6.4.2022
EN
Official Journal of the European Union
C 152/115
deductions, the failure of one resolution entity in the G-SII group would lead to losses in other resolution entities of that group and consequently to a reduction in the loss-absorbing and recapitalisation capacity of those resolution entities.
3.3.4.
Consideration of subsidiaries established outside of the Union.
Articles 12a and 72e(4) of the CRR do not explicitly cover subsidiaries that are located in a third country.
It may thus not be possible for EU banking groups with a global MPE resolution strategy to take subsidiaries that are established outside of the Union into account.
3.3.5.
Clarifications on the eligibility of debt instruments issued in the context of the internal TLAC requirement.
Article 92b of the CRR lays down the internal TLAC requirement for material subsidiaries of non-EU G-SIIs that are not resolution entities.
That requirement may be met with own funds and with eligible liabilities instruments, as specified in Article 92b(2). 3.4.
Detailed Amendments to the proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 575/2013 and Directive 2014/59/EU as regards the prudential treatment of G-SIIs groups with a MPE resolution strategy.
3.4.1.
Consolidated calculation for G-SIIs with multiple resolution entities (Article 12a) 3.4.1.1.
The EESC stresses that MPE banks should be able to make use of the adjustments agreed to in the TLAC term sheet.
These adjustments are designed to ensure equivalent treatment between the SPE and MPE resolution models.
These adjustments are included in Articles 12a and 72e(4) of the CRR II but these two articles do not include third countries.
In particular, Article 12a, as drafted, indicates that adjustments arising from differences in RWAs are limited to entities based in the EU, as the concept of resolution entity only refers to subsidiaries with headquarters in the EU.
It is important to broaden the scope to include any other subsidiaries that the group may have in any other country.
3.4.1.2.
The EESC considers that this objective is not achieved with the Commission’s recent proposal because the comparison between the hypothetical SPE and the sum of RWA of each resolution entity keeps third country subsidiaries out due to the fact that the comparison refers to Articles 45d and 45h of the BRRD, and the BRRD does not include subsidiaries in third countries nor differences between RWA that arise from different calculation criteria between third countries and Member States.
It only includes differences between Member States.
3.4.1.3.
Regarding the need for an agreement to make this adjustment, the EESC is of the opinion that although there is a specific procedure for an agreement about the requirement of own funds and eligible liabilities in Article 45h, points 4 to 6 of BRRD II, this is a procedure that would only be applicable in the case of different resolution authorities within the EU and under a common regulation.
One example to explain why the procedure is not valid for third counties is that it involves the EBA in cases where no agreement is reached between the resolution authorities.
3.4.1.4.
The EESC proposes that in cases where the adjustments arise in a subsidiary of a third country, the European resolution authority of the parent institution is that which, taking into account the non-binding opinion of the resolution authority of said third country, has the ability to apply the adjustment without the need to reach an agreement with the third country authority.
3.4.2.
Deductions from eligible liabilities items (Article 72e) 3.4.2.1.
The EESC underlines that Article 72e shall include a grandfathering period until 31 December 2024 (deadline for TLAC implementation in third countries).
During this transition period MPE banks shall be able to adjust the deduction on the holdings on third country subsidiaries without an equivalent resolution requirement, calculating the surplus based on the total capital requirement applicable in the third country.
Otherwise there would be an unintended consequence, because the need to issue eligible liabilities will increase as a result of not being able to adjust this holding on a third country subsidiary, and from 2025 onwards, with a resolution regime in place, the Parent Institution requirement will decrease due to a lower adjusted deduction for these third country holdings and the need for these issuances of eligible liabilities will no longer be needed.
Brussels, 9 December 2021.
The President of the European Economic and Social Committee Christa SCHWENG