  of  supervisory  reporting  on  compliance  with  own  funds  requirements 
and with MREL. 

(18)  The requirement to include a contractual recognition of the effects of the bail-in tool in 
agreements or instruments creating liabilities governed by the laws of third countries 
should ensure that those liabilities can be bailed in in the event of resolution.  Unless 
and until statutory recognition frameworks to enable effective cross-border resolution 
are adopted in all third country jurisdictions, contractual arrangements, when properly 

17 

Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 
establishing a European Supervisory Authority (European Banking Authority), amending Decision No 
716/2009/EC and repealing Commission Decision 2009/78/EC, OJ L 331, 15.12.2010, p. 12 

EN 

17 

   EN 

                                                 
drafted  and  widely  adopted,  should  offer  a  workable  solution.    Even  with  statutory 
recognition frameworks in place, contractual recognition arrangements should help to 
reinforce the legal certainty and predictability of cross-border recognition of resolution 
actions. There might be instances, however, where it is impracticable for institutions to 
include  those  contractual  terms  in  agreements  or  instruments  creating  certain 
liabilities,  in  particular  liabilities  that  are  not  excluded  from  the  bail-in  tool  under 
Directive  2014/59/EU,  covered  deposits  or  own  funds  instruments.  It  is  in  particular 
impracticable  for  institutions  to  include  in  agreements  or  instruments  creating 
liabilities contractual terms on the recognition of the effects of the bail-in tool, where 
those  contractual  terms  are  unlawful  in  the  third  countries  concerned  or  where 
institutions  do  not  have  the  bargaining  power  to  impose  those  contractual  terms.  
Resolution  authorities  should  therefore  be  able  to  waive  the  application  of  the 
requirement  to  include  those  contractual  terms  where  those  contractual  terms  would 
entail  disproportionate  costs  for  institutions  and  the  resulting  liabilities  would  not 
provide  significant  loss  absorbing  and  recapitalisation  capacity  in  resolution.  This 
waiver should however not be relied upon where a number of agreements or liabilities 
together collectively provide significant loss absorbing and recapitalisation capacity in 
resolution.  In  addition,  to  ensure  that  the  resolvability  of  institutions  is  not  affected, 
liabilities benefitting from waivers should not be eligible for MREL. 

In  order  to  preserve  financial  stability,  it  is  important  that  competent  authorities  are 
able  to  remedy  the  deterioration  of  an  institution’s  financial  and  economic  situation 
before  that  institution  reaches  a  point  at  which  authorities  have  no  other  alternative 
than  to  resolve  it.  To  that  end,  competent  authorities  should  be  granted  appropriate 
early  intervention  powers.  Early  intervention  powers  should  include  the  power  to 
suspend, for the minimum time necessary, certain contractual obligations. That power 
to  suspend  should  be  framed  accurately  and  should  be  exercised  only  where  that  is 
necessary to establish whether early intervention measures are needed or to determine 
whether  the  institution  is  failing  or  likely  to  fail.  That  power  to  suspend  should 
however not apply to obligations in relation to the participation in systems designated 
under  Directive  98/26/EC  of  the  European  Parliament  and  of  the  Council18,  central 
counterparties (CCPs) and central banks including third country CCPs recognised by 
the European Capital Markets Authority ('ESMA'). It should also not apply to covered 
deposits. Early intervention powers should comprise the powers already provided for 
in  Directive  2013/36/EU  for  circumstances  other  than  those  considered  to  be  early 
intervention  as  well  as  for  situations  in  which  it  is  considered  to  be  necessary  to 
restore the financial soundness of an institution. 

It  is  in  the  interest  of  an  efficient  resolution,  and  in  particular  in  the  interest  of 
avoiding conflicts of jurisdiction, that no normal insolvency proceedings for the failing 
institution  be  opened  or  continued  while  the  resolution  authority  is  exercising  its 
resolution powers or applying the resolution tools, except at the initiative of, or with 
the  consent  of,  the  resolution  authority.  It  is  useful  and  necessary  to  suspend,  for  a 
limited  period,  certain  contractual  obligations  so  that  the  resolution  authority  has 
sufficient time to carry out the valuation and put into practice the resolution tools. That 
power  should  be  accurately  framed  and  should  be  exercised  only  for  the  minimum 
time  necessary  for  the  valuation  or  to  put  resolution  tools  into  practice.  That  power 
should  however  not  apply  to  covered  deposits  or  to  obligations  in  relation  to  the 
participation  in  systems  designated  under  Directive  98/26/EC,  CCPs  and  central 

(19) 

(20) 

18 

Directive  98/26/EC  of  the  European  Parliament  and  of  the  Council  of  19  May  1998  on  settlement 
finality in payment and securities settlement systems (OJ L 166, 11.6.1998, p. 45). 

EN 

18 

   EN 

                                                 
banks,  including  third  country  CCPs  recognised  by  ESMA.  Directive  98/26/EC 
reduces  the  risk  associated  with  participation  in  payment  and  securities  settlement 
systems,  in  particular  by  reducing  disruption  in  the  event  of  the  insolvency  of  a 
participant  in  such  a  system.  To  ensure  that  those  protections  apply  appropriately  in 
crisis situations, whilst maintaining appropriate certainty for operators of payment and 
securities  systems  and  other  market  participants,  Directive  2014/59/EU  should  be 
amended to provide that a crisis prevention measure or a crisis management measure 
should  not  as  such  be  deemed  to  be  insolvency  proceedings  within  the  meaning  of 
Directive  98/26/EC,  provided  that  the  substantive  obligations  under  the  contract 
continue to be performed. However, nothing in Directive 2014/59/EU should prejudice 
the  operation  of  a  system  designated  under  Directive  98/26/EC  or  the  right  to 
collateral security guaranteed by that same Directive. 

(21) 

In order to avoid a duplication of requirements and to apply the appropriate rules for 
the effective recovery and resolution of CCPs in accordance with Regulation (EU) No 
[CCP recovery and resolution], Directive 2014/59/EU should be amended to exclude 
from  its  scope  those  CCPs  in  respect  of  which,  pursuant  to  Regulation  (EU)  No 
648/201219,  Member  States  apply  certain  requirements  for  authorisation  under 
Directive 2013/36/EU and are therefore also authorised as credit institutions. 

(22)  The exclusion of specific liabilities of credit institutions or investment firms from the 
application  of  the  bail-in  tool  or  from  powers  to  suspend  certain  obligations,  restrict 
the  enforcement  of  security  interests  or  temporarily  suspend  termination  rights  in 
Directive 2014/59/EU, should equally cover liabilities in relation to CCPs established 
in the Union and to third country CCPs recognised by ESMA.   

(23) 

In order to ensure a common understanding of terms used in various legal instruments, 
it  is  appropriate  to  incorporate  in  Directive  98/26/EC    the  definitions  and  concepts 
introduced  by  Regulation  (EU)  No  648/2012  regarding  a  "central  counterparty"  or 
"CCP" and "participant".  

(24)  To implement resolution of CCPs effectively, the safeguards provided  for in Directive 
2002/47/EC20    should  not  apply  to  any  restriction  of  the  enforcement  of  a  financial 
collateral  arrangement  or  on  the  effect  of  a  security  financial  collateral  arrangement, 
any  close-out  netting  or  set-off  provision  imposed  by  virtue  of  Regulation  (EU)  No 
[CCP recovery and resolution]. 

(25)  Directive  2012/30/EU21,  Directive  2011/35/EU22,  Directive  2005/56/EC23,  Directive 
2004/25/EC24  and  Directive  2007/36/EC25,  contains  rules  for  the  protection  of 

19 

20 

21 

22 

23 

24 

Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC 
derivatives, central counterparties and trade repositories, OJ L 201, 27.7.2012, p.1 
Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC 
derivatives, central counterparties and trade repositories, OJ L 201, 27.7.2012, p.1 
Directive  2012/30/EU  of  the  European  Parliament  and  of  the  Council  of  25  October  2012  on 
coordination of safeguards which, for the protection of the interests of members and others, are required 
by Member States of companies within the meaning of the second paragraph of Article 54 of the Treaty 
on  the  Functioning  of  the  European  Union,  in  respect  of  the  formation  of  public  limited  liability 
companies and the maintenance and alteration of their capital, with a view to making such safeguards 
equivalent ( OJ L 315, 14.11.2012, p. 74). 
Directive  2011/35/EU  of  the  European  Parliament  and  of  the  Council  of  5  April  2011  concerning 
mergers of public limited liability companies (OJ L 110, 29.4.2011, p. 1). 
Directive  2005/56/EC  of  the  European  Parliament  and  of  the  Council  of  26  October  2005  on  cross-
border mergers of limited liability companies (OJ L 310, 25.11.2005, p. 1). 
Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids 
(OJ L 142, 30.4.2004, p. 12). 

EN 

19 

   EN 

                                                 
shareholders and creditors of CCPs that fall within the scope of those Directives. In a 
situation  where  resolution  authorities  need  to  act  rapidly  under  Regulation  (EU)  No 
[CCP recovery and resolution], those rules may hinder effective resolution action and 
use  of  resolution  tools  and  powers  by  resolution  authorities.  Derogations  under 
Directive  2014/59/EU should therefore be extended to  acts taken in  accordance  with  
Regulation  (EU)  No  [CCP  recovery  and  resolution].  In  order  to  guarantee  the 
maximum degree of legal certainty for stakeholders, the derogations should be clearly 
and  narrowly  defined,  and  they  should  only  be  used  in  the  public  interest  and  when 
resolution triggers are met. The use of resolution tools presupposes that the resolution 
objectives  and  the  conditions  for  resolution  laid  down  in  Regulation  (EU)  No  [CCP 
recovery  and  resolution]  are  met.  In  order  to  ensure  that  authorities  can  impose 
sanctions when the provisions of Regulation (EU) No [CCP recovery and resolution] 
have not been complied with and that those sanctions powers are consistent with the 
recovery  and  resolution  legal  framework  of  other  financial  institutions,  the  scope  of 
application of Title VIII of Directive 2014/59/EU should also cover infringements of 
provisions of Regulation (EU) No [CCP recovery and resolution]. 

(26)  Since the objectives of this Directive, namely to lay down uniform rules on recovery 
and resolution framework, cannot be sufficiently achieved by the Member States and 
can therefore, by reason of the scale of the action, be better achieved at Union level, 
the Union may adopt measures, in accordance with the principle of subsidiarity as set 
out in Article 5 of the Treaty on European Union. In accordance with the principle of 
proportionality,  as  set  out  in  that  Article,  this  Directive  does  not  go  beyond  what  is 
necessary in order to achieve those objectives. 

(27)  To  allow  an  appropriate  time  for  the  transposition  and  application  of  this  Directive, 
Member  States  should  be  given  twelve  months  to  transpose  this  Directive  in  their 
national laws from the date of its entry into force and the institutions concerned should 
be    required  to  comply  with  the  new  provisions  within  six  months  from  the  date  of 
transposition.  

HAVE ADOPTED THIS DIRECTIVE: 

Article 1 
Amendments to Directive 2014/59/EU1 

1. 

In Article 1, the following paragraph (3) is added: 

‘3. This Directive shall not apply to those central counterparties in respect of which, 
pursuant  to  Article  14(5)  of  Regulation  (EU)  No  648/2012,  Member  States  apply 
certain requirements for authorisation under Directive 2013/36/EU. 

However, the provisions laid down in Title VIII of this Directive shall also apply as 
regards  penalties  applicable  where  Regulation  [on  the  recovery  and  resolution  of 
CCPs] has not been complied with.’ 

In Article 2(1) point (71),  'eligible liabilities' is replaced by 'bail-inable liabilities'. 

In Article 2(1), the following point is added: 

'(71a) 'eligible  liabilities'  means  bail-inable  liabilities  that  fulfil,  as  applicable,  the 
conditions of Article 45b or point (a) of Article 45g(3).' 

In Article 2(1), the following points (83a) and (83b), (109) and (110) are added : 

Directive 2007/36/EC of the European Parliament and of the Council of 11 July 2007 on the exercise of 
certain rights of shareholders in listed companies (OJ L 184, 14.7.2007, p. 17).  

2. 

3. 

4. 

25 

EN 

20 

   EN 

                                                                                                                                                         
"(83a)'resolution entity' means an entity established in the Union, which is identified 
by the resolution authority in accordance with Article 12 as an entity in respect of the 
resolution plan provides for resolution action; 

(83b) 'resolution  group'  means  a  resolution  entity  and  its  subsidiaries  that  are  not 
resolution  entities  themselves  and  that  are  not  subsidiaries  of  another  resolution 
entity; 

"(109)  ʻclearing  memberʼ  means  a  clearing  member  as  defined  in  Article  2(14)  of 
Regulation (EU) No 648/2012; 

(110)  ʻ  boardʼ  means  the  administrative  or  supervisory  board,  or  both,  set  up 
pursuant  to  national  company  law  in  accordance  with  Article  27(2)  of  Regulation 
(EU) No 648/2012". 

5. 

In Article 12, paragraph (1) is replaced by the following:  

"1.  Member  States  shall  ensure  that  group-level  resolution  authorities,  together 
with  the  resolution  authorities  of  subsidiaries  and  after  consulting  the  resolution 
authorities  of  significant  branches  insofar  as  is  relevant  to  the  significant  branch, 
draw up group resolution plans. The group resolution plan shall identify measures to 
be taken in respect of: 

(a) 

(b) 

(c) 

(d) 

the Union parent undertaking; 

the subsidiaries that are part of the group and that are located in the Union; 

the entities referred to in points (c) and (d) of Article 1(1); and 

subject  to  Title  VI,  the  subsidiaries  that  are  part  of  the  group  and  that  are 
located outside the Union. 

In accordance with the measures referred to in the first subparagraph, the resolution 
plan shall identify for each group: 

(a) 

(b) 

the resolution entities; 

the resolution groups.". 

6. 

In Article 12(3), points (a) and (b) are replaced by the following: 

"(a)  set out the resolution actions planned to be taken for resolution entities in the 
scenarios referred to in Article 10(3), and the implications of those resolution actions  
for the other group entities referred to in points (b), (c) and (d) of Article 1(1), for the 
parent undertaking and for subsidiary institutions; 

examine the extent to which the resolution tools and powers could be applied 
(b) 
and  exercised  in  a  coordinated  way  to  resolution  entities  located  in  the  Union, 
including measures to facilitate the purchase by a third party of the group as a whole, 
or  separate  business  lines  or  activities  that  are  delivered  by  a  number  of  group 
entities,  or  particular  group  entities  or  resolution  groups,  and  identify  any  potential 
impediments to a coordinated resolution;". 

7. 

In Article 12(3), point (e) is replaced by the following: 

"(e) 

set  out  any  additional  actions,  not  referred  to  in  this  Directive,  which  the 
relevant  resolution  authorities  intend  to  take  in  relation  to  the  resolution 
entities;". 

8. 

In Article 12(3), the following point (a1) is added: 

EN 

21 

   EN 

"(a1)  where  a  group  comprises  more  than  one  resolution  group,  set  out  resolution 
actions planned in relation to the resolution entities of each resolution group and the 
implications of those actions on: 

(i) other group entities that belong to the same resolution group; 

(ii) other resolution groups.". 

9. 

In Article 13(4), the following subparagraph is inserted after the first subparagraph: 

"Where a group is composed of more than one resolution group, the planning of the 
resolution  actions  referred to  in  point  (a1)  of Article  12(3) shall  take the form of  a 
joint decision as referred to in the first subparagraph.".  

10. 

In Article 13(6), the first subparagraph is replaced by the following: 

"In  the  absence  of  a  joint  decision  between  the  resolution  authorities  within  four 
months,  each  resolution  authority  that  is  responsible  for  a  subsidiary  and  that 
disagrees  with  the  group  resolution  plan  shall  make  its  own  decision  and,  where 
appropriate, identify the resolution entity and draw up and maintain a resolution plan 
for  the  resolution  group  composed  of  entities  under  its  jurisdiction.  Each  of  the 
individual decisions of disagreeing resolution authorities shall be fully substantiated 
amongst  others  by  setting  out  the  reasons  for  the  disagreement  with  the  proposed 
group  resolution  plan  and  by  taking  into  account  the  views  and  reservations  of  the 
other resolution authorities and competent authorities. Each resolution authority shall 
notify its decision to the other members of the resolution college.". 

11. 

In Article 16(1), the second subparagraph replaced by the following: 

"A  group  shall  be  deemed  to  be  resolvable  if  it  is  feasible  and  credible  for  the 
resolution  authorities  to  either  wind  up  group  entities  under  normal  insolvency 
proceedings  or  to  resolve  that  group  by  applying  resolution  tools  and  powers  to 
resolution entities of that group while avoiding to the maximum extent possible any 
significant  adverse  consequences 
in 
circumstances of broader financial instability or system wide events, of the Member 
States in which group entities are situated, or of other Member States or of the Union 
and with a view to ensuring the continuity of critical functions carried out by those 
group  entities,  where  they  can  be  easily  separated  in  a  timely  manner  or  by  other 
means.  Group-level  resolution  authorities  shall  notify  EBA  in  a  timely  manner 
whenever a group is deemed not to be resolvable.". 

financial  systems, 

including 

the 

for 

12. 

In Article 16, the following paragraph (4) is added: 

"4.  Member States shall ensure that, where a group is composed of more than one 
resolution  group,  the  authorities  referred  to  in  paragraph  1  assess  the 
resolvability of each resolution group in accordance with this Article. 

The  assessment  referred  to  in  the  first  subparagraph  shall  be  performed  in 
addition to the assessment of the resolvability of the entire group.". 

13. 

In Article 17(3), the following subparagraph is added: 

"Where a substantive impediment to resolvability is due to a situation referred to in 
Article  141a(2)  of  Directive  2013/36/EU  the  institution  shall,  within  two  weeks  of 
the date of receipt of a notification made in accordance with paragraph 1, propose to 
the resolution authority possible measures to ensure that the institution complies with 
Articles  45f  or  45g  and  the  requirement  referred  to  in  Article  128(6)  of  Directive 
2013/36/EU.". 

EN 

22 

   EN 

 
 
14. 

In Article 17(5), the following point (h1) is inserted: 

"(h1)  require an institution or an entity referred to in point (b), (c) or (d) of Article 
1(1)  to  submit  a  plan  to  restore  compliance  with  Articles  45f  and  45g,  and  the 
requirement referred to in Article 128(6) of Directive 2013/36/EU;". 

15. 

In Article 17(5), the following point (j1) is inserted: 

'(j1) 

require an institution or entity referred to in point(b), (c) or (d) of Article 1(1), 
to change the maturity profile of items referred to in Article 45b or points (a) 
and (b) of Article 45g(3) to ensure continuous compliance with Article 45f or 
Article 45g.'. 

16. 

In  points (i) and (j)  of Article 17(5), "Article 45"  is replaced with  "Article 45f and 
Article 45g". 

17. 

In Article 18, paragraphs 1 to 7 are replaced by the following: 

"1.  The group-level resolution authority together with the resolution authorities of 
subsidiaries, after consulting the supervisory college and the resolution authorities of 
the jurisdictions in which significant branches are located insofar as is relevant to the 
significant  branch,  shall  consider  the  assessment  required  by  Article  16  within  the 
resolution college and shall take all reasonable steps to reach a joint decision on the 
application of measures identified in accordance with Article 17(4) in relation to all 
resolution entities and their subsidiaries that are entities part of the group referred to 
in Article 1(1). 

The  group-level  resolution  authority,  in  cooperation  with  the  consolidating 
2. 
supervisor  and  EBA  in  accordance  with  Article  25(1)  of  Regulation  (EU)  No 
1093/2010, shall prepare and submit a report to the Union parent undertaking, to the 
resolution authorities of subsidiaries, which will provide it to the subsidiaries under 
their  supervision,  and  to  the  resolution  authorities  of  jurisdictions  in  which 
significant  branches  are  located.  The  report  shall  be  prepared  after  consulting  the 
competent authorities, and shall analyse the substantive impediments to the effective 
application  of  the  resolution  tools  and  the  exercising  of  the  resolution  powers  in 
relation  to  the  group  and  to  resolution  groups  where  a  group  is  composed  of  more 
than  one  resolution  group.  The  report  shall  consider  the  impact  on  the  institution's 
business model and recommend any proportionate and targeted measures that, in the 
authority's view, are necessary or appropriate to remove those impediments. 

Where the impediment to resolvability of the group is due to a situation referred to in 
Article  141a(2)  of  Directive  2013/36/EU,  the  group-level  resolution  authority  shall 
notify its assessment of that impediment to the Union parent undertaking after having 
consulted the resolution authority of the resolution entity and resolution authorities of 
its subsidiary institutions. 

3.  Within  four  months  of  the  date  of  receipt  of  the  report,  the  Union  parent 
undertaking  may  submit  observations  and  propose  to  the  group-level  resolution 
authority alternative measures to remedy the impediments identified in the report. 

Where  those  impediments  are  due  to  a  situation  referred  to  in  Article  141a(2)  of 
Directive 2013/36/EU, the Union parent undertaking shall,  within two weeks of the 
date of receipt of a notification made in accordance with paragraph 2, propose to the 
group-level  resolution  authority  possible  measures  to  address  or  remove  those 
impediments.  

EN 

23 

   EN 

4. 
The group-level resolution authority shall communicate any measure proposed 
by the Union parent undertaking to the consolidating supervisor, EBA, the resolution 
authorities  of  the  subsidiaries  and  the  resolution  authorities  of  the  jurisdictions  in 
which significant branches are located insofar as is relevant to the significant branch. 
The  group-level  resolution  authorities  and  the  resolution  authorities  of  the 
subsidiaries, after consulting the competent authorities and the resolution authorities 
of jurisdictions in which significant branches are located, shall do everything within 
their  power  to  reach  a  joint  decision  within  the  resolution  college  regarding  the 
identification  of  the  material  impediments,  and  if  necessary,  the  assessment  of  the 
measures  proposed  by  the  Union  parent  undertaking  and  the  measures  required  by 
the authorities in order to address or remove the impediments, which shall take into 
account  the  potential  impact  of  the  measures  in  all  the  Member  States  where  the 
group operates. 

5. 
The  joint  decision  shall  be  reached  within  four  months  of  submission  of  any 
observations by the Union parent undertaking at the expiry of the four-month period 
referred to in paragraph 3, whichever the earlier.  

The  joint  decision  concerning  the  impediment  to  resolvability  due  to  a  situation 
referred to in Article 141a(2)  of Directive 2013/36/EU shall be reached within two 
weeks  of  submission  of  any  observations  by  the  Union  parent  undertaking  in 
accordance with paragraph 3.  

The  joint  decision  shall  be  reasoned  and  set  out  in  a  document  which  shall  be 
provided by the group-level resolution authority to the Union parent undertaking. 

EBA may, at the request of a resolution authority, assist the resolution authorities in 
reaching  a  joint  decision  in  accordance  with  Article  31(c)  of  Regulation  (EU)  No 
1093/2010. 

6. 
In the absence of a joint decision within the period referred to in paragraph 5, 
the  group-level  resolution  authority  shall  make  its  own  decision  on  the  appropriate 
measures  to  be  taken  in  accordance  with  Article  17(4)  at  the  group  or  resolution 
group level. 

The  decision  shall  be  fully  reasoned  and  shall  take  into  account  the  views  and 
reservations  of  other  resolution  authorities.  The  decision  shall  be  provided  to  the 
Union parent undertaking by the group-level resolution authority. 

If,  at  the  end  of  the  relevant  period  referred  to  in  paragraph  5,  any  resolution 
authority  has  referred  a  matter  mentioned  in  paragraph  9  of  this  Article  to  EBA  in 
accordance  with  Article  19  of  Regulation  (EU)  No  1093/2010,  the  group-level 
resolution  authority,  shall  defer  its  decision  and  await  any  decision  that  EBA  may 
take in accordance with Article 19(3) of that Regulation, and shall take its decision in 
accordance with the decision of EBA. The relevant period referred to in paragraph 5 
shall be deemed to be the conciliation period within the meaning of that Regulation. 
EBA shall take its decision within one month or within one week when the referral to 
the EBA is related to an impediment to resolvability due to a situation referred to in 
Article 141a(2) of Directive 2013/36/EU.  The matter  shall not  be referred to  EBA 
after the end of the relevant period referred to in paragraph 5 or after a joint decision 
has been reached. In the absence of an EBA decision, the decision of the group-level 
resolution authority shall apply. 

In the absence of a joint decision, the resolution authorities of subsidiaries shall 
7. 
make their own decisions on the appropriate measures to be taken by subsidiaries at 

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individual  level  in  accordance  with  Article  17(4).  The  decision  shall  be  fully 
reasoned  and  shall  take  into  account  the  views  and  reservations  of  the  other 
resolution authorities. The decision shall be provided to the subsidiary concerned and 
to the group-level resolution authority. 

If,  at  the  end  of  the  relevant  period  referred  to  in  paragraph  5,  any  resolution 
authority  has  referred  a  matter  mentioned  in  paragraph  9  of  this  Article  to  EBA  in 
accordance  with  Article  19  of  Regulation  (EU)  No  1093/2010,  the  resolution 
authority of the subsidiary shall defer its decision and await any decision that EBA 
may  take  in  accordance  with  Article  19(3)  of  that  Regulation,  and  shall  take  its 
decision in accordance with the decision of EBA. The relevant period referred to in 
paragraph 5 shall be deemed to be the conciliation period within the meaning of that 
Regulation. EBA shall take its decision within one month or within one week when 
the referral to the EBA is related to an impediment to resolvability due to a breach of 
Articles  45  to  45i.  The  matter  shall  not  be  referred  to  EBA  after  the  end  of  the 
relevant period referred to in paragraph 5 or after a joint decision has been reached. 
In  the  absence  of  an  EBA  decision,  the  decision  of  the  resolution  authority  of  the 
subsidiary shall apply.". 

18. 

In Article 27(1), the following point (i) is added: 

"(h) where the conditions laid down in Article 29a are complied with, suspend any 
payment or  delivery obligation to  which an institution  or  entity  referred to  in  point 
(b), (c) or (d) of Article 1(1) is a party.". 

19. 

The following Article 29a is inserted: 

"Article 29a 
Power to suspend certain obligations. 

1. 

2. 

Member States shall establish that their respective competent authority, after having 
consulted the resolution authority, can exercise the power referred to in point (i) of 
Article 27 (1) only where the exercise of the suspension power is necessary to carry 
out the assessment provided for in the first sentence of Article 27(1) or to make the 
determination provided for in point (a) of Article 32(1).   

The suspension referred to in  paragraph 1 shall not exceed the minimum period of 
time  that  the  competent  authority  considers  necessary  to  carry  out  the  assessment 
referred to  in  point  (a) of  Article  27(1)  or  to  make  the  determination referred to  in 
point (a) of Article 32(1) and shall in any event not exceed 5 working days.   

3. 

Any suspension pursuant to paragraph 1 shall not apply to: 

(a)  payment  and  delivery  obligations  owed  to  systems  or  operators  of 
systems  that  have  been  designated  in  accordance  with  Directive 
98/26/EC, CCPs and third country CCPs recognised by ESMA pursuant 
to Article 25 of Regulation (EU) No 648/2012 and to central banks; 

(b) 

(c) 

eligible claims for the purpose of Directive 97/9/EC; 

covered deposits. 

4. 

5. 

When exercising a power under this Article, competent authorities shall have regard 
to  the  impact  the  exercise  of  that  power  might  have  on  the  orderly  functioning  of 
financial markets.  

A  payment  or  delivery  obligation  that  would  have  been  due  during  the  suspension 
period shall be due immediately upon expiry of that period.   

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6. 

7. 

8. 

When  payment  or  delivery  obligations  under  a  contract  are  suspended  pursuant  to 
paragraph 1, the payment or delivery obligations of the entity's counterparties under 
that contract shall be suspended for the same period of time. 

Member  States  shall  ensure  that  competent  authorities  notify  the  resolution 
authorities about the exercise of any power referred to in paragraph 1 without delay.   

Member States that make use of the option laid down in Article 32 (2) shall ensure 
that  the  suspension  power  referred  to  in  paragraph  1  of  this  Article    can  also  be 
exercised by the resolution authority, after having consulted the competent authority, 
where the exercise of that suspension power is necessary to make the determination 
provided for in point (a) of Article 32(1)." 

20. 

In Article 32(1), point (b) is replaced by the following: 

21. 

2. 

3. 

4. 

'(b) having regard to timing and other relevant circumstances, there is no reasonable 
prospect that any alternative private sector measures, including measures by an IPS, 
or  supervisory  action,  including  early  intervention  measures  or  the  write  down  or 
conversion  of  relevant  capital  instruments  or  eligible  liabilities  in  accordance  with 
Article  59(2)  taken  in  respect  of  the  institution,  would  prevent  the  failure  of  the 
institution within a reasonable timeframe;'. 

In Article 33, paragraphs 2, 3 and 4 are replaced with the following: 

Member  States  shall  ensure  that  resolution  authorities  take  a  resolution  action  in 
relation  to  an  entity  referred  to  in  point  (c)  or  (d)  of  Article  1(1),  when  that  entity 
meets the conditions laid down in Article 32(1). 

Where  the  subsidiary  institutions  of  a  mixed-activity  holding  company  are  held 
directly  or  indirectly  by  an  intermediate  financial  holding  company,  the  resolution 
plan shall provide that the intermediate financial holding company is identified as a 
resolution  entity  and  Member  States  shall  ensure  that  resolution  actions  for  the 
purposes  of  group  resolution  are  taken  in  relation  to  the  intermediate  financial 
holding company. Member States shall ensure that resolution authorities do not take 
resolution  actions  for  the  purposes  of  group  resolution  in  relation  to  the  mixed-
activity holding company. 

Subject  to  paragraph  3  of  this  Article  and  notwithstanding  the  fact  that  an  entity 
referred to in point (c) or (d) of Article 1(1) does not meet the conditions laid down 
in  Article 32(1), resolution authorities may take resolution action with regard to  an 
entity  referred  to  in  point  (c)  or  (d)  of  Article  1(1)  where  all  of  the  following 
conditions are fulfilled: 

(a) 

the entity is a resolution entity;  

(b)  one  or  more  of  the  subsidiaries  of  that  entity  that  are  institutions,  but  not 
resolution entities comply with the conditions laid down  in Article 32(1); 

(c) 

assets  and  liabilities  of  those  subsidiaries  are  such  that  their  failure  threatens 
the resolution group as a whole and resolution action with regard to the entity 
referred to in point (c) or (d) of Article 1(1) is necessary for the resolution of 
such  subsidiaries  which  are  institutions  or  for  the  resolution  of  the  relevant 
resolution group as a whole.". 

22. 

In Article 44(2), point (f) is replaced by the following: 

‘(f) liabilities with a remaining maturity of less than seven days, owed to systems or 
operators  of  systems  designated  in  accordance  with  Directive  98/26/EC  or  to  their 

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participants and arising from the participation in such  a  system, or  to  third country 
central CCPs recognised by ESMA;'. 

23. 

Article 45 is replaced by the following Articles: 

"Article 45  

1. 

2. 

1. 

2. 

1. 

2. 

Application and calculation of the minimum requirement for own funds and eligible 
liabilities  

Member States shall ensure that institutions and entities referred to in points (b),(c) 
and (d) of Article 1(1) meet, at all times,  a requirement for own funds and eligible 
liabilities in accordance with Articles 45 to 45i. 

The  requirement  referred  to  in  paragraph  1  shall  be  calculated  in  accordance  with 
Article  45c(3)  or  (4)  ,  as  applicable,  as  the  amount  of  own  funds  and  eligible 
liabilities and  expressed as percentages of: 

(a) 

(b) 

the total risk exposure amount of the relevant entity referred to in paragraph 1 
calculated in accordance with Article 92(3) of Regulation (EU) No 575/2013,  

the  leverage  ratio  exposure  measure  of  the  relevant  entity  referred  to  in 
paragraph  1  calculated  in  accordance  with  Article  429(3)  of  Regulation  (EU) 
No 575/2013. 

Article 45a Exemption from the minimum requirement for own funds and eligible 

liabilities 

Notwithstanding Article 45, resolution authorities shall exempt from the requirement 
laid  down  in  Article  45(1)  mortgage  credit  institutions  financed  by  covered  bonds 
which, according to national law are not allowed to receive deposits where all of the 
following conditions are met: 

(a) 

(b) 

those institutions will be wound-up through national insolvency procedures, or 
other types of procedure implemented in accordance with Article 38, 40 or 42, 
laid down for those institutions;  

such  national  insolvency  procedures,  or  other  types  of  procedure,  will  ensure 
that  creditors  of  those  institutions,  including  holders  of  covered  bonds  where 
relevant, will bear losses in a way that meets the resolution objectives. 

Institutions  exempted  from  the  requirement  laid  down  in  Article  45(1)  shall  not  be 
part of the consolidation referred to in Article 45f(1). 

Article 45b Eligible liabilities for resolution entities  

Eligible  liabilities  shall  be  included  in  the  amount  of  own  funds  and  eligible 
liabilities of resolution entities only where they satisfy the conditions referred to in 
Article 72a, except for point (d) of Article 72b(2) of Regulation (EU) No 575/2013. 

By  way  of  derogation  from  point  (l)  of  Article  72a(2)  of  Regulation  (EU)  No 
575/2013, liabilities that arise from debt instruments with derivative features, such as 
structured notes, shall be included in the amount of own funds and eligible liabilities 
only where all of the following conditions are met: 

(a) 

a  given  amount  of  the  liability  arising  from  the  debt  instrument  is  known  in 
advance  at  the  time  of  issuance,  is  fixed  and  not  affected  by  a  derivative 
feature; 

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(b) 

the  debt  instrument,  including  its  derivative  feature,  is  not  subject  to  any 
netting agreement and its valuation is not subject to Article 49(3); 

The liabilities referred to in the first subparagraph shall only be included in the 
amount of own funds and eligible liabilities for the part that corresponds with 
the amount referred to in point (a) of the first subparagraph. 

3. 

Resolution  authorities  may  decide  that  the  requirement  referred  to  in  Article  45f  is 
met  by  resolution  entities  with  instruments  that  meet  all  conditions  referred  to  in 
Article 72a of Regulation (EU) No 575/2013 with a view to ensure that the resolution 
entity can be resolved in a manner suitable to meet the resolution objectives. 

The  resolution  authority's  decision  under  this  paragraph  shall  contain  the 
reasons for that decision on the basis of the following elements: 

(a)  non-subordinated liabilities referred to in the first and second paragraphs have 
the  same  priority  ranking  in  the  national  insolvency  hierarchy  as  certain 
liabilities  that  are  excluded  from  the  application  of  the  write-down  or 
conversion powers in accordance with Article 44(2) or Article 44(3); 

(b) 

(c) 

the risk that as a result of a planned application of write-down and conversion 
powers  to  non-subordinated  liabilities  that  are  not  excluded  from  the 
application of the write-down or conversion powers in accordance with Article 
44(2)  or  Article  44(3),  creditors  of  claims  arising  from  those  liabilities  incur 
greater losses than they would incur in a winding up under normal insolvency 
proceedings; 

the amount of subordinated liabilities shall not exceed the amount necessary to 
ensure  that  creditors  referred  to  in  point  (b)  shall  not  incur  losses  above  the 
level of losses that they would otherwise have incurred in a winding up under 
normal insolvency proceedings. 

The  Commission  shall  be  empowered  to  adopt  delegated  acts  in  accordance  with 
Article 115 concerning measures to further specify the conditions referred to in point 
(a) of the first subparagraph of paragraph 2. 

Article 45c Determination of the minimum requirement for own funds and eligible 
liabilities 

The requirement referred to in Article 45(1)of each entity shall be determined by the 
resolution authority, after having consulted the competent authority, on the basis of 
the following criteria: 

(a) 

(b) 

the  need  to  ensure  that  the  resolution  entity  can  be  resolved  by  the 
application of the resolution tools including, where appropriate, the bail-
in tool, in a way that meets the resolution objectives; 

the need to ensure, in appropriate cases, that the resolution entity and its 
subsidiaries that are institutions, but not resolution entities have sufficient 
eligible  liabilities  to  ensure  that,  if  the  bail-in  tool  or  write  down  and 
conversion powers were to be applied to them, respectively, losses could 
be absorbed and the total capital ratio and the leverage ratio in the form 
of  Common  Equity  Tier  1,    of  the  relevant  entities  can  be  restored  to  a 
level necessary to enable them to continue to comply with the conditions 
for  authorisation  and  to  carry  on  the  activities  for  which  they  are 
authorised under Directive 2013/36/EU or Directive 2014/65/EU; 

4. 

1. 

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(c) 

(d) 

(e) 

(f) 

the  need  to  ensure  that,  if  the  resolution  plan  anticipates  that  certain 
classes  of  eligible  liabilities  might  be  excluded  from  bail-in  pursuant  to 
Article 44(3) or might be transferred to a recipient in full under a partial 
transfer,    the  resolution  entity  has  sufficient  other  eligible  liabilities  to 
ensure that losses could be absorbed and the capital requirements, or as 
applicable, the leverage ratio in the form of Common Equity Tier 1 of the 
resolution  entity  can  be  restored  to  a  level  necessary  to  enable  it  to 
continue to comply with the conditions for authorisation and to carry on 
the  activities  for  which  it  is  authorised  under  Directive  2013/36/EU  or 
Directive 2014/65/EU; 

the size, the business model, the funding model and the risk profile of the  
entity; 

the extent to which the Deposit Guarantee Scheme could contribute to the 
financing of resolution in accordance with Article 109;  

the extent to which the failure of the entity would have an adverse effect 
on  financial  stability,  including,  due  to  the  interconnectedness  of  the 
entity  with  other  institutions  or  entities  or  with  the  rest  of  the  financial 
system through contagion to other institutions or entities. 

2. 

Where the resolution plan provides that resolution action is to be taken in accordance 
with  the  relevant  resolution  scenario  referred  to  in  Article  10(3),  the  requirement 
referred to in Article 45(1) shall equal an amount sufficient to ensure that: 

(a) 

(b) 

the  losses  that  might  expected  to  be  incurred  by  the  entity  are  fully 
absorbed ('loss absorption'); 

the  entity  or  its  subsidiaries  that  are  institutions,  but  not  resolution 
entities are recapitalised  to a level necessary to enable them  to continue 
to  comply  with  the  conditions  for  authorisation  and  to  carry  out  the 
activities  for  which  they  are  authorised  under  Directive  2013/36/EU, 
Directive 2014/65/EU or equivalent legislation ('recapitalisation');  

Where  the  resolution  plan  provides  that  the  entity  shall  be  wound  up 
under  normal  insolvency  proceedings,  the  requirement  referred  to  in 
Article  45(1)  for  that  entity  shall  not  exceed  an  amount  sufficient  to 
absorb losses in accordance with point (a) of the first subparagraph. 

3. 

Without  prejudice  to  the  last  subparagraph,  for  resolution  entities,  the  amount 
referred to in paragraph 2 shall not exceed the greater of the following: 

(a) 

the sum of: 

(i)  the  amount  of  losses  to  be  absorbed  in  resolution  that  corresponds  to  the 
requirements referred to in Article 92(1)(a),(b) and (c) of Regulation (EU) No 
575/2013 and Article 104a of Directive 2013/36/EU of the resolution entity at 
sub-consolidated resolution group level,  

(ii)  a  recapitalisation  amount  that  allows  the  resolution  group  resulting  from 
resolution  to  restore  its  total  capital  ratio  referred  in  Article  92(1)(c)  of 
Regulation (EU) No 575/2013 and its requirement referred to in Article 104a of 
Directive 2013/36/EU at resolution group sub-consolidated level;  

(b) 

the sum of: 

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(i)  the  amount  of  losses  to  be  absorbed  in  resolution  that  corresponds  to  the 
resolution entity's leverage ratio requirement referred to in the Regulation (EU) 
No 575/2013 at resolution group sub-consolidated level; and  

(ii)  a  recapitalisation  amount  that  allows  the  resolution  group  resulting  from 
resolution  to  restore  the  leverage  ratio  referred  to  in  Article  92(1)(d)  of 
Regulation (EU) No 575/2013 at resolution group sub-consolidated level.  

For  the  purposes  of  point  (a)  of  Article  45(2),  the  requirement  referred  to  in 
Article 45(1) shall be expressed in percentage terms as the amount calculated 
in accordance with point (a) of this paragraph divided by the total risk exposure 
amount. 

For the purposes of point (b) of Article 45(2), the requirement referred to 
in  Article  45(1)  shall  be  expressed  in  percentage  terms  as  the  amount 
calculated in accordance with point (b) of this paragraph divided  by the 
leverage ratio exposure measure. 

The resolution authority shall set the recapitalisation amounts referred to 
in  the  previous  subparagraphs  in  accordance  with  the  resolution  actions 
foreseen  in  the  resolution  plan  and  may  adjust  those  recapitalisation 
amounts to  adequately reflect risks that affect resolvability arising  from 
the  resolution  group’s  business  model,  funding  profile  and  overall  risk 
profile.  

4. 

Without  prejudice  to  the  last  subparagraph,  for  entities  that  are  not  themselves 
resolution entities, the amount referred to in paragraph 2 shall not exceed the greater 
of any of the following:  

(a) 

the sum of: 

(i)  the  amount  of  losses  to  be  absorbed  in  resolution  that  corresponds  to  the 
requirements referred to in Article 92(1)(a),(b) and (c) of Regulation (EU) No 
575/2013 and Article 104a of Directive 2013/36/EU of the entity, and 

(ii)  a  recapitalisation  amount  that  allows  the  entity  to  restore  its  total  capital 
ratio  referred  in  Article  92(1)(c)  of  Regulation  (EU)  No  575/2013  and  its 
requirement referred to in Article 104a of Directive 2013/36/EU; 

(b) 

the sum of: 

(i)  the  amount  of  losses  to  be  absorbed  in  resolution  that  corresponds  to  the 
entity's  leverage  ratio  requirement  referred  to  in  the  Article  92(1)(d)  of 
Regulation (EU) No 575/2013, and  

(ii) a recapitalisation amount that allows the entity to restore its leverage ratio 
referred to in the Article 92(1)(d) of Regulation (EU) No 575/2013 ;  

For the purposes of point (a) of Article 45(2)(a), the requirement referred to in 
Article 45(1) shall be expressed in percentage terms as the amount calculated 
in accordance with point (a) divided by the total risk exposure amount. 

For the purposes of point (b) of Article 45(2)(b), the requirement referred to in 
Article 45(1) shall be expressed in percentage terms as the amount calculated 
in accordance with point (b) divided by the leverage ratio exposure measure. 

The  resolution  authority  shall  set  the  recapitalisation  amounts  referred  to  the 
previous  subparagraphs  in  accordance  with  the  resolution  actions  foreseen  in 

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5. 

6. 

7. 

the resolution plan and may adjust those recapitalisation amounts to adequately 
reflect  risks  that  affect  the  recapitalisation  needs  arising  from  the  entity's 
business model, funding profile and overall risk profile. 

Where the resolution authority expects that certain classes of eligible liabilities might 
be  excluded  from  bail-in  pursuant  to  Article  44(3)  or  might  be  transferred  to  a 
recipient in full under a partial transfer, the requirement referred to in Article 45(1) 
shall not exceed an amount sufficient to: 

(a) 

cover  the  amount  of  excluded  liabilities  identified  in  accordance  with 
Article 44(3); 

(b) 

ensure that the conditions referred to in paragraph 2 are fulfilled. 

The resolution authority's decision to impose a minimum requirement of own funds 
and  eligible  liabilities  under  this  Article  shall  contain  the  reasons  for  that  decision, 
including a full assessment of the elements referred to in paragraphs 2 to 5. 

For the purposes of paragraphs 3 and 4, capital requirements shall be interpreted in 
accordance with the competent authority's application of transitional provisions laid 
down in Chapters 1, 2 and 4 of Title I of Part Ten of Regulation (EU) No 575/2013 
and  in  the  provisions  of  national  legislation  exercising  the  options  granted  to  the 
competent authorities by that Regulation. 

The resolution authority  may reduce  the requirement referred to  in  Article  45(1) to 
take  account  of  the  amount  which  a  deposit  guarantee  scheme  is  expected  to 
contribute  to  the  financing  of  the  preferred  resolution  strategy  in  accordance  with 
Article 109 of Directive 2014/59/EU.  

The  size  of  any  such  reduction  shall  be  based  on  a  credible  assessment  of  the 
potential contribution from the deposit guarantee scheme, and shall at least:  

(a)  be  less  than  a  prudent  estimate  of  the  potential  losses  which  the  deposit 
guarantee scheme would have had to bear, had the institution been wound up 
under normal insolvency proceedings, taking into account the priority ranking 
of  the  deposit  guarantee  scheme  pursuant  to  Article  108  of  Directive 
2014/59/EU;  

(b)  be less than the limit on deposit guarantee scheme contributions set out in the 

second subparagraph of Article 109(5) of Directive 2014/59/EU;  

(c) 

take account of the overall risk of exhausting the available financial means of 
the  deposit  guarantee  scheme  due  to  contributing  to  multiple  bank  failures  or 
resolutions; and  

(d)  be consistent with any other relevant provisions in national law and the duties 
and  responsibilities  of  the  authority  responsible  for  the  deposit  guarantee 
scheme.  

(e)  The resolution authority shall, after consulting the authority responsible for the 
deposit guarantee scheme, document its approach as regards the assessment of 
the  overall  risk  of  exhausting  the  available  financial  means  of  the  deposit 
guarantee  scheme  and  apply  reductions  in  accordance  with  subparagraph  1, 
provided that that risk is not excessive. 

8. 

EBA shall draft regulatory technical standards which shall further specify the criteria 
referred to in paragraph 1 on the basis of which the requirement for own funds and 
permissible liabilities is to be determined in accordance with this Article. 

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EBA  shall  submit  those  draft  regulatory  standards  to  the  Commission  by  [1  month 
after the entry into force]. 

Power  is  delegated  to  the  Commission  to  adopt  the  regulatory  technical  standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Articles  10  to  14  of 
Regulation (EU) No 1090/2010. 

Article 45d Determination of the minimum requirement for own funds and eligible 

liabilities for entities of G-SIIs 

1. 

The requirement referred to in Article 45(1)  of a resolution entity that is a G-SII or 
part of a G-SII shall consist of the following: 

(a) 

(b) 

the  requirement  referred  to  in  Article  92a  of  Regulation  (EU)  No 
575/2013; and 

any  additional  requirement  for  own  funds  and  eligible  liabilities 
determined  by  the  resolution  authority  specific  to  the  entity    in 
accordance with paragraph 2, which shall be met with liabilities that meet 
the conditions of Article 45b. 

2. 

The  resolution  authority  may  impose  an  additional  requirement  for  own  funds  and 
eligible liabilities referred to in point (b) of paragraph 1 only: 

3. 

4. 

1. 

(a)  where  the  requirement  referred  to  in  point  (a)  of  paragraph  1  is  not 

sufficient to fulfil the conditions set out in Article 45c; and  

(b) 

to an extent that the amount of required own funds and eligible liabilities 
does not exceed a level that is necessary to fulfil the conditions of Article 
45c. 

Where  more  than  one  G-SII  entity  belonging  to  the  same  EU  G-SII  are  resolution 
entities,  the  relevant  resolution  authorities  shall  calculate  the  amount  referred  in 
paragraph 2, 

(a) 

(b) 

for each resolution entity,  

for  the  Union  parent  entity  as  if  it was  the  only  resolution  entity  of  the 
EU G-SII. 

The resolution authority's decision to impose an additional requirement of own funds 
and  eligible  liabilities  under  point  (b)  of  paragraph  1,  shall  contain  the  reasons  for 
that decision, including a full assessment of the elements referred to in paragraph 2. 

Article 45e Guidance for the minimum requirement of own funds and eligible 
liabilities 

The  resolution  authority  may  give  guidance  to  an  entity  to  have  own  funds  and 
eligible liabilities that fulfil the conditions of Article 45b or 45g(3) in excess of the 
levels set out in Article 45c and Article 45d that provides for additional amounts for 
the following purposes: 

(a) 

(b) 

to  cover  potential  additional  losses  of  the  entity  to  those  covered  in 
Article 45c, and/or 

to ensure that, in the event of resolution, a sufficient market confidence 
in  the  entity  is  sustained  through  capital  instruments  in  addition  to  the 
requirement in point (b) of Article 45c(2) ('market confidence buffer').  

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2. 

3. 

4. 

1. 

2. 

1. 

The guidance shall be only provided and calculated with respect to the requirement 
referred to in Article 45(1) calculated in accordance with point (a) of Article 45(2). 

The amount of the guidance given in accordance with of paragraph 1 may be set only 
where the competent authority has already set its own guidance in accordance with 
Article  104b  of  Directive  2013/36/EU  and  shall  not  exceed  the    level  of  that 
guidance.  

The amount of the guidance given in accordance with point (b) of paragraph 1 shall 
not exceed the amount of the combined buffer requirement referred to in point (6) of 
Article 128 of Directive 2013/36/EU, except for the requirement referred to in point 
(a) of that provision, unless a higher level is necessary to ensure that, following the 
event  of  resolution,  the entity  continues  to  meet  the  conditions  for  its  authorisation 
for an appropriate period of time that is not longer than one year. 

The resolution authority shall provide to the entity the reasons and a full assessment 
for the need and the level of the guidance given in accordance with this Article. 

Where an entity consistently fails to have additional own funds and eligible liabilities 
as  expected  under  the  guidance  referred  to  in  the  first  paragraph,  the  resolution 
authority may require that the amount of the requirement referred to in Article 45c(2) 
be increased to cover the amount of the guidance given pursuant to this Article. 

An entity that fails to have additional own funds and eligible liabilities as expected 
under  the  guidance  referred  to  in  the  first  paragraph  shall  not  be  subject  to  the 
restrictions referred to in Article 141 of Directive 2013/36/EU. 

Article 45f Application of the minimum requirement for own funds and eligible 
liabilities to resolution entities  

Resolution entities shall comply with the requirements laid down in Articles 45c to 
Article 45e on a consolidated basis at the level of the resolution group. 

The requirement referred to in Article 45(1) of a resolution entity at the consolidated 
resolution  group  level  shall  be  determined  in  accordance  with  Article  45h,  on  the 
basis of the requirements laid down in Articles 45c to 45e and of whether the third-
country  subsidiaries  of  the  group  are  to  be  resolved  separately  according  to  the 
resolution plan. 

Article 45g Application of the minimum requirement for own funds and eligible 
liabilities to entities that are not themselves resolution entities  

Institutions that are subsidiaries of a resolution entity and are not resolution entities 
themselves shall comply with the requirements laid down in Articles 45c to 45e on 
an individual basis. A resolution authority may, after having consulted the competent 
authority,  decide  to  apply  the  requirement  laid  down  in  this  Article  to  an  entity 
referred to in points (b), (c) or (d) of Article 1(1) that is a subsidiary of a resolution 
entity and is not a resolution entity itself. 

The requirement referred to in Article 45(1)of an entity referred to in the first 
subparagraph  shall  be  determined  in  accordance  with  Article  45h  and  on  the 
basis of the requirements laid down in Articles 45c to 45e. 

2. 

The  requirement  referred  to  in  Article  45(1)of  entities  referred  to  in  the  first 
paragraph shall be subject to the following conditions:  

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(a) 

(b) 

the resolution entity complies with the consolidated requirement referred 
to in Article 45f; 

the  sum  of  all  requirements  to  be  applied  to  the  resolution  group's 
subsidiaries  shall  be  covered  by  and  not  exceed  the  consolidated 
requirement referred to in Article 45f unless this is only due to the effects 
of  the  consolidation  at  the  level  of  the  resolution  group  in  accordance 
with Article 45f(1). 

(c) 

the requirement shall not exceed the contribution of the subsidiary to the 
consolidated requirement referred to in Article 45f(1). 

(d) 

it shall fulfil the eligibility criteria provided in paragraph 3. 

3. 

The requirement shall be met with one or more of the following: 

(a) 

liabilities that: 

(i) are issued to and bought by the resolution entity; 

(ii) fulfil the eligibility criteria referred to in Article 72a, except for point (b) of 
Article 72b(2) of Regulation (EU) No 575/2013; 

(iii) are ranking in normal insolvency proceedings below liabilities other than 
those  eligible  for  own  funds  requirements  that  are  issued  to  and  bought  by 
other entities than the resolution entity; 

(iv) are subject to the power of write down or conversion in accordance with 
Articles 59 to 62 that is consistent with the resolution strategy of the resolution 
group, notably by not affecting the control of the subsidiary by the resolution 
entity. 

(b)  own  funds  instruments  issued  to  and  bought  by  other  entities  than  the 
resolution  entity  when  the  exercise  of  the  power  of  write  down  or 
conversion  in  accordance  with  Articles  59  to  62  does  not  affect  the 
control of the subsidiary by the resolution entity. 

4. 

Subject  to  the  agreement  of  the  resolution  authorities  of  the  subsidiary  and  the 
resolution  entity,  the  requirement  may  be  met  with  a  guarantee  of  the  resolution 
entity granted to its subsidiary, which fulfils the following conditions: 

(a) 

(b) 

(c) 

(d) 

(e) 

the guarantee is provided for at least the equivalent amount as the amount 
of the requirement for which it substitutes; 

the guarantee is triggered when the subsidiary is unable to pay its debts 
or  other  liabilities  as  they  fall  due  or  a  determination  has  been  made  in 
accordance with Article 59(3) in respect of the subsidiary, whichever is 
the earliest; 

the guarantee is collateralised through a financial collateral arrangement 
as defined in point (a) of Article 2(1) of Directive 2002/47/EC for at least 
50 per cent of its amount; 

the  guarantee  and  financial  collateral  arrangement  are  governed  by  the 
laws  of  the  Member  State  where  the  subsidiary  is  established  unless 
specified otherwise by the resolution authority of the subsidiary; 

the  collateral  backing  the  guarantee  fulfils  the  requirements  of  Article 
197  of  Regulation  (EU)  No  575/2013,  which,  following  appropriately 
conservative haircuts, is sufficient to fully cover the amount guaranteed; 

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(f) 

(g) 

(h) 

the collateral backing the guarantee is unencumbered and in particular is 
not used as collateral to back any other guarantee; 

the  collateral  has  an  effective  maturity  that  fulfils  the  same  maturity 
condition as that for referred to in Article 72c(1) of Regulation (EU) No 
575/2013 , and 

there are no legal, regulatory or operational barriers to the transfer of the 
collateral from the resolution entity to the relevant subsidiary, including 
when resolution action is taken in respect of the resolution entity.  

5. 

The resolution authority of a subsidiary that is not a resolution entity may fully waive 
the application of this Article to that subsidiary where: 

(a)  both the subsidiary and the resolution entity are subject to authorisation 

and supervision by the same Member State; 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

the  resolution  entity,  complies  on  a  sub-consolidated  basis  with  the 
requirement referred to in Article 45f; 

there is no current or foreseen material practical or legal impediment to 
the  prompt  transfer  of  own  funds  or  repayment  of  liabilities  by  the 
resolution entity to the subsidiary in respect of which a determination has 
been  made  in  accordance  with  Article  59(3),  in  particular  when 
resolution action is taken in respect of the resolution entity; 

the  resolution  entity  satisfies  the  competent  authority  regarding  the 
prudent management of the subsidiary and has declared, with the consent 
of  the  competent  authority,  that  it  guarantees  the  commitments  entered 
into  by  the  subsidiary,  or  the  risks  in  the  subsidiary  are  of  no 
significance; 

the risk evaluation, measurement and control procedures of the resolution 
entity cover the subsidiary; 

the resolution entity holds more than 50 % of the voting rights attached to 
shares  in  the  capital  of  the  subsidiary  or  has  the  right  to  appoint  or 
remove  a  majority  of  the  members  of  the  management  body  of  the 
subsidiary;  

the competent authority of the subsidiary has fully waived the application 
of individual capital requirements to the subsidiary under Article 7(1) of 
Regulation (EU) No 575/2013. 

Article 45h Procedure for determining the requirement 

1. 

The resolution authority of the resolution entity, the group-level resolution authority, 
where  different  from  the  former,  and  the  resolution  authorities  responsible  for  the 
subsidiaries of the resolution group on an individual basis shall do everything within 
their power to reach a joint decision on: 

(a) 

(b) 

the amount of the requirement applied at the consolidated level for each 
resolution entity; 

the  amount  of  the  requirement  applied  to  each  subsidiary  of  the 
resolution entity on an individual level. 

The joint decision shall ensure compliance with Article 45f and Article 45g, be 
fully reasoned and provided to: 

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2. 

3. 

4. 

(a) 

(b) 

(c) 

the resolution entity by its resolution authority;.  

the  subsidiaries  of  the  resolution  entity  by  their  respective  resolution 
authorities; 

the Union parent undertaking of the group by the resolution authority of 
the  resolution  entity,  when  that  Union  parent  undertaking  is  not  itself  a 
resolution entity from the same resolution group. 

Where  more  than  one  G-SII  entity  belonging  to  the  same  EU  G-SII  are  resolution 
entities,  the  resolution  authorities  referred  to  in  the  first  subparagraph  shall  discuss 
and,  where  appropriate  and  consistent  with  the  G-II’s  resolution  strategy,  agree  on 
the application of Article 72e of Regulation (EU) Regulation (EU) No 575/2013  and 
any  adjustment  to  minimise  or  eliminate  the  difference  between  the  sum  of  the 
amounts referred to in point (a) of Article 45d(3) and Article 12 of Regulation (EU) 
No 575/2013 for individual resolution entities and the sum of the amounts referred to 
in point (b) of Article 45d(3) and Article 12 of Regulation (EU) No 575/2013. 

Such an adjustment may be applied under the following conditions: 

(a) 

the adjustment may be applied in respect of differences in the calculation 
of  the  total  risk  exposure  amounts  between  the  relevant  Member  States 
by adjusting the level of the requirement;  

(b) 

the  adjustment  shall  not  be  applied  to  eliminate  differences  resulting 
from exposures between resolution groups. 

The sum of the amounts referred to in point (a) of Article 45d(3) and Article 12 
of Regulation (EU) No 575/2013 for individual resolution entities shall not be 
lower than the sum of the amounts referred to in point (b) of Article 45d(3) and 
Article 12 of Regulation (EU) No 575/2013. 

In the absence of such a joint decision within four months, a decision shall be taken 
in accordance with paragraphs 4 to 6. 

Where  a  joint  decision  is  not  taken  within  four  months  because  of  a  disagreement 
concerning  the  consolidated  requirement,  a  decision  shall  be  taken  on  the 
consolidated  requirement  by  the  resolution  authority  of  the  resolution  entity  after 
having duly taken into consideration: 

(a) 

the assessment of subsidiaries performed by the relevant resolution authorities,   

the  opinion  of  the  group-level  resolution  authority,  where  different  from  the 
resolution authority of the resolution entity.  

Where,  at  the  end  of  the  four-month  period,  any  of  the  resolution  authorities 
concerned  has  referred  the  matter  to  EBA  in  accordance  with  Article  19  of 
Regulation (EU) No 1093/2010, the resolution authority of the resolution entity 
shall  defer  its  decision  and  await  any  decision  that  EBA  may  take  in 
accordance with Article 19(3) of that Regulation, and shall take its decision in 
accordance with the decision of EBA.  

The decision of the EBA shall take into account points (a) and (b) of the first 
subparagraph. 

The four-month period shall be deemed to be the conciliation period within the 
meaning of that Regulation. EBA shall take its decision within one month.  

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The matter shall not be referred to EBA after the end of the four-month period 
or after a joint decision has been reached.  

In  the  absence  of  an  EBA  decision  within  one  month,  the  decision  of  the 
resolution authority of the resolution entity shall apply. 

5. 

Where  a  joint  decision  is  not  taken  within  four  months  because  of  a  disagreement 
concerning  the  level  of  the  requirement  to  be  applied  to  the  resolution  group's 
subsidiaries  on  an  individual  basis,  the  decision  shall  be  taken  by  the  respective 
resolution  authorities  of  the  subsidiaries  where  all  of  the  following  conditions  are 
fulfilled:  

(a) 

(b) 

the  views  and  reservations  expressed  by  the  resolution  authority  of  the 
resolution entity have been duly taken into account, and 

the  opinion  of  the  group-level  resolution  authority  has  been  duly  taken 
into  account  where  that  authority  is  different  from  the  resolution 
authority of the resolution entity; 

(c) 

compliance with Article 45g(2) has been assessed. 

Where,  at  the  end  of  the  four-month  period,  the  resolution  authority  of  the 
resolution entity or the group-level resolution authority has referred the matter 
to EBA in accordance with Article 19 of Regulation (EU) No 1093/2010, the 
resolution  authorities  responsible  for  the  subsidiaries  on  an  individual  basis 
shall  defer  their  decisions  and  await  any  decision  that  EBA  may  take  in 
accordance with Article 19(3) of that Regulation, and shall take their decisions 
in  accordance  with  the  decision  of  EBA.  The  decision  of  the  EBA  shall  take 
into account points (a), (b) and (c) of the first subparagraph. 

The four-month period shall be deemed to be the conciliation period within the 
meaning of that Regulation. EBA shall take its decision within one month.  

The matter shall not be referred to EBA after the end of the four-month period 
or after a joint decision has been reached.  

In  the  absence  of  an  EBA  decision  within  one  month,  the  decisions  of  the 
resolution authorities of the subsidiaries shall apply. 

The  joint  decision  and  any  decisions  taken  in  the  absence  of  a  joint  decision 
shall be reviewed and where relevant updated on a regular basis. 

6. 

Where  a  joint  decision  is  not  taken  within  four  months  because  of  a  disagreement 
concerning the level of the consolidated requirement and the level of the requirement 
to  be  applied  to  the  resolution  group's  subsidiaries  on  an  individual  basis,  the 
following shall apply: 

(a) 

(b) 

a decision shall be taken on the consolidated requirement in accordance 
with paragraph 4; 

a decision shall be taken on the level of the requirement to be applied to 
the  resolution  group's  subsidiaries  on  an  individual  basis  in  accordance 
with paragraph 4 after: 

(i) having duly considered the decision referred to in point (a); 

(ii) having assessed the compliance with Article 45g(2). 

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7. 

8. 

9. 

The  joint  decision  referred  to  in  paragraph  1  and  any  decisions  taken  by  the 
resolution  authorities  referred  to  in  paragraphs  4,  5  and  6  in  the  absence  of  a  joint 
decision shall be binding on the resolution authorities concerned. 

The  joint  decision  and  any  decisions  taken  in  the  absence  of  a  joint  decision 
shall be reviewed and where relevant updated on a regular basis. 

Resolution authorities, in coordination with competent authorities, shall require and 
verify that entities meet the requirement referred to in article 45(1) , and shall take 
any  decision  pursuant  to  this  Article  in  parallel  with  the  development  and  the 
maintenance of resolution plans.  

The resolution authority of the resolution  entity shall inform EBA of the  minimum 
requirement for own funds and eligible liabilities that have been set: 

(a) 

(b) 

at the consolidated resolution group level; 

at the level of the resolution group's subsidiaries on an individual basis. 

Article 45i Supervisory reporting and public disclosure of the requirement  

1. 

Entities  referred  to  in  Article  1(1)  shall  report  to  their  competent  and  resolution 
authorities on the following on at least a yearly basis: 

(a) 

the levels of available items that meet the conditions of Article 45b or Article 
45g(3)  and  the  amounts  of  own  funds    and  eligible  liabilities  expressed  in 
accordance  with  Article  45(2)  following  the  application  of  deductions  in 
accordance with Articles 72e to 72j of Regulation (EU) No 575/2013;  

(b) 

the  composition  of  the  items  referred  to  in  point  (a),  including  their  maturity 
profile and ranking in normal insolvency proceedings. 

Entities  referred  to  in  Article  1(1)  shall  make  the  following  information  publicly 
available on at least a yearly basis: 

(a) 

(b) 

the levels of available items that meet the conditions of Article 45b or 45g(3);  

the  composition  of  the  items  referred  to  in  point  (a),  including  their  maturity 
profile and ranking in normal insolvency proceedings. 

EBA  shall  develop  draft  implementing  technical  standards  to  specify  uniform 
formats,  templates  and  frequency  and  templates  for  the  supervisory  reporting  and 
public disclosure referred to in paragraphs (1) and (2) of this Article.  

EBA shall submit those implementing technical standards to the Commission by [12 
months from the entry into force]. 

Power is conferred on the Commission to adopt the implementing technical standards 
referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) 
No 1093/2010. 

Public disclosure requirements shall apply at the date where the requirement referred 
to in Article 45(1) is fully complied with for the first time.  

Article 45j Reporting to the EBA 

Resolution authorities, in coordination with competent authorities, shall inform EBA 
of the minimum requirement for own funds and eligible liabilities that have been set 
for each institution under its jurisdiction. 

2. 

3. 

4. 

1. 

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2. 

EBA  shall  develop  draft  implementing  technical  standards  to  specify  uniform 
formats,  templates  and  definitions  for  the  identification  and  transmission  of 
information by resolution authorities, in coordination with competent authorities, to 
EBA for the purposes of paragraph 1. 

EBA  shall  submit  those  draft  implementing  technical  standards  to  the  Commission 
by [12 months after entry into force] .... 

Power is conferred on the Commission to adopt the implementing technical standards 
referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) 
No 1093/2010. 

Article 45k Breaches of the minimum requirement for own funds and eligible liabilities 

1. 

Any breach of the minimum requirement for own funds and eligible liabilities by an 
entity shall be addressed by the relevant authorities on the basis of at least one of the 
following: 

2. 

1. 

(a)  powers to address or remove impediments to resolvability in accordance 

with Article 17 and Article 18; 

(b)  measures referred to in Article 104 of Directive 2013/36/EC;  

(c) 

(d) 

early intervention measures in accordance with Article 27; 

administrative penalties and other administrative measures in accordance 
with Article 110 and Article 111; 

Resolution  and  competent  authorities  shall  consult  each  other  when  they  exercise 
their respective powers referred to in points (a) to (d) of paragraph 1. 

Article 45l Reports  

EBA shall, in cooperation with the competent authorities and resolution  authorities, 
submit  a  report  to  the  Commission  providing  assessments  on  at  least  of  the 
following: 

(a)  how  the  requirement  for  own  funds  and  permissible  liabilities  has  been 
implemented at national level, and in particular whether there have been 
divergences  in  the  levels  set  for  comparable  entities  across  Member 
States;  

(b)  how  the  power  to  require  institutions  to  meet  the  requirement  with 
instruments referred to in Article 45b(2) has been exercised by resolution 
authorities  and  whether  there  have  been  divergences  in  the  exercise  of 
that power across Member States. 

2. 

The report referred to in paragraph 1 shall take account of the following: 

(a) 

the  impact  of  the  minimum  requirement,  and  any  proposed  harmonised 
levels of the minimum requirement on the following: 

financial  markets  in  general  and  markets  for  unsecured  debt  and 

(i) 
derivatives in particular; 

 

OJ please insert date: 12 months after the date of entry into force of this Directive. 

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39 

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(ii) 
business  models  and  balance  sheet  structures  of  institutions,  in 
particular the funding profile and funding strategy of institutions, and the legal 
and operational structure of groups; 

(iii) 

the profitability of institutions, in particular their cost of funding; 

the  migration  of  exposures  to  entities  which  are  not  subject  to 

(iv) 
prudential supervision; 

(v) 

financial innovation; 

the  prevalence  of  contractual  bail-in  instruments,  and  the  nature  and 

(vi) 
marketability of such instruments; 

(vii) 

the risk-taking behaviour of institutions; 

(viii) 

the level of asset encumbrance of institutions; 

taken  by 

the  actions 

(ix) 
to  comply  with  minimum 
institutions 
requirements,  and  in  particular  the  extent  to  which  minimum  requirements 
have  been  met  by  asset  deleveraging,  long-term  debt  issuance  and  capital 
raising; and 

(x) 
the  level  of  lending  by  credit  institutions,  with  a  particular  focus  on 
lending  to  micro,  small  and  medium-sized  enterprises,  local  authorities, 
regional  governments  and  public  sector  entities  and  on  trade  financing, 
including lending under official export credit insurance schemes; 

(b) 

(c) 

the  interaction  of  the  minimum  requirements  with  the  own  funds 
requirements, leverage ratio and the liquidity requirements laid down in 
Regulation (EU) No 575/2013 and in Directive 2013/36/EU; 

the capacity of institutions to independently raise capital or funding from 
markets 
to  meet  any  proposed  harmonised  minimum 
requirements; 

in  order 

3. 

The  report  referred  to  in  paragraph  1  shall  cover  two  calendar  years  and  shall  be 
communicated to the Commission by 30 September of the calendar following the last 
calendar year covered by the report. " 

24. 

Article 55 is replaced by the following: 

"Article 55 
Contractual recognition of bail-in 

1. 

Member States shall require institutions and entities referred to in points (b), (c) and 
(d) of Article 1(1) to include a contractual term by which the creditor or party to the 
agreement or instrument creating the liability recognises that liability may be subject 
to the write-down and conversion powers and agrees to be bound by any reduction of 
the principal  or  outstanding  amount  due, conversion  or  cancellation that is  effected 
by the exercise of those powers by a resolution authority, provided that that liability 
complies with all of the following conditions:  

(a) 

(b) 

(c) 

(d) 

the liability is not excluded under Article 44(2);  

the liability is not a deposit as referred to in point (a) of Article 108;  

the liability is governed by the law of a third country;  

the  liability  is  issued  or  entered  into  after  the  date  on  which  a  Member 
State applies the provisions adopted in order to transpose this Section.  

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2. 

The  requirement  referred  to  in  paragraph  1  may  not  apply  where  the  resolution 
authority of a Member State determines all  of the following conditions are met: 

(a) 

(b) 

(c) 

that the liabilities or instruments referred to in the first subparagraph can 
be  subject  to  write  down  and  conversion  powers  by  the  resolution 
authority of a Member State pursuant to the law of the third country or to 
a binding agreement concluded with that third country; 

that  it  is  legally,  contractually  or  economically  impracticable  for  an 
institution  or  entity  referred  to  in  point  (b),  (c)  or  (d)  of  Article  1(1)  to 
include such a contractual term in certain liabilities;  

that a waiver from the requirement referred to in paragraph 1 for certain 
liabilities does not impede the resolvability of the institutions and entities 
referred to in points (b), (c) and (d) of Article 1(1). 

The  liabilities  referred  to  in  points  (b)  and  (c)  shall  not  include  debt  instruments 
which  are  unsecured  liabilities,  Additional  Tier  1  instruments,  and  Tier  2 
instruments.  Moreover, they shall be senior to the liabilities which count towards the 
minimum requirement for own funds and permissible liabilities.  

The  liabilities  which,  in  accordance  with  points  (b)  and  (c),  do  not  include  the 
contractual  term  referred  to  in  paragraph  1  shall  not  be  counted  towards  the 
minimum requirement for own funds and eligible liabilities.   

Member  States  shall  ensure  that  resolution  authorities  may  require  institutions  and 
entities referred to in points (b), (c) and (d) of Article 1(1) to provide authorities with 
a legal opinion relating to the legal enforceability and effectiveness of the contractual 
term referred to in paragraph 1.  

Where an institution or entity referred to in point (b), (c) or (d) of Article 1(1) fails to 
include in the contractual provisions governing a relevant liability a contractual term 
as  required  in  accordance  with  paragraph  1,  that  failure  shall  not  prevent  the 
resolution  authority  from  exercising  the  write  down  and  conversion  powers  in 
relation to that liability.  

EBA shall develop draft regulatory technical standards in order to further determine 
the list of liabilities to which the exclusion in paragraph 1 applies, and the contents of 
the  contractual  term  required  in  that  paragraph,  taking  into  account  institutions’ 
different business models.  

EBA shall submit those draft regulatory technical standards to the Commission by 3 
July 2015.  

Power  is  delegated  to  the  Commission  to  adopt  the  regulatory  technical  standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Articles  10  to  14  of 
Regulation (EU) No 1093/2010. 

EBA  shall  develop  draft  regulatory  technical  standards  in  order  to  specify  the 
conditions  under  which  it  would  be  legally,  contractually  or  economically 
impracticable for an institution or entity referred to in point (b), (c) or (d) of Article 
1(1) to include the contractual term referred to paragraph 1 in certain liabilities, and 
under  which  a  waiver  from  the  requirement  referred  to  in  paragraph  1  would  not 
impede the resolvability of that institution or entity.   

EBA  shall  submit 
Commission. 

those  draft  regulatory 

technical  standards 

to 

the 

3. 

4. 

5. 

6. 

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Power  is  delegated  to  the  Commission  to  adopt  the  regulatory  technical 
standards referred to in the first subparagraph in accordance with Articles 10 to 
14 of Regulation (EU) No 1093/2010. " 

25. 

In Article 63(1), the following point (n) is added: 

"(n)   the power to suspend payment or delivery obligations to which the institution 
or  entity  referred  to  in  paragraph  1  is  party  when  the  resolution  authority,  after 
having consulted the competent authority, decides that the exercise of the suspension 
power is necessary for the effective application of one or more resolution tools or for 
the purposes of the valuation pursuant to Article 36. 

26. 

In Article 63(1), the following paragraphs 1a and 1b are inserted: 

"1a.   The  period  of  the  suspension  pursuant  to  paragraph  1(n)  shall  not 
exceed  the  minimum  period  of  time  that  the  resolution  authority  considers 
necessary for the effective application of one or more resolution tools or for the 
purposes  of  the  valuation  pursuant  to  Article  36  and  in  any  event  shall  not 
exceed 5 working days.   

1b.   Any suspension under paragraph 1(n) shall not apply to: 

(a)  payment  and  delivery  obligations  owed  to  systems  or  operators  of 
systems  designated  for  the  purposes  of  Directive  98/26/EC,  central 
counterparties  and  third  country  central  counterparties  recognised  by 
ESMA  pursuant  to  Article  25  of  Regulation  (EU)  No  648/2012,  and 
central banks; 

(b) 

(c) 

eligible claims for the purpose of Directive 97/9/EC 

covered deposits as defined in Article 2(1)(94)." 

27. 

28. 

29. 

30. 

In the titles of Article 59 and Article 60 "and eligible liabilities" is inserted . 

In Article 59, paragraph 1 is replaced by the following: 

The  power  to  write  down  or  convert  relevant  capital  instruments  and 

"1. 
eligible liabilities may be exercised either: 

(a) 

(b) 

independently of resolution action; or 

in  combination  with  a  resolution  action,  where  the  conditions  for 
resolution specified in Articles 32 and 33 are met. 

The  power  to  write  down  or  convert  eligible  liabilities  independently  of 
resolution  action  may  be  exercised  only  in  relation  to  eligible  liabilities  that 
meet  the  conditions  referred  to  in  Article  45g(3)(a),  except  the  condition 
related to the remaining maturity of liabilities.". 

"Capital  instruments"  in  Article  59(2)  and  (3)  is  replaced  with  "capital  instruments 
and liabilities referred to in paragraph 1". 

"Capital instruments" in Article 59(4) and (10) is replaced with "capital instruments 
or liabilities referred to in paragraph 1". 

31. 

In Article 60(1), the following point (d) is added: 

"(d) 
the principal amount of eligible liabilities referred to in Article 59(1) is 
written down or converted into Common Equity Tier 1 instruments or both, to 
the extent required to achieve the resolution objectives set out in Article 31 or 

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to  the  extent  of  the  capacity  of  the  relevant  eligible  liabilities,  whichever  is 
lower.". 

32. 

In Article 60, paragraph 2 is replaced by the following: 

"2.  Where  the  principal  amount  of  a  relevant  capital  instrument  or  a 
eligible liability is written down: 

(a) 

the reduction of that principal amount shall be permanent, subject to any 
write  up  in  accordance  with  the  reimbursement  mechanism  in  Article 
46(3); 

(b)  no  liability  to  the  holder  of  the  relevant  capital  instrument  and  liability 
referred to in Article 59(1)   shall remain under or in connection with that 
amount of the instrument, which has been written down, except for any 
liability already accrued, and any liability for damages that may arise as a 
result  of  an  appeal  challenging  the  legality  of  the  exercise  of  the  write-
down power; 

(c)  no compensation is paid to any holder of the relevant capital instruments 
and  liabilities  referred  to  in  Article  59(1)  other  than  in  accordance  with 
paragraph 3.". 

33. 

In Article 60(3), "the relevant capital instruments" is replaced by "the relevant capital 
instruments and liabilities referred to in Article 59(1)". 

34. 

In Article 69(4), point (b) is replaced by the following: 

'(b) payment and delivery obligations owed to systems or operators of systems 
designated for the purposes of Directive 98/26/EC, central counterparties, third 
country  central  counterparties recognised by ESMA pursuant  to  Article 25 of 
Regulation (EU) No 648/2012, and central banks;'.  

35. 

In Article 70, paragraph 2 is replaced by the following: 

"2. Resolution authorities shall not exercise the power referred to in paragraph 
1  in  relation  to  any  security  interest  of  systems  or  operators  of  systems 
designated  for  the  purposes  of  Directive  98/26/EC,  central  counterparties  and 
third  country  central  counterparties  recognised  by  ESMA  pursuant  to  Article 
25 of Regulation (EU) No 648/2012, and central banks over assets pledged or 
provided by way of margin or collateral by the institution under resolution;". 

36. 

In Article 71, paragraph 3 is replaced by the following: 

"3.  Any  suspension  under  paragraph  1  or  2  shall  not  apply  to  systems  or 
operators of systems designated for the purposes of Directive 98/26/EC, central 
counterparties  and  third  country  central  counterparties  recognised  by  ESMA 
pursuant to Article 25 of Regulation (EU) No 648/2012, or central banks.". 

37. 

38. 

In Article 88, "Article 45" is replaced with the "Articles 45 to 45i". 

In Article 88(1), the first subparagraph is replaced with the following: 

"Subject  to  Article  89,  group-level  resolution  authorities  shall  establish 
resolution colleges to carry out the tasks referred to in Articles 12, 13, 16, 18, 
45  to  45i,  91  and  92,  and,  where  appropriate,  to  ensure  cooperation  and 
coordination with third-country resolution authorities.". 

39. 

Article 89 is replaced by the following: 

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1. 

2. 

3. 

4. 

"Article 89 
European resolution colleges 

Where  a  third  country  institution  or  third  country  parent  undertaking  has  Union 
subsidiaries  or  Union  parent  undertakings,  established  in  two  or  more  Member 
States,  or  two  or  more  Union  branches  that  are  regarded  as  significant  by  two  or 
more  Member  States,  the  resolution  authorities  of  Member  States  where  those 
entities are established or where those significant branches are located shall establish 
one single European resolution college. 

The  European  resolution  college  referred  to  in  paragraph  1  shall  perform  the 
functions and carry  out the tasks specified in  Article 88 with respect to the entities 
referred in paragraph 1and, in so far as those tasks are relevant, to branches.  

The  tasks  to  be  performed  by  the  European  resolution  college  as  referred  to  in 
paragraph 2  shall include the setting of the requirement referred to in Articles 45 to 
45i.  

When  setting  the  requirement  referred  to  in  Articles  45  to  45i,  members  of  the 
European  resolution  college  shall  take  into  consideration  the  global  resolution 
strategy, if any, adopted by third-country authorities.  

Where  in  accordance  with  the  global  resolution  strategy  Union  subsidiaries  or  a 
Union  parent  undertaking  and  its  subsidiary  institutions  are  not  resolution  entities 
and the members of the European resolution college agree with that strategy, Union 
subsidiaries  or  the  Union  parent  undertaking  shall  comply  with  the  requirement  of 
Article 45g(1) on a  consolidated basis by issuing eligible instruments referred to in 
Article 45g(3)(a) and (b) to the third-country resolution entity. 

Where  only  one  Union  parent  undertaking  holds  all  Union  subsidiaries  of  a  third 
country  institution  or  third  country  parent  undertaking,  the  European  resolution 
college  shall  be  chaired  by  the  resolution  authority  of  the  Member  State  where  the 
Union parent undertaking is established. 

Where  the  first  subparagraph  does  not  apply,  the  resolution  authority  of  a  Union 
parent undertaking or a Union subsidiary with the highest value of total on-balance 
sheet assets held shall chair the European resolution college. 

Member  States  may,  by  mutual  agreement  of  all  the  relevant  parties,  waive  the 
requirement  to  establish  a  European  resolution  college  if  other  group  or  college, 
performs the same functions and carries out the same tasks specified in this Article 
and  complies  with  all  the  conditions  and  procedures,  including  those  covering 
membership  and  participation  in  European  resolution  colleges,  established  in  this 
Article  and  in  Article  90.  In  such  a  case,  all  references  to  European  resolution 
colleges in this Directive shall also be understood as references to those other groups 
or colleges. 

5. 

Subject to  paragraphs 3 and 4 of this Article, the European resolution college shall 
otherwise function in accordance with Article 88. 

40. 

Article 110 is amended as follows: 

(a) 

 in paragraph 1, the first sentence is replaced by the following: 

ʻWithout  prejudice  to  the  right  of  Member  States  to  provide  for  and  impose 
criminal  penalties,  Member  States  shall  lay  down  rules  on  administrative 
penalties  and  other  administrative  measures  applicable  where  the  national 

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provisions  transposing  this  Directive  or  the  provisions  of  Regulation  [on  the 
recovery and resolution of CCPs] have not been complied with, and shall take 
all measures necessary to ensure that they are implemented; 

(b)  paragraph 2 is replaced by the following: 

ʻ2.  Member  States  shall  ensure  that,  where  obligations  referred  to  in  the  first 
paragraph  apply  to  institutions,  financial  institutions  or  Union  parent 
undertakings  within  the  meaning  of  this  Directive  or  to  CCPs,  clearing 
members of CCPs or parent undertakings within the meaning of Regulation [on 
the  recovery  and  resolution  of  CCPs]  or,  in  the  event  of  an  infringement, 
administrative penalties can be applied, subject to the conditions laid down in 
national law, to the members of the management body within the meaning of 
this Directive or to the members of the board within the meaning of Regulation 
[on  the  recovery  and  resolution  of  CCPs],  and  to  other  natural  persons  who 
under national law are responsible for the infringement.ʼ; 

(c) 

in paragraph 3, the first sentence is replaced by the following: 

ʻThe powers  to  impose  administrative penalties provided for in  this Directive 
Regulation  shall  be  attributed  to  resolution  authorities  or,  where  different,  to 
competent authorities, depending on the type of infringement. ʼ; 

41. 

Article 111 is amended as follows: 

(a) 

in paragraph 1, points (a), (b) and (c) are replaced by the following: 

ʻ(a) failure to draw up, maintain and update recovery plans and group recovery 
plans, infringing Article 5 or 7 of this Directive or Article 9 of Regulation [on 
the recovery and resolution of CCPs]; 

(b)  failure  to  notify  an  intention  to  provide  group  financial  support  to  the 
competent authority infringing Article 25 of this Directive;  

(c)  failure  to  provide  all  the  information  necessary  for  the  development  of 
resolution  plans  infringing  Article  11  of  this  Directive  or  Article  14  of 
Regulation [on the recovery and resolution of CCPs]; 

(d) failure of the management body of an institution or an entity referred to in 
point (b), (c) or (d) of Article 1(1) of this Directive or of the board of a CCP 
within the meaning of Regulation [on the recovery and resolution of CCPs] to 
notify the competent authority when the institution or entity referred to in point 
(b), (c) or (d) of Article 1(1) of this Directive or the CCP is failing or likely to 
fail,  infringing Article 81 of this Directive  or  Article  68(1) of Regulation [on 
the recovery and resolution of CCPs].ʼ; 

(b)  paragraph 2 is amended as follows: 

(i) point (a) is replaced by the following: 

ʻ(a) a public statement which indicates the natural person, institution, financial 
institution,  Union  parent  undertaking,  CCP  or  other  legal  person  responsible 
and the nature of the infringement;ʼ; 

(ii) point (c) is replaced by the following: 

ʻ(c)  a  temporary  ban  against  any  member  of  the  management  body  or  senior 
management of the institution or the entity referred to in point (b), (c) or (d) of 
Article  1(1)  of  this  Directive  or  against  the  board  of  the  CCP  or  any  other 

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natural person, who is held responsible, to exercise functions in institutions or 
entities referred to in point (b), (c) or (d) of Article 1(1) of this Directive or in 
CCPs; ʼ 

42. 

Article 112 is amended as follows: 

(a) 

in paragraph 1, the first sentence is replaced by the following: 

ʻMember  States  shall  ensure  that  resolution  authorities  and  competent 
authorities  shall  publish  on  their  official  website  at  least  any  administrative 
penalties  imposed  by  them  for  infringing  the  national  provisions  transposing 
this Directive or the provisions laid down in Regulation [on the recovery and 
resolution  of  CCPs]  where  such  penalties  have  not  been  the  subject  of  an 
appeal or where the right of appeal has been exhausted.ʼ; 

(b) 

 in paragraph 2, point (c) is replaced by the following: 

ʻ(c)  where  publication  would  cause,  insofar  as  it  can  be  determined, 
disproportionate  damage  to  the  institutions  or  entities  referred  to  in  point  (b), 
(c)  or  (d)  of  Article  1(1)  of  this  Directive  or  to  the  CCP  or  natural  persons 
involved.ʼ; 

(c)  paragraph 4 is amended as follows: 

(i) the first sentence is replaced by the following: 

ʻBy  3  July  2016,  EBA  shall  submit  a  report  to  the  Commission  on  the 
publication  by  Member  States,  on  an  anonymous  basis  as  provided  for  under 
paragraph  2,  of  penalties  for  non-compliance  with  the  national  provisions 
transposing this Directive and in particular whether there have been significant 
divergences between Member States in that respect.ʼ; 

(ii) the following subparagraph is added: 

ʻBy […], ESMA shall submit a similar report to the Commission as regards the 
publication  of  penalties  for  non-compliance  with  the  provisions  laid  down  in 
Regulation [on the recovery and resolution of CCPs]ʼ; 

43. 

Article 113 is replaced by the following: 

"Article 113 

Maintenance of central databases by EBA and ESMA 

1. 

2. 

Subject to the professional secrecy requirements referred to in Article 84, resolution 
authorities  and  competent  authorities  shall  inform  EBA  of  all  administrative 
penalties  imposed  by  them  under  Article  111  for  infringements  of  the  national 
provisions  transposing  this  Directive  and  of  the  status  of  that  appeal  and  outcome 
thereof.  

Subject  to  the  professional  secrecy  requirements  referred  to  in  Article  71  of 
Regulation  [on  the  recovery  and  resolution  of  CCPs],  resolution  authorities  and 
competent  authorities  shall  inform  ESMA  accordingly  as  regards  administrative 
penalties imposed for infringements of that Regulation. 

EBA and ESMA shall maintain central databases of penalties reported to them solely 
for  the  purpose  of  exchange  of  information  between  resolution  authorities  which 
shall be accessible to resolution authorities only and shall be updated on the basis of 
the information provided by resolution authorities.  

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3. 

4. 

EBA and ESMA shall maintain central databases of penalties reported to them solely 
for  the  purpose  of  exchange  of  information  between  competent  authorities  which 
shall be accessible to competent authorities only and shall be updated on the basis of 
the information provided by competent authorities.  

EBA  and  ESMA  shall  maintain  webpages  with  links  to  each  resolution  authority’s 
publication  of  penalties  and  each  competent  authority’s  publication  of  penalties 
under  Article  112  and  indicate  the  period  for  which  each  Member  State  publishes 
penalties.”. 

Article 2 

Amendment to Directive 98/26/EC 

In Article 2, point (c) is replaced by the following: 

"(c)  'central  counterparty'  or  'CCP'  shall  mean  a  CCP  as  defined  in  point  (1)  of 
Article 2 of Regulation (EC) No 648/2012;". 

In Article 2, point (f) is replaced by the following: 

(f) 'participant' shall mean an institution, a central counterparty, a settlement agent, a 
clearing house, a system operator or a clearing member of a CCP authorised pursuant 
to Article 17 of Regulation (EU) No 648/2012;". 

Article 3 

Amendments to Directive 2002/47/EC 

Directive 2002/47/EC is amended as follows: 

In Article 1, paragraph 6 is replaced by the following:  

‘6. Articles  4  to  7  of  this  Directive  shall  not  apply  to  any  restriction  on  the 
enforcement of financial collateral arrangements or any restriction on the effect of a 
security  financial  collateral  arrangement,  any  close  out  netting  or  set-off  provision 
that is imposed by virtue of Title IV, Chapter V or VI of Directive 2014/59/EU of the 
European  Parliament  and  of  the  Council,  or  of  Title  V,  Chapter  IV  of  Regulation 
(EU) No [CCP recovery and resolution] or to any such restriction that is imposed by 
virtue  of  similar  powers  in  the  law  of  a  Member  State  to  facilitate  the  orderly 
resolution of any entity referred to in point (c)(iv) of paragraph 2 which is subject to 
safeguards at  least equivalent to  those set out  in Title IV, Chapter VII  of Directive 
2014/59/EU  and  in  Title  V,  Chapter  V  of  Regulation  (EU)  No  [CCP  recovery  and 
resolution].' 

Article 9a is replaced by the following: 

‘Article 9a 

Directives  2008/48/EC,  Directive  2014/59/EU  and  Regulation  (EU)  No  [CCP 
recovery and resolution] 

This  Directive  shall  be  without  prejudice  to  Directives  2008/48/EC,  Directive 
2014/59/EU and Regulation (EU) No [on CCP recovery and resolution].’ 

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Article 4 

Amendment to Directive 2004/25/EC 

In Article 4, paragraph 5 is replaced by the following: 

"5.  Member States shall ensure that Article 5(1) of this Directive does not apply in 
the case of use of resolution tools, powers and mechanisms provided for in Title IV 
of Directive 2014/59/EU of the European Parliament and of the Council or in Title V 
of Regulation (EU) No [CCP recovery and resolution]". 

Article 5 

Amendment to Directive 2005/56/EC 

In Article 3, paragraph 4 is replaced by the following: 

"4.  Member States shall ensure that this Directive does not apply to the company 
or  companies  that  are  the  subject  of  the  use  of  resolution  tools,  powers  and 
mechanisms  provided  for  in  Title  IV  of  Directive  2014/59/EU  of  the  European 
Parliament and of the Council or in Title V of Regulation (EU) No [CCP recovery 
and resolution]". 

Article 6 

Amendments to Directive 2007/36/EC 

Directive 2007/36/EU is amended as follows: 

(a) 

In Article 1, paragraph 4 is replaced by the following: 

"4.  Member  States  shall  ensure  that  this  Directive  does  not  apply  in  the 
case  of  the  use  of  resolution  tools,  powers  and  mechanisms  provided  for  in 
Title  IV  of  Directive  2014/59/EU  of  the  European  Parliament  and  of  the 
Council or in Title V of Regulation (EU) No [CCP recovery and resolution]". 

(b) 

In Article 5, paragraph 5 is replaced by the following:  

‘5. Member States shall ensure that for the purposes of Directive 2014/59/EU 
and  Regulation  (EU)  No  [CCP  recovery  and  resolution]  the  general  meeting 
may, by a majority of two-thirds of the votes validly cast, issue a convocation 
to a general meeting, or modify the statutes to prescribe that a convocation to a 
general meeting is issued, at shorter notice than as laid down in paragraph 1 of 
this Article, to decide on a capital increase, provided that that meeting does not 
take  place within ten calendar days of the convocation, that the conditions  of 
Article 27 or 29 of Directive 2014/59/EU or of Article 19 of Regulation (EU) 
No  [CCP  recovery  and  resolution]  are  met,  and  that  the  capital  increase  is 
necessary to avoid the conditions for resolution laid down in Articles 32 and 33 
of  Directive  2014/59/EU  or  in  Article  22  of  Regulation  (EU)  No  [CCP 
recovery and resolution].’ 

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Article 7 

Amendment to Directive 2011/35/EU 

In Article 1, paragraph 4 is replaced by the following: 

"4.  Member States shall ensure that this Directive does not apply to the company 
or  companies  which  are  the  subject  of  the  use  of  resolution  tools,  powers  and 
mechanisms  provided  for  in  Title  IV  of  Directive  2014/59/EU  of  the  European 
Parliament and of the Council or in Title V of Regulation (EU) No [CCP recovery 
and resolution]". 

Article 8 

Amendment to Directive 2012/30/EU 

In Article 45, paragraph 4 is replaced by the following: 

"4.  Member States shall ensure that Article 10, Article 19(1), Article 29(1), (2) and 
(3), the first subparagraph of Article 31(2), Articles 33 to 36 and Articles 40, 41 and 
42 of this Directive do not apply in the case of use of the resolution tools, powers and 
mechanisms  provided  for  in  Title  IV  of  Directive  2014/59/EU  of  the  European 
Parliament and of the Council or in Title V of Regulation (EU) No [CCP recovery 
and resolution].". 

Article 9 
Transposition 

1. 

2. 

3. 

Member States shall adopt and publish by [date 12 months from the date of entry into 
force] the laws, regulations and administrative provisions necessary to comply with 
this Directive. They shall forthwith communicate to the Commission the text of those 
measures. 

Member States shall apply those measures from [date – 6 months from transposition 
date]. 

When  Member  States  adopt  the  measures  referred  to  in  paragraph  1,  they  shall 
contain  a  reference to  this  Directive  or  be  accompanied  by  such  a  reference  on  the 
occasion  of  their  official  publication.  Member  States  shall  determine  how  such  a 
reference is to be made. 

Member  States  shall  communicate  to  the  Commission  and  to  EBA  the  text  of  the 
main  provisions  of  national  law  which  they  adopt  in  the  field  covered  by  this 
Directive.  

Article 10 
Entry into force 

This  Directive  shall  enter  into  force  on  the  twentieth  day  following  that  of  its 
publication in the Official Journal of the European Union. 

Articles 1(1), 1(40), 1(41), 1(42), 1(43), 2, 3, 4, 5, 6, 7 and 8 shall enter into force on 
[date - when the Regulation [CCP Recovery and Resolution enters into force]. 

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Article 11 
Addressees 

This Directive is addressed to the Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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