Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 806/2014 as regards early intervention measures, conditions for resolution and funding of resolution action
Date: 2023-04-18
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: Economic and Monetary Union, aid for restructuring, company in difficulties, credit institution, euro area, financial control, financial intervention, financial legislation, financial solvency, investment company

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   EUROPEAN COMMISSION  Strasbourg, 18.4.2023  COM(2023) 226 final 2023/0111 (COD)  Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 806/2014 as regards early intervention measures, conditions for resolution and funding of resolution action (Text with EEA relevance) {SEC(2023) 230 final} - {SWD(2023) 225 final} - {SWD(2023) 226 final}  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

• 
The  proposed  amendments  to  Directive  2014/59/EU1  (the  Bank  Recovery  and  Resolution 
Directive  or  BRRD)  are  part  of  the  crisis  management  and  deposit  insurance  (CMDI) 
legislative  package  that  also  includes  amendments  to  Regulation  (EU)  No  806/20142  (the 
Single  Resolution  Mechanism  Regulation  or  SRMR)  and  to  Directive  2014/49/EU3  (the 
Deposit Guarantee Schemes Directive or DGSD). 

The  EU  crisis  management  framework  is  well-established,  however,  previous  episodes  of 
bank failures have shown that there is need for improvements. The aim of the CMDI reform is 
to  build  on  the  objectives  of  the  crisis  management  framework  and  to  ensure  a  more 
consistent approach to resolution, so that any bank in crisis can exit the market in an orderly 
manner,  while  preserving  financial  stability,  taxpayer  money  and  ensuring  depositor 
confidence.  In  particular,  the  existing  resolution  framework  for  smaller  and  medium-sized 
banks  needs  to  be  strengthened  with  respect  to  its  design,  implementation  and,  most 
importantly,  incentives  for  its  application,  so  that  it  can  be  more  credibly  applied  to  those 
banks. 

Context of the proposal 

In  the  aftermath  of  the  global  financial  and  sovereign  debt  crises,  the  EU  took  decisive 
actions, in line with international calls for reform, to create a safer financial sector for the EU 
single market. This included providing the tools and powers to handle the failure of any bank 
in  an  orderly  manner,  while  preserving  financial  stability,  public  finances  and  depositor 
protection. The Banking Union was created in 2014 and is currently made up of two pillars: a 
Single Supervisory Mechanism (SSM) and a Single Resolution Mechanism (SRM). However, 
the  Banking  Union  is  still  incomplete  and  is  missing  its  third  pillar:  a  European  deposit 
insurance  scheme  (EDIS)4.  The  Commission’s  proposal  adopted  on  24 November  2015  to 
establish EDIS5 is still pending. 

The Banking Union is supported by a Single Rulebook which, in what concerns the CMDI, is 
made up of three EU legal acts adopted in 2014: the BRRD, the SRMR and the DGSD. The 
BRRD  defines  the  powers,  rules  and  procedures  for  the  recovery  and  resolution  of  banks, 
including cross-border cooperation arrangements to tackle cross-border banking failures. The 
SRMR creates the Single Resolution Board (SRB) and the Single Resolution Fund (SRF) and 
defines  powers,  rules  and  procedures  for  the  resolution  of  the  entities  established  in  the 

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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  and  amending 
Council  Directive  82/891/EEC,  and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC, 
2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) 
No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190). 
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  2014/49/EU  of  the  European  Parliament  and  of  the  Council  of  16  April  2014  on  deposit 
guarantee schemes (OJ L 173, 12.6.2014, p. 149). 
Furthermore, there is still no agreement on a credible and robust mechanism for providing liquidity in 
resolution in the Banking Union, in line with the standard set by international peers. 
COM/2015/0586 final. 

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Banking  Union,  in  the  context  of  the  single  resolution  mechanism.  The  DGSD  ensures  the 
protection of depositors and sets-out the rules for the use of DGS funds. The BRRD and the 
DGSD apply in all Member States while the SRMR applies in Member States participating in 
the Banking Union. 

The 2019  banking package, also  known as  the ‘risk  reduction package’, revised the  BRRD, 
the  SRMR,  the  Capital  Requirements  Regulation  (CRR)6  and  the  Capital  Requirements 
Directive  (CRD)7.  These  revisions  included  measures  delivering  on  the  EU’s  commitments 
made  in  international  fora8  to  take  further  steps  towards  completing  the  Banking  Union  by 
providing credible risk reduction measures to mitigate threats to financial stability.  

In November 2020, the Eurogroup agreed on the creation and early introduction of a common 
backstop to the SRF by the European Stability Mechanism (ESM)9.  

The  crisis  management  and  deposit  insurance  (CMDI)  reform  and  the  broader 
implications for the Banking Union 

Together with the CMDI reform, a complete Banking Union, including its third pillar, EDIS, 
would  offer  a  higher  level  of  financial  protection  and  confidence  to  EU’s  households  and 
businesses, increase trust and strengthen financial stability as necessary conditions for growth, 
prosperity and resilience in the Economic and Monetary Union and in the EU more generally. 
The Capital Markets Union complements the Banking Union as both initiatives  are essential 
to finance the twin transitions (digital and green), step up the international role of the euro and 
strengthen  the  EU’s  open  strategic  autonomy  and  its  competitiveness  in  a  changing  world, 
particularly considering the current challenging economic and geopolitical environment10, 11. 
In June 2022, the Eurogroup did not agree to a more comprehensive work plan to complete 
the  Banking  Union  by  including  EDIS.  Instead,  the  Eurogroup  invited  the  Commission  to 
table  more  targeted  legislative  proposals  for  reforming  the  EU  framework  for  bank  crisis 
management and national deposit insurance12.  
In parallel, the European Parliament, in its 2021 annual report on the Banking Union13, also 
stressed  the  importance  of  completing  it  with  the  establishment  of  EDIS  and  supported  the 
Commission in putting forward a legislative proposal on the CMDI review. While EDIS was 
not explicitly endorsed by the Eurogroup, it would make the CMDI reform more robust and it 

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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,  amending  Directive 
2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338). 
The  Basel  Committee  on  Banking  Supervision  and  the  Financial  Stability  Board  (FSB).  Financial 
Stability  Board  (2014  updated  version),  Key  Attributes  of  effective  resolution  regimes  for  financial 
institutions  and  (2015),  Principles  on  Loss-absorbing  and  Recapitalisation  Capacity  of  Globally 
Systemically  Important  Banks  (G-SIBs)  in  Resolution,  Total  Loss-absorbing  Capacity  (TLAC)  Term 
Sheet. 
Eurogroup  (30 November  2020),  Statement  of  the  Eurogroup  in  inclusive  format  on  the  ESM  reform 
and  the  early  introduction of  the  backstop  to  the  Single  Resolution  Fund. The  implementation  would 
take place over 2022-2024. However, the  Agreement Amending the Treaty Establishing the European 
Stability Mechanism is still pending ratification. 
European Commission (2020), Commission Work Programme 2021, section 2.3, p. 5.  
European Commission (2023), Long-term competitiveness of the EU: looking beyond 2030. 
Eurogroup (16 June 2022), Eurogroup statement on the future of the Banking Union. 
European Parliament (2022), Banking Union – annual report 2021; the European Parliament has issued 
a report on the Banking Union every year starting 2015. 

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would  deliver  synergies  and  efficiency  gains  for  the  industry.  Such  a  legislative  package 
would be part of the  agenda for completing the  Banking Union, as  emphasised in  President 
von  der  Leyen’s  Political  Guidelines,  which  also  recalled  the  importance  of  EDIS,  and  as 
regularly supported by leaders14. 

The objectives of the crisis management and deposit insurance (CMDI) framework 

The  CMDI  framework  was  designed  to  mitigate  the  risks  and  manage  the  failure  of 
institutions of any size, while achieving four overarching objectives:  

(i) 

(ii) 

protect  financial  stability  while  avoiding  contagion,  thereby  ensuring  market 
discipline and continuity of critical functions for society,  

safeguard the functioning of the single market and provide a level playing field 
across the EU;  

(iii)  minimise recourse to taxpayer money and weaken the bank-sovereign loop and  

(iv)  protect depositors and ensure consumer confidence.  

The  CMDI  framework  provides  for  a  set  of  instruments  that  can  be  applied  in  the  various 
stages  of  the  life  cycle  of  banks  in  distress:  recovery  action  supported  by  recovery  plans 
drafted  by  banks;  early  intervention  measures;  measures  to  prevent  the  failure  of  a  bank; 
resolution plans prepared by resolution authorities; and a resolution toolbox when the bank is 
declared failing or likely to fail and it is deemed that the resolution of the bank (rather than its 
liquidation) is in the public interest. Additionally, national insolvency procedures, which are 
outside of the CMDI framework15 continue to apply for those failing banks that can be dealt 
with  under  these  national  procedures,  where  they  are  more  suitable  (rather  than  resolution) 
and do not harm public interest or endanger financial stability.  

The  CMDI  framework  is  aimed  at  providing  a  combination  of  funding  sources  to  manage 
failures in an economically efficient manner, protecting financial stability and depositors and 
maintaining market discipline, while reducing recourse to the public budget and ultimately the 
cost  to  taxpayers.  The  cost  of  resolving  the  bank  is  first  covered  through  the  bank’s  own 
resources,  i.e.  allocated  to  the  shareholders  and  creditors  of  the  bank  itself  (constituting  the 
bank’s  internal  loss  absorbing  capacity),  which  also  reduces  moral  hazard  and  improves 
market  discipline.  If  needed,  it  can  be  complemented  by  funds  from  deposit  guarantee 
schemes (DGS) and resolution financing arrangements (national resolution funds (RF) or the 
SRF  in  the  Banking  Union).  These  funds  are  financed  by  contributions  by  all  banks 
irrespective of their size and business model. In the Banking Union, these rules were further 
integrated by entrusting the SRB with managing and overseeing the SRF, which is funded by 
contributions  from  the  industry  in  the  participating  Member  States  of  the  Banking  Union. 
Depending on the tool applied to a bank in distress (e.g. preventive, precautionary, resolution 
or alternative measures under national insolvency proceedings) and the specific details of the 

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Euro Summit Meeting (24 March 2023), Statement of the Euro Summit, meeting in inclusive format.  
National insolvency proceedings are not harmonised. However, the decision by the resolution authority 
whether  to  place  a  failing  bank  in  resolution,  which  requires  a  comparison  between  resolution  and 
national  insolvency  proceedings  (public  interest  assessment),  is  part  of  the  CMDI  framework.  If  a 
resolution authority decides not to place a failing bank in resolution, the case is subsequently treated at 
national  level,  where  the  assessment  of  the  initiation  of  insolvency  proceedings  or  of  other  types  of 
winding up proceedings takes place, according to the specific details of national insolvency regimes.  

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case, State aid16 control may be necessary for interventions by an RF/SRF, a DGS or public 
funding from the State budget. 

Reasons for the proposal 

Notwithstanding  the  progress  achieved  since  2014,  resolution  has  been  rarely  applied, 
especially  in  the  Banking  Union.  Areas  for  further  strengthening  and  adjustment  were 
identified  as  regards  the  CMDI  framework  in  terms  of  design,  implementation  and  most 
importantly, incentives for its application. 

To date, many failing banks of a smaller or medium size have been dealt with under national 
regimes often involving the use of taxpayer money (bailouts) instead of the industry-funded 
safety nets, such as the SRF in the Banking Union that so far has been unused in resolution. 
This  goes  against  the  intention  of  the  framework  as  it  was  set-up  after  the  global  financial 
crisis,  which  involved  a  major  paradigm  shift  from  bailout  to  bail-in.  In  this  context,  the 
opportunity  cost  of  the  resolution  financing  arrangements  financed  by  all  banks  is 
considerable. 

The  resolution  framework  did  not  fully  deliver  on  key  overarching  objectives,  notably 
facilitating  the  functioning  of  the  EU  single  market  in  banking  by  ensuring  a  level  playing 
field, handling cross-border and domestic crises and minimising recourse to taxpayer money.  

The  reasons  are  mainly  due  to  misaligned  incentives  in  choosing  the  right  tool  to  manage 
failing  banks,  leading  to  the  non-application  of  the  harmonised  resolution  framework,  in 
favour  of  other  avenues.  This  is  due  overall  to  the  broad  discretion  in  the  public  interest 
assessment,  difficulties  in  accessing  funding  in  resolution  without  imposing  losses  on 
depositors, and easier access to funding outside of resolution.Following this path raises risks 
of fragmentation and suboptimal outcomes in managing banks’ failures, in particular those of 
smaller and medium-sized banks.  

The review of the CMDI framework and the interaction with national insolvency proceedings 
should provide solutions to address these issues. It should also enable the framework to fully 
achieve its objectives and be fit for purpose for all banks in the EU irrespective of their size, 
business  model and liability structure, even smaller and medium-sized banks, if required by 
prevailing circumstances. The revision should aim at ensuring a consistent application of the 
rules across Member States, delivering a better level playing field, while protecting financial 
stability  and  depositors,  preventing  contagion  and  reducing  recourse  to  taxpayer  money.  In 
particular,  the  framework  should  be  improved  to  facilitate  the  resolution  of  smaller  and 
medium-sized banks as initially expected, by mitigating the impacts on financial stability and 
the real economy without recourse to public funding, and by fostering the confidence of their 
depositors,  consisting  primarily  of  households  and  small  and  medium-sized  enterprises 
(SMEs). In terms of the magnitude of the changes envisaged, the CMDI review does not seek 
to overhaul the current framework but rather to bring much needed improvements in  several 
key areas to make the framework work as intended for all banks. 

Summary of the crisis management and deposit insurance (CMDI) reform elements 

The  amendments  included  in  the  CMDI  package  cover  a  range  of  policy  aspects  and 
constitute a coherent response to the identified problems: 

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State aid rules are intrinsically linked with and complementary to the CMDI framework. These rules are 
not subject to this review and this impact assessment. In order to ensure consistency between the two 
frameworks, the Eurogroup invited the Commission in November 2020 to conduct a review of the State 
aid framework for banks, and to complete it in parallel with the CMDI framework review, ensuring its 
entry into force at the same time with the updated CMDI framework. 

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expanding the scope of resolution by reviewing the public interest assessment, 
when  this  achieves  the  objectives  of  the  framework,  e.g.  protecting  financial 
stability,  taxpayer  money  and  depositor  confidence  better  than  national 
insolvency proceedings; 

strengthening  the  funding  in  resolution  by  complementing  the  internal  loss- 
absorbing capacity of institutions, which remains the first line of defence, with 
the  use  of  DGS  funds  in  resolution  to  help  access  resolution  funds  without 
imposing  losses  on  depositors  where  appropriate,  subject  to  conditions  and 
safeguards; 

amending the ranking of claims in insolvency and ensuring a general depositor 
preference with a single-tier depositor preference, with the aim of enabling the 
use of DGS funds in measures other than payout of covered deposits; 

harmonising  the  least  cost  test  for  all  types  of  DGS  interventions  outside 
payout of covered deposits in insolvency to improve the level playing field and 
ensure consistency of outcomes; 

clarifying  the  early  intervention  framework  by  removing  overlaps  between 
early  intervention  and  supervisory  measures,  providing  legal  certainty  on  the 
applicable  conditions  and  facilitating  cooperation  between  competent  and 
resolution authorities; 

ensuring a timely triggering of resolution; and 

improvements  of  DGSD 
improving  depositor  protection  (e.g. 
provisions on scope of protection and cross-border cooperation, harmonisation 
of  national  options,  and improvement  of  transparency  on  financial  robustness 
of DGSs). 

targeted 

• 

Consistency with existing policy provisions in the policy area 

The proposal puts forward amendments to the existing legislation to render it fully consistent 
with existing policy provisions in the area of bank crisis management and deposit insurance. 
The review of the BRRD/SRMR and of the DGSD aims at improving the functioning of the 
framework in a way that provides the tools to resolution authorities to  be able to handle the 
failure  of  any  bank,  irrespective  of  size  and  business  model,  in  order  to  preserve  financial 
stability, protect depositors, and avoid recourse to taxpayer money. 

• 

Consistency with other EU policies 

The proposal builds on the reforms carried out in the aftermath of the financial crisis that led 
to the creation of the Banking Union and the single rulebook for all EU banks. 

The proposal helps strengthen the EU financial legislation adopted in the last decade to reduce 
risks in the financial sector and ensure an orderly management of bank failures. The aim is to 
make  the  banking  system  more  robust  and  ultimately  promote  the  sustainable  financing  of 
economic  activity  in  the  EU.  It  is  fully  consistent  with  the  EU's  fundamental  goals  of 
promoting  financial  stability,  reducing  taxpayers’  support  in  bank  resolution  and  protecting 
depositor confidence. These objectives are conducive to a high level of competitiveness and 
consumer protection. 

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2. 

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LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The proposal amends an existing regulation, the SRMR, in particular as regards the improved 
application of the tools that are already available in the bank resolution framework, clarifying 
the  conditions  for  resolution,  facilitating  access  to  safety  nets  the  event  of  bank  failure  and 
improving  the  clarity  and  consistency  of  funding  rules.  By  establishing  harmonised 
requirements for applying the CMDI framework to banks in the Member States participating 
in  the  SRM,  the  proposal  considerably  reduces  the  risk  of  divergent  national  rules  in  those 
Member States, which could distort competition in the internal market. 

Consequently,  the  legal  basis  for  the  proposal  is  the  same  as  the  legal  basis  of  the  original 
legislative act, namely Article 114 TFEU. That provision allows for measures to be adopted 
for the approximation of national provisions which have as their objective the establishment 
and functioning of the internal market. 

• 

Subsidiarity (for non-exclusive competence)  

The legal basis falls within the internal market area, which is considered a shared competence, 
as  defined  by  Article 4  TFEU.  Most  of  the  actions  considered  represent  updates  and 
amendments  to  existing  EU law, and as such, they concern areas  where the  EU has already 
exercised its competence and does not intend to cease exercising such competence.  

Given  that  the  objectives  pursued  by  the  proposed  measures  aim  at  supplementing  already 
existing EU legislation, they can be best achieved at EU level rather than by different national 
initiatives. In particular, the rationale for a specific and harmonised EU resolution regime for 
all banks in the EU was laid out at the inception of the framework in 2014. Its main features 
reflect  international  guidance  and  the  ‘Key  Attributes  of  Effective  Resolution  Regimes  for 
Financial Institutions’ adopted by the Financial Stability Board in the aftermath of the 2008 
global financial crisis.  

The principle of subsidiarity is embedded in the existing resolution framework. Its objectives, 
namely  the  harmonisation  of  the  rules  and  processes  for  resolution,  cannot  be  sufficiently 
achieved by Member States. Rather, by reason of the effects of a failure of any institution in 
the whole EU, they can be better achieved at EU level through EU action. 

The  intention  of  the  existing  resolution  framework  has  always  been  to  provide  a  common 
toolbox to  deal  effectively  with  any  bank  failure,  irrespective  of  its  size,  business  model  or 
location, in an orderly way, where this is necessary to preserve financial stability of the EU, 
the Member State or the region in which it operates, and to protect depositors without relying 
on public funds.  

The  proposal  amends  certain  provisions  of  the  SRMR  to  improve  the  existing  framework, 
particularly when it comes to applying it to smaller and medium-sized banks, as otherwise it 
may not reach its objectives.  

Risks to financial stability, depositor confidence or the use of public finances in one Member 
State may have far-reaching impacts on a cross-border basis and may ultimately contribute to 
a fragmentation of the single market. The lack of action at EU level for less significant banks 
and their perceived exclusion from a mutualised safety net would also potentially affect their 
ability  to  access  markets  and  attract  depositors  when  compared  with  significant  banks. 
Furthermore, national solutions to tackle bank failures would worsen the bank-sovereign link 
and undermine the idea behind the Banking Union of introducing a paradigm shift from bail-
out to bail-in. 

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Acting  at  EU  level  to  reform  the  resolution  framework  will  not  prescribe  the  strategy  that 
should  be  taken  when  banks  fail.  The  choice  between  an  EU  harmonised  resolution 
strategy/tool  and  the  national  liquidation  strategy  will  remain  at  the  discretion  of  the 
resolution  authority  on  the  basis  of  the  public  interest  assessment.  This  is  tailored  to  each 
specific failure case and not automatically driven by considerations such as the bank size, the 
geographical outreach of its activities and the structure of the banking sector. In practice, this 
makes the public interest assessment the subsidiarity test in the EU.  

Thus,  while  a  case-by-case  basis  needs  to  be  used  for  assessing  whether  a  bank  undergoes 
resolution  or  not,  it  is  crucial  that  the  possibility  for  all  banks  to  undergo  resolution  is 
preserved and that resolution authorities have the right incentives to opt for resolution, due to 
the potentially systemic nature of all institutions, as already provided for in the SRMR. 

Member States may still consider liquidation for the smaller or medium-sized banks under the 
reformed framework. In this respect, national insolvency regimes (which are not harmonised) 
remain  in  place  when  an  insolvency  procedure  is  deemed  a  better  alternative  to  resolution. 
The continuum of tools is preserved in this way, including those outside resolution, such as: 
preventive and precautionary measures; resolution tools; alternative measures within national 
insolvency proceedings and payout of covered deposits in the event of piecemeal liquidation.  

Amending  the  SRMR  is  therefore  considered  the  best  option.  It  strikes  the  right  balance 
between  harmonising  rules  and  maintaining  national  flexibility,  where  relevant.  The 
amendments  would  further  promote  a  uniform  application  of  the  resolution  framework  and 
the  convergence  of  practices  of  supervisory  and  resolution  authorities,  as  well  as  ensure  a 
level  playing  field  throughout  the  internal  market  for  banking  services.  This  is  particularly 
important  in  the  banking  sector  where  many  institutions  operate  across  the  EU  internal 
market. National rules would not achieve these objectives. 

• 

Proportionality 

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

Proportionality has been an integral part of the impact assessment accompanying the proposal. 
The  proposed  amendments  have  been  individually  assessed  against  the  proportionality 
objective.  In  addition,  the  lack  of  proportionality  of  the  existing  rules  has  been  assessed  in 
several  areas  and  specific  options  have  been  analysed  aimed  at  reducing  administrative 
burden and compliance costs for smaller institutions, in particular by removing the obligation 
to  determine  the  minimum  requirement  for  own  funds  and  eligible  liabilities  (MREL)  for 
certain types of entities. 

The conditions to access the resolution financing arrangements under the current framework 
do  not  sufficiently  account  for  distinctions  on  grounds  of  proportionality  based  on  the 
resolution  strategy,  size  and/or  business  model.  The  ability  of  banks  to  fulfil  the  access 
conditions  to  the  resolution  financing  arrangement  depends  on  the  stock  of  bail-inable 
instruments  available  in  their  balance  sheets  at  the  time  of  the  intervention.  However, 
evidence  suggests  that  some  (smaller  and  medium-sized)  banks  in  certain  markets  face 
structural  difficulties  in  building  up  the  MREL.  For  those  banks,  considering  their  specific 
liability structure (particularly those relying significantly on deposit funding), certain deposits 
would need to be bailed-in in order to access the resolution financing arrangement, which may 
raise concerns of financial stability and operational feasibility considering the economic and 
social  impact  in  several  Member  States.  The  proposed  amendments  (e.g.  clear  rules  on 
tailoring  the  MREL  for  transfer  resolution  strategies,  introducing  a  single-tier  depositor 

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preference  and  allowing  DGS  funds  to  bridge  the  gap  to  access  the  resolution  financing 
arrangement) would improve access to funding in resolution. They would also introduce more 
proportionality  for  banks  that  would  be  resolved  under  transfer  strategies,  by  allowing  the 
protection of deposits from bail-in where appropriate, and addressing effectively the problem 
of funding of resolution without weakening the minimum bail-in conditions for accessing the 
resolution financing arrangement. 

• 

Choice of the instrument 

It is proposed that the measures be implemented by amending the SRM Regulation through a 
regulation.  The  proposed  measures  refer  to  or  further  develop  already  existing  provisions 
inbuilt in this legal instrument. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EVALUATIONS, 

POST 

OF 

EX 

STAKEHOLDER 

Ex post evaluations/fitness checks of existing legislation 

The CMDI framework was designed to avert and manage the failure of institutions of any size 
or  business  model.  It  was  developed  with  the  objectives  of  maintaining  financial  stability, 
protecting  depositors,  minimising  the  use  of  public  support,  limiting  moral  hazard,  and 
improving the internal  market  for financial services. The evaluation  concluded that, overall, 
the  CMDI  framework  should  be  improved  in  certain  respects,  such  as  better  protection  of 
taxpayer money. 

In  particular,  the  evaluation  shows  that  legal  certainty  and  predictability  in  managing  bank 
failures  remains  insufficient.  The  decision  of  public  authorities  on  whether  to  resort  to 
resolution  or  insolvency  may  differ  considerably  across  Member  States.  In  addition,  safety 
nets  financed  by  the  industry  are  not  always  effective  and  divergent  access  conditions  to 
funding  in  resolution  and  outside  resolution  persist.  These  affect  incentives  and  create 
opportunities for arbitrage when decisions are made on what crisis management tool to use. 
Finally,  depositor  protection  remains  uneven  and  inconsistent  across  Member  States  in  a 
number of areas. 

• 

Stakeholder consultations 

The Commission conducted extensive exchanges through different consultation tools to reach 
out to all stakeholders involved, in order to better understand how the framework performed 
as well as the possible scope for improvements. 

In 2020, the Commission launched a consultation on a combined inception impact assessment 
and a roadmap aimed at providing a detailed analysis of actions to be taken at EU level and 
the potential impact of different policy options on the economy, society and the environment. 

In 2021, the Commission launched two consultations: a targeted and a public consultation to 
seek stakeholder feedback on how the CMDI framework was applied and views on possible 
modifications.  The  targeted  consultation,  comprising  39  general  and  specific  technical 
questions,  was  available  in  English  only  and  open  from  26 January  to  20 April  2021.  The 
public consultation consisted of 10 general questions, available in  all EU languages and ran 
over the feedback period from 25 February to 20 May 2021.  

In  addition,  the  Commission  hosted  a  high-level  conference  on  18 March  2021  gathering 
representatives from all relevant stakeholders. The conference confirmed the importance of an 
effective framework but also highlighted the current weaknesses. 

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Commission staff have also repeatedly consulted Member States on the EU implementation of 
the  CMDI  framework  and  on  possible  revisions  of  the  BRRD/SRMR  and  DGSD  in  the 
context of the Commission Expert Group on Banking, Payments and Insurance. In parallel to 
the discussions in the Expert Group, the issues addressed in this proposal were also covered in 
meetings of the Council’s preparatory bodies, namely the Council Working Party on Financial 
Services and the Banking Union and the High-Level Working Group on EDIS. 

Furthermore,  during  the  preparatory  phase  of  the  legislation,  Commission  staff  also  held 
numerous  meetings  (physical  and  virtual)  with  representatives  of  the  banking  industry  and 
with other stakeholders. 

The  results  of  all  the  above-mentioned  initiatives  have  fed  into  the  preparation  of  this 
proposal and the accompanying impact assessment. They have provided clear evidence of the 
need to update and complete the current rules to best achieve the objectives of the framework. 
Annex  2  of  the  impact  assessment  provides  the  summaries  of  these  consultations  and  the 
public conference. 

• 

Collection and use of expertise 

The  Commission  issued  a  call  for  advice  to  the  European  Banking  Authority  (EBA)  on 
funding in insolvency and resolution. The Commission sought targeted technical advice to: (i) 
assess  the  reported  difficulty  for  some  smaller  and  medium-sized  banks  to  issue  sufficient 
loss-absorbing financial instruments; (ii) examine the current requirements to access available 
sources  of  funding  in  the  current  framework;  and  (iii)  assess  the  quantitative  impacts  of 
various possible policy options in the area of funding in resolution and insolvency and their 
effectiveness in achieving the policy objectives. The EBA responded in October 202117. 

The Commission also benefited from the opinion  provided by the Fit for Future Platform in 
December  2021.  The  opinion  highlighted  the  need  to  make  the  CMDI  framework  fit  for 
purpose  for  all  banks,  in  a  proportionate  manner,  taking  into  consideration  the  potential 
impact on depositors’ confidence and on financial stability. 

• 

Impact assessment18 

The  proposal  has  been  subject  to  an  extensive  impact  assessment  taking  into  account  the 
feedback  received  from  stakeholders  and  the  need  to  address  various  interconnected  issues 
spanning three different legal texts. 

The impact assessment considered a range of policy options to address the problems identified 
in the design and implementation of the crisis management and deposit insurance framework. 
Given  the  strong  links  between  the  crisis  management  toolbox  and  its  funding,  the  impact 
assessment  considered  packages  of  policy  options  that  bundle  together  relevant  design 
features of the CMDI framework to ensure a  comprehensive and consistent approach. Some 
changes proposed – related to early intervention measures, the triggers to determine whether a 
bank is failing or likely to fail, and the harmonisation of certain features of the DGSD – are 
common across the option packages considered.  

The  different  packages  of  options  are  mainly  focused  on  analysing  the  spectrum  of 
possibilities  to  broaden  credibly  and  effectively  the  scope  of  resolution  as  a  function  of  the 
level  of  ambition  in  making  the  funding  more  accessible.  In  particular,  the  policy  options 
consider facilitating the use of DGS funds in resolution, including serving as a bridge, under 

17 
18 

EBA (22 October 2021), Call for advice regarding funding in resolution and insolvency. 
Please  see  references  to  SWD(2023)226  (summary  sheet  of  the  IA)  and  SEC(2023)230  (the  positive 
opinion of the Regulatory Scrutiny Board). 

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the  least-cost  test  safeguard,  to  improve  the  proportionality  in  accessing  the  resolution 
financing arrangements for banks, particularly smaller and medium-sized banks, being subject 
to transfer strategies with market exit. In addition, the policy options explore the possibility of 
using  DGS  funds  more  effectively  and  efficiently  under  a  harmonised  least  cost  test  for 
measures other than the payout of covered deposits, seeking to improve the compatibility of 
incentives  for  resolution  authorities  when  selecting  the  most  appropriate  tool  to  manage  a 
crisis. Unlocking DGS funds for measures other than the payout of covered deposits depends 
on where the DGS ranks in the hierarchy of claims. Therefore, the policy options also explore 
different scenarios of harmonisation of depositor preference.  

In light of these elements, the impact assessment explores three possible packages of policy 
options that deliver outcomes with varying ranges of ambition. Each package strives to create 
an  incentive-based  framework,  by  encouraging  the  application  of  resolution  tools  in  a  more 
consistent  manner,  increasing  legal  certainty  and  predictability,  levelling  the  playing  field, 
and facilitating access to common safety nets, all while maintaining some alternatives outside 
resolution under national insolvency procedures. However, by design, the packages of options 
achieve these objectives to a varying extent and their political feasibility differs. 

The preferred option envisages ambitious improvements in the funding equation, opening the 
possibility for the resolution scope to be substantially broadened to include more smaller and 
medium-sized banks and a better alignment of incentives for deciding on the best crisis tool 
for these institutions. It was considered more effective, efficient and coherent in achieving the 
objectives of the framework relative to other options, including the baseline where no action 
is taken. In particular, the removal of the super-preference for the DGS was identified as the 
most effective means of ensuring that DGS funds can be used in resolution. The existence of a 
super-preference for DGS claims is the main reason why the DGS funds can almost never be 
used outside a payout of covered deposits in insolvency because of the impact it has on the 
outcome of the least cost test (LCT) that privileges a payout. However, it was found that the 
super-preference  ends up protecting the financial  means of the DGS  and the banking sector 
from  possible  replenishment  by  hindering  any  DGS  intervention  in  resolution,  without 
bringing a better protection for covered deposits. Therefore, the removal  of  the DGS super-
preference is necessary to address the existing outcome of the LCT assessment that is skewed 
towards  payout  and  to  provide  adequate  funding  in  resolution  to  make  the  resolution  of 
smaller and medium-sized banks through a transfer of business and market exit of the  failed 
bank feasible.  

The impact assessment also included another option consisting of an ambitious reform of the 
CMDI  framework  including  EDIS,  in  the  form  of  an  intermediate,  hybrid  model,  different 
from  the  2015  Commission  proposal.  This  option  acknowledges  the  importance  of 
establishing a common deposit insurance system for the robustness of the framework and the 
completion of the Banking Union;  however, it has  been assessed as politically unfeasible at 
this stage. 

The proposal would entail costs for authorities and certain banks, depending on the extent to 
which resolution would be expanded on the basis of case-by-case public interest assessments 
and the specific circumstances of each case. Using the DGS funds and the RF/SRF would be 
more  cost-efficient  in  terms  of  financial  means  required  to  be  used,  however  it  may  also 
trigger  replenishment  needs  through  contributions  from  the  industry.  Overall,  costs  for 
resolution authorities and banks would, however, be compensated by the benefits of enhanced 
preparedness for a larger spectrum of banks, clarified incentives when deciding which crisis 
tools  to  use,  reduced  recourse  to  taxpayer  funds,  and  increased  financial  stability  and 
depositor confidence, all thanks to clearer rules and access to industry-funded safety nets. For 
consumers and the public, the costs should be limited and clearly outweighed by the benefits, 

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particularly  through  increased  depositor  protection,  financial  stability  and  reduced  use  of 
taxpayer money. 

The  Regulatory  Scrutiny  Board  endorsed  the  impact  assessment  following  a  first  negative 
opinion.  To  address  the  comments  raised  by  the  Board,  the  impact  assessment  has  been 
extended to include additional explanations on: (i) the nature of the problems the review aims 
to  address  and  the  general  merits  of  resolution  compared  with  insolvency  proceedings  to 
protect  financial  stability,  depositor  confidence  and  minimise  the  recourse  to  taxpayers 
money; (ii) clarifications on how the reform complies with the principle of subsidiarity; and 
(iii) additional details on other aspects such as consistency with the review of State aid rules, 
the interaction with the 2015 Commission proposal on EDIS, how the EBA’s advice has been 
taken into account or the conditions in which DGS could intervene in resolution. 

• 

Regulatory fitness and simplification 

The review is mainly focused on the overall set-up and functioning of the crisis management 
and deposit insurance framework, with particular attention being paid to smaller and medium 
sized  banks  and  a  more  equal  treatment  of  depositors.  The  proposed  reform  is  expected  to 
bring benefits with respect to the effectiveness of the framework and legal clarity. 

The reform is technology-neutral and does not impact digital readiness. 

• 

Fundamental rights 

The EU is committed to high standards of protection for fundamental rights and is a signatory 
to  a  broad  set  of  conventions  on  human  rights.  In  this  context,  the  proposal  complies  with 
these  rights,  as  listed  in  the  main  UN  conventions  on  human  rights,  the  Charter  of 
Fundamental Rights of the European Union, which is an integral part of the EU Treaties and 
the European Convention on Human Rights. 

4. 

BUDGETARY IMPLICATIONS 

The proposal does not have implications for the EU budget. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The  proposal  requires  Member  States  to  transpose  the  amendments  to  the  BRRD  in  their 
national laws within 18 months from the entry into force of the amending Directive.  

The  proposal  includes  requirements  for  the  EBA  to  issue  standards  in  relation  to  certain 
provisions of the framework and to report to the Commission on its effective implementation, 
e.g.  in  relation  to  resolvability  assessments  conducted  by  resolution  authorities  or  the 
preparation for resolution execution.  

The  legislation  will  be  subject  to  an  evaluation  5  years  after  its  implementation  deadline  in 
order to assess how effective and efficient it has been in terms of achieving its objectives and 
to decide whether new measures or amendments are needed. 

6. 

DETAILED  EXPLANATION  OF  THE  SPECIFIC  PROVISIONS  OF  THE 
PROPOSAL 

Early intervention measures and preparation for resolution  

Article  13  is  replaced  by  a  new  set  of  articles  (Articles  13  to  13c)  mirroring  the  BRRD 
provisions on early intervention (Articles 27 to 29 BRRD), in order to provide the ECB with a 

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directly  applicable legal  basis for the exercise of those powers. As in  BRRD, the escalation 
mechanism  between  the  different  types  of  measures  is  clarified  and  it  is  specified  that  the 
prior  adoption  of  early  intervention  measures,  or  the  meeting  of  the  conditions  for  early 
intervention,  are  not  prerequisites  to  start  the  preparation  for  resolution  or  to  exercise  the 
related powers. 

SRMR already included provisions concerning the cooperation and exchange of information 
between the Board and the ECB or national competent authorities (NCAs) when the financial 
situation of a bank starts deteriorating. However, those provisions needed to be strengthened 
to  ensure  better  and  more  effective  cooperation.  The  new  Article  13c  builds  on  the  former 
Article  13  and  provides  additional  details  on  cooperation  in  the  run-up  to  resolution, 
concerning the type of information that should be exchanged, the situations in which the ECB 
or the NCA need to exchange information and the type of arrangements that the Board may 
put in place to prepare for resolution. 

Early warning of failing or likely to fail  

Article 13c includes an obligation for the ECB, or the NCA in relation to the less significant 
cross-border  groups under the  Board’s direct  remit,  to  notify sufficiently  early the  Board as 
soon  as  it  considers  that  there  is  a  material  risk  that  an  institution  or  entity  meets  the 
conditions  for being  assessed as  failing or likely to  fail,  as  laid  down in  Article 18(4). This 
notification should include the reasons for the ECB/NCA’s assessment as well as an overview 
of the alternative solutions that may prevent the failure of the institution or entity concerned 
within a reasonable timeframe. 

In  recognition  of  the  critical  role  that  the  timing  of  resolution  action  plays  with  respect  to 
preserving as much as possible the levels of capital, MREL and liquidity of the institution or 
entity, and more generally, in ensuring that the necessary conditions are in place for the Board 
to  successfully  execute  the  resolution  strategy  prepared  for  each  institution  or  entity,  the 
Board is empowered to assess, in close cooperation with the ECB/NCA, what it considers to 
be  a  reasonable  timeframe  for  the  purposes  of  looking  for  solutions  of  private  or 
administrative  nature,  able  to  prevent  the  failure.  During  this  early  warning  period,  the 
ECB/NCA should continue exercising its competences, while liaising with the Board in line 
with  Article  13c.  The  ECB/NCA  and  the  Board  should  monitor,  in  close  cooperation,  the 
evolution  of  the  situation  of  the  institution  or  entity  and  the  implementation  of  alternative 
measures.  In  this  context,  the  Board  and  the  ECB/NCA  should  meet  regularly,  with  a 
frequency set by the Board. 

If no appropriate alternative measure which would avert the failure is found or implemented 
within this timeframe, the ECB/NCA should assess whether the institution or entity is failing 
or  likely  to  fail.  Where  the  ECB/NCA  concludes  that  the  institution  or  entity  is  failing  or 
likely to fail, it should formally communicate this to the Board, following the procedure laid 
down in Article 18(1). The Board may also make this assessment itself, in compliance with 
the  existing  rules  in  Article  18(1),  second  subparagraph.  The  Board  should  then  determine 
whether the conditions for resolution are met. Where the public interest assessment results in 
the need to resolve the institution or entity, the Board should adopt a resolution scheme. This 
is in line with the recent case law of the Court of Justice of the  EU related to a case taking 
place  in  the  Banking  Union,  according  to  which  the  ECB’s  assessment  is  a  preparatory 
measure  designed  to  allow  the  Board  to  take  a  decision  regarding  the  resolution  of  a  bank. 
The  Court  further  stated  that  the  Board  has  the  exclusive  power  to  assess  the  conditions 

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required for the application of resolution action, subject to the endorsement of the resolution 
scheme by the Commission and, where applicable, non-objection by the Council19. 

Public interest assessment (PIA)  

The CMDI framework was designed to avert and manage the failure of institutions of any size 
while protecting depositors and taxpayers. When a bank is considered failing or likely to fail 
and there is a public interest in resolving it, the resolution authorities will intervene by using 
the  tools  and  powers  granted  by  the  BRRD/SRMR  in  absence  of  a  private  solution.  In  the 
absence of a public interest for resolution, the bank failure should be handled through national 
orderly winding up proceedings carried out by national authorities, potentially with financing 
from the DGS or other funding sources, as appropriate. 

In  essence,  the  public  interest  assessment  (PIA)  compares  resolution  against  insolvency,  in 
particular  assessing  how  each  scenario  achieves  the  resolution  objectives.  The  resolution 
objectives against which the assessment is made include: (i) the impact on financial stability 
(a  wide-spread  crisis  may  result  in  a  different  outcome  of  the  PIA  than  an  idiosyncratic 
failure); (ii) the assessment of the impact on the bank’s critical functions; and (iii) the need to 
limit  the  use  of  extraordinary  public  financial  support.  Under  the  current  framework, 
resolution  can  only  be  chosen  where  insolvency  would  not  allow  achieving  the  resolution 
objectives to the same extent. 

The SRMR leaves margin of discretion to the Board when carrying out the PIA, which leads 
to  divergent  applications  and  interpretations  that  do  not  always  fully  reflect  the  logic  and 
intention of the legislation. In some cases, the PIA has been applied rather restrictively in the 
Banking Union.  

To minimise divergences and widen the application of the PIA, i.e. broadening the scope of 
resolution, the proposal includes the following legislative amendments:  

Amendments to the resolution objectives  

The  resolution  objective  requiring  minimising  the  reliance  on  extraordinary  public  financial 
support does not allow for a distinction between the use of national budget money and the use 
of  industry-funded  safety  nets  (the  SRF  or  DGSs).  Therefore,  this  resolution  objective  is 
amended to include a specific reference to support provided by the budget of a Member State, 
to  indicate  that  funding  provided  by  industry-funded  safety  nets  should  be  considered 
preferable 
is 
complemented with a change in the procedural rules on PIA, requiring the Board to consider 
and compare all extraordinary public financial support that can reasonably be expected to be 
provided  to  the  institution  in  resolution  against  those  in  the  insolvency  counterfactual.  If 
liquidation aid is expected in the insolvency counterfactual, this should lead to a positive PIA 
outcome (Article 18(5), second subparagraph).  

taxpayers’  money  (Article  14(2)(c)).  This 

to  funding  supported  by 

The resolution  objective related to  depositor protection is  amended to  clarify that resolution 
should aim at protecting depositors, while minimising losses for deposit guarantee schemes. 
This  means  that  resolution  should  be  preferred  if  insolvency  would  be  more  costly  for  the 
DGS.  

19 

Order  of  6  May  2019,  ABLV  Bank  /  ECB,  T-281/18,  EU:T:2019:296,  paragraphs  34  to  36,  and 
Judgment of 6 May 2021, ABLV Bank / ECB, C-551/19 P and C-552/19 P, EU:C:2021:369, paragraphs 
62 to 71. 

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Procedural  changes  to  the  comparison  between  resolution  and  national  insolvency 
proceedings  

Under  the  current  SRMR,  the  Board  is  expected  to  choose  insolvency  unless  opting  for 
resolution  would  better  achieve  the  resolution  objectives.  The  current  text  of  Article  18(5) 
provides  that  resolution  shall  only  be  chosen  when  winding  up  the  institution  under  normal 
insolvency proceedings would not meet the resolution objectives to the same extent. To make 
it  possible  to  broaden  the  application  of  resolution,  Article  18(5)  is  amended  to  clarify  that 
national insolvency proceedings should be  selected as the preferred strategy only when they 
achieve the framework’s objectives better than resolution (and not to the same extent). While 
keeping insolvency as the default option, the amendment leads to an increase in the burden of 
proof  for  resolution  authorities  in  demonstrating that  resolution  is  not  in  the  public  interest. 
Nevertheless, the PIA will remain a case-by-case decision at the discretion of the resolution 
authority. 

Use of DGS in resolution  

Under the current framework the decision on the use of  DGS funds to finance  resolution  is 
taken  by  the  Board  after  consulting  the  DGS  and  the  amount  of  the  DGS  contribution  is 
determined  on  the  basis  of  the  valuation  of  the  losses  that  covered  depositors  would  have 
suffered  have  they  not  been  shielded  from  suffering  losses.  To  ensure  that  the  enhanced 
possibilities  and  strict  conditions  for  the  use  of  national  DGS  resources  to  finance  transfer 
strategies in resolution under the amended Article 109 BRRD are also applied consistently in 
the Banking Union, Article 79 SRMR is amended to specify that the DGS to which the credit 
institution is affiliated should be used for the purposes and under the conditions laid down in 
Article 109 BRRD. In addition, the second and third subparagraphs of Article 79(5) SRMR, 
which mirror the conditions under the current Article 109(5), second and third subparagraphs 
BRRD, are deleted.  

Given  that  within the  Banking  Union  resolution  decisions  are  taken  by  the  Board  while  the 
financing might be provided from national DGS resources, the reference to Article 109 BRRD 
in  the  first  paragraph  of  Article  79  SRMR  also  ensures  that  the  enhanced  role  of  the  DGS 
under BRRD should apply in the decision-making process for banks under the Board’s remit. 
In particular, the calculation of the cost of repaying depositors for the purpose of limiting the 
amount  of  the  DGS  contribution  to  resolution  remains  at  national  level  under  the 
responsibility of the DGS based on the least cost test (LCT). The Board should determine the 
amount of the contribution to be provided by the DGS only after consulting the  DGS on the 
results of this calculation and it should be bound by these results. Therefore, the Board should 
not be able to determine a DGS contribution to a transaction which would be above the cost of 
repaying depositors as calculated by the DGS according to the DGSD rules (no breaching of 
the  LCT),  nor  higher  than  what  is  needed  to  reach  the  access  condition  to  the  resolution 
financing arrangement (8% total liabilities and own funds requirement). 

Conditions for providing extraordinary public financial support 

In order to ensure that public funds in the form of extraordinary public financial support are 
not  used  to  support  institutions  or  entities  that  are  not  financially  viable,  it  is  necessary  to 
provide for strict conditions on when such support can be provided and what form it can take. 
The existing rules provide for certain limitations but are not sufficiently precise. Provision of 
extraordinary  public  financial  support  outside  of  resolution  should  be  limited  to  cases  of 
precautionary recapitalisation, preventive measures of DGS aimed at preserving the financial 
soundness and long-term viability of credit institutions, measures taken by DGS to preserve 
the  access  of  depositors  and  other  forms  of  support  granted  in  the  context  of  winding  up 
proceedings. Providing extraordinary public financial support in any other situations outside 

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of  resolution  should  not  be  permitted  and  should  result  in  the  receiving  institution  or  entity 
being considered as failing or likely fail. 

Precautionary recapitalisation 

Particular attention must be paid to the extraordinary public financial support granted in the 
form  of  precautionary  recapitalisation.  It  is  necessary  to  lay  down  more  clearly  the 
permissible  forms  of  precautionary  measures  provided  outside  of  resolution  and  aimed  at 
recapitalising  the  entity  concerned.  The  measures  granted  should  be  temporary  in  nature 
because they are supposed to address adverse consequences of external shocks and not used to 
compensate for intrinsic weaknesses linked, for example, to an outdated business model. Use 
of  perpetual  instruments,  such  as  Common  Equity  Tier  1,  should  become  exceptional  and 
possible  only  if  other  forms  of  capital  instruments  would  not  be  adequate.  Such  change  is 
necessary to ensure that the support remains temporary in nature. Stronger and more explicit 
requirements  on determining in  advance the duration and exit strategy for the precautionary 
measures  are  also  needed.  The  entity  receiving  support  should  be  solvent  at  the  time  the 
measures are applied, i.e. assessed by the competent authority as not being in breach and not 
likely to  breach the  applicable capital  requirements  in  the next  12 months.  If the conditions 
under which the support is granted are not adhered to, the entity receiving the support should 
be considered as failing or likely to fail. 

Amendments related to the minimum requirement for own funds and eligible liabilities 
(MREL)  

MREL for transfer strategies 

As already provided under the current framework, the level of the MREL requirement should 
reflect  the  preferred  resolution  strategy.  The  existing  provision  of  Article  12d  focuses  on 
MREL  calibration for bail-in  strategies (requirement for loss absorption  and recapitalisation 
amount,  with  detailed  rules  on  how  each  should  be  adjusted,  and  on  subordination 
requirements  mostly  geared  towards  ensuring  compliance  with  the  minimum  8%  TLOF 
requirement). While acknowledging the possibility to use resolution tools other than bail-in, 
the  current  BRRD  does  not  regulate  in  detail  MREL  calibration  for  transfer  strategies.  In 
practice,  this  leads  to  legal  uncertainty  and  divergent  methodologies  applied  by  resolution 
authorities when setting MREL for such strategies.  

It is therefore necessary to provide a clearer legal basis for distinguishing MREL calibration 
for  transfer  strategies  from  the  one  for  bail-in,  also  for  the  sake  of  proportionality  and 
consistent  application.  In  this  respect,  a  new  Article  12da  is  added  which  sets  out  the 
principles  which  should  be  considered  by  the  SRB  when  calibrating  MREL  for  transfer 
strategies - size, business  model, risk profile, transferability analysis, marketability, whether 
the strategy is  asset  transfer or share deal,  complementary use of asset  management vehicle 
for assets which cannot be transferred, and the amount which DGS is expected to contribute 
to finance the preferred strategy in resolution. 

The amendments reinforce the principle that MREL should remain the first and main line of 
defence for all banks, including for those that will be subject to a transfer strategy and market 
exit, to ensure that losses are absorbed to the maximum extent possible by shareholders and 
creditors. 

Estimating the combined buffer requirement in case of prohibition of certain distributions 

To address an existing gap in legal clarity of the current framework with respect to the power 
to  prohibit  certain  distributions  in  case  of  failure  of  an  entity  to  meet  the  combined  buffer 
requirement  in  addition  to  its  MREL,  in  particular  where  the  entity  is  not  subject  to  the 
combined buffer requirement (under Article 104a of Directive 2013/36/EU) on the same basis 

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as its MREL, a new paragraph 7 is added to Article 10a to clarify that the power to prohibit 
certain distributions should be applied on the basis of the estimation of the combined buffer 
requirement  resulting  from  the  delegated  act  under  Article  45c(4)  that  specifies  the 
methodology to be used by resolution authorities to estimate the combined buffer requirement 
in such circumstances. 

De minimis exemption from certain MREL requirements  

Under the existing  MREL  rules in  SRMR, structurally subordinated liabilities  referred to  in 
Article  72b(2)(d)(iii)  CRR  are  captured  by  the  definition  of  ‘subordinated  eligible 
instruments’ used throughout Article 12c SRMR. However, liabilities that are permitted to be 
eligible  in  CRR  under  the  de  minimis  exemption  in  Article  72b(4)  CRR  do  not  qualify  as 
‘subordinated eligible instruments’ under the SRMR because paragraph 4 of Article 72b CRR 
is explicitly excluded from the definition in Article 3(1)(49b) SRMR. 

To  correct  this  inconsistency  and  in  line  with  the  approach  followed  in  BRRD,  a  new 
paragraph  10  is  added  to  Article  12c,  allowing  SRB  to  permit  resolution  entities  to  comply 
with  the  MREL  subordination  requirements  using  senior  liabilities  when  the  conditions  in 
Article 72b(4) CRR are met. 

To  ensure  alignment  with  the  TLAC  framework,  resolution  entities  benefitting  from  the  de 
minimis exemption may not have their MREL subordination requirement adjusted downwards 
by  an  amount  equivalent  to  the  3.5%  TREA  allowance  for  TLAC  pursuant  to  the  second 
sentence of the first subparagraph of Article 12c(4) BRRD. 

Contributions and irrevocable payment commitments 

To take into account the end of the initial period for the build-up of the Fund and the ensuing 
reduction in the amount of regular ex ante contributions, technical amendments are made to 
Articles 69 and 71 to disconnect the maximum amount of ex post contributions that may be 
raised from the amount of the regular ex ante contributions, thus avoiding a disproportionately 
low  cap  on  ex  post  contributions,  as  well  as  to  allow  for  a  deferral  of  the  collection  of  the 
regular  ex  ante  contributions  in  case  the  cost  of  an  annual  collection  would  not  be 
proportionate to the amount to be raised. The treatment of irrevocable payment commitments 
is  also  clarified  in  Article  70,  both  as  regards  their  use  in  resolution  and  as  regards  the 
procedure to follow in case an institution or entity ceases to be subject to the obligation to pay 
contributions. 

In  addition,  to  provide  more  transparency  and  certainty  with  respect  to  the  share  of 
irrevocable payment commitments in the total amount of ex ante contributions to be raised, it 
is  clarified  that  the  Board  should  determine  such  share  on  an  annual  basis,  subject  to  the 
applicable limits.  

Other provisions 

Amendments to resolution planning  

The  Board  is  required  to  identify  measures  to  be  taken  with  respect  to  group  entities  when 
drafting group resolution plans. The intensity and level of detail of this work with respect to 
subsidiaries that are not resolution entities may vary depending on the size and risk profile of 
the  institutions  and  entities  concerned,  the  presence  of  critical  functions  and  the  group 
resolution  strategy.  SRMR  is  thus  amended  with  the  introduction  of  a  new  subparagraph  in 
Article 8(10), which will allow resolution authorities to follow a simplified approach, where 
appropriate, when carrying out this task.  

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Clarifications on Article 27(9)  

The current provisions of Article 27(9) and (10) are unclear as to what are the condition and 
the sequence of use of the SRF and alternative financing sources after the provision of initial 
financing of up to the 5 % TLOF limit and after all unsecured, non-preferred liabilities, other 
than eligible deposits, have been written down or converted in full. Therefore, paragraphs 9 
and 10 of Article 27 are amended to provide legal clarity and additional flexibility to use the 
SRF beyond the 5% TLOF. 

Governance of the Board 

To  facilitate  continuity  and  the  build-up  of  institutional  expertise,  amendments  are  made  to 
Article 56 in order to establish the possibility for the Chair, the Vice-Chair and the permanent 
Members  of  the  Board  to  serve  a  second  term  in  office,  in  the  same  capacity  as  their  first 
term. The procedure for the renewal of the Chair, Vice-Chair and Board Members has been 
designed  while  taking  into  account  the  procedure  applicable  to  the  renewal  of  the 
Chairpersons of the ESAs. 

Other amendments  are  made to  Article 43, 53 and 55 in  order to  grant  a voting right  to  the 
Vice-Chair  and  accommodate  this  voting  right  throughout  SRMR.  His  or  her  appointment 
follows the same procedure as this of the Chair and he or she is able to substitute the Chair in 
its absence or reasonable impediment. A treatment different for the Vice-Chair than for other 
members of the Board did not therefore seem justified. 

Ranking of SRF claims 

Article  22(6)  provides  that  the  Board  should  be  able  to  recover  any  reasonable  expenses 
properly  incurred  in  connection  with  the  use  of  resolution  tools  and  powers  from  the 
institution  under  resolution  as  a  preferred  creditor.  However,  SRMR  did  not  specify  the 
relative  ranking  of  the  Board  to  other  preferred  creditors.  It  was  also  unclear  how  this 
provision  could  be  operationalised,  given  that  the  ranking  of  claims  in  insolvency  is 
exclusively laid down in national laws governing normal insolvency proceedings (even if that 
ranking  is  partially  harmonised  across  the  EU).  The  new  paragraph  6  added  to  Article  76 
clarifies that those claims of the Board should have, in each participating  Member State, the 
same ranking as the claims of the national resolution funds pursuant to the new Article 108(9) 
BRRD (which should be above the claims of depositors and of DGSs). 

Additionally, the SRF can be further used in resolution for the purposes identified in Article 
76(1). So far, SRMR has not specified whether such use creates a claim in favour of the Board 
and, if so, on the insolvency ranking of such claim. A new paragraph 5 is added in Article 76 
specifying that, where the activity of the institution under resolution is partially transferred to 
a bridge institution or a private purchaser with the support of the SRF, the Board should have 
a claim against the residual entity. The existence of such claim should be assessed on a case-
by-case  basis,  depending  on  the  resolution  strategy  and  the  way  in  which  the  SRF  was 
concretely  used,  but  it  should  be  connected  to  the  use  of  the  SRF  to  bear  losses  in  lieu  of 
creditors,  such  as  when  the  SRF  is  used  to  guarantee  assets  and  liabilities  transferred  to  a 
recipient  or  to  cover  the  difference  between  the  transferred  assets  and  liabilities.  Where  the 
SRF  is  used  to  support  the  application  of  the  bail-in  tool  as  the  primary  resolution  strategy 
(Article 27(1), point (a)), in lieu of the write down and conversion of the liabilities of certain 
creditors, this should not generate a claim against the institution under resolution, as it would 
eliminate the purpose of the SRF’s contribution. Compensations paid due to the breach of the 
‘no creditor worse off’ principle should likewise not generate a claim in favour of the Board. 

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Allocation of responsibilities  

Article  7  established  a  division  of  tasks  whereby  the  Board  has  direct  responsibility  for 
entities  under  the  direct  responsibility  of  the  ECB,  for  cross  border  less  significant 
institutions, and for entities for which there has been a decision, either on the initiative of the 
Board, on this of a national competent authority, or on this of a Member State, that the Board 
would exercise direct responsibility. NRAs would retain primary responsibility over all other 
entities. However, although Article 7 was explicit on this division of tasks, the language of the 
articles  of  the  Regulation  that  dealt  with  the  specific  responsibilities  concerned,  such  as 
resolution  planning,  resolvability  assessment,  assessment  of  simplified  obligations,  MREL-
setting or adoption of resolution schemes, referred only to the Board and thus did not make it 
fully clear that, in case of entities within their remit, the responsibility for the tasks mentioned 
laid with the NRAs. This point is clarified in Article 7.  

Similarly, the power for the Board to prohibit certain distributions where an entity within its 
remit does not meet is combined buffer requirement in addition to its MREL was laid down in 
the SRMR, but the exact procedure governing the exercise of this power was not specified. It 
is  now  clarified  in  Article  10a(1)  that  the  Board  is  able  to  instruct  the  relevant  NRA  to 
exercise this power.  

A  number  of  cases  has  also  been  identified  in  which  powers  were  granted  to  NRAs  in  the 
BRRD but, in the absence of a mention in the SRMR, the modalities of their application in the 
case of entities under the direct  remit of the Board were unclear. To address this issue, it is 
clarified  in  Article  12  that,  for  entities  under  its  direct  remit,  the  Board  is  responsible  for 
granting  the  permission  to  call,  redeem,  repay  or  repurchase  eligible  liabilities  instruments 
under Article 78a of Regulation (EU) No 575/2013. Article 8 is also amended to clarify that 
the Board is  able, where it deems  it necessary, to instruct  NRAs to  require an institution or 
entity to maintain detailed records of the financial contracts to which the institution is a party. 
It is further clarified in Article 18(11) that the Board is able to instruct NRAs to exercise their 
power to  suspend some financial obligations following the determination that the institution 
or entity is failing or likely to fail, pursuant to Article 33a of Directive 2014/59/EU.  

Amendments to Article 18 also clarify the division of tasks between the ECB and the national 
competent  authorities  as  regards  the  failing  or  likely  to  fail  assessment.  In  some  situations, 
namely cross-border less significant groups, less significant institutions and entities receiving 
assistance from the SRF, and specific less significant institutions and entities for which it has 
been decided, on the initiative of the Board, of a national competent authority or of a Member 
State,  that  the  Board  will  exercise  direct  responsibility,  although  the  resolution  scheme  is 
adopted by the Board, the supervision of the institution or entity, and thus the assessment of 
whether an institution or entity is failing or likely to fail, is the responsibility of the national 
competent authority. It is therefore specified that the assessment of whether an institution or 
entity is failing or likely to fail is to be performed by the ECB for the significant institutions 
and  by  the  relevant  national  competent  authority  for  the  less  significant  institutions  and 
entities for which the Board adopts the resolution scheme. 

Lastly,  to  reflect  the  establishment  of  the  Single  Resolution  Mechanism,  it  is  specified  in 
Article 31 that NRAs should consult the Board before they act in accordance with Article 86 
of the BRRD, that provides that normal insolvency proceedings in relation to institutions and 
entities within the scope of the BRRD shall not be commenced except at the initiative of the 
resolution  authority  and  that  a  decision  placing  an  institution  or  an  entity  into  normal 
insolvency proceedings shall be taken only with the consent of the resolution authority. 

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18 

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Exchange of information  

A number of amendments are made in order to facilitate access to information for the Board. 
Articles  30  and  34  are  amended  to  clarify  that  the  information  that  the  Board  may  request 
from the ECB covers not only information available to it in its supervisory function but also 
information  collected  in  its  central  bank  function.  Pursuant  to  Article  8(4a)  of  Council 
Regulation (EC) No 2533/9820, the SRB should ensure the physical and logical protection of 
confidential statistical information and should require authorisation to the ECB for the further 
transmission that may be necessary for the execution of the tasks of the Board. 

A  new  Article  30a  is  introduced  allowing  the  SRB  to  obtain  information  held  by  the 
centralised automated mechanisms established by  Article 32a of Directive (EU) 2015/84921, 
which may prove to  be relevant  when carrying out  the public interest  assessment. The SRB 
can  only  request  information  regarding  the  number  of  customers  for  which  an  entity  is  the 
only  or  principal  banking  partner.  The  SRB  should  receive  that  information  by  way  of  the 
authorities  or  public  entities  managing  the  centralised  automated  mechanisms,  filtered  of 
personal data that is not relevant for the performance of SRB’s tasks. 

Amendments are also added to bring the ESRB, the ESAs and the DGS under the scope of the 
obligation  to  cooperate  and  share  information  with  the  SRB,  including  the  possibility  to 
conclude memoranda of understanding on information-sharing with the Board.  

Furthermore, Article 34 is amended to allow the Board to specify the procedure and the form 
under which it requests information to be shared, as well as to specifically mention the ESM 
as one of the entities with which cooperation and information exchange may take place.  

Finally, Article 74 is amended to provide for an early warning from the Board to the ECB and 
the Commission when it foresees a possible need to use the fiscal backstop, in order to allow 
for the timely activation of such backstop. 

Disclosures  

The  SRMR  rules  on  the  protection  of  institution-specific  confidential  information  are  quite 
strict and could in the future hinder efforts towards further transparency regarding the banking 
sector. To address this issue, Article 88 is amended to allow the Board to disclose information 
that is not directly collected from institutions and entities within its remit but results from its 
own analyses, assessments and determinations when this would not undermine the protection 
of the public interest  as  regards  financial, monetary or economic policy  and that there is  an 
overriding public interest in the disclosure. 

20 

21 

Council  Regulation  (EC)  No  2533/98  of  23  November  1998  concerning  the  collection  of  statistical 
information by the European Central Bank (OJ L 318, 27.11.1998, p.8). 
Directive  (EU)  2015/849  of  the  European  Parliament  and  of  the  Council  of  20  May  2015  on  the 
prevention  of  the  use  of  the  financial  system  for  the  purposes  of  money  laundering  or  terrorist 
financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and 
repealing  Directive  2005/60/EC  of  the  European  Parliament  and  of  the  Council  and  Commission 
Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73). 

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2023/0111 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EU) No 806/2014 as regards early intervention measures, 
conditions for resolution and funding of resolution action 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

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

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Central Bank22,  
Having regard to the opinion of the European Economic and Social Committee23,  

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

22 
23 
24 

25 

26 

The  Union  resolution  framework  for  credit  institutions  and  investment  firms 
(‘institutions’)  was  established  in  the  aftermath  of  the  2008-2009  global  financial 
crisis  and  following  the  internationally  endorsed  Key  Attributes  of  Effective 
Resolution  Regimes  for  Financial  Institutions24 of  the Financial Stability  Board. The 
Union  resolution  framework  consists  of  Directive  2014/59/EU  of  the  European 
Parliament  and  of  the  Council25  and  Regulation  (EU)  No  806/2014  of  the  European 
Parliament  and  of  the  Council26.  Both  acts  apply  to  institutions  established  in  the 
Union,  and  to  any  other  entity  that  falls  under  the  scope  of  that  Directive  or  that 
Regulation (‘entities’). The Union resolution framework aims at dealing in an orderly 
manner  with  the  failure  of  institutions  and  entities  by  preserving  institutions  and 
entities’  critical  functions  and  avoiding  threats  to  financial  stability,  and  at  the  same 
time  protecting  depositors  and  public  funds.  In  addition,  the  Union  resolution 

OJ C , , p. . 
OJ C , , p. . 
Financial Stability Board, Key Attributes of Effective Resolution Regimes for Financial Institutions, 15 
October 2014. 
Directive  2014/59/EU  of  the  European  Parliament  and  of  the  Council  of  15  May  2014 establishing  a 
framework  for  the  recovery  and  resolution  of  credit  institutions  and  investment  firms  and  amending 
Council  Directive  82/891/EEC,  and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC, 
2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) 
No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190). 
Regulation  (EU)  No  806/2014  of  the  European  Parliament  and  of  the  Council  of  15  July  2014 
establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain 
investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and 
amending Regulation (EU) No 1093/2010 (OJ L 225, 30.7.2014, p. 1). 

EN 

20 

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(2) 

(3) 

(4) 

(5) 

framework  intends  to  foster  the  development  of  the  internal  market  in  banking  by 
creating a harmonised regime to address cross-border crises in a coordinated way and 
by avoiding level playing field issues. 

Several  years  into  its  implementation,  the  Union  resolution  framework  as  currently 
applicable  does  not  deliver  as  intended  with  respect  to  some  of  those  objectives.  In 
particular,  while  institutions  and  entities  have  made  significant  progress  towards 
resolvability and have dedicated significant resources to that end, in particular through 
the build-up of the loss  absorption  and  recapitalisation  capacity  and the filling-up of 
resolution financing arrangements, the Union resolution framework is seldom resorted 
to.  Failures  of  certain  smaller  and  medium-sized  institutions  and  entities  are  instead 
mostly  addressed  through  unharmonised  national  measures.  Taxpayer  money  is  used 
rather  than  resolution  financing  arrangements.  That  situation  appears  to  arise  from 
inadequate  incentives.  Those  inadequate  incentives  result  from  the  interplay  of  the 
Union resolution  framework with  national  rules, whereby the broad discretion in  the 
public interest assessment is not always exercised in a way that reflects how the Union 
resolution  framework was  intended to  apply.  At the same time, the  Union resolution 
framework saw little use due to the risks for depositors of deposit-funded institutions 
to  bear  losses  to  ensure  that  those  institutions  can  access  external  funding  in 
resolution, in particular in the absence of other bail-inable liabilities. Finally, the fact 
that  there  are  less  stringent  rules  on  access  to  funding  outside  resolution  than  in 
resolution  has  discouraged  the  application  of  the  Union  resolution  framework  in 
favour of other solutions, which often entail the use of taxpayers’ money instead of the 
own resources of the institution or entity or industry-funded safety nets. That situation 
in  turn  generates  risks  of  fragmentation,  risks  of  suboptimal  outcomes  in  managing 
institutions and entities’ failures, in particular in the case of smaller and medium-sized 
institutions  and  entities,  and  opportunity  costs  from  unused  financial  resources.  It  is 
therefore necessary to ensure a more effective and coherent  application of the Union 
resolution  framework  and  to  ensure  that  it  can  be  applied  whenever  that  is  in  the 
public  interest,  including  for  smaller  and  medium-sized  institutions  primarily  funded 
through deposits and without sufficient other bail-inable liabilities. 

Pursuant  to  Article  4  of  Regulation  (EU)  No 806/2014,  Member  States  which  have 
established  a  close  cooperation  between  the  European  Central  Bank  (ECB)  and  the 
respective  national  competent  authorities  are  to  be  considered  participant  Member 
States  for  the  purposes  of  that  Regulation.  However,  Regulation  (EU)  No  806/2014 
does  not  contain  any  details  on  the  process  for  preparing  the  start  of  the  close 
cooperation  on  resolution-related  tasks.  It  is  therefore  appropriate  to  lay  down  those 
details. 

The intensity, and level of detail, of the resolution planning work needed with respect 
to subsidiaries that have not been identified as resolution entities varies depending on 
the  size  and  risk  profile  of  the  institutions  and  entities  concerned,  the  presence  of 
critical functions, and the group resolution strategy. The Single Resolution Board (the 
‘Board’)  should  therefore  be  able  to  consider  those  factors  when  identifying  the 
measures to be taken in respect of such subsidiaries and follow a simplified approach 
where appropriate. 

An  institution  or  entity  that  is  being  wound  up  under  national  law,  following  a 
determination that the institution or entity is  failing or likely to fail and a conclusion 
by  the  Board  that  its  resolution  is  not  in  the  public  interest,  is  ultimately  heading 
towards market exit. That implies that a plan for actions to be taken in case of failure 
is not needed, irrespective of whether the competent authority has already withdrawn 

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(6) 

(7) 

the authorisation of the institution or entity concerned. The same applies for a residual 
institution  under  resolution  after  the  transfer  of  assets,  rights,  and  liabilities  in  the 
context  of  a  transfer  strategy.  It  is  therefore  appropriate  to  specify  that  in  those 
situations, the adoption of resolution plans is not required. 

the  existing  procedures  for 

legal  certainty  and  alignment  with 

The  Board  may  currently  prohibit  certain  distributions  where  an  institution  or  entity 
fails  to  meet  the  combined  buffer  requirement  when  considered  in  addition  to  the 
minimum  requirement  for  own  funds  and  eligible  liabilities  (‘MREL’).  However,  to 
ensure 
the 
implementation of decisions taken by the Board, it is necessary to specify more clearly 
the  roles  of  the  authorities  involved  in  the  process  for  prohibiting  distributions.  It  is 
therefore  appropriate  to  lay  down  that  the  Board  should  address  an  instruction  to 
prohibit  such  distributions  to  the  national  resolution  authority,  which  should 
implement  the  Board’s  decision.  In  addition,  in  certain  situations,  an  institution  or 
entity might be required to comply with the MREL on a different basis than the basis 
on  which  that  institution  or  entity  is  required  to  comply  with  the  combined  buffer 
requirement. That situation creates uncertainties as to the conditions for the exercise of 
the Board’s  powers to  prohibit distributions and for the calculation  of the Maximum 
Distributable Amount related to MREL. It should therefore be laid down that, in those 
cases,  the  Board  should  instruct  national  resolution  authorities  to  prohibit  certain 
distributions based on the estimate of the combined buffer requirement resulting from 
Commission  Delegated  Regulation  (EU)  2021/111827.  To  ensure  transparency  and 
legal  certainty,  the  Board  should  communicate  the  estimated  combined  buffer 
requirement  to  the  institution  or  entity,  which  should  then  publicly  disclose  that 
estimated combined buffer requirement. 

Directive  2014/59/EU  and  Regulation  (EU)  No  575/2013  lay  down  powers  to  be 
exercised by resolution authorities, some of which are not included in Regulation (EU) 
No  806/2014.  In  the  Single  Resolution  Mechanism,  this  can  create  uncertainty  as  to 
who should exercise those powers and in what conditions they should be exercised. It 
is  therefore  necessary  to  specify  how  national  resolution  authorities  should  exercise 
certain powers set out only in Directive 2014/59/EU in relation to entities and groups 
that fall under the direct responsibility of the Board. In those cases, the Board should 
be able, where it deems necessary, to instruct national resolution authorities to exercise 
those  powers.  In  particular,  the  Board  should  be  able  to  instruct  national  resolution 
authorities  to  require  an  institution  or  entity  to  maintain  detailed  records  of  the 
financial contracts to which the institution or entity is a party, or to apply the power to 
suspend some  financial  obligations pursuant  to  Article 33a of Directive  2014/59/EU. 
However, given that the permissions for the reduction of eligible liabilities instruments 
laid  down  in  Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the 
Council28, which is also applicable to institutions and entities and liabilities subject to 
the MREL, do not require the application of national legislation, the Board should be 

27 

28 

Commission  Delegated  Regulation  (EU)  2021/1118  of  26  March  2021  supplementing  Directive 
2014/59/EU  of  the  European  Parliament  and  of  the  Council  with  regard  to  regulatory  technical 
standards specifying the methodology to be  used by resolution authorities to estimate the requirement 
referred to in Article 104a of Directive 2013/36/EU of the European Parliament and of the Council and 
the combined buffer requirement for resolution entities at the resolution group consolidated level where 
the resolution group is not subject to those requirements under that Directive (OJ L 241, 8.7.2021, p. 1). 
Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on 
prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 
648/2012 (OJ L 176, 27.6.2013, p. 1). 

EN 

22 

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(8) 

(9) 

able  to  grant  those  permissions  to  institutions  or  entities  directly,  without  having  to 
instruct national resolution authorities to exercise that power. 
Regulation  (EU)  2019/876  of  the  European  Parliament  and  of  the  Council29, 
Regulation  (EU)  2019/877  of  the  European  Parliament  and  of  the  Council30  and 
Directive  (EU)  2019/879  of  the  European  Parliament  and  of  the  Council31 
implemented  in  Union law the international ‘Total  Loss-absorbing Capacity (TLAC) 
Term  Sheet’,  published  by  the  Financial  Stability  Board  on  9  November  2015  (the 
‘TLAC standard’), for global  systemically important  banks, referred to  in  Union  law 
as global systemically important institutions (G-SIIs). Regulation (EU) 2019/877 and 
Directive  (EU)  2019/879  also  amended  the  MREL  set  out  in  Directive  2014/59/EU 
and  in  Regulation  (EU)  No  806/2014.  It  is  necessary  to  align  the  provisions  in 
Regulation  (EU)  No  806/2014  on  the  MREL  with  the  implementation  of  the  TLAC 
standard for G-SIIs with respect to certain liabilities that could be used to meet the part 
of the MREL that should be met with own funds and other subordinated liabilities. In 
particular,  liabilities  that  rank  pari  passu  with  certain  excluded  liabilities  should  be 
included in the own funds and subordinated eligible instruments of resolution entities 
where the  amount of those excluded liabilities on the balance sheet  of the resolution 
entity does not exceed 5% of the amount of the own funds and eligible liabilities of the 
resolution entity and no risks related to the ‘no creditor worse off’ principle arise from 
that inclusion.  

The  rules  for  determining  the  MREL  are  mostly  focused  on  setting  the  appropriate 
level of the MREL with the assumption of the bail-in tool as the preferred resolution 
strategy.  However,  Regulation  (EU)  No  806/2014  allows  the  Board  to  use  other 
resolution tools, namely those relying on the transfer of the business of the institution 
under resolution to a private purchaser or to a bridge institution. It should therefore be 
specified that, in case the resolution plan envisages the use of the sale of business tool 
or  of  the  bridge  institution  tool  and  the  resolution  entity’s  exit  from  the  market,  the 
Board should determine the level of the MREL for the resolution entity concerned on 
the  basis  of  the  specificities  of  those  resolution  tools  and  of  the  different  loss-
absorbing and recapitalisation needs those tools entail. 

(10)  The level of the MREL for resolution entities is the sum of the amount of the losses 
expected  in  resolution  and  the  recapitalisation  amount  that  enables  the  resolution 
entity  to  continue  to  comply  with  its  conditions  for  authorisation  and  enabling  it  to 
pursue  its  activities  for  an  appropriate  period.  Certain  preferred  resolution  strategies 
entail  the  transfer  of  assets,  rights  and  liabilities  to  a  recipient  and  market  exit,  in 
particular  the  sale  of  business  tool.  In  those  cases,  the  objectives  pursued  by  the 
recapitalisation  component  might  not  apply  to  the  same  extent  as  in  the  case  of  an 
open-bank bail-in  strategy, because  the  Board will not  be required to  ensure that the 

29 

30 

31 

Regulation (EU) 2019/876 of the European Parliament and of the  Council of 20 May 2019 amending 
Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements 
for  own  funds  and  eligible  liabilities,  counterparty  credit  risk,  market  risk,  exposures  to  central 
counterparties,  exposures  to  collective  investment  undertakings,  large  exposures,  reporting  and 
disclosure requirements, and Regulation (EU) No 648/2012 (OJ L 150, 7.6.2019, p. 1). 
Regulation (EU) 2019/877 of the European Parliament and of the Council of 20 May 2019 amending 
Regulation  (EU)  No  806/2014  as  regards  the  loss-absorbing  and  recapitalisation  capacity  of  credit 
institutions and investment firms (OJ L 150, 7.6.2019, p. 226). 
Directive  (EU)  2019/879  of  the  European  Parliament  and  of  the  Council  of  20  May  2019  amending 
Directive  2014/59/EU  as  regards  the  loss-absorbing  and  recapitalisation  capacity  of  credit  institutions 
and investment firms and Directive 98/26/EC (OJ L 150, 7.6.2019, p. 296). 

EN 

23 

  EN 

                                                 
resolution entity restores compliance with its own funds requirements after resolution 
action.  Nevertheless,  the  losses  in  such  cases  are  expected  to  exceed  the  resolution 
entity’s own funds requirements. It is therefore appropriate to lay down that the level 
of the MREL of those resolution entities continues to include a recapitalisation amount 
that is adjusted in a way which is proportionate to the resolution strategy. 

(11)  Where the resolution strategy envisages the use of resolution tools other than bail-in, 
the  recapitalisation  needs  of  the  entity  concerned  will  generally  be  smaller  after 
resolution  than  in  case  of  open  bank  bail-in.  The  calibration  of  the  MREL  in  such  a 
case  should  take  that  aspect  into  account  when  estimating  the  recapitalisation 
requirement. Therefore, when adjusting the level of the MREL for resolution entities 
the resolution plan of which envisages the sale of business tool or the bridge institution 
tool  and  its  exit  from  the  market,  the  Board  should  take  into  account  the  features  of 
those tools, including the expected perimeter of the transfer to the private purchaser or 
to the bridge institution, the types of instruments to be transferred, the expected value 
and  marketability  of  those  instruments,  and  the  design  of  the  preferred  resolution 
strategy,  including  the  complementary  use  of  the  asset  separation  tool.  Since  the 
resolution  authority  has  to  decide  on  a  case  by  case  basis  on  any  possible  use  in 
resolution of funds from the deposit guarantee scheme and since such decision cannot 
be  assumed  with  certainty  ex  ante,  the  Board  should  not  consider  the  potential 
contribution of the deposit guarantee scheme (in resolution when calibrating the level 
of the MREL. 

(12) 

It  is  necessary  to  ensure  equal  incentives  to  build  sufficient  amounts  of  MREL  for 
institutions and entities that would be subject to transfer strategies both in and outside 
resolution. The setting of the level of the MREL for institutions and entities that may 
be subject  to  measures in the context  of national  insolvency proceedings  pursuant  to 
Article  11(5)  of  Directive  2014/49/EU  of  the  European  Parliament  and  of  the 
Council32 should therefore follow the same rules as those applicable to the setting of 
the MREL for resolution entities whose preferred resolution strategy provides for the 
sale of business or transfer to a bridge institution leading to its exit from the market. 

(13)  Pursuant  to  Article  4  of  Council  Regulation  (EU)  No  1024/201333,  the  ECB  is 
competent  to  carry  out  supervisory  tasks  in  relation  to  early  intervention.  It  is 
necessary  to  reduce  the  risks  stemming  from  diverging  transpositions  into  national 
laws of the early intervention measures in Directive 2014/59/EU and to facilitate the 
effective and consistent application by the ECB of its powers to take early intervention 
measures.  Those  early  intervention  measures  were  created  to  enable  competent 
authorities  to  remedy  the  deterioration  of  the  financial  and  economic  situation  of  an 
institution  or  entity  and  to  reduce,  to  the  extent  possible,  the  risk  and  impact  of  a 
possible resolution. However, due to a lack of certainty regarding the triggers for the 
application of those early intervention measures and partial overlaps with supervisory 
measures,  early  intervention  measures  have  seldom  been  used.  The  provisions  of 
Directive  2014/59/EU  concerning  early  intervention  measures  should  therefore  be 
mirrored  in  Regulation  (EU)  No 806/2014,  thereby  ensuring  a  single  and  directly 
applicable legal tool for the ECB, and the conditions for the application of those early 

32 

33 

Directive  2014/49/EU  of  the  European  Parliament  and  of  the  Council  of  16  April  2014  on  deposit 
guarantee schemes (OJ L 173, 12.6.2014, p. 149). 
Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European 
Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 
29.10.2013, p. 63). 

EN 

24 

  EN 

                                                 
(14) 

(15) 

intervention  measures  should  be  simplified  and  further  specified.  To  dispel 
uncertainties concerning the conditions and timing for the removal of the management 
body  and  the  appointment  of  temporary  administrators,  those  measures  should  be 
explicitly  identified  as  early  intervention  measures  and  their  application  should  be 
subject  to  the same triggers.  At the same time, the ECB should be required to  select 
the  appropriate  measures  to  address  a  specific  situation  in  compliance  with  the 
principle of proportionality. To enable the ECB to take into account reputational risks 
or  risks  related  to  money  laundering  or  information  and  communication  technology, 
the  ECB  should  assess  the  conditions  for  the  application  of  early  intervention 
measures not only on the basis of quantitative indicators, including capital or liquidity 
requirements, level  of leverage, non-performing loans  or concentration of exposures, 
but also on the basis of qualitative triggers. 

It is necessary to ensure that the Board is able to prepare for the possible resolution of 
an institution or entity.  The ECB or the relevant national competent authority  should 
therefore  inform  the  Board  of  the  deterioration  of  the  financial  condition  of  an 
institution or entity sufficiently early, and the Board should have the necessary powers 
for  the  implementation  of  preparatory  measures.  Importantly,  to  enable  the  Board  to 
react as swiftly as possible to a deterioration of the situation of an institution or entity, 
the prior application of early intervention measures should not be a condition for the 
Board to make arrangements for the marketing of the institution or entity or to request 
information  to  update  the  resolution  plan  and  prepare  the  valuation.  To  ensure  a 
consistent,  coordinated,  effective  and  timely  reaction  to  the  deterioration  of  the 
financial  situation  of  an  institution  or  entity  and  to  prepare  properly  for  a  possible 
resolution,  it  is  necessary  to  enhance  the  interaction  and  coordination  between  the 
ECB,  the  national  competent  authorities  and  the  Board.  As  soon  as  an  institution  or 
entity  meets  the  conditions  for  application  of  early  intervention  measures,  the  ECB, 
the  national  competent  authorities  and  the  Board  should  increase  their  exchanges  of 
information, including provisional information, and monitor  the financial situation of 
the institution or entity jointly. 

It is necessary to ensure timely action and early coordination between the Board and 
the ECB, or the relevant national competent authority, with respect to less significant 
cross-border  groups  when  an  institution  or  entity  is  still  a  going  concern  but  where 
there is a material risk that that institution or entity may fail. The ECB or the relevant 
national competent authority should therefore notify the Board as early as possible of 
such risk. That notification should contain the reasons for the assessment of the ECB 
or  of  the  relevant  national  competent  authority  and  an  overview  of  the  alternative 
private  sector  measures,  supervisory  action  or  early  intervention  measures  that  are 
available  to  prevent  the  failure  of  the  institution  or  entity  within  a  reasonable 
timeframe.  Such  early  notification  should  not  prejudice  the  procedures  to  determine 
whether the conditions for resolution are met. The prior notification by the ECB or by 
the  relevant  national  competent  authority  to  the  Board  of  a  material  risk  that  an 
institution or entity is failing or likely to fail should not be a condition for a subsequent 
determination that an institution or entity is actually failing or likely to fail. Moreover, 
if at a later stage the institution or entity is assessed to be failing or likely to fail and 
there  are  no  alternative  solutions  to  prevent  such  failure  within  a  reasonable 
timeframe, the Board has to take a decision whether to take resolution action. In such a 
case, the timeliness of the decision to apply resolution action to an institution or entity 
can  be  fundamental  to  the  successful  implementation  of  the  resolution  strategy,  in 
particular because an earlier intervention in the institution or entity can contribute to 
ensuring  sufficient  levels  of  loss  absorption  capacity  and  liquidity  to  execute  that 

EN 

25 

  EN 

strategy. It is therefore appropriate to enable the Board to assess, in close cooperation 
with  the  ECB  or  the  relevant  national  competent  authority,  what  constitutes  a 
reasonable  timeframe  to  implement  alternative  measures  to  avoid  the  failure  of  the 
institution  or  entity.  To  ensure  a  timely  outcome  and  to  enable  the  Board  to  prepare 
properly for the potential resolution of the institution or entity, the Board and the ECB, 
or  the  relevant  national  competent  authority,  should  meet  regularly,  and  the  Board 
should decide on the frequency of those meetings considering the circumstances of the 
case. 

(16)  To cover material infringements of prudential requirements, it is necessary to further 
specify  the  conditions  for  determining  that  parent  undertakings,  including  holding 
companies,  are  failing  or  likely  to  fail.  An  infringement  of  those  requirements  by  a 
parent undertaking should be material where the type and extent of such infringement 
is  comparable  with  an  infringement  that,  if  committed  by  a  credit  institution,  would 
have  justified  the  withdrawal  of  the  authorisation  by  the  competent  authority  in 
accordance with Article 18 of Directive 2013/36/EU. 

(17)  The  resolution  framework  is  meant  to  be  applied  to  potentially  any  institution  or 
entity, irrespective of its size and business model, if the tools available under national 
law  are  not  adequate  to  manage  its  failure.  To  ensure  such  outcome,  the  criteria  to 
apply  the  public  interest  assessment  to  a  failing  institution  or  entity  should  be 
specified.  

(18)  The  assessment  of  whether  the  resolution  of  an  institution  or  entity  is  in  the  public 
interest  should  reflect  the  consideration  that  depositors  are  better  protected  when 
deposit  guarantee  scheme  funds  are  used  more  efficiently  and  the  losses  for  those 
funds  are  minimised.  Therefore,  in  the  public  interest  assessment,  the  resolution 
objective of protecting depositors should be considered better achieved in resolution if 
opting for insolvency would be more costly for the deposit guarantee scheme. 

(19)  The  assessment  of  whether  the  resolution  of  an  institution  or  entity  is  in  the  public 
interest should also reflect, to the extent possible, the difference between, on the one 
hand,  funding  provided  through  industry-funded  safety  nets  (resolution  financing 
arrangements or deposit guarantee schemes) and, on the other hand, funding provided 
by Member States from taxpayers’ money. Funding provided by Member States bears 
a higher risk of moral hazard and a lower incentive for market discipline. Therefore, 
when assessing the objective of minimising reliance on extraordinary public financial 
support, the Board should find funding through the resolution financing arrangements 
or  the  deposit  guarantee  scheme,  preferable  to  funding  through  an  equal  amount  of 
resources from the budget of Member States. 

(20)  To  ensure  that  the  resolution  objectives  are  attained  in  the  most  effective  way,  the 
outcome of the public interest assessment should be negative only where the winding 
up  of  the  failing  institution  or  entity  under  normal  insolvency  proceedings  would 
achieve the resolution objectives more effectively and not only to the same extent as 
resolution. 

(21) 

In  light  of  the  experience  acquired  in  the  implementation  of  Directive  2014/59/EU, 
Regulation  (EU)  No  806/2014  and  Directive  2014/49/EU,  it  is  necessary  to  specify 
further the conditions under which measures of a precautionary nature that qualify as 
extraordinary  public  financial  support  may  exceptionally  be  granted.  To  minimise 
distortions  of  competition  arising  from  differences  in  nature  of  deposit  guarantee 
schemes  in  the  Union,  interventions  of  such  schemes  in  the  context  of  preventive 
measures  complying  with  the  requirements  laid  down  in  Directive  2014/49/EU  that 

EN 

26 

  EN 

qualify  as  extraordinary  public  financial  support  should  exceptionally  be  allowed 
where  the  beneficiary  institution  or  entity  does  not  meet  any  of  the  conditions  for 
being  deemed  as  failing  or  likely  to  fail.  It  should  be  ensured  that  precautionary 
measures  are  taken  sufficiently early.  The ECB  currently bases its  consideration that 
an institution or entity is solvent, for the purposes of precautionary recapitalisation, on 
a forward-looking assessment for the following 12 months of whether the institution or 
entity  can  comply  with  the  own  funds  requirements  set  out  in  Regulation  (EU)  No 
575/2013 or in Regulation (EU) 2019/2033, and the additional own funds requirement 
laid down in Directive 2013/36/EU or Directive (EU) 2019/2034. That practice should 
be laid down in Regulation (EU) No 806/2014. Moreover, measures to provide relief 
for impaired assets, including asset management vehicles or asset guarantee schemes, 
can  prove  effective  and  efficient  in  addressing  causes  of  possible  financial  distress 
faced  by  institutions  and  entities  and  preventing  their  failure  and  could  therefore 
constitute relevant  precautionary measures.  It should therefore  be specified  that such 
precautionary measures can take the form of impaired asset measures. 

(22)  To  preserve  market  discipline,  protect  public  funds  and  avoid  distortions  of 
competition, precautionary measures should remain the exception and only be applied 
to  address  serious  disturbances  in  the  market  or  to  preserve  financial  stability. 
Moreover,  precautionary  measures  should  not  be  used  to  address  incurred  or  likely 
losses. The most reliable instrument to identify incurred or likely to be incurred losses 
is an asset quality review by the ECB, the European Supervisory Authority (European 
Banking  Authority)  (EBA),  established  by  Regulation  (EU)  No  1093/2010  of  the 
European Parliament and of the Council34 or national competent authorities. The ECB 
and  national  competent  authorities  should  use  such  a  review  to  identify  incurred  or 
likely  to  be  incurred  losses  if  such  review  can  be  carried  out  within  a  reasonable 
timeframe.  Where  that  is  not  possible,  the  ECB  and  national  competent  authorities 
should  identify  incurred  or  likely  to  be  incurred  losses  in  the  most  reliable  way 
possible  under  the  prevailing  circumstances,  based  on  on-site  inspections  where 
appropriate. 

(23)  Precautionary  recapitalisation  is  aimed  at  supporting  viable  institutions  and  entities 
identified as likely to encounter temporary difficulties in the near future and to prevent 
their situation from deteriorating further. To avoid that public subsidies are granted to 
businesses  that  are  already  unprofitable  when  the  support  is  granted,  precautionary 
measures granted in the form of acquisition of own funds instruments or other capital 
instruments  or  through  impaired  asset  measures  should  not  exceed  the  amount 
necessary to cover capital shortfalls as identified in the adverse scenario of a stress test 
or  equivalent  exercise.  To  ensure  that  public  financing  is  ultimately  discontinued, 
those  precautionary  measures  should  also  be  limited  in  time  and  contain  a  clear 
timeline  for  their  termination  (exit  strategy).  Perpetual  instruments,  including 
Common Equity Tier 1 capital, should only be used in exceptional circumstances and 
be subject to certain quantitative limits because by their nature they are not well suited 
for compliance with the condition of temporariness. 

(24)  Precautionary  measures  should be limited to  the  amount that  the institution or entity 
would need to maintain its solvency in case of an adverse scenario event as determined 
in  a  stress  test  or  equivalent  exercise.  In  the  case  of  precautionary  measures  in  the 

34 

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

EN 

27 

  EN 

                                                 
form of impaired asset measures, the receiving institution or entity  should be able to 
use  that  amount  to  cover  losses  on  the  transferred  assets  or  in  combination  with  an 
acquisition  of  capital  instruments,  provided  that  the  overall  amount  of  the  shortfall 
identified  is  not  exceeded.  It  is  also  necessary  to  ensure  that  such  precautionary 
measures in the form of impaired asset measures comply with existing State aid rules 
and best practices, that they  restore the institution or entity's long-term viability, that 
State aid is limited to the minimum necessary and that distortions of competition are 
avoided. For those reasons, the authorities concerned should, in case of precautionary 
measures  in  the  form  of  impaired  asset  measures,  take  into  account  the  specific 
guidance,  including  the  AMC  Blueprint35  and  the Communication  on  Tackling  Non-
Performing  Loans36.  Those  precautionary  measures  in  the  form  of  impaired  asset 
measures should also always be subject to the overriding condition of temporariness. 
Public  guarantees  granted  for  a  specified  period  in  relation  to  the  impaired  assets  of 
the  institution  or  entity  concerned  are  expected  to  ensure  better  compliance  with  the 
temporariness condition than transfers of such assets to a publicly supported entity. To 
ensure the market  exit of  institutions  and  entities that prove not to  be viable,  despite 
the support received, it is necessary to lay down that non-compliance by the institution 
or entity concerned with the terms of the support measures specified at the time such 
measures  were  granted  is  to  result  in  the  institution  or  entity  concerned  being 
considered failing or likely to fail. 

It  is  important  to  ensure swift and timely  resolution  action by the Board  where such 
action involves the granting of State aid or Fund aid. It is therefore necessary to enable 
the  Board  to  adopt  the  resolution  scheme  concerned  before  the  Commission  has 
assessed whether such aid is compatible with the internal market. However, to ensure 
the  good  functioning  of  the  internal  market  in  such  a  scenario,  resolution  schemes 
involving the granting of State aid or Fund aid should ultimately remain subject to the 
Commission  approving  such  aid.  To  enable  the  Commission  to  assess  as  early  as 
practicable whether the Fund aid is compatible with the single market, and to ensure a 
smooth  flow  of  information,  it  is  also  necessary  to  lay  down  that  the  Board  and  the 
Commission  should  promptly  share  all  information  necessary  regarding  the  possible 
use  of  Fund  aid  and  to  provide  for  specific  rules  on  when  and  what  information  the 
Board  should  provide  to  the  Commission  in  order  to  inform  the  Commission’s 
assessment of Fund aid compatibility. 

(25) 

(26)  The  procedure  governing  the  entry  into  resolution  and  the  procedure  governing  the 
decision  to  apply  the  write  down  and  conversion  powers  are  similar.  It  is  therefore 
appropriate  to  align  the  respective  tasks  of  the  Board  and  of  either  the  ECB  or  the 
national competent authority, as relevant, when, on the one hand, they assess whether 
the  conditions  for  the  application  of  the  write  down  and  conversion  powers  are 
present,  and,  on  the  other  hand,  when  they  assess  the  conditions  for  adopting  a 
resolution scheme.  

(27) 

It  is  possible  that  resolution  action  is  to  be  applied  to  a  resolution  entity  that  is  the 
head of a resolution group, while write down and conversion powers are to be applied 
to  another  entity  of  the  same  group.  Interdependencies  between  such  entities, 
including  the  existence  of  consolidated  capital  requirements  to  be  restored  and  the 
need  to  activate  loss  upstream  and  capital  downstream  mechanisms,  may  make  it 
challenging  to  assess  the  loss  absorption  and  recapitalisation  needs  for  each  entity 

35 
36 

COM(2018) 133 final. 
COM(2020) 822 final. 

EN 

28 

  EN 

                                                 
separately,  and  thus  to  determine  the  necessary  amounts  to  be  written  down  and 
converted  for  each  entity.  The  procedure  for  the  application  of  the  power  to  write 
down and convert capital instruments and eligible liabilities in those situations should 
therefore  be  specified,  whereby  the  Board  should  take  such  interdependencies  into 
account. For that purpose, where one entity meets the conditions for the application of 
the write down and conversion power and another entity within the same group meets 
at  the  same  time  the  conditions  for  resolution,  the  Board  should  adopt  a  resolution 
scheme covering both entities. 

(28)  To increase legal certainty, and in view of the potential relevance of liabilities which 
may arise from future uncertain events, including the outcome of litigations pending at 
the  time  of  resolution,  it  is  necessary  to  lay  down  which  treatment  those  liabilities 
should  receive  for  the  application  of  the  bail-in  tool.  The  guiding  principles  in  that 
respect  should  be  those  provided  in  the  accounting  rules,  and  particularly  the 
accounting rules laid down in the International Accounting Standard 37 as adopted by 
Commission  Regulation  (EC)  No 1126/200837.  On  that  basis,  resolution  authorities 
should draw a distinction between provisions and contingent liabilities. Provisions are 
liabilities  that  relate  to  a  probable  outflow  of  funds  and  which  can  be  reliably 
estimated.  Contingent  liabilities  are  not  recognised  as  accounting  liabilities  as  they 
relate to an obligation which cannot be considered probable at the time of the estimate 
or cannot be reliably estimated. 

(29)  Since provisions are accounting liabilities, it should be  specified that such provisions 
are  to  be  treated  the  same  way  as  other  liabilities.  Such  provisions  should  be  bail-
inable, unless they meet one of the specific criteria for being excluded from the scope 
of the bail-in tool. Given the potential relevance of those provisions in resolution and 
to  ensure  certainty  in  the  application  of  the  bail-in  tool,  it  should  be  specified  that 
provisions  are  part  of  the  bail-inable  liabilities  and  that,  as  a  result,  the  bail-in  tool 
applies to them.  

(30)  According  to  accounting  principles,  contingent  liabilities  cannot  be  recognised  as 
liabilities  and  should  therefore  not  be  bail-inable.  It  is  however  necessary  to  ensure 
that a contingent liability that would arise from an event that is improbable or cannot 
be reliably estimated at the time of resolution does not impair the effectiveness of the 
resolution strategy and in particular of the bail-in tool. To achieve that objective, the 
valuer should, as part of the valuation for the purposes of resolution, assess contingent 
liabilities  that  are  included  in  the  balance  sheet  of  the  institution  or  entity  under 
resolution  and  quantify  the  potential  value  of  those  liabilities  to  the  valuer’s  best 
abilities.  To  ensure  that,  after  the  resolution  process,  the  institution  or  entity  can 
sustain  sufficient  market  confidence  for  an  appropriate  amount  of  time,  the  valuer 
should take into account that potential value when establishing the amount by which 
bail-inable liabilities need to be written down or converted to restore the capital ratios 
of the institution under resolution. In particular, the resolution authority should apply 
its conversion powers to bail-inable liabilities to the extent necessary to ensure that the 
recapitalisation of the institution under resolution is sufficient to cover potential losses 
which  may  be  caused  by  a  liability  that  may  arise  because  of  an  improbable  event. 
When assessing the amount to be written down or converted, the resolution authority 
should  carefully  consider  the  impact  of  the  potential  loss  on  the  institution  under 

37 

Commission  Regulation  (EC)  No  1126/2008  of  3  November  2008  adopting  certain  international 
accounting  standards  in  accordance  with  Regulation  (EC)  No  1606/2002  of  the  European  Parliament 
and of the Council (OJ L 320, 29.11.2008, p. 1). 

EN 

29 

  EN 

                                                 
resolution  based  on  a  number  of  factors,  including  the  likelihood  of  the  event 
materialising, the time frame for its materialisation and the amount of the contingent 
liability. 

(31) 

In certain circumstances, after the Single Resolution Fund has provided a contribution 
up to the maximum of 5 % of the institution or entity’s total liabilities including own 
funds,  the  Board  may  use  additional  sources  of  funding  to  further  support  their 
resolution  action.  It  should  be  specified  more  clearly  in  which  circumstances  the 
Single Resolution Fund may provide further support where all liabilities with a priority 
ranking lower than deposits that are not mandatorily or discretionarily excluded from 
bail-in have been written down or converted in full. 

(32)  The  success  of  resolution  hinges  on  timely  access  for  the  Board  to  relevant 
information  from  the  institutions  and  entities  that  fall  under  the  responsibility  of  the 
Board  and  from  public  institutions  and  authorities.  Within  that  context,  the  Board 
should  be  able  to  access  information  of  a  statistical  nature  which  the  ECB  collected 
under its central bank function, in addition to the information available to the ECB as a 
supervisor  within  the  framework  of  Regulation  (EU)  No 1024/2013.  Pursuant  to 
Council  Regulation  (EC)  No  2533/9838,  the  Board  should  ensure  the  physical  and 
logical  protection  of  confidential  statistical 
information  and  should  require 
authorisation  to  the  ECB  for  the  further  transmission  that  may  be  necessary  for  the 
execution of the tasks of the Board. As information related to the number of customers 
for which an institution or entity is the only or principal banking partner, which is held 
by the centralised automated mechanisms set up pursuant to Directive (EU) 2015/849 
of  the  European  Parliament  and  of  the  Council39,  may  be  necessary  to  carry  out  the 
public interest assessment, the Board should be able to  receive that information on a 
case-by-case  basis.  The  exact  timing  of  indirect  access  to  information  by  the  Board 
should also be specified. In particular, when the relevant information is available to an 
institution or authority which is obliged to cooperate with the Board when the Board 
requests information, such  institution or authority  should  provide  that information to 
the Board. If, at that time, the information is not available, irrespective of the reason 
for  this  unavailability,  the  Board  should  be  able  to  obtain  that  information  from  the 
natural  or  legal  person  that  has  that  information  through  the  national  resolution 
authorities  or  directly,  after  having  informed  those  national  resolution  authorities 
thereof.  It  should  also  be  possible  for  the  Board  to  specify  the  procedure  under,  and 
the form in which it should receive information from financial entities to ensure that 
such  information  is  the  most  suited  to  its  needs,  including  virtual  data  rooms.  In 
addition,  to  ensure  the  broadest  cooperation  possible  with  all  entities  susceptible  of 
holding  data  relevant  to  the  Board,  and  necessary  for  the  performance  of  the  tasks 
conferred on it, and to avoid duplicating requests to institutions and entities, the public 
institutions  and  authorities  with  which  the  Board  should  be  able  to  cooperate,  check 
the availability of information and exchange information, should include the members 
of the European System of Central Banks, the relevant DGSs, the European Systemic 
Risk  Board,  the  European  Supervisory  Authorities  and  the  European  Stability 

38 

39 

Council  Regulation  (EC)  No  2533/98  of  23  November  1998  concerning  the  collection  of  statistical 
information by the European Central Bank (OJ L 318, 27.11.1998, p.8). 
Directive  (EU)  2015/849  of  the  European  Parliament  and  of  the  Council  of  20  May  2015  on  the 
prevention  of  the  use  of  the  financial  system  for  the  purposes  of  money  laundering  or  terrorist 
financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and 
repealing  Directive  2005/60/EC  of  the  European  Parliament  and  of  the  Council  and  Commission 
Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73). 

EN 

30 

  EN 

                                                 
Mechanism.  Finally,  to  ensure  a  timely  intervention  of  financial  arrangements 
contracted for the Single Resolution Fund in case of need, the Board should inform the 
Commission and the ECB as soon as it considers that it may be necessary to activate 
such  financial  arrangements  and  provide  the  Commission  and  the  ECB  with  all 
information  necessary  for  the  performance  of  their  tasks  in  respect  of  such  financial 
arrangements. 

(33)  Article 86(1) of Directive 2014/59/EU provides that normal insolvency proceedings in 
relation  to  institutions  and  entities  within  the  scope  of  that  Directive  are  not  to  be 
commenced  except  at  the  initiative  of  the  resolution  authority  and  that  a  decision 
placing  an  institution  or  an  entity  into  normal  insolvency  proceedings  is  to  be  taken 
only  with  the  consent  of  the  resolution  authority.  That  provision  is  not  reflected  in 
Regulation  (EU)  No 806/2014.  In  line  with  the  division  of  tasks  specified  in 
Regulation (EU) No 806/2014, national resolution authorities should consult the Board 
before  they  act  in  accordance  with  Article  86(1)  of  Directive  2014/59/EU  for 
institutions and entities that are under the direct responsibility of the Board. 

(34)  The selection criteria for the position of the Vice-Chair of the Board are the same as 
those  for  the  selection  of  the  Chair  and  other  full-time  members  of  the  Board.  It  is 
therefore appropriate to provide also the Vice-Chair of the Board with the same voting 
rights as those enjoyed by the Chair and the full-time members of the Board. 

(35) 

In  order  to  ensure  institutional  continuity  and  the  build-up  of  institutional  expertise, 
the  Chair,  the  Vice-Chair  and  the  other  full-time  members  of  the  Board  should  be 
allowed  to  serve  for  two  consecutive  terms  in  their  respective  positions.  It  should 
therefore  be  possible  to  renew  their  term  of  office  for  a  five-year  term,  based  on  an 
evaluation by the Commission of the discharge of their duties during the first term. 

(36)  To allow for a preliminary assessment by the Board in its plenary session of the draft 
preliminary budget before the Chair presents its final draft, the period for the Chair to 
put forward an initial proposal for the annual budget of the Board should be extended. 

(37)  After  the  initial  build-up  period  of  the  Single  Resolution  Fund  referred  to  in 
Article 69(1) of Regulation (EU) No 806/2014, its available financial means may face 
slight  decreases  below  its  target  level,  in  particular  resulting  from  an  increase  in 
covered deposits. The amount of the ex-ante contributions likely to be called in those 
circumstances  is  thus  likely  to  be  small.  It  may  therefore  be  possible  that,  in  some 
years, the amount of those ex ante contributions is no longer commensurate to the cost 
of  the  collection  of  those  contributions.  The  Board  should  therefore  be  able  to  defer 
the collection of the ex ante contributions for one or more years until the amount to be 
collected reaches an amount that is proportionate to the cost of the collection process, 
provided that such deferral does not materially affect the capacity of the Board to use 
the Single Resolution Fund. 

(38) 

Irrevocable  payment  commitments  are  one  of  the  components  of  the  available 
financial means of the Single Resolution Fund. It is therefore necessary to specify the 
circumstances in which those payment commitments may be called, and the applicable 
procedure when terminating the commitments in case an institution or entity ceases to 
be  subject  to  the  obligation  to  pay  contributions  to  the  Single  Resolution  Fund.  In 
addition,  to  provide  more  transparency  and  certainty  with  respect  to  the  share  of 
irrevocable payment  commitments in  the total  amount of  ex ante  contributions to  be 
raised,  the  Board  should  determine  such  share  on  an  annual  basis,  subject  to  the 
applicable limits. 

EN 

31 

  EN 

(39)  The  maximum  annual  amount  of  extraordinary  post  contributions  to  the  Single 
Resolution  Fund  that are allowed to  be called, is currently  limited to  three times  the 
amount  of  the  ex  ante  contributions.  After  the  initial  build-up  period  referred  to  in 
Article 69(1) of Regulation (EU) No 806/2014, such ex ante contributions will depend 
only, in circumstances other than the use of the Single Resolution Fund, on variations 
in the level of  covered deposits and are therefore likely to become small. Basing the 
maximum  amount  of  extraordinary  ex  post  contributions  on  ex  ante  contributions 
could  then  have  the  effect  of  drastically  limiting  the  possibility  for  the  Single 
Resolution Fund to raise ex post contributions, thereby reducing its capacity for action. 
To  avoid  such  an  outcome,  a  different  limit  should  be  laid  down  and  the  maximum 
amount  of  extraordinary  ex  post  contributions  allowed  to  be  called  should  be  set  at 
three times one-eighth of the target level of the Fund. 

(40)  The  Single  Resolution  Fund  can  be  used  to  support  the  application  of  the  sale  of 
business  tool  or  of  the  bridge  institution  tool,  whereby  a  set  of  assets,  rights,  and 
liabilities of the institution under resolution are transferred to a recipient. In that case, 
the Board may have a claim against the residual institution or entity in its subsequent 
winding  up  under  normal  insolvency  proceedings.  That  may  occur  where  the  Single 
Resolution  Fund  is  used  in  connection  to  losses  that  creditors  would  otherwise  have 
borne, including under the form of guarantees to assets and liabilities, or coverage of 
the  difference  between  the  transferred  assets  and  liabilities.  To  ensure  that  the 
shareholders  and  creditors  left  behind  in  the  residual  institution  or  entity  effectively 
absorb  the  losses  of  the  institution  under  resolution  and  improve  the  possibility  of 
repayments in insolvency to the Board, those claims of the Board against the residual 
institution or entity, and claims that arise from reasonable expenses properly incurred 
by  the  Board,  should  benefit  from  the  same  priority  ranking  in  insolvency  as  the 
ranking  of  the  claims  of  the  national  resolution  financing  arrangements  in  each 
participating  Member  State,  which  should  be  higher  than  the  priority  ranking  of 
deposits and of deposit guarantee schemes. Since compensations paid to shareholders 
and  creditors  from  the  Single  Resolution  Fund  due  to  breaches  of  the  ‘no  creditor 
worse  off’  principle  aim  to  compensate  for  the  results  of  resolution  action,  those 
compensations should not give rise to claims of the Board.  

(41)  Since some of the provisions of Regulation (EU) No 806/2014 concerning the role that 
deposit  guarantee  schemes  may  play  in  resolution  are  similar  to  those  of  Directive 
2014/59/EU,  the  amendments  made  to  those  provisions  in  Directive  2014/59/EU  by 
[OP please insert the number of the directive amending Directive 2014/59/EU] should 
be mirrored in Regulation (EU) No 806/2014. 

(42)  Transparency is key to ensuring market integrity, market discipline, and the protection 
of  investors.  To  ensure  that  the  Board  is  able  to  foster,  and  participate  in,  efforts 
towards greater transparency, the Board should be allowed to disclose information that 
result  from  its  own  analyses,  assessments  and  determinations, 
including  its 
resolvability  assessments, where  such disclosure would not  undermine the protection 
of  the  public  interest  as  regards  financial,  monetary  or  economic  policy  and  where 
there is an overriding public interest in the disclosure. 

(43)  Regulation (EU) No 806/2014 should therefore be amended accordingly. 

(44)  To  ensure  consistency,  the  amendments  to  Regulation  (EU)  No  806/2014  that  are 
similar  to  the  amendments  to  Directive  2014/59/EU  by  …  [OP,  please  insert  the 
number of the directive amending Directive 2014/59/EU] should be applied from the 
same date as the date for the transposition of … [OP, please insert the number of the 

EN 

32 

  EN 

directive amending Directive 2014/59/EU], which is … [OP please insert the date = 18 
months from the date of entry into force of this amending Regulation]. However, there 
is  no  reason  to  delay  the  application  of  those  amendments  to  Regulation  (EU) 
No 806/2014  that  relate  exclusively  to  the  functioning  of  the  Single  Resolution 
Mechanism. Those amendments should therefore apply from … [OP please insert the 
date = 1 month from the date of entry into force of this amending Regulation]. 

(45)  Since  the  objectives  of  this  Regulation,  namely  to  improve  the  effectiveness  and 
efficiency  of  the  recovery  and  resolution  framework  for  institutions  and  entities, 
cannot be sufficiently achieved by the Member States due to the risks that diverging 
national approaches might entail for the integrity of the single market but can rather, 
by  amending  rules  that  are  already  set  at  Union  level,  be  better  achieved  at  Union 
level, the Union may adopt measures, in accordance with the principle of subsidiarity 
as  set  out  in  Article  5  of  the  Treaty  on  the  European  Union.  In  accordance  with  the 
principle  of  proportionality,  as  set  out  in  that  Article,  this  Regulation  does  not  go 
beyond what is necessary in order to achieve those objectives, 

HAVE ADOPTED THIS REGULATION: 

Article 1 

Amendments to Regulation (EU) No 806/2014 

Regulation (EU) No 806/2014 is amended as follows: 

(1) 

Article 3(1) is amended as follows: 

(a) 

point (24a) is replaced by the following: 

‘(24a)  ‘resolution  entity’  means  a  legal  person  established  in  a  participating 
Member  State,  which  the  Board  or  the  national  resolution  authority,  in 
accordance  with  Article  8  of  this  Regulation,  has  identified  as  an  entity  in 
respect of which the resolution plan provides for resolution action;’; 

(b) 

the following points (24d) and (24e) are inserted: 

‘(24d)  ‘non-EU  G-SII’  means  a  non-EU  G-SII  as  defined  in  Article  4(1), 
point (134), of Regulation (EU) No 575/2013; 

‘G-SII  entity’  means  a  G-SII  entity  as  defined  in  Article  4(1),  point 

(24e) 
(136), of Regulation (EU) No 575/2013;’; 

(c) 

point (49) is replaced by the following: 

‘(49) ‘bail-inable liabilities’ means the liabilities, including those liabilities that 
give  rise to  accounting provisions, and capital instruments that do not qualify 
as Common Equity Tier 1, Additional Tier 1 or Tier 2 instruments of an entity 
as referred to in Article 2 and that are not excluded from the scope of the bail-
in tool pursuant to Article 27(3);’; 

(2) 

in Article 4, the following paragraph 1a is inserted: 

‘1a.  Member  States  shall  inform  the  Board  as  soon  as  possible  of  their  request  to 
enter into a close cooperation with the ECB pursuant to Article 7 of Regulation (EU) 
No 1024/2013. 

Following  the  notification  made  pursuant  to  Article  7  of  Regulation  (EU) 
No 1024/2013  and  before  close  cooperation  is  established,  Member  States  shall 
provide all information about the entities and groups established in their territory that 

EN 

33 

  EN 

the Board may require to prepare for the tasks conferred on it by this Regulation and 
the Agreement.’; 

(3) 

Article 7 is amended as follows: 

(a) 

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

‘When  performing  the  tasks  referred  to  in  this  paragraph,  the  national 
resolution  authorities  shall  apply  the  relevant  provisions  of  this  Regulation. 
Any references to the Board in Article 5(2), Article 6(5), Article 8(6), (8), (12) 
and (13), Article 10(1) to (10), Article 10a, Articles 11 to 14, Article 15(1), (2) 
and (3), Article 16, Article 18(1), (1a), (2) and (6), Article 20, Article 21(1) to 
(7), Article 21(8), second subparagraph, Article 21(9) and (10), Article 22(1), 
(3)  and  (6),  Articles  23  and  24,  Article  25(3),  Article  27(1)  to  (15),  Article 
27(16), second subparagraph, second sentence, third subparagraph, and fourth 
subparagraph, first, third and fourth sentences, and Article 32, shall be read as 
references  to  the  national  resolution  authorities  with  regard  to  groups  and 
entities referred to in the first subparagraph of this paragraph.’; 

(b)  paragraph 5 is amended as follows: 

(i) 

the words ‘Article 12(2)’ are replaced by the words ‘Article 12(3)’; 

(ii) 

the following subparagraph is added: 

‘After  the  notification  referred  to  in  the  first  subparagraph  has  taken 
effect, participating Member States may decide that the responsibility for 
performing  the  tasks  related  to  entities  and  groups  established  in  their 
territory, other than those referred to in paragraph 2, shall be returned to 
the  national  resolution  authorities,  in  which  case  the  first  subparagraph 
shall  no  longer  apply.  Member  States  that  intend  to  make  use  of  that 
option  shall  notify  the  Board  and  the  Commission  thereof.  That 
notification shall take effect from the day of its publication in the Official 
Journal of the European Union.’; 

(4) 

Article 8 is amended as follows: 

(a) 

in paragraph 2, the following subparagraph is added: 

‘The  Board  may  instruct  the  national  resolution  authorities  to  exercise  the 
powers  referred  to  in  Article  10(8)  of  Directive  2014/59/EU.  The  national 
resolution  authorities  shall  implement  the  instructions  of  the  Board  in 
accordance with Article 29 of this Regulation.’; 

(b) 

in paragraph 10, the following subparagraph is added: 

‘The  identification  of  the  measures  to  be  taken  in  respect  of  the  subsidiaries 
referred  to  in  the  first  subparagraph,  point  (b),  that  are  not  resolution  entities 
may be subject to a simplified approach by the Board if such approach would 
not negatively affect the resolvability of the group, taking into account the size 
of the subsidiary, its risk profile, the absence of critical functions and the group 
resolution strategy.’; 

(c) 

the following paragraph 14 is added: 

‘14.  The  Board  shall  not  adopt  resolution  plans  for  the  entities  and  groups 
referred  to  in  paragraph  1  where  Article  22(5)  applies  or  where  the  entity  or 

EN 

34 

  EN 

group  is  being  wound  up  in  accordance  with  the  applicable  national  law 
pursuant to Article 32b of Directive 2014/59/EU.’; 

(5) 

Article 10 is amended as follows: 

(a) 

(b) 

in  paragraph  4,  fourth  subparagraph,  the  words  ‘first  subparagraph’  are 
replaced by the words ‘third subparagraph’; 

in  paragraph  7,  the  words  ‘addressed  to  the  institution  or  the  parent 
undertaking’  are  replaced  by  the  words  ‘addressed  to  the  entity  or  the  parent 
undertaking’  and  the  words  ‘impact  on  the  institution’s  business  model’  are 
replaced by the words ‘impact on the entity’s or the group’s business model’; 

(c) 

paragraph 10 is amended as follows: 

(i) 

(ii) 

in  the  second  subparagraph,  the  word  ‘institution’  is  replaced  by  the 
words ‘entity concerned’; 

in the third subparagraph, the word ‘institution’ is replaced by the word 
‘entity’; 

(iii) 

the following subparagraph is added: 

‘If  the  measures  proposed  by  the  entity  concerned  effectively  reduce  or 
remove the impediments to resolvability, the Board shall take a decision, 
after  having  consulted  the  ECB  or  the  relevant  national  competent 
authority  and,  where  appropriate,  the  designated  macro-prudential 
authority.  That  decision  shall  indicate  that  the  measures  proposed 
effectively  reduce  or  remove  the  impediments  to  resolvability  and  shall 
instruct  the  national  resolution  authorities  to  require  the  institution,  the 
parent  undertaking,  or  any  subsidiary  of  the  group  concerned,  to 
implement the measures proposed.’; 

(6) 

Article 10a is amended as follows: 

(a) 

in paragraph 1, the introductory wording is replaced by the following: 

‘1.  Where  an  entity  is  in  a  situation  where  it  meets  the  combined  buffer 
requirement when  considered in addition  to  each of the requirements referred 
to in Article 141a(1), points (a), (b) and (c), of Directive 2013/36/EU, but fails 
to  meet  the  combined  buffer  requirement  when  considered  in  addition  to  the 
requirements  referred  to  in  Articles  12d  and  12e  of  this  Regulation  when 
calculated in accordance with Article 12a(2), point (a), of this Regulation, the 
Board  shall  have  the  power,  in  accordance  with  paragraphs  2  and  3  of  this 
Article,  to  instruct  the  national  resolution  authority  to  prohibit  an  entity  from 
distributing  more  than  the  Maximum  Distributable  Amount  related  to  the 
minimum  requirement  for  own  funds  and  eligible  liabilities  ("M-MDA"), 
calculated  in  accordance  with  paragraph  4  of  this  Article,  through  any  of  the 
following actions:’; 

(b) 

the following paragraph 7 is added: 

‘7.  Where  an  entity  is  not  subject  to  the  combined  buffer  requirement  on  the 
same basis as the basis on which it is required to comply with the requirements 
referred to in Articles 12d and 12e, the Board shall apply paragraphs 1 to 6 of 
this Article on the basis of the estimation of the combined buffer requirement 
in  accordance  with  Commission  Delegated  Regulation  (EU)  2021/1118*. 
Article 128, fourth paragraph, of Directive 2013/36/EU shall apply. 

EN 

35 

  EN 

The Board shall include the estimated combined buffer requirement referred to 
in the first subparagraph in the decision determining the requirements referred 
to  in  Articles  12d  and  12e  of  this  Regulation.  The  entity  shall  make  the 
estimated  combined  buffer  requirement  publicly  available  together  with  the 
information referred to in Article 45i(3) of Directive 2014/59/EU. 

______________________________ 

to  regulatory 

* 
Commission Delegated Regulation (EU) 2021/1118 of 26 March 2021 
supplementing  Directive  2014/59/EU  of  the  European  Parliament  and  of  the 
Council  with  regard 
the 
methodology  to  be  used  by  resolution  authorities  to  estimate  the  requirement 
referred to in Article 104a of Directive 2013/36/EU of the European Parliament 
and of the Council and the combined buffer requirement for resolution entities 
at  the  resolution  group  consolidated  level  where  the  resolution  group  is  not 
subject to those requirements under that Directive (OJ L 241, 8.7.2021, p. 1).’; 

technical  standards  specifying 

(7) 

in Article 12, the following paragraph 8 is added: 

‘8.  The  Board  shall  be  responsible  for  granting  the  permissions  referred  to  in 
Articles 77(2) and 78a of Regulation (EU) No 575/2013 to the entities referred to in 
paragraph  1  of  this  Article.  The  Board  shall  address  its  decision  to  the  entity 
concerned.’; 

(8) 

in Article 12a, paragraph 1 is replaced by the following: 

‘1. The Board and national resolution authorities shall ensure that the entities referred 
to  in  Article  12(1)  and  (3)  meet,  at  all  times,  the  requirements  for  own  funds  and 
eligible liabilities where required by and as determined by the Board in accordance 
with this Article and Articles 12b to 12i.’; 

(9) 

Article 12c is amended as follows: 

(a) 

(b) 

in  paragraphs  4  and  5,  the  word  ‘G-SIIs’  is  replaced  by  the  words  ‘G-SII 
entities’; 

in paragraph 7, introductory wording, the words ‘paragraph 3’ are replaced by 
the words ‘paragraph 4’, and the word ‘G-SIIs’ is replaced by the words ‘G-SII 
entities’; 

(c) 

paragraph 8 is amended as follows: 

(i) 

(ii) 

in the first subparagraph, the word ‘G-SIIs’ is replaced by the words ‘G-
SII entities’; 

in the second subparagraph, point (c), the word ‘G-SII’ is replaced by the 
words ‘G-SII entity’; 

(d) 

the following paragraph 10 is added: 

‘10. The Board may permit resolution entities to comply with the requirements 
referred to in paragraphs 4, 5 and 7 using own funds or liabilities as referred to 
in paragraphs 1 and 3 when all of the following conditions are met: 

(a) 

for entities that are G-SII entities or resolution entities that are subject to 
Article 12d(4) or (5), the Board has not reduced the requirement referred 
to in paragraph 4 of this Article, pursuant to the first subparagraph of that 
paragraph; 

EN 

36 

  EN 

(b) 

the liabilities referred to in  paragraph 1 of this  Article that do not  meet 
the condition referred to in Article 72b(2), point (d), of Regulation (EU) 
No 575/2013 comply with the conditions set out in Article 72b(4), points 
(b) to (e), of that Regulation.’; 

(10) 

in  Article  12d,  paragraph  3,  eight  subparagraph,  and  paragraph  6,  eight 
subparagraph,  the  words  ‘critical  economic  functions’  are  replaced  by  the  words 
‘critical functions’; 

(11) 

the following Article 12da is inserted: 

‘Article 12da 

Determination of the minimum requirement for own funds and eligible 
liabilities for transfer strategies leading to market exit 

1.  When  applying  Article  12d  to  a  resolution  entity  whose  preferred  resolution 
strategy  envisages  primarily  the  use  of  the  sale  of  business  tool  or  the  bridge 
institution tool  and its  exit from  the market,  the  Board  shall  set  the  recapitalisation 
amount  provided  in  Article  12d(3)  in  a  proportionate  way  on  the  basis  of  the 
following criteria, as relevant: 

(a) 

(b) 

the resolution entity’s size, business model, funding model and risk profile, and 
the depth of the market in which the resolution entity operates; 

the  shares,  other  instruments  of  ownership,  assets,  rights  or  liabilities  to  be 
transferred  to  a  recipient  as  identified  in  the  resolution  plan,  taking  into 
consideration: 

(i) 

the core business lines and critical functions of the resolution entity; 

(ii) 

the liabilities excluded from bail-in pursuant to Article 27(3); 

(iii) 

the safeguards referred to in Articles 73 to 80 of Directive 2014/59/EU; 

(c) 

the  expected  value  and  marketability  of  the  shares,  other  instruments  of 
ownership,  assets,  rights  or  liabilities  of  the  resolution  entity  referred  to  in 
point (b), taking into account: 

(i) 

any  material  impediments  to  resolvability,  identified  by  the  resolution 
authority,  that  are  directly  related  to  the  application  of  the  sale  of 
business tool or the bridge institution tool; 

(ii) 

the losses resulting from the assets, rights or liabilities left in the residual 
institution; 

(d)  whether  the  preferred  resolution  strategy  envisages  the  transfer  of  shares  or 
other instruments of ownership issued by the resolution entity, or of all or part 
of the assets, rights and liabilities of the resolution entity; 

(e)  whether the preferred resolution strategy envisages the application of the asset 

separation tool. 

2. Where the resolution plan provides that the entity is to be wound up under normal 
insolvency proceedings or other equivalent national procedures and envisages the use 
of the deposit guarantee scheme pursuant to Article 11(5) of Directive 2014/49/EU, 
the Board shall also take into account paragraph 1 of this Article when carrying out 
the  assessment  referred  to  in  Article  12d(2a),  second  subparagraph,  of  this 
Regulation. 

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3. The application of paragraph 1 shall not result in an amount that is higher than the 
amount resulting from the application of Article 12d(3).’; 

(12) 

in Article 12e(1), the words ‘G-SII or part of a G-SII’ are replaced by the words ‘G-
SII entity’; 

(13) 

Article 12g is amended as follows: 

(a) 

paragraph 1 is amended as follows: 

(i) 

the second subparagraph is replaced by the following: 

‘The  Board,  after  having  consulted  the  competent  authorities,  including 
the ECB, may decide to apply the requirement laid down in this Article 
to  an  entity  as  referred  to  in  Article  2,  point  (b),  and  to  a  financial 
institution  as  referred  to  in  Article  2,  point  (c),  that  is  a  subsidiary  of  a 
resolution entity but is not itself a resolution entity.’; 

(ii) 

in the third subparagraph, the words ‘first subparagraph’ are replaced by 
the words ‘first and second subparagraphs’; 

(b) 

the following paragraph 4 is added: 

‘4.  Where,  in  accordance  with  the  global  resolution  strategy,  subsidiaries 
established  in  the  Union,  or  a  Union  parent  undertaking  and  its  subsidiary 
institutions,  are  not  resolution  entities  and  the  members  of  the  European 
resolution  college,  where  established  pursuant  to  Article  89  of  Directive 
2014/59/EU, agree with that strategy, subsidiaries established in the Union or, 
on  a  consolidated  basis,  the  Union  parent  undertaking,  shall  comply  with  the 
requirement  of  Article  12a(1)  by  issuing  the  instruments  referred  to  in 
paragraph 2, points (a) and (b), of this Article to any of the following: 

(a) 

(b) 

(c) 

their ultimate parent undertaking established in a third country; 

the subsidiaries of that ultimate parent undertaking that are established in 
the same third country; 

other entities under the conditions set out in paragraph 2, points (a)(i) and 
(b)(ii), of this Article.’; 

(14) 

Article 12k is amended as follows: 

(a) 

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

‘By  way  of  derogation  from  Article  12a(1),  the  Board  shall  determine 
appropriate transitional periods for entities to comply with the requirements in 
Articles 12f or 12g, or with the requirements that result from the application of 
Article 12c(4), (5) or (7), as appropriate.’; 

in  paragraph  3,  point  (a),  the  words  ‘the  Board  or  the  national  resolution 
authority’ are replaced by the words ‘the Board’; 

in paragraph 4, the words ‘G-SII’ are replaced by the words ‘G-SII or a non-
EU G-SII’; 

in  paragraphs  5  and  6,  the  words  ‘the  Board  and  the  national  resolution 
authorities’ are replaced by the words ‘the Board’; 

(b) 

(c) 

(d) 

(15) 

Article 13 is replaced by the following: 

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‘Article 13 

Early intervention measures 

1. The ECB may apply early intervention measures where an entity as referred to in 
Article 7(2)(a) meets any of the following conditions: 

(a) 

the  entity  meets  the  conditions  referred  to  in  Article  102  of  Directive 
2013/36/EU or in Article 16(1) of Regulation (EU) No 1024/2013 and either of 
the following applies: 

(i) 

(ii) 

the  entity  has  not  taken  the  remedial  actions  required  by  the  ECB, 
including 
in  Article  104  of  Directive 
2013/36/EU,  Article  16(2)  of  Regulation  (EU)  No 1024/2013  or  Article 
49 of Directive (EU) 2019/2034;  

the  measures  referred 

to 

the  ECB  deems  that  remedial  actions  other  than  early  intervention 
measures are insufficient to address the problems due inter alia to a rapid 
and significant deterioration of the financial condition of the entity; 

(b) 

the  entity  infringes  or  is  likely  to  infringe  in  the  12  months  following  the 
assessment  of  the  ECB  the  requirements  laid  down  in  Title  II  of  Directive 
2014/65/EU, in Articles 3 to 7, 14 to 17, or 24, 25 and 26 of Regulation (EU) 
No 600/2014, or in Articles 12f or 12g of this Regulation. 

The ECB may determine that the condition referred to in the first subparagraph, point 
(a)(ii), is met without having previously  taken other remedial actions, including the 
exercise  of  the  powers  referred  to  in  Article  104  of  Directive  2013/36/EU  or  in 
Article 16(2) of Regulation (EU) No 1024/2013. 

2.  For  the  purposes  of  paragraph  1,  early  intervention  measures  shall  include  the 
following: 

(a) 

the  requirement  for  the  management  body  of  the  entity  to  do  either  of  the 
following: 

(i) 

(ii) 

to implement one or more of the arrangements or measures set out in the 
recovery plan; 

to update the recovery plan in accordance with Article 5(2) of Directive 
2014/59/EU where the circumstances that led to the early intervention are 
different from the assumptions set out in the initial recovery plan and to 
implement  one  or  more  of  the  arrangements  or  measures  set  out  in  the 
updated recovery plan within a specific timeframe; 

the  requirement  for  the  management  body  of  the  entity  to  convene  or,  if  the 
management  body  fails  to  comply  with  that  requirement,  convene  directly,  a 
meeting  of  shareholders  of  the  entity,  and  in  both  cases  set  the  agenda  and 
require certain decisions to be considered for adoption by the shareholders; 

the  requirement  for  the  management  body  of  the  entity  to  draw  up  a  plan,  in 
accordance  with  the  recovery  plan  where  applicable,  for  negotiation  on 
restructuring of debt with some or all of its creditors; 

(b) 

(c) 

(d) 

the requirement to change the legal structure of the institution; 

(e) 

the  requirement  to  remove  or  replace  the  senior  management  or  management 
body  of  the  entity  in  its  entirety  or  with  regard  to  individuals,  in  accordance 
with Article 13a; 

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(f) 

the  appointment  of  one  or  more  temporary  administrators  to  the  entity,  in 
accordance with Article 13b. 

3. The ECB shall choose the appropriate early intervention measures based on what 
is  proportionate  to  the  objectives  pursued,  having  regard  to  the  seriousness  of  the 
infringement or likely infringement and the speed of the deterioration in the financial 
situation of the entity, among other relevant information. 

4. For each of the measures referred to in paragraph 2, the ECB shall set a deadline 
that  is  appropriate  for  completion  of  that  measure  and  that  enables  the  ECB  to 
evaluate its effectiveness.  

5. Where a group includes entities established in participating Member States as well 
as  in  non-participating  Member  States,  the  ECB  shall  represent  the  national 
competent  authorities  of  the  participating  Member  States  for  the  purposes  of 
consultation  and  cooperation  with  non-participating  Member  States  in  accordance 
with Article 30 of Directive 2014/59/EU. 

Where  a  group  includes  entities  established  in  participating  Member  States  and 
subsidiaries established, or significant branches located, in non-participating Member 
States, the ECB shall communicate any decisions or measures referred to in Articles 
13  to  13c  relevant  to  the  group  to  the  competent  authorities  or  the  resolution 
authorities of the non-participating Member States, as appropriate.’; 

(16) 

the following Articles 13a, 13b and 13c are inserted: 

‘Article 13a 

Replacement of the senior management or management body 

For  the  purposes  of  Article  13(2),  point  (e),  the  new  senior  management  or 
management  body,  or  individual  members  of  those  bodies,  shall  be  appointed  in 
accordance with Union and national law and be subject to the approval of the ECB. 

Article 13b 

Temporary administrator 

1.  For  the  purposes  of  Article  13(2),  point  (f),  the  ECB  may,  based  on  what  is 
proportionate in the circumstances, appoint any temporary administrator to do either 
of the following: 

(a) 

temporarily replace the management body of the entity; 

(b)  work temporarily with the management body of the entity. 

The ECB shall specify its choice under points (a) or (b) at the time of appointment of 
the temporary administrator. 

For the purposes of the first subparagraph, point (b), the ECB shall further specify at 
the  time  of  the  appointment  of  the  temporary  administrator  the  role,  duties  and 
powers  of  that  temporary  administrator  and  any  requirements  for  the  management 
body of the entity to consult or to obtain the consent of the temporary administrator 
prior to taking specific decisions or actions.  

The ECB shall make public the appointment of any temporary administrator, except 
where the temporary administrator does not have the power to represent the entity. 

Any temporary administrator shall fulfil the requirements set out in Article 91(1), (2) 
and  (3)  of  Directive  2013/36/EU.  The  assessment  by  the  ECB  of  whether  the 

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temporary administrator complies with those requirements shall be an integral part of 
the decision to appoint that temporary administrator.  

2. The ECB shall specify the powers of the temporary administrator at the time of his 
or  her  appointment,  based  on  what  is  proportionate  in  the  circumstances.  Such 
powers may include some or all of the powers of the management body of the entity, 
under  the  statutes  of  the  entity  and  under  national  law,  including  the  power  to 
exercise some or all of the administrative functions of the management body of the 
entity.  The  powers  of  the  temporary  administrator  in  relation  to  the  entity  shall 
comply with the applicable company law. 

3. The ECB shall specify the role and functions of the temporary administrator at the 
time of appointment. Such role and functions may include all of the following: 

(a) 

ascertaining the financial position of the entity; 

(b)  managing  the  business  or  part  of  the  business  of  the  entity  to  preserve  or 

restore its financial position; 

(c) 

taking measures to restore the sound and prudent management of the business 
of the entity. 

The  ECB  shall  specify  any  limits  on  the  role  and  functions  of  the  temporary 
administrator at the time of his or her appointment. 

4.  The  ECB  shall  have  the  exclusive  power  to  appoint  and  remove  any  temporary 
administrator. The ECB may remove a temporary administrator at any time and for 
any  reason.  The  ECB  may  vary  the  terms  of  appointment  of  a  temporary 
administrator at any time subject to this Article. 

5. The ECB may require that certain acts of a temporary administrator be subject to 
the  prior  consent  of  the  ECB.  The  ECB  shall  specify  any  such  requirements  at  the 
time of appointment of the temporary administrator or at the time of any variation of 
the terms of appointment of the temporary administrator. 

In  any  case,  the  temporary  administrator  may  exercise  the  power  to  convene  a 
general  meeting  of  the  shareholders  of  the  entity  and  to  set  the  agenda  of  such  a 
meeting only with the prior consent of the ECB. 

6. At the request of the  ECB, the temporary administrator shall draw up reports on 
the financial position of the entity and on the acts performed in the course of his or 
her appointment, at intervals set by the ECB, and in any case at the end of his or her 
mandate. 

7. The temporary administrator shall be appointed for maximum 1 year. That period 
may  be  exceptionally  renewed  if  the  conditions  for  appointing  the  temporary 
administrator continue to be met. The ECB shall determine those conditions and shall 
justify  any  renewal  of  the  appointment  of  the  temporary  administrator  to  the 
shareholders. 

8.  Subject  to  this  Article,  the  appointment  of  a  temporary  administrator  shall  not 
prejudice the rights of the shareholders laid down in Union or national company law. 

9. A temporary administrator appointed pursuant to paragraphs 1 to 8 of this Article 
shall not be deemed to be a shadow director or a de facto director under national law. 

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Article 13c 

Preparation for resolution 

1. For the entities and groups referred to in Article 7(2), and the entities and groups 
referred  to  in  Article  7(4),  point  (b),  and  Article  7(5)  where  the  conditions  for  the 
application  of  those  provisions  are  met,  the  ECB  or  national  competent  authorities 
shall notify the Board without delay of any of the following:  

(a) 

any  of  the  measures  referred  to  in  Article  16(2)  of  Regulation  (EU) 
No 1024/2013 or Article 104(1) of Directive 2013/36/EU they require an entity 
or group to take; 

(b)  where supervisory activity shows that the conditions laid down in Article 13(1) 
of this Regulation or Article 27(1) of Directive 2014/59/EU are met in relation 
to an entity or group, the assessment that those conditions are met, irrespective 
of any early intervention measure; 

(c) 

the application of any of the early intervention measures referred to in Article 
13 of this Regulation or Article 27 of Directive 2014/59/EU. 

The Board shall notify the Commission of notification it has received pursuant to the 
first subparagraph. 

The  ECB  or  the  relevant  national  competent  authority  shall  closely  monitor,  in 
cooperation with the Board, the situation of the entities and groups referred to in the 
first  subparagraph  and  their  compliance  with  the  measures  referred  to  in  the  first 
subparagraph, point (a), that  aim to address  a deterioration in  the situation of those 
entities  and  groups  and  with  the  early  intervention  measures  referred  to  in  the  first 
subparagraph, point (c). 

2.  The  ECB  or  the  relevant  national  competent  authority  shall  notify  the  Board  as 
early as possible where they consider that there is a material risk that one or more of 
the circumstances referred to in Article 18(4) would apply in relation to an entity as 
referred to  in  Article 7(2), or an entity  as  referred to  in  Article 7(4), point  (b), and 
Article  7(5)  where  the  conditions  for  the  application  of  those  provisions  are  met. 
That notification shall contain: 

(a) 

(b) 

the reasons for the notification; 

an  overview  of  the  measures  which  would  prevent  the  failure  of  the  entity 
within a reasonable timeframe, their expected impact  on the entity  as  regards 
the circumstances  referred to  in  Article 18(4) and the expected timeframe for 
the implementation of those measures.  

After having received the notification referred to in the first subparagraph, the Board 
shall  assess,  in  close  cooperation  with  the  ECB  or  the  relevant  national  competent 
authority, what constitutes a reasonable timeframe for the purposes of the assessment 
of the condition referred to in Article 18(1), point (b), taking into account the speed 
of the deterioration of the conditions of the entity, the need to implement effectively 
the  resolution  strategy  and  any  other  relevant  considerations.  The  Board  shall 
communicate  that  assessment  to  the  ECB  or  to  the  relevant  national  competent 
authority as early as possible. 

Following  the  notification  referred  to  in  the  first  subparagraph,  the  ECB  or  the 
relevant  national  competent  authority  and  the  Board  shall,  in  close  cooperation, 
monitor the situation of the entity, the implementation of the any relevant measures 

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within  their  expected  timeframe  and  any  other  relevant  developments.  For  that 
purpose,  the  Board  and  the  ECB  or  the  relevant  national  competent  authority  shall 
meet regularly,  with a frequency set by the Board considering the circumstances of 
the case. The ECB or the relevant national competent authority and the Board shall 
provide each other with any relevant information without delay. 

The Board shall notify the Commission of any information it has received pursuant 
to the first subparagraph. 

3. The ECB or the relevant national competent authority shall provide the Board with 
all the information requested by the Board that is necessary for all of the following: 

(a) 

updating  the  resolution  plan  and  preparing  for  the  possible  resolution  of  an 
entity as referred to in Article 7(2), or  an entity as referred to in Article 7(4), 
point (b),  and  Article  7(5)  where  the  conditions  for  the  application  of  those 
provisions are met; 

(b) 

 carrying out the valuation referred to in Article 20(1) to (15). 

Where  such  information  is  not  already  available  to  the  ECB  or  the  national 
competent  authorities,  the  Board  and  the  ECB  and  such  national  competent 
authorities  shall  cooperate  and  coordinate  to  obtain  that  information.  For  that 
purpose,  the  ECB  and  the  national  competent  authorities  shall  have  the  power  to 
require the entity to provide such information, including through on-site inspections, 
and to provide that information to the Board. 

4.  The  Board  shall  have  the  power  to  market  to  potential  purchasers,  or  make 
arrangements for such marketing, the entity referred to in Article 7(2), or the entity 
referred  to  in  Article  7(4),  point  (b),  and  Article  7(5)  where  the  conditions  for  the 
application  of  those  provisions  are  met  or  require  the  entity  to  do  so,  for  the 
following purposes: 

(a) 

to prepare for the resolution of that entity, subject to the conditions specified in 
Article  39(2)  of  Directive  2014/59/EU  and  the  requirements  of  professional 
secrecy laid down in Article 88 of this Regulation; 

(b) 

to  inform  the  assessment  by  the  Board  of  the  condition  referred  to  in 
Article 18(1), point (b), of this Regulation. 

5. For the purposes of paragraph 4, the Board shall have the power to: 

(a) 

request  the  entity  concerned  to  put  in  place  a  digital  platform  for  sharing  the 
information  that  is  necessary  for  the  marketing  of  that  entity  with  potential 
purchasers or with advisors and valuers engaged by the Board; 

(b) 

 require  the  relevant  national  resolution  authority  to  draft  a  preliminary 
resolution scheme for the entity concerned. 

6. The determination that the conditions laid down in Article 13(1) of this Regulation 
or  Article  27(1)  of  Directive  2014/59/EU  are  met  and  the  prior  adoption  of  early 
intervention measures are not  necessary conditions for the Board to  prepare for the 
resolution of the entity or to exercise the powers referred to in the paragraphs 4 and 5 
of this Article.  

7. The Board shall inform the Commission, the ECB, the relevant national competent 
authorities  and  the  relevant  national  resolution  authorities  of  any  action  taken 
pursuant to paragraphs 4 and 5 without delay. 

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8. The ECB, the national competent authorities, the Board and the relevant national 
resolution authorities shall closely cooperate:  

(a)  when  considering  taking  the  measures  referred  to  in  paragraph  1,  first 
subparagraph, point (a) that aim to address a deterioration in the situation of an 
entity  and  group,  and  the  measures  referred  to  in  paragraph  1,  first 
subparagraph, point (c);  

(b)  when considering taking any of the actions referred to in paragraphs 4 and 5;  

(c) 

during the implementation of the actions referred to in points (a) and (b) of this 
subparagraph.  

The  ECB,  the  national  competent  authorities,  the  Board  and  the  relevant  national 
resolution  authorities  shall  ensure  that  those  measures  and  actions  are  consistent, 
coordinated and effective.’; 

(17) 

in Article 14(2), points (c) and (d) are replaced by the following: 

‘(c) to protect public funds by minimising reliance on extraordinary public financial 
support, in particular when provided from the budget of a Member State; 

(d) to protect depositors while minimising losses for deposit guarantee schemes, and 
to protect investors covered by Directive 97/9/EC;’; 

(18) 

in Article 16, paragraph 2 is replaced by the following: 

‘2.  The  Board  shall  take  a  resolution  action  in  relation  to  a  parent  undertaking  as 
referred to in Article 2, point (b), where the conditions laid down in Article 18(1) are 
met. 

For those purposes, a parent undertaking as referred to Article 2, point (b), shall be 
deemed to be failing or likely to fail in any of the following circumstances:  

(a) 

(b) 

the  parent  undertaking  meets  one  or  more  of  the  conditions  laid  down  in 
Article 18(4), points (b), (c) or (d); 

the parent undertaking infringes materially, or there are objective elements that 
show  that  the  parent  undertaking  will,  in  the  near  future,  infringe  materially, 
the applicable  requirements  laid down in  Regulation  (EU) No 575/2013  or  in 
the national provisions that transpose Directive 2013/36/EU.’; 

(19) 

Article 18 is amended as follows: 

(a) 

paragraphs 1, 1a, 2 and 3 are replaced by the following: 

‘1.  The  Board  shall  adopt  a  resolution  scheme  pursuant  to  paragraph  6  in 
relation to the entities referred to in Article 7(2), and to the entities referred to 
in  Article  7(4),  point (b)  and  Article  7(5)  where  the  conditions  for  the 
application  of  those  provisions  are  met,  only  when  it  has  determined,  in  its 
executive  session,  upon  receiving  a  communication  pursuant  to  the  second 
subparagraph  or  on  its  own  initiative,  that  all  of  the  following  conditions  are 
met: 

(a) 

the entity is failing or is likely to fail; 

(b)  having  regard  to  the  timing,  the  need  to  implement  effectively  the 
resolution  strategy  and  other  relevant  circumstances,  there  is  no 
reasonable prospect that any alternative private sector measure, including 
measures by  an  IPS, supervisory action, early intervention measures,  or 

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the write down or conversion of relevant capital instruments and eligible 
liabilities  as  referred  to  in  Article  21(1),  taken  in  respect  of  the  entity 
would prevent the failure of the entity within a reasonable timeframe; 

(c) 

a  resolution  action  is  necessary  in  the  public  interest  pursuant  to 
paragraph 5. 

The assessment of the condition referred to in the first subparagraph, point (a), 
shall be made by the ECB for the entities referred to in Article 7(2), point (a), 
or  by  the  relevant  national  competent  authority  for  the  entities  referred  to  in 
Article  7(2),  point (b),  Article  7(3),  second  subparagraph,  Article  7(4), 
point (b) and Article 7(5), after having consulted the Board. The Board, in its 
executive  session,  may  make  such  an  assessment  only  after  having  informed 
the ECB or the relevant  national  competent  authority of its intention to make 
such  an  assessment  and  only  if  the  ECB  or  the  relevant  national  competent 
authority,  within  three  calendar  days  of  receipt  of  that  information,  do  not 
make  such  an  assessment  themselves.  The  ECB  or  the  relevant  national 
competent authority shall, without delay, provide the Board with any relevant 
information  that  the  Board  requests  to  inform  its  assessment,  before  or  after 
being  informed  by  the  Board  of  its  intention  to  make  the  assessment  of  the 
condition referred to in the first subparagraph, point (a). 

Where the ECB or the relevant national competent authority has assessed that 
the condition referred to in the first subparagraph, point (a), is met in relation to 
an entity  as referred to  in  the first  subparagraph,  they shall communicate that 
assessment to the Commission and to the Board without delay. 

The assessment of the condition referred to in the first subparagraph, point (b), 
met  shall  be  made  by  the  Board,  in  its  executive  session  and  in  close 
cooperation  with  the  ECB  or  the  relevant  national  competent  authority.  The 
ECB or the relevant national competent authority shall, without delay, provide 
the Board  with  any  relevant  information  that the Board requests to  inform  its 
assessment.  The  ECB  or  the  relevant  national  competent  authority  may  also 
inform  the  Board  that  it  considers  the  condition  laid  down  in  the  first 
subparagraph, point (b), to be met. 

1a. The Board may adopt a resolution scheme in accordance with paragraph 1 
in relation to a central body and all credit institutions permanently affiliated to 
it  that  are  part  of  the  same  resolution  group  where  the  central  body  and  all 
credit institutions permanently affiliated to it, or the resolution group to which 
they belong, comply as a whole with the conditions laid down in paragraph 1, 
first subparagraph. 

2. Without prejudice to cases where the  ECB has decided to  exercise directly 
supervisory  tasks  relating  to  credit  institutions  pursuant  to  Article 6(5), 
point (b)  of  Regulation  (EU)  No  1024/2013,  in  the  event  of  receipt  of  a 
communication  pursuant  to  paragraph  1  in  relation  to  an  entity  or  group  as 
referred  to  in  Article  7(3),  the  Board  shall  communicate  its  assessment  as 
referred  to  paragraph  1,  fourth  subparagraph,  to  the  ECB  or  the  relevant 
national competent authority without delay. 

3.  The  previous  adoption  of  a  measure  pursuant  to  Article  16  of  Regulation 
(EU)  No  1024/2013,  to  Article  27  of  Directive  2014/59/EU,  to  Article  13  of 

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this  Regulation  or  to  Article  104  of  Directive  2013/36/EU  shall  not  be  a 
condition for taking a resolution action.’; 

(b)  paragraph 4 is amended as follows: 

(i) 

in the first subparagraph, point (d) is replaced by the following: 

‘(d) extraordinary public financial support is required except where such 
support is granted in one of the forms referred to in Article 18a(1)’; 

(ii) 

the second and third subparagraphs are deleted; 

(c) 

paragraph 5 is replaced by the following: 

‘5.  For  the  purposes  of  paragraph  1,  point  (c),  a  resolution  action  shall  be 
treated as in the public interest where that resolution action is necessary for the 
achievement  of,  and  is  proportionate  to,  one  or  more  of  the  resolution 
objectives  referred  to  in  Article  14  and  where  winding  up  of  the  institution 
under  normal  insolvency  proceedings  would  not  meet  those  resolution 
objectives more effectively. 

When  carrying  out  the  assessment  referred  to  in  the  first  subparagraph,  the 
Board, based on the information available to it at the time of that assessment, 
shall consider and compare all extraordinary public financial support that can 
reasonably  be  expected  to  be  granted  to  the  entity,  both  in  the  event  of 
resolution  and  in  the  event  of  winding  up  in  accordance  with  the  applicable 
national law.’; 

(d) 

in paragraph 7, the second subparagraph is replaced by the following: 

‘Within 24 hours from the transmission of the resolution scheme by the Board, 
the Commission shall endorse the resolution scheme or object to it, either with 
regard  to  the  discretionary  aspects  of  the  resolution  scheme  in  the  cases  not 
covered  in  the  third  subparagraph  of  this  paragraph  or  with  regard  to  the 
proposed use of State aid or Fund aid that is not considered compatible with the 
internal market.’; 

(e) 

the following paragraph 11 is added: 

‘11.  Where  the  conditions  referred  to  in  paragraph  1,  points  (a)  and  (b),  are 
met, the Board may instruct  the national  resolution  authorities to  exercise the 
powers under national law transposing Article 33a of Directive 2014/59/EU, in 
accordance  with  the  conditions  laid  down  in  national  law.  The  national 
resolution  authorities  shall  implement  the  instructions  of  the  Board  in 
accordance with Article 29.’; 

(20) 

the following Article 18a is inserted: 

‘Article 18a 

Extraordinary public financial support 

1. Extraordinary public financial support outside of resolution action may be granted 
to an entity as referred to in Article 2 only in one of the following cases and provided 
that  the  extraordinary  public  financial  support  complies  with  the  conditions  and 
requirements established in the Union State aid framework: 

(a)  where, to remedy a serious disturbance in the economy of a Member State or to 
preserve financial stability, the extraordinary public financial support takes any 
of the following forms: 

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(i) 

a State guarantee to back liquidity facilities provided by central banks in 
accordance with the central banks’ conditions; 

(ii) 

a State guarantee of newly issued liabilities; 

(iii)  an acquisition of own funds instruments other than Common Equity Tier 
1 instruments or of other capital instruments, or a use of impaired assets 
measures  at  prices,  duration,  and  terms  that  do  not  confer  an  undue 
advantage upon the institution or entity concerned, provided that none of 
the  circumstances  referred  to  in  Article  18(4),  points  (a),  (b)  or  (c),  or 
Article 21(1) are present at the time the public support is granted. 

(b)  where  the  extraordinary  public  financial  support  takes  the  form  of  an 
intervention by a deposit guarantee scheme to preserve the financial soundness 
and  long-term  viability  of  the  credit  institution  in  compliance  with  the 
conditions set out in Articles 11a and 11b of Directive 2014/49/EU, provided 
that none or of the circumstances referred to in Article 18(4) are present; 

(c)  where  the  extraordinary  public  financial  support  takes  the  form  of  an 
intervention by a deposit guarantee scheme in the context of the winding up of 
an  institution  pursuant  to  Article  32b  of  Directive  2014/59/EU  and  in 
accordance  with  the  conditions  set  out  in  Article  11(5)  of  Directive 
2014/49/EU; 

(d)  where  the  extraordinary  public  financial  support  takes  the  form  of  State  aid 
within  the  meaning  of  Article  107(1)  TFEU  granted  in  the  context  of  the 
winding  up  of  the  institution  or  entity  pursuant  to  Article  32b  of  Directive 
2014/59/EU,  other  than  the  support  granted  by  a  deposit  guarantee  scheme 
pursuant to Article 11(5) of Directive 2014/49/EU. 

2.  The  support  measures  referred  to  in  paragraph  1,  point  (a),  shall  fulfil  all  of  the 
following conditions: 

(a) 

(b) 

(c) 

(d) 

the measures  are  confined to  solvent entities,  as confirmed by the ECB or by 
the relevant national competent authority;  

the measures  are  of a precautionary  and temporary nature and are based on  a 
pre-defined  exit  strategy  approved  by  the  ECB  or  the  relevant  national 
competent authority, including a clearly specified termination date, sale date or 
repayment schedule for any of the measures provided; 

the  measures  are  proportionate  to  remedy  the  consequences  of  the  serious 
disturbance or to preserve financial stability;  

the  measures  are  not  used  to  offset  losses  that  the  entity  has  incurred  or  is 
likely to incur in the near future. 

For the purposes of the first subparagraph, point (a), an entity shall be deemed to be 
solvent where the ECB or the relevant national competent authority have concluded 
that no breach has occurred, or is likely to occur in the 12 following months, of any 
of  the  requirements  referred  to  in  Article  92(1)  of  Regulation  (EU)  No  575/2013, 
Article 104a of Directive 2013/36/EU, Article 11(1) of Regulation (EU) 2019/2033, 
Article 40 of Directive (EU) 2019/2034 or the relevant applicable requirements under 
national or Union law. 

For the purposes of the first subparagraph, point (d), the relevant competent authority 
shall  quantify  the  losses  that  the  entity  has  incurred  or  is  likely  to  incur.  That 

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quantification  shall  be  based,  as  a  minimum,  on  the  institution’s  balance  sheet, 
provided  that  the  balance  sheet  complies  with  the  applicable  accounting  rules  and 
standards, as confirmed by an independent external auditor, and, where available, on 
asset quality reviews conducted by the ECB, EBA or national  authorities or, where 
appropriate,  on  on-site  inspections  conducted  by  the  ECB  or  the  relevant  national 
competent authority. 

The  support  measures  referred  to  in  paragraph  1,  point  (a)(iii),  shall  be  limited  to 
measures that have been assessed by the ECB or the national competent authority as 
necessary  to  maintain  the  solvency  of  the  entity  by  addressing  its  capital  shortfall 
established  in  the  adverse  scenario  of  national,  Union  or  SSM-wide  stress  tests  or 
equivalent  exercises  conducted  by  the  ECB,  EBA  or  national  authorities,  where 
applicable, confirmed by the ECB or the relevant competent authority. 

By way of derogation from paragraph 1, point (a)(iii), acquisition of Common Equity 
Tier 1 instruments shall be exceptionally permitted where the nature of the shortfall 
identified  is  such  that  the  acquisition  of  any  other  own  funds  instruments  or  other 
capital instruments would not make it possible for the entity concerned to address its 
capital  shortfall  established  in  the  adverse  scenario  in  the  relevant  stress  test  or 
equivalent  exercise.  The  amount  of  acquired  Common  Equity  Tier  1  instruments 
shall  not  exceed  2%  of  the  total  risk  exposure  amount  of  the  institution  or  entity 
concerned  calculated  in  accordance  with  Article  92(3)  of  Regulation  (EU)  No 
575/2013. 

In  case  any  of  the  support  measures  referred  to  in  paragraph  1,  point  (a),  is  not 
redeemed,  repaid  or  otherwise  terminated  in  accordance  with  the  terms  of  the  exit 
strategy  established  at  the  time  of  granting  such  measure,  the  ECB  or  the  relevant 
national  competent  authority  shall  conclude  that  the  condition  laid  down  in 
Article 18(1),  point  (a),  is  met  in  relation  to  the  institution  or  entity  which  has 
received  those  support  measures  and  shall  communicate  that  assessment  to  the 
Commission  and 
third 
subparagraph.’; 

in  accordance  with  Article  18(1), 

the  Board, 

to 

(21) 

Article 19 is amended as follows: 

(a) 

paragraph 1 is replaced by the following: 

‘1.  Where  resolution  action  involves  the  granting  of  State  aid  pursuant  to 
Article  107(1)  TFEU  or  of  Fund  aid  in  accordance  with  paragraph  3  of  this 
Article,  the  resolution  scheme  referred  to  in  Article  18(6)  of  this  Regulation 
shall  not  enter  into  force  until  such  time  when  the  Commission  adopts  a 
positive  or  conditional  decision,  or  a  decision  not  to  raise  objections, 
concerning  the  compatibility  of  the  use  of  such  aid  with  the  internal  market. 
The Commission shall take the decision concerning the compatibility of the use 
of  State  aid  or  of  Fund  aid  with  the  internal  market  at  the  latest  when  it 
endorses or objects to the resolution scheme pursuant to Article 18(7), second 
subparagraph, or when the period of 24 hours referred to in Article 18(7), fifth 
subparagraph, expires, whichever is earlier. 

In  performing  the  tasks  conferred  on  them  by  Article  18  of  this  Regulation, 
Union  institutions  shall  have  in  place  structural  arrangements  that  ensure 
operational  independence  and  avoid  conflicts  of  interest  that  could  arise 
between the functions entrusted with the performance of those tasks and other 

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functions  and  shall  make  public  in  an  appropriate  manner  all  relevant 
information on their internal organisation in this regard.’; 

(b)  paragraph 3 is replaced by the following: 

‘3. As soon as the Board considers that it may be necessary to use the Fund, it 
shall  informally,  promptly,  and  in  a  confidential  manner  contact  the 
Commission  to  discuss  the  possible  use  of  the  Fund,  including  legal  and 
economic aspects related to its use. Once the Board is sufficiently certain that 
the resolution scheme envisaged will entail the use of Fund aid, the Board shall 
formally  notify  the  Commission  of  the  proposed  use  of  the  Fund.  That 
notification  shall  contain  all  the  information  that  the  Commission  needs  to 
make its assessments pursuant to this paragraph, and that the Board has in its 
possession or which the Board has the power to obtain in accordance with this 
Regulation. 

Upon  receiving  the  notification  referred  to  in  the  first  subparagraph,  the 
Commission shall assess whether the use of the Fund would distort, or threaten 
to distort, competition by favouring the beneficiary or any other undertaking so 
as, insofar as it would affect trade between Member States, to be incompatible 
with  the  internal  market.  The  Commission  shall  apply  to  the  use  of  the  Fund 
the  criteria  established  for  the  application  of  State  aid  rules  as  enshrined  in 
Article  107  TFEU.  The  Board  shall  provide  the  Commission  with  the 
information  in  its  possession,  or  which  the  Board  has  the  power  to  obtain  in 
accordance  with  this  Regulation,  and  that  the  Commission  deems  to  be 
necessary to carry out that assessment.  

When  making  its  assessment,  the  Commission  shall  be  guided  by  all  the 
relevant regulations adopted under Article 109 TFEU, all related and relevant 
communications and guidance of the Commission, and all measures adopted by 
the Commission in application of the rules of the Treaties relating to State aid 
as are in force at the time the assessment is to be made. Those measures shall 
be  applied  as  if  references  to  the  Member  State  responsible  for  notifying  the 
aid were references to the Board, and with any other necessary modifications.  

The Commission shall decide on the compatibility of the use of the Fund with 
the internal market  and address that decision to  the Board and to the national 
resolution authorities of the Member State or Member States concerned. That 
decision  may  be  contingent  on  conditions,  commitments  or  undertakings  in 
respect  of  the  beneficiary  and  it  shall  take  into  account  the  need  for  timely 
execution of resolution action by the Board.  

The  decision  may  also  lay  down  obligations  on  the  Board,  the  national 
resolution  authorities  in  the  participating  Member  State  or  Member  States 
concerned or the beneficiary to enable compliance with it to be monitored. This 
may include requirements for the appointment of a trustee or other independent 
person  to  assist  in  monitoring.  A  trustee  or  other  independent  person  may 
perform such functions as may be specified in the Commission decision.  

Any  decision  pursuant  to  this  paragraph  shall  be  published  in  the  Official 
Journal of the European Union.  

The Commission may issue a negative decision, addressed to the Board, where 
it  decides  that  the  proposed  use  of  the  Fund  would  be  incompatible  with  the 
internal market and cannot be implemented in the form proposed by the Board. 

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49 

  EN 

On receipt of such a decision the Board shall reconsider its resolution scheme 
and prepare a revised resolution scheme.’; 

(c) 

paragraph 10 is replaced by the following: 

‘10.  By  way  of  derogation  from  paragraph  3,  the  Council  may,  on  an 
application of a Member State or the Board, within 7 days of such application 
being  made, unanimously  decide that the use of  the Fund is  to  be considered 
compatible  with  the  internal  market,  where  such  a  decision  is  justified  by 
exceptional  circumstances. The Commission  shall  take a decision on the case 
where the Council has not decided within those 7 days.’; 

(22) 

Article 20 is amended as follows: 

(a) 

paragraph 1 is replaced by the following: 

‘1. Before determining whether the conditions for resolution, or the conditions 
for  write  down  or  conversion  of  capital  instruments  and  eligible  liabilities  as 
referred to in Article 21(1) are met, the Board shall ensure that a fair, prudent 
and realistic valuation of the assets and liabilities of an entity as referred to in 
Article  2  is  carried  out  by  a  person  that  is  independent  from  any  public 
authority, including the  Board and the national  resolution  authority, and  from 
the entity concerned.’; 

(b) 

the following paragraph 8a is inserted: 

‘8a. Where necessary to inform the decisions referred to paragraph 5, points (c) 
and (d), the valuer shall complement the information in paragraph 7, point (c), 
with  an  estimate  of  the  value  of  the  off-balance  sheet  assets  and  liabilities, 
including contingent liabilities and assets.’; 

(c) 

in paragraph 18, the following point (d) is added: 

‘(d) when determining the losses that the deposit guarantee scheme would have 
incurred  had  the  institution  been  wound  up  under  normal  insolvency 
proceedings,  apply  the  criteria  and  methodology  referred  to  in  Article  11e  of 
Directive  2014/49/EU  and  in  any  delegated  act  adopted  pursuant  to  that 
Article.’; 

(23) 

Article 21 is amended as follows: 

(a) 

paragraph 1 is amended as follows: 

(i) 

the first subparagraph is amended as follows: 

— 

the introductory wording is replaced by the following: 

‘1. The Board, acting under the procedure laid down in Article 18, 
shall exercise the power to  write down or convert relevant  capital 
instruments, and eligible liabilities as referred to in paragraph 7a, in 
relation to the entities and groups referred to in Article 7(2), and to 
the  entities  and  groups  referred  to  in  Article  7(4),  point (b),  and 
Article7(5)  where  the  conditions  for  the  application  of  those 
provisions  are  met,  only  where  it  determines,  in  its  executive 
session,  on  receiving  a  communication  pursuant  to  the  second 
subparagraph  or  on  its  own  initiative,  that  one  or  more  of  the 
following conditions are met:’; 

—  point (e) is replaced by the following: 

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‘(e) extraordinary public financial support is required by the entity 
or group, except where that support is granted in one of the forms 
referred to in Article 18a(1).’; 

(ii) 

the second subparagraph is replaced by the following: 

‘The  assessment  of  the  conditions  referred  to  in  the  first  subparagraph, 
points  (a)  to  (d),  shall  be  made  by  the  ECB  for  entities  referred  to  in 
Article  7(2)(a),  or  by  the  relevant  national  competent  authority  for 
entities referred to in Article 7(2)(b), (4)(b) and (5), and by the Board, in 
its executive session, in accordance with the allocation of tasks pursuant 
to the procedure laid down in Article 18(1) and (2).’; 

(b)  paragraph 2 is deleted; 

(c) 

in paragraph 3, point (b) is replaced by the following: 

‘(b) having regard to timing, the need to implement effectively the write down 
and conversion powers  or the resolution  strategy  for the resolution  group  and 
other  relevant  circumstances,  there  is  no  reasonable  prospect  that  any  action, 
including  alternative  private  sector  measures,  supervisory  action  or  early 
intervention  measures,  other  than  the  write-down  or  conversion  of  relevant 
capital instruments, and eligible liabilities as referred to in paragraph 7a, would 
prevent the failure of that entity or group within a reasonable timeframe.’; 

(d)  paragraph 9 is replaced by the following: 

‘9. Where one or more of the conditions referred to in paragraph 1 are met in 
relation to an entity referred to in that paragraph, and the conditions referred to 
in Article 18(1) are also met in relation to that entity or to an entity belonging 
to the same group, the procedure laid down in  Article 18(6), (7) and (8) shall 
apply.’; 

(24) 

Article 27 is amended as follows: 

(a) 

paragraph 7 is replaced by the following: 

‘7. The Fund may make a contribution as referred to in paragraph 6 only where 
all of the following conditions are met: 

(a) 

a contribution to loss absorption and recapitalisation equal to an amount 
not  less  than  8  %  of  the  total  liabilities  including  own  funds  of  the 
institution  under  resolution,  measured  in  accordance  with  the  valuation 
provided for in Article 20(1) to (15), has been made by shareholders, the 
holders  of  relevant  capital  instruments  and  other  bail-inable  liabilities 
through reduction, write-down, or conversion pursuant to Article 48(1) of 
Directive 2014/59/EU and Article 21(10) of this Regulation, and by the 
deposit  guarantee  scheme  pursuant  to  Article  79  of  this  Regulation  and 
Article 109 of Directive 2014/59/EU where relevant; 

(b) 

the contribution from the Fund does not exceed 5 % of the total liabilities 
including  own  funds  of  the  institution  under  resolution,  measured  in 
accordance with the valuation provided for in Article 20(1) to (15).’; 

(b)  paragraphs 9 and 10 are replaced by the following: 

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51 

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‘9. The Fund may make a contribution from resources which have been raised 
through  ex-ante  contributions  as  referred to  in Article 70  and which have not 
yet been used, provided that all of the following conditions are met: 

(a) 

(b) 

the  Fund  has  made  a  contribution  pursuant  to  paragraph  6  and  the  5  % 
limit referred to in paragraph 7, point (b), has been reached; 

all liabilities ranking lower than deposits, and not excluded from bail-in 
pursuant to paragraphs 3 and 5, have been written down or converted in 
full. 

10.  In  extraordinary  circumstances,  as  an  alternative  or  in  addition  to  the 
contribution of the Fund referred to in paragraph 9, where the conditions laid 
down  in  paragraph  9  are  met,  the  Board  may  seek  further  funding  from 
alternative financing sources.’; 

(c) 

in paragraph 13, the second subparagraph is replaced by the following: 

‘The assessment referred to in the first subparagraph shall establish the amount 
by which bail-inable liabilities need to be written down or converted: 

(a) 

(b) 

to restore the Common Equity Tier 1 capital ratio of the institution under 
resolution,  or,  where  applicable,  establish  the  ratio  of  the  bridge 
institution,  taking  into  account  any  contribution  of  capital  by  the  Fund 
made pursuant to Article 76(1), point (d); 

to sustain sufficient market confidence in the institution under resolution 
or the bridge institution, taking into account the need to cover contingent 
liabilities, and enable the institution under resolution to continue to meet, 
for at least 1 year, the conditions for authorisation and to continue to carry 
out  the activities for  which it is  authorised under Directive 2013/36/EU 
or Directive 2014/65/EU.’; 

(25) 

Article 30 is amended as follows: 

(a) 

the title is replaced by the following: 

‘Obligation to cooperate and information exchange’; 

(b) 

the following paragraphs 2a, 2b and 2c are inserted: 

‘2a.  The  Board,  the  ESRB,  the  EBA,  ESMA  and  EIOPA  shall  cooperate 
closely  and  provide  each  other  with  all  information  necessary  for  the 
performance of their respective tasks. 

2b.  The  ECB  and  other  members  of  the  European  System  of  Central  Banks 
(ESCB)  shall  cooperate  closely  with  the  Board  and  provide  it  with  all 
information  necessary  for  the  performance  of  the  Board’s  tasks,  including 
information  collected  by  them  in  accordance  with  their  statute.  Article  88(6) 
shall apply to the exchanges concerned. 

2c.  The  designated  authorities  referred  to  in  Article  2(1),  point  (18),  of 
Directive  2014/49/EU  shall  cooperate  closely  with  the  Board  and  provide  it 
with all information necessary to the performance of its tasks.’; 

(c) 

paragraph 6 is replaced by the following: 

‘6.  The  Board  shall  endeavour  to  cooperate  closely  with  any  public  financial 
assistance  facility,  including  the  European  Financial  Stability  Facility  (EFSF) 

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and  the  European  Stability  Mechanism  (ESM),  in  particular  in  all  of  the 
following situations: 

(a) 

in the extraordinary circumstances referred to in Article 27(9) and where 
such a facility has granted, or is likely to grant, direct or indirect financial 
assistance to entities established in a participating Member State;  

(b)  where  the  Board  has  contracted  for  the  Fund  a  financial  arrangement 

pursuant to Article 74.’; 

(d)  paragraph 7 is replaced by the following:  

‘7.  Where  necessary, 
the  Board  shall  conclude  a  memorandum  of 
understanding  with  the  ECB  and  other  members  of  the  ESCB,  the  national 
resolution  authorities  and  the  national  competent  authorities  describing  in 
general terms how they will cooperate under paragraphs 2, 2a, 2b and 4 of this 
Article  and  under  Article  74,  second  paragraph,  in  the  performance  of  their 
respective  tasks  under  Union  law.  The  memorandum  shall  be  reviewed  on  a 
regular basis and shall be published subject to the requirements of professional 
secrecy.’;  

(26) 

the following Article 30a is inserted: 

‘Article 30a 

Information held by centralised automated mechanism 

1.  The  authorities  operating  the  centralised  automated  mechanisms  established  by 
Article  32a  of  Directive  (EU)  2015/849  of  the  European  Parliament  and  of  the 
Council** shall provide the Board, upon its request, with information related to the 
number  of  customers  for  which  an  entity  as  referred  to  in  Article  2  is  the  only  or 
principal banking partner. 

2. The Board shall request the information referred to in paragraph 1 only on a case-
by-case basis and where necessary for the purpose of performing its tasks under this 
Regulation. 

3. The Board may share the information obtained pursuant to the first paragraph with 
national  resolution  authorities  in  the  context  of  the  performance  of  their  respective 
tasks under this Regulation. 

______________________________ 

**  Directive (EU) 2015/849 of the European Parliament and of the Council of 20 
May  2015  on  the  prevention  of  the  use  of  the  financial  system  for  the  purposes  of 
money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of 
the European Parliament and of the Council, and repealing Directive 2005/60/EC of 
the European Parliament and of the Council and Commission Directive 2006/70/EC 
(OJ L 141, 5.6.2015, p. 73).’; 

(27) 

in Article 31, the following paragraph 3 is added: 

‘3.  For  the  entities  and  groups  referred  to  in  Article  7(2),  and  for  the  entities  and 
groups referred to in Article 7(4), point (b) and Article 7(5) where the conditions for 
the  application  of  those  provisions  are  met,  national  resolution  authorities  shall 
consult the Board before acting under Article 86 of Directive 2014/59/EU.’; 

(28) 

in Article 32(1), the first subparagraph is replaced by the following: 

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‘Where a group includes entities established in participating Member States  as well 
as in in non-participating Member States or third countries, without prejudice to any 
approval  by  the  Council  or  the  Commission  required  under  this  Regulation,  the 
Board shall represent the national resolution authorities of the participating Member 
States  for  the  purposes  of  consultation  and  cooperation  with  non-participating 
Member  States  or  third  countries  in  accordance  with  Articles  7,  8,  12,  13,  16,  18, 
45h, 55, and 88 to 92 of Directive 2014/59/EU.’; 

(29) 

Article 34 is amended as follows: 

(a) 

in paragraph 1, the introductory wording is replaced by the following: 

‘The  Board  may,  making  full  use  of  all  of  the  information  which  is  already 
available  to  the  ECB,  including  information  collected  by  the  members  of  the 
ESCB in accordance with their statute, or of all the information available to the 
national  competent  authorities,  to  the  ESRB,  the  EBA,  ESMA  or  EIOPA, 
require,  through  the  national  resolution  authorities  or  directly,  after  having 
informed those authorities, the following legal or natural persons to provide it 
with all the information necessary, in accordance with the procedure requested 
by the Board and in the form requested by the Board, to perform its tasks:’; 

(b)  paragraphs 5 and 6 are replaced by the following: 

‘5.  The  Board,  the  ECB,  the  members  of  the  ESCB,  the  national  competent 
authorities,  the  ESRB,  the  EBA,  ESMA,  EIOPA  and  the  national  resolution 
authorities may draw up memoranda of understanding  setting out a procedure 
governing the exchange of information. The exchange of information between 
the Board, the ECB and other members of the ESCB, the national  competent 
authorities,  the  ESRB,  the  EBA,  ESMA,  EIOPA  and  the  national  resolution 
authorities  shall  not  be  deemed  to  infringe  the  requirements  of  professional 
secrecy. 

6. National competent authorities, the ECB, members of the ESCB, the ESRB, 
the  EBA,  ESMA,  EIOPA,  and  the  national  resolution  authorities  shall 
cooperate  with  the  Board  to  verify  whether  some  or  all  of  the  information 
requested  is  already  available  at  the  time  the  request  is  made.  Where  such 
information is available, the national competent authorities, the ECB and other 
members  of  the  ESCB,  the  ESRB,  the  EBA,  ESMA,  EIOPA,  or  the  national 
resolution authorities shall provide that information to the Board.’; 

(30) 

in Article 43(1), the following point (aa) is inserted: 

‘(aa) the Vice-Chair appointed in accordance with Article 56;’; 

(31) 

in Article 50(1), point (n) is replaced by the following: 

‘(n)  appoint  an  Accounting  Officer  and  an  Internal  Auditor,  subject  to  the  Staff 
Regulations  and  the  Conditions  of  Employment,  who  shall  be  functionally 
independent in the performance of their duties;’; 

(32) 

Article 53 is amended as follows: 

(a) 

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

‘The Board in its executive session shall be composed of the Chair, the Vice-
Chair and the four members referred to in Article 43(1), point (b).’; 

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(b) 

in paragraph 5, the words ‘Article 43(1)(a) and (b)’ are replaced by the words 
‘Article 43(1), points (a), (aa) and (b)’.; 

(33) 

in Article 55, paragraphs 1 and 2 are replaced by the following: 

‘1.  When  deliberating  on  an  individual  entity  or  a  group  established  in  only  one 
participating Member State, if all members referred to in Article 53(1) and (3) are not 
able to reach a joint agreement by consensus within a deadline set by the Chair, the 
Chair, the Vice-Chair and the members referred to  in  Article 43(1), point  (b), shall 
take a decision by a simple majority. 

2. When deliberating on a cross-border  group,  if all members referred to in  Article 
53(1) and (4) are not able to reach a joint agreement by consensus within a deadline 
set  by  the  Chair,  the  Chair,  the  Vice-Chair  and  the  members  referred  to  in  Article 
43(1), point (b), shall take a decision by a simple majority.’; 

(34) 

Article 56 is amended as follows: 

(a) 

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

‘(d) the establishment of a preliminary  draft budget  and a draft budget  of the 
Board, in accordance with Article 61, and the implementation of the budget of 
the Board, in accordance with Article 63;’; 

(b) 

in paragraph 5, the first subparagraph is replaced by the following: 

‘The term of office of the Chair, of the Vice-Chair and of the members referred 
to in Article 43(1), point (b), shall be five years. That term shall be renewable 
once.  

A person who has served two terms of office as the Chair, the Vice-Chair or a 
member  referred  to  in  Article  43(1),  point  (b),  shall  not  be  eligible  for 
appointment to any of the other two positions.’; 

(c) 

in paragraph 6, first subparagraph, the following sentence is added: 

‘The Commission may arrange the names on the shortlist in the order reflecting 
the Commission’s assessment of the suitability of each candidate in light of the 
criteria referred to in paragraph 4 of this Article.’; 

(d) 

the following paragraph 6a is inserted: 

‘6a. In the 9 months preceding the end of the first term of office of the Chair, 
of the Vice-Chair and of the members referred to in Article 43(1), point (b), the 
Commission  shall  evaluate the results achieved in the first  term  of office and 
shall decide whether to put forward a proposal for renewal of the term based on 
the results of that evaluation.  

The  Council,  acting  on  a  proposal  from  the  Commission,  shall  adopt  an 
implementing  decision  to  renew  the  term  of  office  of  the  Chair,  of  the  Vice-
Chair and of the members referred to in Article 43(1), point (b). The Council 
shall act by qualified majority.’; 

(e) 

in paragraph 7, the last sentence is replaced by the following: 

‘The  Chair,  the  Vice-Chair,  and  the  members  referred  to  in  Article  43(1), 
point (b)  shall  remain  in  office  until  their  successors  are  appointed  and  have 
taken  up  their  duties  in  accordance  with  the  Council  decision  referred  to  in 
paragraph 6 of this Article.’; 

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(35) 

Article 61 is replaced by the following: 

‘Article 61 

Establishment of the budget 

1. By 31 March each year, the Chair shall draw up a preliminary draft budget of the 
Board, including a statement of estimates of the Board’s revenue and expenditure for 
the following  year, together with the establishment plan, for the following  year and 
submit it to the Board in its plenary session. 

The Board in its plenary session shall, where necessary, adjust the preliminary draft 
budget of the Board together with the draft establishment plan. 

2. On the basis of the preliminary draft budget as adopted by the Board in its plenary 
session,  the  Chair  shall  draw  up  a  draft  budget  of  the  Board  and  submit  it  to  the 
Board in its plenary session for adoption. 

By  30  November  each  year,  the  Board  in  its  plenary  session  shall  adjust  the  draft 
budget  submitted  by  the  Chair,  where  necessary,  and  adopt  the  final  budget  of  the 
Board together with the establishment plan.’; 

(36) 

in Article 69, paragraph 4 is replaced by the following: 

‘4. If, after the initial period referred to in paragraph 1, the available financial means 
fall  below  the  target  level  specified  in  that  paragraph,  the  regular  contributions 
calculated  in  accordance  with  Article  70  shall  be  raised  until  the  target  level  is 
reached.  The  Board  may  defer  the  collection  of  the  regular  contributions  raised  in 
accordance  with  Article  70  for  1  or  more  years  to  ensure  that  the  amount  to  be 
collected  reaches  an  amount  that  is  proportionate  to  the  costs  of  the  collection 
process,  provided  that  such  deferral  does  not  materially  affect  the  capacity  of  the 
Board to use the Fund pursuant to Section 3. After the target level has been reached 
for  the  first  time  and  where  the  available  financial  means  have  subsequently  been 
reduced to less than two-thirds of the target level, those contributions shall be set at a 
level allowing for reaching the target level within 6 years.’; 

(37) 

Article 70 is amended as follows: 

(a) 

paragraph 3 is replaced by the following: 

‘3. The available financial means to be taken into account in order to reach the 
target  level  specified  in  Article  69  may  include  irrevocable  payment 
commitments  which  are  fully  backed  by  collateral  of  low-risk  assets 
unencumbered by any third-party rights, at the free disposal of and earmarked 
for the exclusive use by the Board for the purposes specified in Article 76(1). 
The share of those irrevocable payment commitments shall not exceed 50 % of 
the total amount of contributions raised in accordance with this Article. Within 
that limit, the Board shall determine annually the share of irrevocable payment 
commitments  in  the  total  amount  of  contributions  to  be  raised  in  accordance 
with this Article.’; 

(b) 

the following paragraph 3a is inserted: 

‘3a. The Board shall call the irrevocable payment commitments made pursuant 
to paragraph 3 of this Article when the use of the Fund is needed pursuant to 
Article 76.  

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Where an institution or entity stops being within the scope of Article 2 and is 
no  longer  subject  to  the  obligation  to  pay  contributions  in  accordance  with 
paragraph 1  of  this  Article,  the  Board  shall  call  the  irrevocable  payment 
commitments  made  pursuant  to  paragraph  3  and  still  due.  If  the  contribution 
linked  to  the  irrevocable  payment  commitment  is  duly  paid  at  first  call,  the 
Board shall cancel the commitment and return the collateral. If the contribution 
is not duly paid at first call, the Board shall seize the collateral and cancel the 
commitment.’; 

(38) 

in Article 71(1), the second subparagraph is replaced by the following: 

‘The  total  amount  of  extraordinary  ex-post  contributions  per  year  shall  not  exceed 
three times 12,5 % of the target level.’; 

(39) 

in Article 74, the following paragraph is inserted:  

‘The Board shall inform the Commission and the ECB as soon as it considers that it 
may  be  necessary  to  activate  financial  arrangements  contracted  for  the  Fund  in 
accordance with this Article, and shall provide the Commission and the ECB with all 
information necessary for the performance of their tasks in respect of such financial 
arrangements.’;  

(40) 

Article 76 is amended as follows: 

(a) 

paragraph 3 is replaced by the following: 

‘3.  Where  the  Board  determines  that  the  use  of  the  Fund  for  the  purposes 
referred  to  in  paragraph  1  is  likely  to  result  in  part  of  the  losses  of  an  entity 
referred to  in  Article 2 being passed on to  the Fund, the  principles governing 
the use of the Fund set out in Article 27 shall apply.’; 

(b) 

the following paragraphs 5 and 6 are added: 

‘5. Where the resolution tools referred to in Article 22(2), point (a) or (b), are 
used  to  transfer  only  part  of  the  assets,  rights  or  liabilities  of  the  institution 
under  resolution,  the  Board  shall  have  a  claim  against  the  residual  entity  for 
any  expense  and  loss  incurred  by  the  Fund  as  a  result  of  any  contributions 
made to resolution pursuant to paragraphs 1 and 2 of this Article in connection 
to losses which creditors would have otherwise borne. 

6. The claims of the Board referred to paragraph 5 of this Article and in Article 
22(6) shall, in each participating Member State, have the same priority ranking 
as the claims of the national resolution financing arrangements in the national 
law  of  that  Member  State  governing  normal  insolvency  proceedings  pursuant 
to Article 108(9) of Directive 2014/59/EU.’; 

(41) 

Article 79 is amended as follows: 

(a) 

paragraphs 1, 2 and 3 are replaced by the following: 

‘1.  Participating  Member  States  shall  ensure  that  when  the  Board  takes 
resolution action with respect to a credit institution, provided that such action 
ensures  that  depositors  continue  to  have  access  to  their  deposits,  to  prevent 
depositors  from  bearing  losses,  the  deposit  guarantee  scheme  to  which  that 
credit  institution  is  affiliated  shall  contribute  for  the  purposes  and  under  the 
conditions laid down in Article 109 of Directive 2014/59/EU. 

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2.  The  Board  shall  determine  the  amount  of  the  contribution  of  the  deposit 
guarantee  scheme  in  accordance  with  paragraph  1  after  having  consulted  the 
deposit guarantee scheme, and where necessary the designated authority within 
the  meaning  of  Article  2(1),  point (18),  of  Directive  2014/49/EU,  on  the 
estimated  cost  of  repaying  depositors  pursuant  to  Article  11e  of  Directive 
2014/49/EU and in compliance with the conditions referred to in Article 20 of 
this Regulation. 

3. The Board shall notify its decision as referred to in the first subparagraph to 
the  designated  authority  within  the  meaning  of  Article  2(1),  point (18),  of 
Directive  2014/49/EU  and  to  the  deposit  guarantee  scheme  to  which  the 
institution  is  affiliated.  The  deposit  guarantee  scheme  shall  implement  that 
decision without delay.’; 

(b) 

in paragraph 5, the second and third subparagraph are deleted; 

in Article 85(3), the words ‘referred to in’ are replaced by the words ‘adopted under’; 

in Article 88, the following paragraph 7 is added: 

(42) 

(43) 

‘7.  This  Article  shall  not  prevent  the  Board  from  disclosing  its  analyses  or 
assessments, including when they are based on information provided by the entities 
referred  to  in  Article  2  or  other  authorities  as  referred  to  in  paragraph  6  of  this 
Article,  when  the  Board  assesses  that  the  disclosure  would  not  undermine  the 
protection  of  the  public  interest  as  regards  financial,  monetary  or  economic  policy 
and  that  there  is  a  public  interest  in  disclosing  which  overrides  any  other  interests 
referred to in paragraph  5 of this Article. Such disclosure shall be considered to be 
made  by  the  Board  in  the  exercise  of  its  functions  under  this  Regulation  for  the 
purposes of paragraph 1 of this Article.’. 

Article 2 

Entry into force and application 

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

It shall apply from … [OP please insert the date = 18 months from the date of entry into force 
of this amending Regulation]. 

However, Article 1, points (1)(a), points (2) and, (3), point (4)(a), point (5)(a), (b) and (c)(i) 
and (ii), point (6)(a), point (7), point (13)(a)(i) and (b), point (14)(a), (b) and (d), point (19)(d) 
and  (e),  point  (21),  point  (23)(a)(i),  first  indent,  (b)  and  (d),  points  (25)  to  (35),  and  points 
(39), (42) and (43), shall apply from … [OP please insert the date = 1 month from the date of 
entry into force of this amending Regulation]. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Strasbourg, 

For the European Parliament 
The President 

For the Council 
The President 

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