CELEX: 52013PC0520
Language: en
Date: 2013-07-10
Title: Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 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 Bank Resolution Fund and amending Regulation (EU) No 1093/2010 of the European Parliament and of the Council

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		52013PC0520
		
			Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 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 Bank Resolution Fund and amending Regulation (EU) No 1093/2010 of the European Parliament and of the Council /* COM/2013/0520 final - 2013/0253 (COD) */
			
				
		
		
			
			   	EXPLANATORY MEMORANDUM
1.           CONTEXT OF THE PROPOSAL
As outlined in the Communication from the
Commission to the European Parliament and the Council ‘A Roadmap towards a
Banking Union’[1],
in the Communication from the Commission ‘A Blueprint for a Deep and Genuine
Economic and Monetary Union Launching a European Debate’[2] and in the Four Presidents’
report ‘Towards a genuine economic and monetary union’[3] in 2012, an integrated
financial framework or ‘Banking Union’ is a vital part of the policy measures
to put Europe back on the path of economic recovery and growth.
Swift progress towards a Banking Union is
indispensable to ensure financial stability and growth in the Euro Area and in
the whole internal market. It is a crucial step to overcome the current financial
fragmentation and uncertainty, to ease funding conditions for vulnerable
sovereigns and banks and break the link between the two, and to re-launch
cross-border banking activity in the internal market to the benefit of both
Euro Area and non-Euro Area Member States. Building on the regulatory framework
common to the 28 members of the internal market (single rulebook), the European
Commission has therefore taken an inclusive approach and proposed a roadmap for
the Banking Union with different instruments and steps, potentially open to all
Member States but in any case including the 18 currently within the Euro Area.
In March 2013, the European Council
committed to complete the Banking Union via the following steps. First, the
remaining legislative procedures to set up the Single Supervisory Mechanism
(SSM) conferring powers on the ECB to supervise Euro Area banks[4] should be concluded as a
priority. Second, agreement should be reached in the summer months on how the
European Stability Mechanism (ESM) could, following the establishment of the
SSM and a review of bank balance sheets including the definition of “legacy
assets”, recapitalise banks directly. Likewise in summer 2013, agreement should
be reached on the Commission’s proposals for a Directive of the European
Parliament and of the Council of [ ] establishing a framework for the recovery
and resolution of credit institutions and investment firms (hereinafter ‘Directive
[ ] of the European Parliament and of the Council’[5]). Finally, the Commission’s
proposal for a Single Resolution Mechanism (SRM) together with appropriate and
effective backstop arrangements should be examined as a matter of priority with
the intention of adopting them during the current parliamentary cycle.
As established, the Banking Union will
cover all Euro Area Member States and those non-Euro Area Member States that
choose to join. The same EU-wide single rulebook of prudential requirements[6] and rules on bank resolution
will apply within the Banking Union and in all other Member States. The
integrity of the internal market will thus be preserved. The enhanced financial
stability generated by the Banking Union will also boost confidence and the
prospects for growth across the internal market. Central and uniform
application of prudential and resolution rules in the Member States
participating in the Banking Union will benefit all Member States. By
overcoming the financial fragmentation currently hampering economic activity,
it will help ensure fair competition for and remove obstacles to the free
exercise of fundamental freedoms not only in the participating Member States
but in the whole of the internal market.
1.1.        A Single Resolution
Mechanism and financing arrangements as key elements of Banking Union
The swift agreement on a Single Supervisory
Mechanism in April 2012, only seven months after the Commission's proposal of
September 2012 has laid the ground for a Banking Union, as integral part of the
Economic and Monetary Union.
Reinforced supervision within the SSM will
restore confidence in the health of banks. The ECB will assume ultimate
responsibility for the supervision of all Euro Area banks in 2014. In practice,
the ECB will directly supervise the largest and most internationally active
banks with the possibility to “call up” direct supervision for the others,
while the national authorities will be in charge of the day-to-day supervision
of smaller banks.
Building on the SSM, in order to set up the
sustainability of the banking markets in the participating Member States in the
SSM, the EU must put in place a Single Resolution Mechanism to deal with
failing banks. The risk of a bank experiencing a severe liquidity or solvency
problem can never be totally excluded. It is therefore necessary to set out a
framework that allows for the in-depth restructuring of banks by authorities
whilst avoiding the very significant risks to economic stability and costs
derived from their disorderly liquidation under national insolvency laws, and
putting an end to the need to finance the process with public resources.
The Directive on Bank Recovery and
Resolution, when adopted by the European Parliament and the Council, will
determine the rules for how EU banks in serious financial difficulties are
restructured, how vital functions for the real economy are maintained, and how
losses and costs are allocated to the banks’ shareholders, creditors and
uninsured depositors. Bail-in, a key instrument in the resolution directive,
would sequentially allocate losses and write down the claims of shareholders, subordinated
creditors, and senior creditors. Depositors below €100 000 are in any case excluded
from suffering losses, their claims being protected by national Deposit
Guarantee Schemes.
The directive relies on a network of
national authorities and resolution funds to resolve banks. While this is a
major step forward to minimise differing national approaches and to protect the
integrity of the internal market, it is not sufficient for those Member States
which share the supervision of credit institutions within the SSM. As
recognised by the European Council, in the Banking Union, bank supervision and
resolution need to be exercised by the same level of authority. Otherwise
tensions between the supervisor (ECB) and national resolution authorities may
emerge over how to deal with ailing banks, while market expectations about
Member States’ (in)ability to deal with bank failures nationally could
continue, reinforcing feedback loops between sovereigns and banks and
fragmentation and competitive distortions across the internal market.
Compared to a network of resolution authorities,
a Single Resolution Mechanism with a central decision-making body and a Single
Bank Resolution Fund will provide key benefits for Member States, taxpayers,
banks, and financial and economic stability in the entire EU:
·       
strong central decision-making will ensure that
resolution decisions across participating Member States will be taken
effectively and quickly, avoiding uncoordinated action, minimising negative
impacts on financial stability, and limiting the need for financial support;
·       
a centralised pool of bank resolution expertise
and experience will be able to deal with failing banks in a more systematic and
efficient way than individual national authorities with more limited resources
and experience;
·       
a Single Bank Resolution Fund will be able to pool
significant resources from bank contributions and therefore protect taxpayers
more effectively than national funds, while at the same time providing a level
playing field for banks across participating Member States. A Single Fund will
prevent coordination problems arising in the deployment of national funds and
will be instrumental in eliminating the dependence of banks on sovereign
creditworthiness.
The Single Resolution Mechanism must be
created within the EU legal and institutional framework. The European Council
Conclusions of 14 December 2012 state that “the process of completing EMU will
build on the EU’s institutional and legal framework.” While the deployment of
ad hoc inter-governmental tools outside the EU framework has been necessary to
tackle exceptional market circumstances and governance flaws in the original
construction of EMU, it threatens to undermine the democratic quality of EU
decision-making and the coherence of the EU legal system. The creation of the
SRM within the EU legal and institutional framework, like the SSM before it, is
therefore a necessary step to complete EMU in line with the European Council’s
conclusions and, more broadly, in order to protect the democratic and institutional
order of the EU.
1.2.        Transition to Banking
Union
The Single Supervisory Mechanism is set to
enter into force in mid-2014. The Single Resolution Mechanism meanwhile should
commence operations in January 2015, when Directive [ ] which will provide the
rulebook governing bank resolution across the internal market is set to enter
into force[7].
The SRM would thereafter apply the rules of this Regulation which are in line
with the rules of Directive [ ] for Member States participating in the Banking
Union, while national authorities would apply the rules of Directive [ ] for
those outside.
In any case the State aid rules on
burden-sharing will apply if resolution actions involve government support. In
order to implement the burden-sharing by shareholders and junior creditors, the
SRM would be able to apply as of the entry into application of this Regulation,
rules allowing the write down of shares and subordinated debt to the extent
necessary in order to apply the State aid rules.
In addition, Member States may decide to implement the new rules set out in Directive [ ] in their national
law, even before the deadline for transposition of that directive. In any event, the State aid competences of the Commission will be
preserved in all resolution cases involving support which qualifies as State
aid. In fact, to the extent that the use of the Single Bank Resolution Fund by
the SRM does not constitute State aid pursuant to the specific criteria laid
down by the Treaty those criteria would still remain applicable, by way of
analogy, to ensure that where the Resolution Fund is used, the same rules apply
to its intervention as if the national resolution authorities were to use
national financing arrangements.
At the European level, this process of
convergence is furthered, on the one hand, by the revised State aid guidelines
for support to banks and, on the other hand, by the agreement on how the
European Stability Mechanism could recapitalise ailing banks. The revised State
aid guidelines impose stricter requirements for burden sharing for shareholders
and junior creditors in any Member State providing public support to their
banks. This would counter the on-going fragmentation of the internal market
depending on the strength of the sovereign and the presence of legacy assets.
The ESM guidelines would meanwhile specify under what conditions, and subject
to State aid rules, Member States unable to provide public support to banks
could get loans or if necessary how banks could be directly recapitalised by
the ESM. 
2.           RATIONALE FOR A SINGLE RESOLUTION
MECHANISM
The Commission has taken into account the
analysis carried out in the Impact Assessment conducted for the adoption of the
proposal for Directive [ ] which assessed operational and legal aspects
relevant to the establishment of a single resolution mechanism (SRM).
Additional analysis has been conducted on
the proposed features of the SRM on the basis of updates of the information
comprised in the Impact Assessment. With regard to the ability of the SRM to
produce effective decisions, time is critical for two important reasons:
ex-ante, to enhance the credibility of the newly-established SRM as a
responsive tool, contributing to minimize the sources of uncertainty in the
markets; and where resolution is triggered, for the SRM to preserve the value
of the assets which can be eroded by unnecessary delays in the resolution
process. A network of national authorities would require additional procedural
time for each deliberation regarding cross-border institutions. On the
contrary, the proposed division of responsibilities between a central
decision-making level and local implementing authorities will result in time
savings. At the national level, it will take shorter time than at the central
level to accumulate all the expertise to manage implementation, because the
applicable law is national; at the central level, there will be scope for a
larger critical mass to attract and develop the best specialized human capital
more promptly.
With regard to the ability of the SRM to
produce efficient decisions, a central decision-making level will contribute to
minimizing the costs of resolution both since it can attain significant
advantages in terms of economies of scale over a network, and because it is
instrumental to the enforceability and optimality of the resolution decision. Structurally,
a system which does not overcome national authorities’ mandate to minimize the
cost to their own Member State fails to fully consider cross-border
externalities. A burden-sharing mechanism to minimize global welfare losses in
these situations has been envisioned by Member States since the beginning of
the crisis[8].
A single resolution mechanism is better suited than a network to guarantee the
enforceability of burden transfers, a necessary condition for the functioning
of a burden-sharing agreement. It will also guarantee the external
enforceability of the optimal resolution policy, which allows agreeing on a
burden-sharing rule ex-ante that allocates the costs of resolution according to
equitable and balanced criteria.
3.           LEGAL ELEMENTS OF THE PROPOSAL
3.1.        Legal basis
The legal basis for this proposal is
Article 114 of the TFEU, which allows the adoption of measures for the
approximation of national provisions aiming at the establishment and
functioning of the internal market.
The proposal aims to preserve the integrity
and enhance the functioning of the internal market. Uniform application of a
single set of resolution rules, together with access to a single European
resolution fund by a central authority will restore the orderly functioning of
the Union banking markets, will remove obstacles to the exercise of fundamental
freedoms and will avoid significant distortion of competition at least in those
Member States which share the supervision of credit institutions at the
European level.
Whilst Directive [ ] brings a high level of
harmonisation, it still allows flexibility to Member States which means that a
certain fragmentation in the internal market could remain. The SRM provides
instead for an integrated decision-making structure aligning resolution under
the SRM with supervision under the SSM to eliminate the competitive
disadvantage that banks in the participating Member States in the SSM have
compared to banks in the non-participating Member States because of the lack of
a centralized system to deal with failing banks. To ensure that all
participating Member States have full confidence in the quality and
impartiality of the bank resolution process notably as regards local economic
implications, resolution decisions will be prepared and monitored centrally by
a Single Resolution Board to ensure a coherent and uniform approach and the
resolution process will be initiated by the Commission. The Commission will
also decide on the framework of the resolution tools that shall be applied in
respect of the entity concerned and on the use of the Fund to support the
resolution action.
In addition, to support the resolution
process and enhance its effectiveness, the proposed Regulation establishes a
Single Bank Resolution Fund. The proposed regulation is directly enforceable in
all Member States, but applies to all entities supervised by the SSM. The
single rulebook established by 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[9],
Directive 2013/36/EU of 26 June 2013 of the European Parliament and of the
Council on access to the activity of credit institutions and the prudential
supervision of credit institutions and investment firms[10], and Directive [ ] will apply
to the participating Member States as they apply within the whole internal
market.
Article 114 of the TFEU is, therefore, the
appropriate legal base.
3.2.        Subsidiarity
Under the principle of subsidiarity set out
in Article 5.3 of the TEU, in areas which do not fall within its exclusive responsibility,
the Union should act only if and in so far as the objectives of the proposed
action cannot be sufficiently achieved by the Member States, either at central
level or at regional and local level, but can rather, by reason of the scale or
effects of the proposed action, be better achieved at Union level.
Only action at European level can ensure
that failing banks are resolved with minimal spill over effects and in a
consistent manner pursuant to a single set of rules. The SRM will bring
significant economies of scale and will avoid the negative externalities that
may derive from purely national decisions and funds. Substantial differences
between resolution decisions taken at national level, and subject to local
specificities and funding constraints, may undermine the stability and
integrity of the internal market.
Whilst the establishment of the Single
Supervisory Mechanism ensures a level playing field in the supervision of banks
and diminishes the risk of forbearance, the SRM ensures that when a bank
failure occurs, restructuring can be carried out at the least cost, creditors
receive fair and equal treatment, and funding can be quickly deployed to its
most productive use across the internal market.
Therefore, it is appropriate that the Union
should propose the necessary legislative action to establish such resolution
arrangement for banks supervised by the SSM. A regulation is the appropriate
legal instrument to avoid discrepancies in national transposition and to ensure
a unified institutional mechanism and level playing field for all the banks in
the participating Member States.
3.3.        Proportionality
Under the principle of proportionality, the
content and form of Union action should not exceed what is necessary to achieve
the objectives of the Treaties.
In the Banking Union, bank supervision and
resolution need to be exercised by the same level of authority. Otherwise
tensions between the European supervisor and national resolution authorities
may emerge over how to deal with and cover the costs of ailing banks. These
tensions could undermine the effectiveness of both supervision and resolution
and distort competition between Member States.
The recent crisis highlighted the need for
swift and decisive action backed by European level funding arrangements to
avoid nationally conducted bank resolution from having disproportionate impacts
on the real economy, and in order to curb uncertainty and prevent bank runs and
contagion within the internal market. The Single Resolution Mechanism would
ensure that the same rules are applied in the same manner to any failing bank
in participating Member State. Adequate backup funding would mitigate problems
in individual banks from translating into a loss of confidence in the entire
banking system of the Member State or of others perceived by markets to be
exposed to similar risks.
The added legal certainty, properly aligned
incentives in the Banking Union context, and economic benefits of central and
uniform resolution action entail that the proposal complies with the principle
of proportionality and it does not go beyond what is necessary to achieve the
objectives pursued.
This Regulation respects the fundamental
rights and observes the principles recognised in the Charter of Fundamental
Rights of the European Union, notably the right to the protection of personal
data, the freedom to conduct a business, the right to an effective remedy and
to a fair trial, and has to be implemented in accordance with those rights and
principles.
4.           DETAILED EXPLANATION OF THE PROPOSAL
4.1.        A Single Resolution
Mechanism
4.1.1.     Principles, structure and
scope
The Single Resolution Mechanism must entail
decision-making structures which are legally sound and effective in times of
crisis. Decision-making must ensure European decisions, but involving MS,
recognising significance of bank resolution for national economies.
The Single Resolution Mechanism will apply
the single Rulebook on bank resolution set out in the Bank Recovery and Resolution
Directive in respect of ailing banks from the participating Member States in
this mechanism. The Single Resolution Mechanism will consist of uniform rules and procedures to be applied by the Single Resolution
Board (‘the Board’), together with the Commission and the resolution
authorities of the participating Member States.
The European Commission will participate in
the SRM only in so far as needed to perform specific tasks provided for in this
Regulation and in relation to State aid scrutiny under the Treaty or for the
purpose of application, by way of analogy, the criteria established for the
application of Article 107 of the TFEU.
However, the Single Resolution Mechanism
does not follow the differentiated approach of the Single Supervisory Mechanism
for different types of banks due to the characteristics of the resolution
process. Contrary to the on-going task of day-to-day supervision, only a number
of banks are likely fail and be in resolution at any given time. Furthermore, a
comprehensive scope for the Single Resolution Mechanism is fully consistent
with the logic whereby the ECB can assume direct supervision for any bank in
case of problems, including in view of its possible resolution. Finally, the
crisis has shown that it is not only the large international banks that require
a resolution framework at European level. The existence of differentiated
resolution authorities for different sizes of banks would also imply
differentiated funding and backstop mechanisms which could again entrench links
between sovereigns and banks and distort competition.
4.1.2.     Principles of SRM actions
To ensure an objective and fair resolution
process, any discrimination by the Commission, the
Board and the national resolution authorities against
banks, their depositors, creditors or shareholders on grounds of nationality or
place of business is forbidden. Resolution of cross-border groups is guided by
a number of principles to ensure equality of treatment between the different
entities of the group, to allow for proper
consideration of the interests of the Member States involved in the resolution,
to avoid that the cost imposed on the creditors goes beyond what it would be
under normal insolvency proceedings. Where only parts of a group are under
resolution, the proposal aims at ensuring that the resolution process will not
negatively impact the entities of the group that are not under resolution. As a
principle, the cost of resolution will be borne by bail-in and the banking
sector. Therefore, the proposal ensures that the Commission, the Board and the
national resolution authorities decide upon resolution funding arrangements in
such a manner that the use of extraordinary public support is minimised.
4.1.3.     Interaction with the State
aid control of the Commission
Within the SRM, the State aid control of
the Commission would be preserved in all circumstances. This means that once
the ECB notifies the Commission and the Board that a bank or group is failing
or likely to fail, the resolution procedure within the SRM should run in
parallel with the State aid procedure where applicable, so that the Member
State or Member States concerned should be invited to notify the envisaged
measures to the Commission in accordance with Article 108 of the TFEU. This
requires the establishment of a continuous cooperation and exchange of
information between the Board and the Commission for the completion of the
State aid procedure. Moreover, the decision of the Commission under State aid
rules would be the precondition for the adoption by the Commission of a
decision to place a bank under resolution. Where no State aid is present in the
use of the Fund, the criteria established for the application of Article 107 of
the TFEU should be applied, by way of analogy, as a precondition for the adoption
of a decision to place a bank under resolution, in order to preserve the
integrity of the internal market between participating and non-participating
Member States.
4.1.4.     Tasks and decision-making
structure
The single resolution mechanism covers all
key resolution tasks that are indispensable to resolve failing banks. Such
tasks include, inter alia, the authorisation to apply simplified obligations in
relation to the requirement of drafting resolution plans, drawing up resolution
plans, reviewing resolution plans, assessing the resolvability of banks,
deciding to place a bank under resolution, exercising resolution powers in
relation to an institution under resolution, and implementing resolution
schemes. Furthermore, the SRM covers decisions on the use of resolution funding.
The composition of the SRM ensures that its
decision-making structures are legally sound and effective, including in times
of crisis. They are designed to ensure that the decisions are European and
involve Member States in view of the significance of bank resolution for
national economies.
The decision-making structures of the
Single Resolution Mechanism include the Single Resolution Board, the national
resolution authorities of participating Member States and the European
Commission. The tasks of the SRM are shared between Single Resolution Board and
the national resolution authorities.
To ensure the effectiveness and
accountability of the Single Resolution Mechanism and in compliance with legal
requirements, the European Commission, as an EU institution, has the power to
initiate the resolution of a bank, based on a recommendation by the Resolution
Board or on its own initiative. If the Commission initiates a resolution
procedure, it would also decide on the framework of the resolution tools that
will be applied in each case and on the use of the Fund. The Single Resolution
Board would take all other decisions under the SRM Regulation and would address
them to the national resolution authorities for execution at the national level
in accordance with the SRM Regulation and Directive [ ]. The Board would
monitor the execution by the national resolution authorities of its decisions
at the national level and, should a national resolution authority not comply
with its decision, it could directly address decisions to banks.
4.1.5.     Decision-making process
Pursuant to the Rulebook set out in Directive
[ ], a bank would be placed into resolution when it is failing or likely to
fail, when no private sector arrangement can avert failure, and when resolution
is in the public interest because the bank is systemic in that its failure
would damage financial stability. The objective of resolution is to ensure the
continuity of the bank’s critical functions, to protect financial stability, to
minimise reliance on taxpayers’ money, and to protect depositors.
Resolution is triggered following a process
ensuring that a justified and impartial decision is taken in respect of any failing
bank:
–     
the ECB, as bank supervisor, notifies that a
bank is failing to Commission, to the Resolution Board and to the relevant
national authorities and ministries;
–     
the Resolution Board assesses if there is a
systemic threat and no private sector solution;
–     
if so, the Resolution Board recommends to the Commission
to initiate resolution;
–     
the Commission decides to initiate resolution
and indicates to the Resolution Board the framework for applying the resolution
tools and for using the Fund to support the resolution action. The Resolution
Board adopts, through a decision addressed to the national resolution
authorities, a resolution scheme setting out the resolution tools, actions, and
funding measures, and instructing the relevant national resolution authorities
to execute the resolution measures;
–     
the national resolution authorities execute the
resolution measures decided by the Board according to the national law. If the
national resolution authorities do not comply with the decisions of the Board,
the Board has the power to supersede the national resolution authorities and
address certain decisions for the implementation of the resolution measures
directly to the banks.
4.1.6.     Accountability and budget
Each individual component of the Single
Resolution Mechanism will be independent in the performance of its tasks and
will be subject to strict accountability provisions to ensure that it uses its
powers in a correct and impartial way, within the boundaries set by this
regulation and Directive [ ]. The Resolution Board will therefore be accountable to the European Parliament and to the Council
for any decisions taken on the basis of this proposal. The national Parliaments
of the participating Member States will also be informed of the activities of
the Resolution Board. The Board will have to respond to any observations or
questions addressed to it by the national Parliaments of the participating
Member States. The SRM budget, which includes the single resolution fund, is
not part of the Union budget. Expenditures relating to the SRM tasks, the
management and use of the Fund will be financed by contributions from the banking sector.
4.1.7.     Relationship with non-participating
Member States
Directive [ ] establishes resolution
colleges among national resolution authorities for dealing with banking groups,
ensuring appropriate and balanced involvement of the resolution authorities of
all the Member States where the bank operates. The EBA has a mediation role
where home and host national resolution authorities are in disagreement on the
preparation of resolution plans and on the resolution itself. Within the SRM
context, for entities and groups established only within the SSM participating
Member States, the SRM replaces the resolution colleges provided for in the Directive
[ ] establishing a framework for the recovery and resolution of credit institutions
and investment firms. Instead, representatives from national resolution
authorities are instead involved in the Resolution Board.
For banks established in non-participating
Member States as defined by the SSM Regulation, Directive [ ] continues to
apply fully. Similarly, the interaction between the SRM and national resolution
authorities in non-participating Member States will be governed fully by Directive
[ ]. Provisions on the interaction between different resolution funds
(mutualisation and voluntary mutual borrowing and lending) also fully apply
between the Single Resolution Fund and national resolution funds of
non-participating Member States. The proposal also clarifies that the role of
the EBA provided for by Directive [ ] and the EBA Regulation, including its
mediation powers, will apply fully to the Resolution Board.
In addition, the proposal takes into
account the situation of banks which are established in Member States that do
not participate in the SRM in three ways.
First, the proposal sets out the principle
of non-discrimination by any of the SRM components against credit institutions,
deposit holders, investors or other creditors on grounds of their nationality
or place of business.
Second, the proposal foresees that where a
group includes credit institutions established in a participating Member State
and in a non-participating Member State, the Board replaces the national
resolution authorities of the participating Member States in the resolution
colleges provided for under Directive [ ].
Third,
non-participating Member States have always the possibility to join the SSM,
and thereby also ensure that banks established within their territory are
subject to the SRM.
4.1.8.     Relationship with Directive
[ ] of the European Parliament and of the Council of [ ] establishing a
framework for the recovery and resolution of credit institutions and investment
firms
Within the Single Resolution Mechanism, the
Rulebook set out in Directive [ ] establishing a framework for the recovery and
resolution of credit institutions and investment firms will apply to the
participating Member States as it applies within the whole internal market.
Exceptions to this can only be made where the procedures or provisions provided
for in this Regulation supersede the relevant provisions of Directive [ ] (for
example provisions on cross-border colleges, which are superseded by the
decision-making within the SRM).
The SRM proposal integrates certain
provisions which are parallel to Directive [ ], as the Resolution Board and the
Commission must base their actions on directly applicable Union law. Other
provisions of this proposal make specific cross-references to the Commission
proposal on Directive [ ]. Some of these provisions have been amended by the
report voted by the European Parliament’s ECON committee on May and by the
Council’s general approach of 26 June. The SRM regulation must ultimately be
fully in line with the agreement on Directive [ ] found between the European
Parliament and the Council. This proposal refers to the Council general
approach, as the latest available document. As the negotiations are on-going between
the European Parliament and the Council and the Directive is not yet finalised,
the objective of the Commission is to replace those substantial provisions with
the final outcome of the negotiations between the co-legislators on Directive [
].
For certain aspects already covered by Directive
[ ], a further alignment is indispensable for the proper functioning of an SRM
with a Single Bank Resolution Fund. First, the hierarchy of claims should be
fully harmonised for resolution, based on the principle of depositor
preference. Article 15 proposes to harmonise the hierarchy of claims in
resolution, based on the principle of depositor preference. The Commission
considers that such a harmonisation is necessary for all entities subject to Directive
[ ], in order to ensure a level playing field within the internal market.
Second, within an SRM any flexibility for the use of bail in must be tightly
framed and subject to the same conditions for all banks. Article 24 of the
proposal therefore includes an additional tight framing, based on the general
approach of the Council of 26 June 2013, and excludes in this context the use
of any derogations provided for by Directive [ ] (in particular on the
calculation of the threshold for bail-in).
4.2.        The Resolution Board
4.2.1.     Governance
In order to ensure an effective and
accountable resolution decision-making
process, the structure and operating rules of the Resolution Board provide for the appropriate involvement of
all directly concerned Member States. The Board is
composed of the Executive Director, the Deputy Executive Director, the
representatives appointed by the Commission and the ECB, and the members
appointed by each participating Member States, representing the national
resolution authorities. The Board, chaired by an
Executive Director, will meet
and operate in two sessions: an executive one and a plenary one. Observers
could be invited to attend the
Board meetings.
In its plenary session, the Board would
take all decisions of general nature. In its executive session, the Board takes
decisions in respect of individual entities or banking groups. Such decisions
range from resolution planning, early intervention powers to decisions on
resolution schemes, including on the use of the Fund for financing the
resolution process, and instructing the national resolution on how to implement
the resolution decisions.
In its executive session, the Board
comprises the Executive Director, the Deputy Executive Director and
representatives appointed by the Commission and the ECB.
Depending on the banks or groups to be
resolved in each case, when meeting in its executive session, the Board will
also convene in addition to the Executive Director, the Deputy Executive
Director and representatives appointed by the Commission and the ECB, members
appointed by the relevant national resolution authorities. Therefore, in case of resolution of cross-border banking groups,
both the member appointed by the Member State in which the group level
resolution authority is situated, and the members appointed by the Member
States in which subsidiaries or entities covered by consolidated supervision
are established participate in the meetings and the decision-making process.
The voting rules applying to the Board take into account the need to consider
the interest of all Member States concerned by a resolution decision. None of
the participants in the deliberation has a veto.
However in view of the sovereignty of
Member States to decide on the use of national budgets, the proposal explicitly
foresees that the SRM cannot require Member States to provide extraordinary
public support to any entity under resolution. Moreover, in order to take fully
into account any fiscal implications on Member States, the members appointed by
the relevant national resolution authorities in the Executive session of the
Board may request one further deliberation to discuss such potential
implications.
4.2.2.     Powers
The Resolution Board centralises the information
that the ECB and national resolution authorities have on the financial
soundness of banks under their jurisdiction. Compared to a network of national
authorities operating within national mandates, this allows assessing better
the circumstances that might lead to the need to put a bank under resolution
and avoid cross-border spill-overs. The proposal builds on the framework of the
Bank Recovery and Resolution Directive and empowers the Resolution Board to
intervene promptly where the financial situation of a bank or group is
deteriorating.
The Resolution Board is vested with powers
to determine when to recommend to the Commission to place a bank or a group
under resolution. Once the Commission decides that the conditions are met and
places a bank under resolution, the Board decides within the framework
established by the Commission the details of the resolution tools to be applied
and how to allocate the Fund resources. Such powers allow the Resolution Board
to select and apply the resolution tools, rules and procedures in a uniform
manner. In particular, where banks operate cross-border, this will lead to the
elimination of the current divergences in Member States’ rules and approaches,
together with the negative consequences they have on the functioning of the
Union banking markets.
Such direct responsibility for the
Resolution Board will ensure an equal treatment of banks across the
participating Member States and the predictability and confidence in the
implementation of the single Rulebook on bank resolution. This will increase
legal certainty and better preserve the value of financial assets by avoiding
unnecessary disruptions in the flow of funds. It will also ensure that the
assets of the failing institution are used in the most productive way to
minimise losses for creditors across the participating Member States, and not
according to individual Member States’ concerns.
The Resolution Board ensures that the
resolution decisions are implemented faithfully by the national resolution
authorities, according to national law. For this purpose, the Board has the
power to oversee and assess the implementation by the national resolution
authorities by the ability, where necessary, to obtain information directly
from banks or to perform investigations or on-site inspections. Where a
national resolution authority does not implement a resolution decision
according to the agreed resolution scheme, the Board is empowered to directly
address certain decisions to the bank concerned requiring the necessary action
for the implementation of the resolution decision.
4.2.3.     European and international
cooperation
For the purpose of carrying out its tasks,
the Resolution Board will cooperate with the ECB and the other authorities
empowered to supervise credit institutions within the SSM, as well as with
other authorities which form part of the European System of Financial
Supervision. The Resolution Board will also closely cooperate with the national
resolution authorities as they play a key role in the preparation and implementation
of resolution measures.
As many credit institutions operate not
only within the Union, but internationally, the Resolution Board will be
exclusively empowered to conclude, on behalf of the national authorities of the
participating Member States, non-binding cooperation agreements with third
country authorities.
4.3.        The Single Bank Resolution
Fund
4.3.1.     Principles,
establishment and missions
The principle underlying the action of the
Board is that any losses, costs or other expenses incurred in connection with
the use of the resolution tools shall be first borne by the shareholders and
the creditors of the institution under resolution and ultimately, if necessary,
by the financial industry. However, even if the cost of the restructuring of an
institution should be allocated to their internal resources, there needs to be
a mechanism enabling the institution (either in its original form, through a
bridge bank or as an asset management vehicle – bad bank) to continue
operating. It is therefore important to establish a bank resolution fund to
ensure the effectiveness of the resolution actions, such as providing short
term funding to an institution under resolution or guarantees to potential
buyers of an institution under resolution.
The primary objective of the Single
Resolution Fund is to ensure financial stability, rather than to absorb losses
or provide capital to an institution under resolution. The Fund should not be
considered as a bailout fund. There might be however exceptional circumstances
where, after sufficiently having exhausted the internal resources (at least 8%
of the liabilities and own funds of the institution under resolution), the
primary objective could not be achieved without allowing the Fund to absorb
those losses or provide the capital. It is only in these circumstances when the
Fund could act as a backstop to the private resources.
The creation of the Single Resolution Fund
is primarily justified by the fact that in integrated financial markets any
financial support to resolve a bank enhances the financial stability and the
health of other banks not only in the Member State concerned, but also in other
Member States. Since banks throughout participating Member States are indirect
beneficiaries of such support, contributions to finance the support should not
be limited to banks from a single Member State.
In terms of effectiveness, the Fund’s
ability to pool the resources from all Euro-area banks provides a much more
effective buffer against banking crises where losses are concentrated
asymmetrically in some Member States and in this regard serves as a Euro
area-wide insurance mechanism. The recent crisis showed that losses arose in a
differentiated manner in the Member States.
Since losses from any future shocks in the
banking industry are likely to be concentrated at a specific moment of time in
some Member States, a common European private backstop mechanism, as opposed to
national backstops taken individually, will be more effective in absorbing such
shocks through ex-ante and, in extreme cases, ex post contributions from the
whole Euro-area banking industry. Therefore, by pooling
resources at the European level, the Fund will provide a bigger “firepower” and
will increase the resilience of the banking system. At the same time, spreading
extraordinary ex-post contributions evenly across banks in all participating
Member States will reduce the level of such contributions for each bank,
limiting any pro-cyclical effect of such contributions.
Moreover, a mechanism where loss absorption
reaches beyond national borders can effectively break the vicious circle of the
interdependence between the banking crisis in a given Member State and the
fiscal position of the sovereign. In this manner, the current burden on some
Member States would have been mitigated if a Single Resolution Fund had existed
since the start of the financial crisis.
Furthermore, a Single Resolution Fund
having the ability to pool funds from the banking industry across the
participating Member States will rely on a larger contribution base and
therefore will have an increased reputational base allowing the Board, if
needed, to borrow more on the market and at a lower cost. A greater ability to
obtain finance externally on the market will reduce the need for the Fund to
rely on public finances in extreme loss cases, which would further contribute
to breaking the link between sovereigns and banks and to protecting taxpayers
from the costs of resolution.
Finally, the proper alignment of incentives
across the institutions of the Banking Union also calls for a single fund. If,
especially in the case of cross-border banking groups, the means for covering
the costs of resolution in excess of those absorbed by shareholders and
creditors had to be provided by national funds, the effectiveness of not only
the Single Resolution Mechanism but also of the Single Supervisory Mechanism
would be impaired.
The establishment of a Single Resolution
Mechanism requires that the Resolution Board have swift and effective access to
a Single Bank Resolution Fund. The Fund creates a private external layer which
can provide mid and long-term funding to avoid or minimise the use of public
money in resolving banks. Moreover, it increases the effectiveness of the
resolution process by preventing coordination issues that arise in the
deployment of national funds, especially in the case of cross-border groups.
4.3.2.     Financing
of the Fund
To ensure sufficient funding, avoid the
pro-cyclicality of pay-as-you go systems and minimise the need to request
external financial support, the Fund needs readily available resources. To this end, the target size of
the Fund should be at least 1% of covered deposits in the banking system of the
participating Member States would be sufficient to ensure an orderly resolution
in the future crisis provided that creditors are bailed in at least up to 8% of
the total liabilities and own funds of the institution under resolution.
On the basis of 2011 data on banks and an
estimated amount of covered deposits held in banks in the euro-area, the 1%
target level for the Single Resolution Fund would correspond to around 55
billion Euros. The target size of the Fund in absolute amounts (Euros) will
remain dynamic and will increase automatically if the banking industry grows.
A transitional period of 10 years is
foreseen before the Fund reaches its full target level. This could be extended
to 14 years if the Fund makes disbursements exceeding half of the target size
of the Fund. If no disbursements are made from the Fund during the initial
build-up phase, the banking industry would annually contribute around one tenth
of the target amount or in absolute terms around 5.5 billion Euros.
After the initial phase to build-up the
Fund, banks will be subject to additional contributions if their contribution
basis grows or there are disbursements from the Fund. If available financial
means of the Fund become lower than half of its target size, banks will become
subject to a minimum annual contribution of at least one fifth of the total
liabilities (excluding regulatory capital and covered deposits) of all banks in
Member States participating in the Single Resolution Mechanism.
The contributions will be calculated in
line with the Bank Recovery and Resolution Directive on the basis of bank’s liabilities excluding own funds and covered deposits, and adjusted to their risk profile. This means that banks which are financed almost exclusively by
deposits will in practice have very low contributions. Of course, these banks will
contribute to national deposit guarantee schemes.
Safeguards are foreseen in order to avoid
that levying of contributions create financial stability issues in healthy
institutions, i.e. temporary exemption from the obligation to pay ex-post
contributions.
Where the ex-ante contributions are
not sufficient and the ex-post contributions not immediately accessible,
additional backup funding may be needed, especially in the transitional phase,
to ensure the continuity of systemic functions of the bank(s) throughout the
restructuring process. The Fund will be able to contract borrowings or other
forms of support from financial institutions or other third parties if
necessary to finance resolution (including from the public resources). This
support will be paid back in principle by the institution under resolution
itself. However, should this be not possible, the Regulation foresees that the
losses are allocated to all the banks subject to the mechanism by ex-post
contributions. This will ensure that any use of public resources is neutral in
the medium term.
To avoid creating a disadvantage for the
Member States that have put in place a resolution fund upon the entry into
force of this proposal, the Regulation leaves it up to the Member States
concerned to decide in which manner the existing national resolution funds
would be used for the purpose of fulfilling their banks’ obligations under this
Regulation.
4.3.3.     Role
of deposit guarantee schemes in the context of
resolution
Where a bank is resolved, the national
deposit guarantee scheme to which the bank is affiliated will contribute, up to
the amount of covered deposits, for the amount of losses that it would have had
to bear if the bank had been wound up under normal insolvency proceedings. This
is a role already fully provided for by Directive [ ].
Moreover, the SRM does not affect
Institutional Protection Schemes and other intragroup financing support
mechanisms set up by certain groups of credit institutions. The SRM will only
intervene when such private sector solutions are not successful in dealing with
a bank failure.
4.3.4.     Role of the Fund in the
resolution of groups involving institutions outside the SRM
For the purpose of resolution of groups
involving both institutions subject to the SRM, the Fund’s contribution will
correspond to the parts of the group that are subject to the SRM, while the
national financing arrangements outside the SRM contribution will cover the
rest.
To strengthen the resolution funding
throughout the internal market, the proposal allows the Fund to borrow from or
lend to other resolution financing arrangements, on a voluntary basis. This
will allow the Fund to bear important disbursements not covered by ex-ante
and ex-post contributions. It will also support resolution financing arrangements
in Member States outside the SRM.
4.3.5.     Replacement of national
resolution financing arrangements
As the Fund
replaces the national resolution financing arrangements of the Member States
participating in it, Member States which have already established national
resolution financing arrangements at the time of entry into force of this
Regulation may decide upon the use of such arrangements according to their
national law. Member States could also decide that those national resolution
financing arrangements pay the contributions due to the Fund on behalf of their
banks until those arrangements fully depleted.
5.           BUDGETARY IMPLICATIONS
The Resolution Board will be fully financed from contributions from the financial institutions. However,
there will be some minor implications on the Union’s budget in the start-up
phase of the Board. The details are set out in the financial statement
attached. 
2013/0253 (COD)
Proposal for a
REGULATION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL
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 Bank
Resolution Fund and amending Regulation (EU) 
No 1093/2010 of the European Parliament and of the Council
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 Bank[11],
Having regard to the opinion of the
European Economic and Social Committee[12],
Acting in accordance with the ordinary
legislative procedure,
Whereas:
(1)       Having a better integrated
internal market for banking services is essential in order to foster economic
recovery in the Union. However, the current financial and economic crisis has
shown that the functioning of the internal market in this area is under threat
and that there is an increasing risk of financial fragmentation. Interbank
markets have become less liquid and cross-border bank activities are decreasing
due to fear of contagion, lack of confidence in other national banking systems
and in the ability of Member States to support banks.
(2)       Divergences in national
resolution rules between different Member States and corresponding
administrative practices and the lack of a unified decision making process at
Union level for the resolution of cross-border banks contribute to this lack of
confidence and market instability, as they do not ensure certainty and
predictability as to the possible outcome of a bank failure. Resolution
decisions taken at the national level only may lead to distortions of
competition and ultimately to the undermining of the internal market.
(3)       In particular, the
different practices of Member States in the treatment of creditors of banks in
resolution and in the bail-out of failing banks have an impact on the perceived
credit risk, financial soundness and solvency of their banks. This undermines
public confidence in the banking sector and obstructs the exercise of the
freedom of establishment and the free provision of services within the internal
market because financing costs would be lower without such differences in
practices of Member States.
(4)       Divergences in national
resolution rules between different Member States and corresponding
administrative practices may lead banks and customers to have higher borrowing
costs only because of their place of establishment and irrespective of their
real creditworthiness. In addition, customers of banks in some Member States
face higher borrowing rates than customers of banks in others irrespective of
their own creditworthiness.
(5)       As long as resolution
rules, practices and approaches to burden-sharing remain national and the
financial resources needed for funding resolution are raised and spent at
national level, the internal market will remain fragmented. Moreover, national
supervisors have strong incentives to minimise the potential impact of bank
crises on their national economies by adopting unilateral action to ring-fence
banking operations, for instance by limiting intra-group transfers and lending,
or by imposing higher liquidity and capital requirements on subsidiaries in
their jurisdictions of potentially failing parent undertakings. This restricts
the cross-border activities of banks and thus creates obstacles to the exercise
of fundamental freedoms and distorts competition in the internal market.
(6)       Directive [ ] of the
European Parliament and of the Council[13]
has harmonised to a certain extent national bank resolution rules and has
provided for cooperation among resolution authorities when dealing with the
failure of cross-border banks. However, the harmonisation provided by the Directive
[ ] is not complete and the decision making process is not centralised. Directive
[ ] essentially provides for common resolution tools and powers available for
the national authorities of every Member State but leaves discretion to
national authorities in the application of the tools and in the use of national
financing arrangements in support of resolution procedures. Directive [ ] does
not avoid the taking of separate and potentially inconsistent decisions by
Member States regarding the resolution of cross-border groups which may affect
the overall costs of resolution. Moreover, as it provides for national
financing arrangements, it does not sufficiently reduce the dependence of banks
on the support from national budgets and does not prevent different approaches
by Member States to the use of the financing arrangements.
(7)       Ensuring effective uniform
resolution decisions for failing banks within the Union, including on the use
of funding raised at Union level, is essential for the completion of the internal
market in financial services. Within the internal market, the failure of banks
in one Member State may affect the stability of the financial markets of the
whole Union. Ensuring effective and uniform resolution rules and equal
conditions of resolution financing across Member States is in the best interest
not only of the Member States in which banks operate, but also of all Member
States in general as a means to preserve competition and improve the
functioning of the internal market. Banking systems in the internal market are
highly interconnected, bank groups are international and banks have a large
percentage of foreign assets. In the absence of a single resolution mechanism,
bank crises in Member States participating in the Single Supervisory Mechanism
(SSM) would have stronger negative systemic impact also in non-participating
Member States. The establishment of the single resolution mechanism will
increase stability of the banks of the participating Member States and prevent the
spill-over of crises into non-participating Member States and will thus
facilitate the functioning of the whole of the internal market.
(8)       Following the
establishment of the SSM by Council Regulation (EU) No …/… [14] where banks in the
participating Member States are centrally supervised by the European Central
Bank (ECB), there is a misalignment between the Union supervision of such banks
and the national treatment of those banks in the resolution proceedings pursuant
to Directive [ ].
(9)       Whilst banks in Member
States remaining outside the SSM benefit at national level from supervision,
resolution and financial backstop arrangements which are aligned, banks in
Member States participating in the SSM are subject to Union arrangements for
supervision and national arrangements for resolution and financial backstops.
This misalignment creates a competitive disadvantage for the banks in the
Member States participating in the SSM compared to those in the other Member
States. Because supervision and resolution are at two different levels within
the SSM, intervention and resolution in banks in the Member States
participating in the SSM would not be as rapid, consistent and effective as in
banks in the Member States outside of the SSM. This has negative repercussions
on the funding costs for these banks and creates a competitive disadvantage
with detrimental effects for the Member States in which those banks operate and
for the overall functioning of the internal market. Therefore, a centralised
resolution mechanism for all banks operating in the Member States participating
in the SSM is essential to guarantee a level playing field.
(10)     The sharing of resolution
responsibilities between the national and the Union levels should be aligned to
the sharing of supervision responsibilities between those levels. As long as
supervision remains national in a Member State, that Member State should remain
responsible for the financial consequences of a bank failure. The single
resolution mechanism should therefore only extend to banks and financial
institutions established in Member States participating in the SSM and subject
to the supervision of the ECB within the framework of the SSM. Banks
established in the Member States not participating in the SSM should not be
subject to the single resolution mechanism. If such Member States became
subject to the single resolution mechanism, this would create the wrong
incentives for them. In particular, supervisors in these Member States may
become more lenient towards banks in their jurisdictions as they would not have
to bear the full financial risk of their failures. Therefore, in order to
ensure parallelism with the SSM, the single resolution mechanism should apply
to Member States participating in the SSM. As Member States join the SSM, they
should also automatically become subject to the single resolution mechanism.
Ultimately, the single resolution mechanism is expected to extend to the entire
internal market.
(11)     A single bank resolution
fund (hereinafter referred to as the ‘Fund’) is an essential element without
which a single resolution mechanism could not work properly. Different systems
of national funding would distort the application of uniform bank resolution
rules in the internal market. The Fund should help to ensure a uniform
administrative practice in the financing of resolution and to avoid the
creation of obstacles for the exercise of fundamental freedoms or the distortion
of competition in the internal market due to divergent national practices. The
Fund should be financed directly by banks and should be pooled at Union level
so that the resolution resources can be objectively allocated across Member
States thus increasing financial stability and limiting the link between the
perceived fiscal position of individual Member States and the funding costs of
banks and undertakings operating in those Member States.
(12)     It is therefore necessary
to adopt measures to create a single resolution mechanism for all Member States
participating in the single supervisory mechanism in order to facilitate the
proper and stable functioning of the internal market.
(13)     A centralised application
of the bank resolution rules set out in Directive [ ] by a single Union
resolution authority in the participating Member States can only be ensured
where the rules governing the establishment and functioning of a single
resolution mechanism are directly applicable in the Member States to avoid
divergent interpretations across the Member States. This should bring benefits
to the internal market as a whole because it will contribute to ensuring fair
competition and to preventing obstacles to the free exercise of fundamental
freedoms not only in the participating Member States but in the whole internal
market.
(14)     Mirroring the scope of the
Council Regulation (EU) No …/…, a single resolution mechanism should cover all
credit institutions established in the participating Member States. However,
within the framework of a single resolution mechanism, it should be possible to
resolve directly any credit institution of a participating Member State in
order to avoid asymmetries within the internal market in the treatment of
failing institutions and creditors during a resolution process. To the extent that
parent undertakings, investment firms and financial institutions are included
in the consolidated supervision by the ECB, they should be included in the
scope of the single resolution mechanism. Although the ECB will not supervise
those institutions on a solo basis, it will be the only supervisor that will
have a global perception of the risk to which a group, and indirectly the
individual members, is exposed to. To exclude entities which form part of the
consolidated supervision within the scope of the ECB from the scope of the
single resolution mechanism would make it impossible to plan for the resolution
of banking groups and to adopt a group resolution strategy, and would make any
resolution decisions much less effective.
(15)     Within the single resolution
mechanism, decisions should be taken at the most appropriate level.
(16)     The ECB, as the supervisor
within the SSM, is the best placed to assess whether a credit institution is
failing or likely to fail and whether there is no reasonable prospect that any
alternative private sector or supervisory action would prevent its failure
within a reasonable timeframe. The Board, upon notification of the ECB, should
provide a recommendation to the Commission. Given the need to balance the
different interests at stake the Commission should decide whether or not to
place an institution under resolution and should also decide on a clear and
detailed resolution framework establishing the resolution actions to be taken
by the Board. Within this framework, the Board should decide on a resolution
scheme and instruct the national resolution authorities on the resolution tools
and powers to be executed at national level.
(17)     The Board should be
empowered to take decisions, in particular, in connection with resolution planning,
the assessment of resolvability, the removal of impediments to resolvability
and the preparation of resolution actions. National resolution authorities
should assist the Board in resolution planning and in the preparation of
resolution decisions. In addition, as the exercise of resolution powers
involves the application of national law, national resolution authorities
should be responsible for the implementation of resolution decisions.
(18)     It is instrumental for the
good functioning of the internal market that the same rules apply to all
resolution measures, regardless of whether they are taken by national
resolution authorities under Directive [ ] or within the framework of the
single resolution mechanism The Commission will assess those measures under
Article 107 of the TFEU. Where the use of resolution financing arrangements
does not involve State aid pursuant to Article 107 (1) of the TFEU, the
Commission should, in order to ensure a level playing field within the internal
market, assess those measures by analogy to Art 107 of the TFEU. If a
notification under Article 108 of the TFEU is not necessary as no state aid
pursuant to Article 107 of the TFEU is entailed in the proposed use of the Fund
by the Board, in order to ensure the integrity of the internal market between
participating and non-participating Member States, the Commission should apply
the relevant State aid rules under Article 107 of the TFEU by way of analogy
when assessing the proposed use of the Fund. The Board should not decide on a
resolution scheme until the Commission has ensured, by way of analogy with
State aid rules, that the use of the Fund follows the same rules as
interventions by national financing arrangements.
(19)     In order to ensure a swift
and effective decision making process in resolution, the Board should be a specific
Union agency with a specific structure, corresponding to its specific tasks,
and which departs from the model of all other agencies of the Union. Its
composition should ensure that due account is taken of all relevant interests
at stake in resolution procedures. The Board should operate in executive and
plenary sessions. In its executive session, it should be composed of an
Executive Director, a Deputy Executive Director, and representatives of the Commission
and the ECB. Considering the missions of the Board, the Executive Director and
Deputy Executive Director should be appointed by the Council on a proposal from
the Commission and after hearing the European Parliament. When deliberating on
the resolution of a bank or group established within a single participating
Member State, the executive session of the Board should also convene and
involve in the decision-making process the member appointed by the Member State
concerned representing its national resolution authority. When deliberating on
a cross-border group, the members appointed by the home and all host Member
States concerned representing the relevant national resolution authorities
should also be convened and involved in the decision-making process of the
executive session of the Board. However, home authorities and host authorities
should have a balanced influence on the decision, so host authorities should
have jointly one single vote. Observers, including a representative of the ESM
and of the Euro Group, may also be invited to attend the meetings of the Board.
(20)     In the light of the Board’s
missions and the resolution objectives which include the protection of public
funds, the functioning of the Board should be financed from contributions paid
by the institutions in the participating Member States.
(21)     The Board and the
Commission, where relevant, should replace the national resolution authorities
designated under Directive [ ] in respect of all aspects related to the
resolution decision-making process. The national resolution authorities
designated under Directive [ ] should continue to carry out activities related
to the implementation of resolution schemes adopted by the Board. In order to
ensure transparency and democratic control, as well as to safeguard the rights
of the Union institutions, the Board should be accountable to the European
Parliament and to the Council for any decisions taken on the basis of this
proposal. For the same reasons of transparency and democratic control, national
parliaments should have certain rights to obtain information about the
activities of the Board and to engage in a dialogue with it.
(22)     Where Directive [ ] provides
for the possibility of applying simplified obligations or waivers by the
national resolution authorities in relation to the requirement of drafting
resolution plans, a procedure should be provided for whereby the Board could
authorise the application of such simplified obligations.
(23)     To ensure a uniform
approach for institutions and groups the Board should be empowered to draw up
resolution plans for such institutions and groups. The Board should assess the
resolvability of institutions and groups, and take measures aimed at removing
impediments to resolvability, if any. The Board should require national
resolution authorities to apply such appropriate measures designed to remove
impediments to resolvability in order to ensure consistency and the
resolvability of the institutions concerned.
(24)     Resolution planning is an
essential component of effective resolution. The Board should therefore have
the power to require changes to the structure and organization of institutions
or groups in order to remove practical impediments to the application of
resolution tools and ensure the resolvability of the entities concerned. Due to
the potentially systemic nature of all institutions, it is crucial in order to
maintain financial stability that authorities have the possibility to resolve
any institution. In order to respect the right to conduct business laid down by
Article 16 of the Charter of Fundamental Rights, the Board's discretion should
be limited to what is necessary to simplify the structure and operations of the
institution solely to improve its resolvability. In addition, any measure imposed
for such purposes should be consistent with Union law. Measures should neither
directly nor indirectly be discriminatory on ground of nationality, and should
be justified by the overriding reason of the public interest in financial
stability. To determine whether an action was taken in the general public
interest, the Board, acting in the general public interest, should be able to
achieve the resolution objectives without encountering impediments to the
application of resolution tools or its ability to exercise the powers conferred
on it. Furthermore, an action should not go beyond the minimum necessary to
attain the objectives.
(25)     The single resolution
mechanism should be constructed on the frameworks of Directive [ ] and the SSM.
Therefore, the Board should be empowered to intervene at an early stage where
the financial situation or the solvency of an institution is deteriorating. The
information that the Board receives from the national resolution authorities or
the ECB at this stage is instrumental in making a determination on the action
it might take in order to prepare for the resolution of the institution
concerned.
(26)     In order to ensure rapid
resolution action when it becomes necessary, the Board should closely monitor,
in cooperation with the relevant competent authority or the ECB, the situation
of the institutions concerned and the compliance of those institutions with any
early intervention measure taken in their respect.
(27)     In order to minimise
disruption to the financial market and to the economy, the resolution process
should be accomplished in a short time. The Commission should, throughout the
resolution procedure, have access to any information which it deems necessary
to take an informed decision in the resolution process. Where the Commission
decides to put an institution under resolution, the Board should immediately
adopt a resolution scheme establishing the details of the resolution tools and
powers to be applied, and the use of any financing arrangements.
(28)     Liquidation of a failing
institution under normal insolvency proceedings could jeopardise financial
stability, interrupt the provision of essential services, and affect the
protection of depositors. In such a case there is a public interest in applying
resolution tools. The objectives of resolution should therefore be to ensure
the continuity of essential financial services, to maintain the stability of
the financial system, to reduce moral hazard by minimising reliance on public
financial support to failing institutions, and to protect depositors.
(29)     However, the winding up of
an insolvent institution through normal insolvency proceedings should always be
considered before a decision could be taken to maintain the institution as a
going concern. An insolvent institution should be maintained as a going concern
for financial stability purposes and with the use, to the extent possible, of
private funds. That may be achieved
either through sale to or merger with a private sector purchaser, or after
having written down the liabilities of the institution, or after having
converted its debt to equity in order to do a recapitalisation.
(30)     When exercising resolution
powers, the Commission and the Board should make sure that shareholders and
creditors bear an appropriate share of the losses, that the managers are
replaced, that the costs of the resolution of the institution are minimised,
and that all creditors of an insolvent institution that are of the same class are
treated in a similar manner.
(31)     The limitations on the
rights of shareholders and creditors should comply with Article 52 of the
Charter of Fundamental Rights. The resolution tools should therefore be applied
only to those institutions that are failing or likely to fail, and only when it
is necessary to pursue the objective of financial stability in the general
interest. In particular, resolution tools should be applied where the
institution cannot be wound up under normal insolvency proceedings without
destabilizing the financial system and the measures are necessary in order to
ensure the rapid transfer and continuation of systemically important functions
and where there is no reasonable prospect for any alternative private solution,
including any increase of capital by the existing shareholders or by any third
party sufficient to restore the full viability of the institution.
(32)     Interference with property
rights should not be disproportionate. As a consequence, affected shareholders
and creditors should not incur greater losses than those which they would have
incurred had the institution been wound up at the time that the resolution
decision is taken. In the event of partial transfer of assets of an institution
under resolution to a private purchaser or to a bridge institution, the
residual part of the institution under resolution should be wound up under
normal insolvency proceedings. In order to protect existing shareholders and
creditors of the institution during the winding up proceedings, they should be
entitled to receive in payment of their claims not less than what it is
estimated they would have recovered if the whole institution had been wound up
under normal insolvency proceedings.
(33)     In order to protect the
right of shareholders and ensure that creditors do not receive less than what
they would receive in normal insolvency proceedings, clear obligations should
be laid down concerning the valuation of the assets and liabilities of the
institution and sufficient time should be allowed to estimate properly the
treatment that they would have received if the institution had been wound up
under normal insolvency proceedings. There should be the possibility to start
such a valuation already in the early intervention phase. Before any resolution
action is taken, an estimate should be carried out of the value of the assets
and liabilities of the institution and of the treatment that shareholders and
creditors would receive under normal insolvency proceedings.
(34)     It is important that losses
be recognised upon failure of the institution. The guiding principle for the valuation
of assets and liabilities of failing institutions should be their market value
at the moment when the resolution tools are applied and to the extent that
markets are functioning properly. When markets are truly dysfunctional,
valuation should be performed at the duly justified long term economic value of
assets and liabilities. It should be possible, for reasons of urgency, that the
Board makes a rapid provisional valuation of the assets or liabilities of a
failing institution which should apply until an independent valuation is
carried out.
(35)     So as to ensure that the
resolution process remains objective and certain, it is necessary to lay down
the order in which unsecured claims of creditors against an institution put
under resolution should be written down or converted. In order to limit the
risk of creditors incurring greater losses than if the institution had been
wound up under normal insolvency proceedings, the order to be laid down should
be applicable both in normal insolvency proceedings and in the write down or
conversion process under resolution. This would also facilitate the pricing of
debt.
(36)     The Commission should
provide the framework for the resolution action to be taken depending on the
circumstances of the case and should be able to designate for use all necessary
resolution tools. Within that clear and precise framework, the Board should
decide on the detailed resolution scheme. The relevant resolution tools should
include the sale of business tool, the bridge institution tool, the bail-in
tool and the asset separation tool, which are also provided for by Directive [
]. The framework should also make it possible to assess whether the conditions
for the write-down and conversion of capital instruments are met.
(37)     The sale of business tool
should enable the sale of the institution or parts of its business to one or
more purchasers without the consent of shareholders.
(38)     The asset separation tool
should enable authorities to transfer under-performing or impaired assets to a
separate vehicle. That tool should be used only in conjunction with other tools
to prevent an undue competitive advantage for the failing institution.
(39)     An effective resolution
regime should minimise the costs of the resolution of a failing institution
borne by the taxpayers. It should also ensure that even large institutions of
systemic importance can be resolved without jeopardising financial stability.
The bail-in tool achieves that objective by ensuring that shareholders and
creditors of the entity suffer appropriate losses and bear an appropriate part
of those costs. To this end, statutory debt write down powers should be
included in a framework for resolution as an additional option in conjunction
with other resolution tools, as recommended by the Financial Stability Board.
(40)     In order to ensure the
necessary flexibility to allocate losses to creditors in a range of
circumstances, it is appropriate that the bail-in tool be applicable both where
the objective is to resolve the failing institution as a going concern if there
is a realistic prospect that the institution’s viability may be restored, and
where systemically important services are transferred to a bridge institution
and the residual part of the institution ceases to operate and is wound up.
(41)     Where the bail-in tool is
applied with the objective of restoring the capital of the failing institution
to enable it to continue to operate as a going concern, resolution through
bail-in should always be accompanied by the replacement of management and a
subsequent restructuring of the institution and its activities in a way that
addresses the reasons for its failure. That restructuring should be achieved
through the implementation of a business reorganisation plan.
(42)     It is not appropriate to
apply the bail-in tool to claims in so far as they are secured, collateralised
or otherwise guaranteed. However, in order to ensure that the bail-in tool is
effective and achieves its objectives, it should be possible to apply it to as
wide a range of the unsecured liabilities of a failing institution as possible.
Nevertheless, it is appropriate to exclude certain kinds of unsecured liability
from the scope of application of the bail-in tool. For reasons of public policy
and effective resolution, the bail-in tool should not apply to those deposits
that are protected under Directive 94/19/EC of the European Parliament and of
the Council[15],
to liabilities to employees of the failing institution or to commercial claims
that relate to goods and services necessary for the daily functioning of the
institution.
(43)     Depositors that hold
deposits guaranteed by a deposit guarantee scheme should not be subject to the
exercise of the bail-in tool. The deposit guarantee scheme, however,
contributes to funding the resolution process to the extent that it would have
had to indemnify the depositors. The exercise of the bail-in powers would
ensure that depositors continue having access to their deposits which is the
main reason why the deposit guarantee schemes have been established. Not
providing for the involvement of those schemes in such cases would constitute
an unfair advantage with respect to the other creditors which would be subject
to the exercise of the powers by the resolution authority.
(44)     In order to implement the
burden-sharing by shareholders and junior creditors, as required under State
aid rules, the single resolution mechanism would be able to apply, by way of
analogy, as of the entry into application of this Regulation, the bail-in tool.
(45)     To avoid institutions
structuring their liabilities in a manner that impedes the effectiveness of the
bail in tool, the Board should be able to establish that the institutions hold
an aggregate amount of own funds, subordinated debt and senior liabilities
subject to the bail-in tool expressed as a percentage of the total liabilities
of the institution, that do not qualify as own funds for the purposes of
Regulation (EU) No 575/2013 of the European Parliament and of the Council[16] and of Directive 2013/36/EU of
26 June 2013 of the European Parliament and of the Council[17], which institutions should
have at all times.
(46)     The best method of
resolution should be chosen depending on the circumstances of the case and for
this purpose, all the resolution tools provided for by Directive [ ] should be
available.
(47)     Directive [ ] has conferred
the power to write down and convert capital instruments on national resolution
authorities, since the conditions for the write-down and conversion of capital
instruments may coincide with the conditions for resolution and in such a case,
an assessment is to be made of whether the sole write-down and conversion of
the capital instruments is sufficient to restore the financial soundness of the
entity concerned or it is also necessary to take resolution action. As a rule,
it will be used in the context of resolution. The Commission should replace
national resolution authorities also in this function and should therefore be
empowered to assess whether the conditions for the write-down and conversion of
capital instruments are met and to decide whether to place an entity under
resolution, if the requirements for resolution are also fulfilled.
(48)     The efficiency and
uniformity of resolution action should be ensured in all the participating
Member States. For this purpose, the Board should be empowered in exceptional
cases and where a national resolution authority has not or not sufficiently
applied the decision of the Board to transfer to another person specified
rights, assets or liabilities of an institution under resolution or to require
the conversion of debt instruments which contain a contractual term for
conversion in certain circumstances. Any action by national resolution
authorities that would restrain or affect the exercise of powers or functions of
the Board should be excluded.
(49)     In order to enhance the
effectiveness of the single resolution mechanism, the Board should closely
cooperate with the European Banking Authority in all circumstances. Where
appropriate the Board should also cooperate with the European Securities and
Markets Authority, the European Insurance and Occupational Pensions Authority
and the European Systemic Risk Board, and the other authorities which form part
of the European System of Financial Supervision. Moreover, the Board should
closely cooperate with the ECB and the other authorities empowered to supervise
credit institutions within the SSM, in particular for groups subject to the
consolidated supervision by the ECB. To effectively manage the resolution
process of failing banks, the Board should cooperate with the national
resolution authorities at all stages of the resolution process. Thus,
cooperation with the latter is necessary not only for the implementation of
resolution decisions taken by the Board, but also prior to the adoption of any
resolution decision, at the stage of resolution planning or during the phase of
early intervention.
(50)     Since the Board replaces
national resolution authorities of the participating Member States in their
resolution decisions, the Board should also replace those authorities for the
purposes of the cooperation with non-participating Member States as far as the
resolution functions are concerned. In particular, the Board should represent
all authorities from the participating Members in the resolution colleges
including authorities from non-participating Member States.
(51)     As many institutions
operate not only within the Union, but internationally, an effective resolution
mechanism needs to set out principles of cooperation with the relevant third
country authorities. Support to third country authorities should be provided in
accordance with the legal framework provided by Article 88 of Directive [ ].
For this purpose, as the Board should be the single authority empowered to
resolve failing banks in the participating Member States, the Board should be
exclusively empowered to conclude non-binding cooperation agreements with those
third country authorities, on behalf of the national authorities of the
participating Member States.
(52)     In order to carry out its
tasks effectively, the Board should have appropriate investigatory powers. It
should be able to require all necessary information either directly or through
national resolution authorities, and to conduct investigations and on-site inspections,
where appropriate in cooperation with national competent authorities. In the
context of resolution, on-site inspections would be available for the Board to
effectively monitor implementation by national authorities and to ensure that
the Commission and the Board take their decisions on the basis of fully
accurate information.
(53)     So as to ensure that the
Board has access to all relevant information, the employees should not be able
to invoke professional secrecy rules to prevent the disclosure of information
to the Board.
(54)     In order to ensure that
decisions adopted within the framework of the single resolution mechanism are
respected, proportionate and dissuasive sanctions should be imposed in case of
infringement. The Board should be entitled to instruct national resolution
authorities to impose fines or periodic penalty payments on undertakings for
failure to comply with obligations under its decisions. In order to ensure
consistent, efficient and effective enforcement practices the Board should be
entitled to issue guidelines addressed to national resolution authorities
concerning the application of fines and penalty payments.
(55)     Where a national resolution
authority infringes the rules of the single resolution mechanism by not using
the powers conferred on it under national law to implement an instruction by
the Board, the Member State concerned may be liable to make good any damage
caused to individuals, including where applicable to the entity or group under
resolution, or any creditor of any part of that entity or group in any Member
State, in accordance with that case law.
(56)     Appropriate rules should be
laid down governing the budget of the Board, the preparation of the budget, the
adoption of internal rules specifying the procedure for the establishment and
implementation of its budget, and the internal and external audit of the
accounts.
(57)     There are circumstances
when the effectiveness of the resolution tools applied may depend on the
availability of short-term funding for the institution or a bridge institution,
the provision of guarantees to potential purchasers, or the provision of
capital to the bridge institution. It is therefore important to set up a fund
to avoid that public funds are used for such purposes.
(58)     It is necessary to ensure
that the Fund is fully available for the purpose of the resolution of failing
institutions. Therefore, the Fund should not be used for any other purpose than
the efficient implementation of resolution tools and powers. Furthermore, it
should be used only in accordance with the applicable resolution objectives and
principles. Accordingly, the Board should ensure that any losses, costs or
other expenses incurred in connection with the use of the resolution tools are
first borne by the shareholders and the creditors of the institution under
resolution. It is only if the resources from shareholders and creditors are
exhausted, that the losses, costs or other expenses incurred with the
resolution tools should be borne by the Fund.
(59)     As a rule, contributions
should be collected from the financial industry prior to and independently of
any operation of resolution. When prior funding is insufficient to cover the
losses or costs incurred by the use of the Fund, additional contributions
should be collected to bear the additional cost or loss. Moreover, the Fund
should be able to contract borrowings or other forms of support from financial
institutions or other third parties where its available funds are not
sufficient to cover the losses, costs and other expenses incurred by the use of
the Fund and the extraordinary ex post contributions are not immediately
accessible.
(60)     In order to reach a
critical mass and to avoid pro-cyclical effects which would arise if the Fund
had to rely solely on ex post contributions in a systemic crisis, it is
indispensable that the ex-ante available financial means of the Fund amount to
a certain target level.
(61)     An appropriate time frame
should be set to reach the target funding level for the Fund. However, it
should be possible for the Board to adjust the contribution period to take into
account significant disbursements made from the Fund.
(62)     Where participating Member
States have already established national resolution financing arrangements,
they should be able to provide that the national resolution financing
arrangements use their available financial means, collected from institutions
in the past by way of ex-ante contributions, to compensate institutions for the
ex-ante contributions which those institutions should pay into the Fund. Such
restitution should be without prejudice to the obligations of Member States
under Directive 94/18/EC of the European Parliament and of the Council[18].
(63)     In order to ensure a fair
calculation of contributions and provide incentives to operate under a model
which presents less risk, contributions to the Fund should take account of the
degree of risk incurred by credit institutions.
(64)     In order to ensure the
proper sharing of resolution costs between deposit guarantee schemes and the
Fund, the deposit guarantee scheme to which an institution under resolution is
affiliated may be liable, up to the amount of covered deposits, for the amount
of losses that it would have had to bear if the institution had been wound up
under normal insolvency proceedings.
(65)     So as to protect the value
of the amounts held in the Fund, these amounts should be invested in
sufficiently safe, diversified and liquid assets.
(66)     The Commission should be
empowered to adopt delegated acts in accordance with Article 290 TFEU in order
to determine the type of contributions to the Fund and the matters for which
contributions are due, the manner in which the amount of the contributions is
calculated and the way in which they are to be paid; specify registration, accounting,
reporting and other rules necessary to ensure that the contributions are fully
and timely paid; determine the contribution system for institutions that have
been authorized to operate after the Fund has reached its target level;
determine the criteria for the spreading out in time of the contributions;
determine the circumstances under which the payment of contributions may be
advanced; determine the criteria for establishing the annual contributions;
determine the measures to specify the circumstances and modalities under which
an institution may be partially or entirely exempted from ex post
contributions, and the measures to specify the circumstances and modalities
under which an institution may be partially or entirely exempted from ex-post
contributions.
(67)     To preserve the
confidentiality of the work of the Board, its members, staff of the Board,
including the staff exchanged with or seconded by participating Member States
for the purpose of carrying out resolution duties should be subject to
requirements of professional secrecy, even after their duties have ceased. For
the purpose of carrying out the tasks conferred upon it, the Board should be
authorized, subject to conditions, to exchange information with national or
Union authorities and bodies.
(68)     In order to ensure that the
Board is represented in the European System of Financial Supervision, Regulation
(EU) No 1093/2010 should be amended in order to include the Board in the
concept of competent authorities established by that Regulation. Such
assimilation between the Board and competent authorities pursuant to Regulation
No 1093/2010 is consistent with the functions attributed to EBA pursuant to
Article 25 of Regulation No 1093/2010 to contribute and participate actively in
the development and coordination of recovery and resolution plans and to aim at
the facilitation of the resolution of failing institutions and in particular
cross border groups.
(69)     Until the Board is fully
operational, the Commission should be responsible for the initial operations
including collecting contributions necessary to cover administrative expenses
and the designation of an interim executive director to authorise all necessary
payments on behalf of the Board.
(70)     This Regulation respects
the fundamental rights and observes the principles recognised in the Charter of
Fundamental Rights of the European Union, notably the right to property, the
protection of personal data, the freedom to conduct a business, the right to an
effective remedy and to a fair trial, and has to be implemented in accordance
with those rights and principles. 
(71)     Since the objectives of
this Regulation, namely setting up an efficient and effective single European
framework for the resolution of credit institutions and ensuring the consistent
application of resolution rules, cannot be sufficiently achieved at the Member
State level and can therefore be better achieved at the Union level, the Union
may adopt measures, in accordance with the principle of subsidiarity as set out
in Article 5 of the Treaty on European Union. In accordance with the principle
of proportionality, as set out in that Article, this Regulation does not go
beyond what is necessary in order to achieve those objectives.
HAVE ADOPTED THIS REGULATION:
PART I
GENERAL PROVISIONS
Article 1
Subject matter
This Regulation establishes uniform rules
and a uniform procedure for the resolution of the entities referred to in
Article 2 that are established in the participating Member States referred to
in Article 4.
Those uniform rules and procedure shall be
applied by the Commission together with a Board and the resolution authorities
of the participating Member States within the framework of a single resolution
mechanism established by this Regulation. The single resolution mechanism shall
be supported by a single bank resolution fund (hereinafter called the Fund).
Article 2
Scope
This Regulation shall apply to the
following entities:
(a)                   
credit institutions established in participating
Member States;
(b)                   
parent undertakings established in one of the
participating Member States, including financial holding companies and mixed
financial holding companies when subject to consolidated supervision carried
out by the ECB in accordance with Article 4(1)(i) of Council Regulation (EU)No[
] conferring specific tasks on the European Central Bank concerning policies
relating to the prudential supervision of credit institutions;
(c)                   
investment firms and financial institutions
established in participating Member States when they are covered by the
consolidated supervision of the parent undertaking carried out by the ECB in
accordance with Article 4(1)(i) of Council Regulation (EU)No[ ].
Article 3
Definitions
For the purposes of this Regulation, the
definitions laid down in Article 2 of Directive [ ] and Article 3 of Directive
2013/36/EU of 26 June 2013 of the European Parliament and of the Council[19] shall apply. In addition, the
following definitions shall apply:
(1)                   
‘national competent authority’ means any
national competent authority as defined in Article 2(2) of Council Regulation
(EU)No[ ];
(2)                   
‘national resolution authority’ means an
authority designated by a Member State in accordance with Article 3 of Directive
[ ];
(3)                   
‘resolution action’ means the application of a
resolution tool to an institution or an entity referred to in Article 2, or the
exercise of one or more resolution powers in relation to it;
(4)                   
‘covered deposits’ mean deposits which are
guaranteed by deposit guarantee schemes under national law in accordance with
Directive 94/19/EC and up to the coverage level provided for in Article 7 of
Directive 94/19/EC;
(5)                   
‘eligible deposits’ means deposits defined in
Article 1 of Directive 94/19/EC which are not excluded from protection
according to Article 2 of that Directive, regardless of their amount;
(6)                   
‘group level resolution authority’ means the
national resolution authority of the participating Member State in which the
institution, or parent undertaking subject to consolidated supervision, is established;
(7)                   
“credit institution’ means credit institution as
defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013[20];
(8)                   
‘investment firm’ means an investment firm as
defined in point (2) of Article 4(1) of Regulation (EU) No 575/2013 that are
subject to the initial capital requirement specified in Article 9 of that Regulation;
(9)                   
‘financial institution’ means a financial
institution as defined in point (26) of Article 4(1) of Regulation (EU) No
575/2013;
(10)               
‘parent undertaking’ means a parent undertaking
as defined in point (15) of Article 4(1) of Regulation (EU) No 575/2013,
including an institution, a financial holding company or a mixed financial
holding company;
(11)               
‘institution under resolution’ means an entity
referred to in Article 2 in respect of which a resolution action is taken;
(12)               
‘institution’ means a credit institution, or an
investment firm covered by consolidated supervision in accordance with point
(c) of Article 2;
(13)               
‘group’ means a parent undertaking and its
subsidiaries, which are entities as referred to in Article 2;
(14)               
‘subsidiaries’ means subsidiary as defined in point
(16) of Article 4(1) of Regulation (EU) No 575/2013;
(15)               
‘sale of business tool’ means the transfer of
instruments of ownership, or assets, rights or liabilities, of an institution
that meets the conditions for resolution to a purchaser that is not a bridge
institution;
(16)               
‘bridge institution tool’ means the transfer of
the assets, rights or liabilities of an institution that meets the conditions
for resolution to a bridge institution;
(17)               
‘asset separation tool’ means the transfer of
assets and rights of an institution that meets the conditions for resolution to
an asset management vehicle;
(18)               
‘bail-in tool’ means the write-down and
conversion powers of liabilities of an institution that meets the conditions
for resolution;
(19)               
‘available financial means’ means the cash,
deposits, assets and irrevocable payment commitments available to the Fund for
the purposes listed under Article74;
(20)               
‘target funding level’ means the amount of
available financial means to be reached under Article 68.
Article 4
Participating Member States
A participating Member States shall be a
Member States whose currency is the euro or a Member State whose currency is
not the euro which has established a close cooperation in accordance with
Article 7 of Council Regulation (EU)No[ ].
Article 5
Relation to Directive [ ] and applicable national law
1.           Where, by virtue of this
Regulation, the Commission or the Board exercises tasks or powers, which,
according to Directive [ ] are to be exercised by the national resolution
authority of a participating Member State, the Board shall, for the application
of this Regulation and Directive [ ], be considered to be the relevant national
resolution authority or, in case of cross-border group resolution, the relevant
group national resolution authority.
2.           The Board, when acting as
national resolution authority, shall act, where relevant, under authorisation
of the Commission.
3.           Subject to the provisions
of this Regulation, the national resolution authorities of the participating
Member State shall act on the basis of and in conformity with the relevant
provisions of national law, as harmonized by Directive [ ].
Article 6
General principles
1.           No action, proposal or
policy of the Board, the Commission or a national resolution authority shall
discriminate against entities referred to in Article 2, deposit holders,
investors or other creditors established in the Union on grounds of their
nationality or place of business.
2.           When making decisions or
taking action, which may have an impact in more than one participating Member
State, and in particular when taking decisions concerning groups established in
two or more participating Member States, the Commission shall give due
consideration to all of the following factors:
(a)         
the interests of the participating Member States
where a group operates and in particular the impact of any decision or action
or inaction on the financial stability, the economy, the deposit guarantee
scheme or the investor compensation scheme of any of those Member States;
(b)         
the objective of balancing the interests of the
various Member States involved and avoiding unfairly prejudicing or unfairly
protecting the interests of a participating Member State;
(c)         
the need to avoid a negative impact for other
parts of a group of which an entity referred to in Article 2, which is subject
to a resolution, is a member;
(d)         
the need to avoid a disproportionate increase in
the costs imposed on the creditors of these entities referred to in Article 2,
to the extent that it would be greater than the one that they will have incurred
had they been resolved through normal insolvency proceedings;
(e)         
the decisions to be taken under Article 107 of
the TFEU and referred to in Article 16(10).
3.           The Commission shall
balance the factors referred to in paragraph 2 with the resolution objectives
referred to in Article 12 as appropriate to the nature and circumstances of
each case.
4.           No decision of the Board
or the Commission shall require Member States to provide extraordinary public
financial support.
PART II
SPECIFIC PROVISIONS
TITLE I
Functions within the Single
Resolution Mechanism and procedural rules
Chapter 1
Resolution planning
Article 7
Resolution plans
1.           The Board shall draw up resolution
plans for the entities referred to in Article 2 and for groups.
2.           For the purposes of
paragraph 1, the national resolution authorities shall forward to the Board all
information necessary to draw up and implement the resolution plans, as obtained
by them in accordance with Articles 10 and 12(1) of Directive [ ], without
prejudice to Chapter 5 of this Title.
3.           The resolution plan shall
set out options for applying the resolution tools and resolution powers
referred to in this Regulation to the entities referred to in Article 2.
4.           The resolution plan shall
provide for the resolution actions which the Commission and the Board may take
where an entity referred to in Article 2 or a group meet the conditions for
resolution. The resolution plan shall take into consideration a range of
scenarios including that the event of failure may be idiosyncratic or may occur
at a time of broader financial instability or of system wide events. The
resolution plan shall not assume any extraordinary public financial support
besides the use of the Fund established in accordance with this Regulation.
5.           The resolution plan for
each entity shall include all of the following:
(a)         
a summary of the key elements of the plan;
(b)         
a summary of the material changes to the
institution that have occurred after the latest resolution information was
filed;
(c)         
a demonstration of how critical functions and
core business lines could be legally and economically separated, to the extent
necessary, from other functions so as to ensure continuity upon the failure of
the institution;
(d)         
an estimation of the timeframe for executing
each material aspect of the plan;
(e)         
a detailed description of the assessment of
resolvability carried out in accordance with Article 8;
(f)           
a description of any measures required pursuant
to Article 8(5) to address or remove impediments to resolvability identified as
a result of the assessment carried out in accordance with Article 8;
(g)         
a description of the processes for determining
the value and marketability of the critical functions, core business lines and
assets of the institution;
(h)         
a detailed description of the arrangements for
ensuring that the information required pursuant to Article 8 is up to date and
at the disposal of the resolution authorities at all times;
(i)           
an explanation by the resolution authority as to
how the resolution options could be financed without the assumption of any extraordinary
public financial support;
(j)           
a detailed description of the different
resolution strategies that could be applied according to the different possible
scenarios;
(k)         
a description of critical interdependencies;
(l)           
an analysis of the impact of the plan on other
institutions within the group;
(m)       
a description of options for preserving access
to payments and clearing services and other infrastructures;
(n)         
a plan for communicating with the media and the
public;
(o)         
the minimum requirement for own funds and
eligible liabilities required pursuant to Article 10 and a deadline to reach
that level, where applicable;
(p)         
where applicable, the minimum requirement for
own funds and contractual bail-in instruments pursuant to Article 10, and a
deadline to reach that level, where applicable;
(q)         
a description of essential operations and
systems for maintaining the continuous functioning of the institution’s
operational processes;
(r)          
a description of the impact on employees of
implementing the plan, including an assessment of any associated costs.
6.           Group resolution plans
shall include a plan for the resolution of the group as a whole and shall
identify measures for the resolution of the parent undertakings and the
subsidiaries that are part of the group.
7.           The Board shall draw up
the resolution plans in cooperation with the supervisor or consolidating
supervisor and with the national resolution authorities of the participating
Member States in which the entities are established.
8.           The Board may require national
resolution authorities to prepare preliminary draft resolution plans and the
group level resolution authority to prepare a preliminary draft group resolution
plan.
9.           Resolution plans shall be
reviewed, and where appropriate updated, at least annually and after any
changes to the legal or organisational structure of the institution or to its
business or its financial position that could have a material effect on or
require a change to the plan.
Article 8
Assessment of resolvability
1.           When drafting resolution
plans in accordance with Article 7, the Board, after consultation with the
competent authority, including the ECB, and the resolution authorities of
non-participating Member States in which significant branches are located
insofar as is relevant to the significant branch, shall conduct an assessment
of the extent to which institutions and groups are resolvable without the
assumption of extraordinary public financial support besides the use of the
Fund established in accordance with Article 64.
2.           When drafting a resolution
plan for entities referred to in Article 2, the Board shall assess the extent
to which such an entity is resolvable in accordance with this Regulation. An
entity shall be deemed resolvable if it is feasible and credible for the
resolution authority to either liquidate it under normal insolvency proceedings
or to resolve it by applying to it the different resolution tools and powers
without giving rise to significant adverse consequences for financial systems,
including circumstances of broader financial instability or system wide events,
of the Member State in which the entity is situated, or other Member States, or
the Union and with a view to ensuring the continuity of critical functions
carried out by the entity.
3.           When drafting resolution
plans for groups, the Board shall assess the extent to which groups are
resolvable in accordance with this Regulation. A group shall be deemed
resolvable if it is feasible and credible for the resolution authorities to
either wind up group entities under normal insolvency proceedings or to resolve
group entities by applying resolution tools and powers to group entities
without giving rise to significant adverse consequences for the financial
systems, including circumstances of broader financial instability or system
wide events, of the Member States in which entities belonging to a group are
situated, or other Member States or the Union and with a view to ensuring the
continuity of critical functions carried out by those entities, either because
they can be easily separated in a timely manner or by other means.
4.           For the purpose of the
assessment, the Board shall, as a minimum, examine the matters specified in
Section C of the Annex of Directive [ ].
5.           If pursuant to an
assessment of resolvability for an entity or a group carried out in accordance
with paragraphs 2 and 3, the Board after consultation with the competent
authority, including the ECB, determines that there are potential substantive
impediments to the resolvability of that entity or group, the Board shall
prepare a report, in consultation with the competent authorities, addressed to
the institution or the parent undertaking analysing the substantive impediments
to the effective application of the resolution tools and the exercising of the
resolution powers. That report shall also recommend any measures that, in the
Board’s view, are necessary or appropriate to remove those impediments in
accordance with paragraph 8.
6.           The report shall be
notified to the entity or parent undertaking concerned, to the competent
authorities and to the resolution authorities of non-participating Member
States in which significant branches are located. It shall be supported by
reasons for the assessment or determination in question and shall indicate how
that assessment or determination complies with the requirement for
proportionate application set out in Article 6.
7.           Within four months from
the date of receipt of the report, the entity or the parent undertaking may
submit observations and propose to the Board alternative measures to remedy the
impediments identified in the report. The Board shall communicate any measure
proposed by the entity or parent undertaking to the competent authorities and
to the resolution authorities of non-participating Member States in which
significant branches are located.
8.           If the measures proposed
by the entity or parent undertaking
concerned do not effectively remove the impediments to resolvability, the Board
shall take a decision, after consultation with the competent authority and,
where appropriate, the macroprudential authority, indicating that the measures
proposed do not effectively remove the impediments to resolvability, and
instructing the national resolution authorities to require the institution, the
parent undertaking, or any subsidiary of the group concerned, to take any of
the measures listed in paragraph 9, based on the following criteria:
(a)         
the effectiveness of the measure in removing the
impediments to resolvability;
(b)         
the need to avoid a negative impact on financial
stability in participating Member States;
(c)         
the need to avoid an impact on the institution
or the group concerned which would go beyond what is necessary to remove the
impediment to resolvability or would be disproportionate.
9.           For the purpose of
paragraph 8, the Board shall instruct national resolution authorities to take
any of the following measures:
(a)         
to require the entity to draw up service
agreements (whether intra-group or with third parties) to cover the provision
of critical functions;
(b)         
to require the entity to limit its maximum individual
and aggregate exposures;
(c)         
to impose specific or regular information
requirements relevant for resolution purposes;
(d)         
to require the entity to divest specific assets;
(e)         
to require the entity to limit or cease specific
existing or proposed activities;
(f)           
to restrict or prevent the development of new or
existing business lines or sale of new or existing products;
(g)         
to require changes to legal or operational
structures of the entity or any entity belonging to a group, either directly or
indirectly under its control, so as to reduce complexity in order to ensure
that critical functions may be legally and operationally separated from other
functions through the application of the resolution tools;
(h)         
to require an entity to set up a parent
financial holding company in a Member State or a Union parent financial holding
company;
(i)           
to require an entity to issue eligible
liabilities to meet the requirements of Article 10;
(j)           
to require an entity to attempt to renegotiate
any eligible liability, additional Tier 1 instrument or Tier 2 instrument it
has issued, with a view to ensuring that any decision of the Commission to
write down or convert that liability or instrument would be effected under the
law of the jurisdiction governing that liability or instrument.
10.         The national resolution
authorities shall implement the instructions of the Board in accordance with
Article 26.
Article 9
Simplified obligations and waivers
1.           The Board, on its own
initiative or upon proposal by a national resolution authority, may apply
simplified obligations in relation to the drafting of resolution plans referred
to, in Article 7 or may waive the obligation of drafting those plans.
2.           National resolution
authorities may propose to the Board to apply simplified obligations or to
waive the obligation of drafting resolution plans for specific institutions or
groups. That proposal shall be reasoned and shall be supported by all the
relevant documentation.
3.           On receiving a proposal
pursuant to paragraph 1, or when acting on its own initiative, the Board shall
conduct an assessment of the institutions or group concerned. The assessment
shall be made having regard to the the potential impact that the failure of the
institution or group could have, due to the nature of its business, its size or
its interconnectedness to other institutions or to the financial system in
general, on financial markets, on other institutions, or on funding conditions.

4.           The Board shall assess the
continuing application of the waivers at least annually and from the date of
grant or following a change to the legal or organisational structure, business
or financial situations of the institution or group concerned. The Board shall
not grant waivers to an institution in cases where that institution has one or
more subsidiary or significant branches in another Member State or third
country.
The Board shall cease to apply simplified
obligations or to waive the obligation of drafting resolution plans if any of
the circumstances that justified them no longer exists.
Where the national resolution authority which
has proposed the application of simplified obligation or the grant of a waiver
in accordance with paragraph 1 considers that the decision to apply simplified
obligation or to grant the waiver must be withdrawn, it shall submit a proposal
to the Board to that end. In that case, the Board shall take a decision on the
proposed withdrawal taking full account of the justification for withdrawal put
forward by the national resolution authority in the light of the elements set
out in paragraph 3.
5.           The Board may grant, in
accordance with paragraphs 3 and 4, a waiver concerning the obligation of
drafting recovery plans to individual institutions affiliated to a central body
as in Article 21 of Directive 2013/36/EU and wholly or partially exempted from
prudential requirements in national law in accordance with Article 2(5) of
Directive 2013/36/EU. In that case the obligation of drafting the resolution
plan shall apply on a consolidated basis to the central body.
6.           The Board may grant waiver
concerning the application of the obligation of drafting resolution plans to
institutions that belong to an institutional protection scheme in accordance
with Article 113(7) of Regulation (EU) No 575/2013. When deciding to grant a
waiver to an institution that belongs to an institutional protection scheme,
the Board shall consider whether the institutional protection scheme is likely
to be able to meet simultaneoues demands placed on the scheme in relation to
its members.
7.           The Board shall inform the
EBA about its application of paragraphs 1, 4 and 5.
Article 10
Minimum requirement for own funds and eligible liabilities
1.           The Board shall, in
consultation with competent authorities, including the ECB, determine the
minimum requirement of own funds and eligible liabilities, as referred to in paragraph
2, subject to write down and conversion powers, that institutions and parent
undertakings referred to in Article 2 shall be required to maintain.
2.           The minimum requirement
shall be calculated as the amount of own funds and eligible liabilities
expressed as a percentage of the total liabilities and own funds, excluding
liabilities arising from derivatives, of the institutions and parent
undertakings referred to in Article 2.
3.           The determination referred
to in paragraph 1 shall be made on the basis of the following criteria:
(a)         
the need to ensure that the institution and
parent undertaking referred to in Article 2 can be resolved by the application
of the resolution tools including, where appropriate, the bail-in tool, in a
way that meets the resolution objectives;
(b)         
the need to ensure, in appropriate cases, that
the institution and parent undertaking referred to in Article 2 has sufficient
eligible liabilities to ensure that, if the bail-in tool were to be applied,
losses could be absorbed and the Common Equity Tier 1 ratio of the institution
and parent undertaking referred to in Article 2 could be restored to a level
necessary to enable it to continue to comply with the conditions for
authorisation and to carry on the activities for which it is authorised under Regulation
(EU) No 575/2013 and to sustain sufficient market confidence in the institution
and parent undertaking referred to in Article 2;
(c)         
the need to ensure that, if the resolution plan
anticipates that certain classes of eligible liabilities might be excluded from
bail-in under Article 24 (5), or that certain classes of eligible liabilities
might be transferred to a recipient in full under a partial transfer, that the institution
and parent undertaking referred to in Article 2 has sufficient other eligible
liabilities to ensure that losses could be absorbed and the Common Equity Tier
1 ratio of the institution and parent undertaking referred to in Article 2
could be restored to a level necessary to enable it to continue to comply with
the conditions for authorisation and to carry on the activities for which it is
authorised under Regulation (EU) No 575/2013;
(d)         
the size, the business model and the risk
profile of the institution and parent undertaking referred to in Article 2,
including its own funds;
(e)         
the extent to which the Deposit Guarantee Scheme
could contribute to the financing of resolution in accordance with Article 73;
(f)           
the extent to which the failure of the institution
and parent undertaking referred to in Article 2 would have an adverse effect on
financial stability, including, due to its interconnectedness with other
institutions or with the rest of the financial system through contagion to
other institutions.
The determination shall specify the minimum
requirement that the institutions shall be required to comply with on an
individual basis, and that parent undertakings shall be required to comply with
on a consolidated basis. The Board may decide to waive the minimum requirement
on a consolidated basis to the parent undertaking provided that the conditions
set out in points (a) and (b) of Article 39(4ca) of the Directive [ ] are met.
The Board may decide to grant a waiver concerning the minimum requirement on a
consolidated basis to a subsidiary provided that the conditions set out in
points (a) to (c) of Article 39 (4d) of Directive [ ] are met.
4.           The determination referred
to in paragraph 1 may provide that the minimum requirement of own funds and
eligible liabilities is partially met on a consolidated or an individual basis
through contractual bail-in instrument.
5.           To qualify as a
contractual bail-in instrument under paragraph 4, the Board must be satisfied
that the instrument:
(a)         
contains a contractual term providing that,
where the Commission decides to apply the bail-in tool to that institution, the
instrument shall be written down or converted to the extent required before
other eligible liabilities are written down or converted; and
(b)         
is subject to a binding subordination agreement,
undertaking or provision under which in the event of normal insolvency
proceedings, it ranks below other eligible liabilities and cannot be repaid
until other eligible liabilities outstanding at the time have been settled.
6.           The Board shall take any determination
referred to in paragraph 1 in the course of developing and maintaining
resolution plans pursuant to Article 7.
7.           The Board shall address
its determination to the national resolution authorities. The national
resolution authorities shall implement the instructions of the Board in
accordance with Article 26. The Board shall require that the national
resolution authorities verify and ensure that institutions and parent
undertakings maintain the minimum requirement provided for in paragraph 1.
8.           The Board shall inform the
ECB and the EBA of the minimum requirement that it has determined for each
institution and parent undertaking under paragraph 1.
Chapter 2
Early
intervention
Article 11
Early intervention
1.           The ECB or competent
authorities of participating Member States shall inform the Board of any
measure that they require an institution or group to take or that they take
themselves pursuant to Article 13b of Council Regulation (EU)No[ ], pursuant to
Articles 23(1) or 24 of Directive [ ], or pursuant to Article 104 of Directive 2013/36/EU.
The Board shall notify the Commission of any
information which it has received pursuant to the first subparagraph.
2.           From the date of receipt
of the information referred to in paragraph 1, and without prejudice to the
powers of the ECB and competent authorities in accordance with other Union law,
the Board may prepare for the resolution of the institution or group concerned.
For the purposes of the first subparagraph, the
Board shall closely monitor, in cooperation with the ECB and relevant competent
authority, the conditions of the institution or the parent undertaking, and their
compliance with any early intervention measure that has been required to take.
3.           The Board shall have the
power:
(a)         
to require, in accordance with Chapter 5 of this
Title, all information that is necessary in order to prepare for the resolution
of the institution or of the group;
(b)         
to carry out a valuation of the assets and
liabilities of the institution or group in accordance with Article 17;
(c)         
to contact potential purchasers in order to
prepare for the resolution of the institution or the group, or to require the
institution, parent undertaking, or the national resolution authority to do so,
subject to compliance with the confidentiality requirements established by this
Regulation and by Article 76 of Directive [ ];
(d)         
to require the relevant national resolution
authority to draft a preliminary resolution scheme for the institution or group
concerned.
4.           If ECB or the competent
authorities of the participating Member States intend to impose on an
institution or a group any additional measure under Article 13b of Council
Regulation (EU)No[ ] or under Articles 23 or 24 of Directive [ ] or under
Article 104 of Directive 2013/36/EU, before the institution or group has fully complied
with the first measure notified to the Board, they shall consult the Board,
before imposing such additional measure on the institution or group concerned.
5.           The ECB or the competent
authority, and the Board shall ensure that the additional measure referred to
in paragraph 4 and any action of the Board aimed at preparing for resolution
under paragraph 2 are consistent.
Chapter 3
Resolution
Article 12
Resolution Objectives
1.           When acting under the
resolution procedure referred to in Article 16, the Commission and the Board, in
respect of their respective responsibilities, shall have regard to the
resolution objectives, and choose the tools and powers that, in its view, best
achieve the objectives that are relevant in the circumstances of the case.
2.           The resolution objectives
referred to in paragraph 1 are the following:
(a)         
to ensure the continuity of critical functions;
(b)         
to avoid significant adverse effects on
financial stability, including to prevent contagion, and maintain market
discipline;
(c)         
to protect public funds by minimising reliance
on extraordinary public financial support;
(d)         
to protect depositors covered by Directive
94/19/EC and investors covered by Directive 97/9/EC[21].
When pursuing the above objectives, the Commission
and the Board shall seek to avoid the unnecessary destruction of value and to
minimise the cost of resolution.
3.           The Commission shall
balance the objectives referred to in paragraph 2 as appropriate to the nature
and circumstances of each case.
Article 13
General principles governing resolution
1.           When acting under the
resolution procedure referred to in Article 16, the Commission and the Board
shall take all appropriate measures to ensure that the resolution action is
taken in accordance with the following principles:
(a)         
the shareholders of the institution under
resolution bear first losses;
(b)         
creditors of the institution under resolution
bear losses after the shareholders in accordance with the order of priority of
their claims pursuant to Article 15;
(c)         
management of the institution under resolution
is replaced, except in those cases when the retention of the management, in
whole or in part, as appropriate to the circumstances, is considered necessary
for the achievement of the resolution objectives;
(d)         
 in accordance with due process of law,
individuals and entities are held accountable for the failure of the
institution under resolution to the extent of their responsibility under
national law;
(e)         
creditors of the same class are treated in an
equitable manner;
(f)           
no creditor shall incur greater losses than
would have been incurred if the entity referred to in Article 2 had been wound
up under normal insolvency proceedings.
2.           Where an institution is an
entity belonging to a group, the Commission, where applicable, and the Board
shall apply resolution tools and exercise resolution powers in a way that minimises
the impact on other entities belonging to the group and on the group as a whole
and minimises the adverse effect on financial stability in the Union and particularly
in Member States where the group operates.
3.           Where the sale of business
tool, the bridge institution tool or the asset separation tool is applied to an
entity referred to in Article 2, that entity shall be considered to be the
subject of bankruptcy proceedings or analogous insolvency proceedings for the
purposes of Article 5(1) of Directive 2001/23/EC[22].
Article 14
Resolution of financial institutions and parent undertakings
1.           The Commission shall take
a resolution action in relation to a financial institution, when the conditions
specified in Article 16(2) are met with regard to both the financial
institution and with regard to the parent undertaking.
2.           The Commission shall take
a resolution action in relation to a parent undertaking referred to in point
(b) of Article 2, when the conditions specified in Article 16(2) are met with
regard to both that parent undertaking and with regard to one or more
subsidiaries which are institutions.
3.           By way of derogation from
paragraph 2 and notwithstanding the fact that a parent undertaking may not meet
the conditions established in Article 16(2), the Commission may take resolution
action with regards to that parent undertaking when one or more of the
subsidiaries which are institutions comply with the conditions established in
Article 16(2) and action with regard to that parent undertaking is necessary
for the resolution of one or more subsidiaries which are institutions or for
the resolution of the group as a whole.
Article 15
Order of priority of claims
When applying the bail-in tool to an
institution under resolution, and without prejudice to liabilities excluded
from the bail-in tool under Article 24(3), the Commission shall decide on, and
the Board and the national resolution authorities of the participating Member
States shall exercise the write down and conversion powers to claims following
a reverse order of priority to the following order for normal insolvency
procedures:
(a)                   
claims related to eligible deposits and claims
from deposit guarantee schemes;
(b)                   
unsecured non preferred claims;
(c)                   
claims subordinated other than those mentioned
in points (d) to (f);
(d)                   
claims from senior executives and directors;
(e)                   
claims related to additional Tier 1 and Tier 2
instruments;
(f)                     
claims related to common equity Tier 1
instruments;
starting from point (f) and ending with
point (a).
Article 16
Resolution procedure
1.           Where the ECB or a
national resolution authority assesses that the conditions referred to in points
(a) and (b) of paragraph 2 are met in relation to an entity referred to in Article
2, it shall communicate that assessment without delay to the Commission and the
Board.
2.           On receiving a
communication pursuant to paragraph 1, or on its own initiative, the Board
shall conduct an assessment of whether the following conditions are met:
(a)         
the entity is failing or likely to fail;
(b)         
having regard to timing and other relevant
circumstances, there is no reasonable prospect that any alternative private
sector or supervisory action (including early intervention measures or the
write down or conversion of capital instruments in accordance with Article 14),
taken in respect of the entity, would prevent its failure within a reasonable
timeframe;
(c)         
a resolution action is necessary in the public interest
pursuant to paragraph 4.
3.           For the purposes of point
(a) of paragraph 2, the entity is deemed to be failing or likely to fail in any
of the following circumstances:
(a)         
the entity is in breach or there are objective
elements to support a determination that the institution will be in breach, in
the near future, of the requirements for continuing authorisation in a way that
would justify the withdrawal of the authorisation by the ECB or competent
authority including but not limited to because the institution has incurred or
is likely to incur losses that will deplete all or a significant amount of its
own funds;
(b)         
the assets of the entity are or there are
objective elements to support a determination that the assets of the entity
will be, in the near future, less than its liabilities;
(c)         
the entity is or there are objective elements to
support a determination that the entity will be in the near future unable to
pay its debts as they fall due;
(d)         
extraordinary public financial support is
required except when, in order to remedy a serious disturbance in the economy
of a Member State and preserve financial stability, that extraordinary public
financial support takes any of the following forms:
(i)      a State guarantee to back liquidity
facilities provided by central banks according to the central banks’
conditions;
(ii)      a State guarantee of newly issued
liabilities; 
(iii)     an injection of own funds or
purchase of capital instruments at prices and on terms that do not confer an
advantage upon the entity, where neither the circumstances set out in points
(a), (b) and (c) of paragraph 2 nor the circumstances set out in Article 14 are
present at the time the public support is granted.
In each of the cases mentioned in points (i),
(ii) and (iii) the guarantee or equivalent measures referred to therein shall
be confined to solvent entities and shall be conditional on approval under
State aid rules. These measures shall be of a precautionary and temporary
nature and shall be proportionate to remedy the consequences of the serious
disturbance and shall not be used to offset losses that the entity has incurred
or is likely to incur in the near future.
4.           For the purposes of point
(c) of paragraph 2, a resolution action shall be treated as in the public
interest if it achieves and is proportionate to one or more of the resolution
objectives as specified in Article 12 and winding up of the entity under normal
insolvency proceedings would not meet those resolution objectives to the same
extent.
5.           If all the conditions
established in paragraph 2 are met, the Board shall recommend to the Commission
that the entity be placed under resolution. The recommendation shall include at
least the following:
(a)         
the recommendation to place the entity under
resolution;
(b)         
the framework of the resolution tools referred
to in Article 19(3);
(c)         
the framework of the use of the Fund to support
the resolution action in accordance with Article 71.
6.           Having regard to the
urgency of the circumstances in the case, the Commission shall decide, on its
own initiative or taking into account, if any, the communication referred to in
paragraph 1 or the recommendation of the Board referred to in paragraph 5,
whether or not to place the entity under resolution, and on the framework of
the resolution tools that shall be applied in respect of the entity concerned
and of the use of the Fund to support the resolution action. The Commission, on
its own initiative, may decide to place an entity under resolution if all the
conditions referred to in paragraph 2 are met.
7.           The decision of the
Commission shall be addressed to the Board. If the Commission decides not to place
the entity under resolution, because the condition laid down in paragraph 2(c)
is not met, the entity concerned shall be wound up in accordance with national
insolvency law.
8.           Within the framework set
by the Commission decision, the Board shall decide on the resolution scheme
referred to in Article 20 and shall ensure that the necessary resolution action
is taken to carry out the resolution scheme by the relevant national resolution
authorities. The decision of the Board shall be addressed to the relevant national
resolution authorities and shall instruct those authorities, which shall take
all necessary measures to implement the decision of the Board in accordance
with Article 26, by exercising any of the resolution powers provided for in Directive
[ ], in particular those in Articles 56 to 64 of that Directive [ ]. Where
State aid is present, the Board may only decide after the Commission has taken
a decision on that State aid.
9.           On receiving a
communication pursuant to paragraph 1, or on its own initiative, if the Board
considers that resolution measures could constitute State aid pursuant to
Article 107(1) TFEU, it shall invite the participating Member State or Member
States concerned to immediately notify the envisaged measures to the Commission
under Article 108(3) TFEU.
10.         To the extent that the resolution
action as proposed by the Board involves the use of the Fund and does not
entail the grant of State aid pursuant to Article 107(1) of the TFEU, the
Commission shall apply in parallel, by way of analogy, the criteria established
for the application of Article 107 TFEU.
11.         The Commission shall have
the power to obtain from the Board any information which it deems relevant for
fulfilling its tasks under this Regulation and, where applicable, Article 107 TFEU.
The Board shall have the power to obtain from any person, in accordance with
Chapter 5 of this Title, any information necessary for it to prepare and decide
upon a resolution action including updates and supplements of information
provided in the resolution plans.
12.         The Board shall have the
power to recommend to the Commission to amend the framework for the resolution
tools and for the use of the Fund in respect of an entity placed under
resolution.
Article 17
Valuation
1.           Before taking resolution
action or exercising the power to write down or convert capital instruments,
the Board shall ensure that a fair and realistic valuation of the assets and liabilities
of an entity referred to in Article 2 is carried out by a person independent
from any public authority, including the Board, the resolution authority, and
the entity concerned.
2.           Subject to paragraph 13,
where all the requirements laid down in paragraphs 3 to 14 are respected, the
valuation shall be considered as definitive.
3.           Where an independent
valuation according to paragraph 1 is not possible, the Board may carry out a
provisional valuation of the assets and liabilities of the entity referred to
in Article 2, in accordance with the provisions of paragraph 9.
4.           The objective of the
valuation shall be to assess the value of the assets and liabilities of the entity
referred to in Article 2 that is failing or is likely to fail.
5.           The purposes of the
valuation shall be:
(a)         
to be taken into account for the determination
of whether the conditions for resolution or the conditions for the write down
or conversion of capital instruments are met;
(b)         
if the conditions for resolution are met, to be
taken into account for the decision on the appropriate resolution action to be
taken in respect of the entity referred to in Article 2;
(c)         
when the power to write down or convert capital
instruments is applied, to be taken into account for the decision on the extent
of the cancellation or dilution of shares or other instruments of ownership,
and the extent of the write down or conversion of relevant capital instruments;
(d)         
when the bail-in tool is applied, to be taken
into account for the decision on the extent of the write down or conversion of
eligible liabilities;
(e)         
when the bridge institution tool or asset separation
tool is applied, to be taken into account for the decision on the assets,
rights, liabilities or shares or other instruments of ownership to be
transferred and the decision on the value of any consideration to be paid to
the institution under resolution or, as the case may be, to the owners of the
shares or other instruments of ownership;
(f)           
when the sale of business tool is applied, to be
taken into account for the decision on the assets, rights, liabilities or
shares or other instruments of ownership to be transferred and to inform the
Board’s understanding of what constitutes commercial terms for the purposes of
Article 21(2)(b);
(g)         
in all cases, to ensure that any losses on the
assets of the entity referred to in Article 2 are fully recognised at the moment
the resolution tools are applied or the power to write down or convert capital
instruments is exercised.
6.           Where applicable, the
valuation shall be based on prudent assumptions, including as to rates of
default and severity of losses. The valuation shall not assume any potential
future provision of extraordinary public financial support to the entity
referred to in Article 2 from the point at which resolution action is taken or
the power to write down or convert capital instruments is exercised. Furthermore,
the valuation shall take account of the fact that, if any resolution tool is
applied:
(a)         
the Board may recover any reasonable expenses
properly incurred from the institution under resolution;
(b)         
the Fund may charge interest or fees in respect of
any loans or guarantees provided to the institution under resolution, in
accordance with Article 71.
7.           The valuation shall be
supplemented by the following information as appearing in the accounting books
and records of the entity referred to in Article 2:
(a)         
an updated balance sheet and a report on the
financial position of the entity referred to in Article 2;
(b)         
an analysis and an estimate of the accounting
value of the assets;
(c)         
the list of outstanding liabilities shown in the
books and records of the entity referred to in Article 2, with an indication of
the respective credits and priority of claims referred to in Article 15;
(d)         
the list of assets held by the entity referred
to in Article 2 for account of third parties who have ownership rights in
respect of those assets.
8.           Where appropriate, to provide
reasoning for the decisions referred to in points (e) and (f) of paragraph 5,
the information in point (b) of paragraph 7 may be complemented by an analysis
and estimate of the value of the assets and liabilities of the entity referred
to in Article 2 on a market value basis.
9.           The valuation shall
indicate the subdivision of the creditors in classes in accordance with the
priority of claims referred to in Article 15 and an estimate of the treatment
that each class of shareholders and creditors would have been expected to
receive, if the entity referred to in Article 2 were wound up under normal
insolvency proceedings.
10.         Where, due to the urgency in the circumstances of the case, either it is not possible to comply with the requirements in
paragraphs 6 and 8, or where paragraph 2 applies, a provisional valuation shall
be carried out. The provisional valuation shall comply with the requirements in
paragraph 4 and in so far as reasonably practicable in the circumstances with the
requirements of paragraphs 1, 7 and 9.
The provisional valuation referred to in the
first subparagraph shall include a buffer for additional losses, with
appropriate justification.
11.         A valuation that does not
comply with all the requirements laid down in this Article shall be considered
as provisional until an independent person has carried out a valuation that is
fully compliant with all the requirements set out in this Article. That ex post
definitive valuation shall be carried out as soon as practicable.
The purposes of the ex post definitive
valuation shall be:
(a)         
to ensure that any losses on the assets of the entity
referred to in Article 2 are fully recognised in the books of accounts of that
entity;
(b)         
to provide reasoning for a decision to write
back creditors’ claims or to increase the value of the consideration paid, in
accordance with paragraph 12.
12.         In the event that the ex
post definitive valuation’s estimate of the net asset value of the entity
referred to in Article 2 is higher than the provisional valuation’s estimate of
the net asset value of that entity, the Board may request the national
resolution authority to:
(a)         
exercise its power to increase the value of the
claims of creditors which have been written down under the bail-in tool;
(b)         
instruct a bridge institution or asset
management vehicle to make a further payment of consideration in respect of the
assets, rights, liabilities to the entity referred to in Article 2 under
resolution, or as the case may be, in respect of the shares or instruments of
ownership to the owners of the shares or other instruments of ownership.
13.         By derogation from paragraph
1, a provisional valuation conducted in accordance with paragraphs 10 and 11
shall be a valid basis for the Board to take resolution actions or to exercise
the write down or conversion power of capital instruments.
14.         The valuation shall not
have any legal effect and be a procedural step preparing for the recommendation
of the Board to apply a resolution tool or exercise a resolution power.
15.         The valuation shall also
comply with the delegated acts concerning the circumstances in which a person
is independent, the methodology for assessing the value of the assets and
liabilities of the entity, and the methodology for calculating and including a
buffer for additional losses in the provisional valuation adopted by the
Commission pursuant to Article 30(7) of Directive [ ].
16.         After the resolution action
has been effected, for the purposes of assessing whether shareholders and
creditors would have received better treatment if the institution under
resolution had entered into normal insolvency proceedings, the Board shall
ensure that a valuation is carried out by an independent person. That valuation
shall be distinct from the valuation carried out under paragraphs (1) to (14).
17.         The valuation referred to
in paragraph 16 shall determine:
(a)         
the treatment that shareholders and creditors
would have received if the entity referred to in Article 2 under resolution in
connection to which the partial transfer, write down or conversion has been
made, had entered normal insolvency proceedings immediately before the
transfer, write down or conversion was effected;
(b)         
the actual treatment that shareholders and
creditors have received in the resolution of the entity referred to in Article
2 under resolution;
(c)         
whether there is any difference between the
treatment referred to in point (a) and the treatment referred to in point (b).
18.         The valuation referred to in
paragraph 16 shall:
(a)         
assume that the entity referred to in Article 2 under
resolution in connection to which the partial transfer, write down or
conversion has been made would have entered normal insolvency proceedings
immediately before the resolution action has been effected;
(b)         
assume that the partial transfer, or transfers,
of rights, assets or liabilities, or the write down or the conversion had not
been made;
(c)         
disregard any provision of extraordinary public
support to the entity referred to in Article 2 under resolution.
Article 18
Write down and conversion of capital instruments
1.           The ECB, a competent
authority or a resolution authority, as designated by a Member State in
accordance with Articles 51(1)(ba) and (bb), and 54 of the Directive [ ], shall
inform the Board where they assess that the following conditions are met in
relation to an entity referred to in Article 2 or a group established in a
participating Member State:
(a)         
the entity will no longer be viable unless the
capital instruments are written down or converted into equity;
(b)         
extraordinary public financial support is
required by the entity or group, except in any of the circumstances set out in
point (d)(iii) of Article 16(3).
2.           For the purposes of
paragraph 1, an entity referred to in Article 2 or a group shall be deemed to
be no longer viable only if both of the following conditions are met:
(a)         
that entity or group is failing or likely to
fail;
(b)         
having regard to timing and other relevant
circumstances, there is no reasonable prospect that any action, including
alternative private sector or supervisory action (including early intervention
measures), other than the write down or conversion of capital instruments,
either singly or in combination with resolution action, would prevent the
failure of that entity or group within a reasonable timeframe.
3.           For the purposes of point
(a) of paragraph 1, that entity shall be deemed to be failing or likely to fail
where one or more of the circumstances set out in Article 16(3) occur.
4.           For the purposes of point
(a) of paragraph 2, a group shall be deemed to be failing or likely to fail
where the group is in breach or there are objective elements to support a
determination that the group will be in breach, in the near future, of its
consolidated prudential requirements in a way that would justify action by the
competent authority including but not limited to because the group has incurred
or is likely to incur losses that will deplete all or a significant amount of
its own funds.
5.           The Commission, upon a
recommendation of the Board or on its own initiative, shall verify that the
conditions referred to in paragraph 1 are met. The Commission shall determine
whether the powers to write down or convert capital instruments shall be
exercised singly or, following the procedure under Article 16(4) to (7),
together with a resolution action.
6.           Where the Commission
determines that the conditions referred to in paragraph 1 are met, but the
conditions for resolution in accordance with Article 16(2) are not met, the
Board, following a decision of the Commission, shall instruct the national
resolution authorities to exercise the write down or conversion powers in
accordance with Articles 51 and 52 of Directive [ ].
7.           Where the conditions
referred to in paragraph 1 are met, and the conditions referred to in Article
16(2) are also met, the procedure set out in Article 16(4) to (7) shall apply.
8.           The Board shall ensure
that national resolution authorities exercise the write down or conversion
powers in a way that produces the following results:
(a)         
Common Equity Tier 1 reduces first in proportion
to the losses and up to its capacity;
(b)         
the principal amount of relevant capital
instruments is written down or converted into Common Equity Tier 1 instruments
or both, to the extent required and up to the capacity of the relevant capital
instruments.
9.           The national resolution
authorities shall implement the instructions of the Board and exercise the
write down or conversion of capital instruments in accordance with Article 26.
Article 19
General principles of resolution tools
1.           Where the Board decides to
apply a resolution tool to an entity referred to in Article 2, and that
resolution action would result in losses being borne by creditors or their
claims being converted, the Board shall exercise the power under Article 18
immediately before or together with the application of the resolution tool.
2.           The resolution tools
referred to in point be of Article 16(5)are the following:
(a)         
the sale of business tool;
(b)         
the bridge institution tool;
(c)         
the asset separation tool;
(d)         
the bail-in tool.
3.           When adopting the recommendation
referred to in Article 16(5), the Board shall consider the following factors:
(a)         
the assets and liabilities of the institution
under resolution on the basis of the valuation pursuant to Article 17;
(b)         
the liquidity position of the institution under
resolution;
(c)         
the marketability of the franchise value of the
institution under resolution in the light of the competitive and economic
conditions of the market;
(d)         
the time available.
4.           Subject to paragraph 5,
the resolution tools may be applied either separately or together, except for
the asset separation tool which may be applied only together with another
resolution tool.
Article 20
Resolution Scheme
The resolution scheme adopted by the Board
under Article 16(8) shall establish, in compliance with the decisions of the
Commission on the resolution framework under Article 16(6) and with any
decision on State aid where applicable by analogy the details of the resolution
tools to be applied to the institution under resolution concerning at least the
measures referred to in Articles 21(2), 22(2), 23(2) and 24(1) and determine
the specific amounts and purposes for which the Fund shall be used.
In the course of the resolution process,
the Board may amend and update the resolution scheme as appropriate in light of
the circumstances in the case and within the resolution framework decided upon by
the Commission pursuant to Article 16(6).
Article 21
Sale of business tool
1.           Within the framework
decided by the Commission, the sale of business tool shall consist of the transfer
to a purchaser that is not a bridge institution of the following:
(a)         
shares or other instruments of ownership of an
institution under resolution; or
(b)         
all or specified assets, rights or liabilities
of an institution under resolution.
2.           Concerning the sale of
business tool, the resolution scheme referred to in Article 16(8) shall
establish in particular:
(a)         
the instruments, assets, rights and liabilities
to be transferred by the national resolution authority in accordance with Article
32(1) and (7) to (11) of the Directive [ ];
(b)         
the commercial terms, having regard to the
circumstances and to the costs and expenses incurred in the resolution process,
pursuant to which the national resolution authority shall make the transfer in accordance
with Article 32(2) to (4) of Directive [ ];
(c)         
whether the transfer powers may be exercised by
the national resolution authority more than once in accordance with Article
32(5) and (6) of Directive [ ];
(d)         
the arrangements for the marketing by the
national resolution authority of that entity or those instruments, assets,
rights and liabilities in accordance with Article 33 (1) and (2) of Directive [
];
(e)         
whether the compliance with the marketing
requirements by the national resolution authority is likely to undermine the
resolution objectives in accordance with paragraph 3.
3.           The Board shall apply the
sale of business tool without complying with the marketing requirements under point
(e) of paragraph 2 when it determines that compliance with those requirements
would be likely to undermine one or more of the resolution objectives and in
particular where the following conditions are met:
(a)         
it considers that there is a material threat to
financial stability arising from or aggravated by the failure or potential
failure of the institution under resolution; 
(b)         
it considers that compliance with those
requirements would be likely to undermine the effectiveness of the sale of
business tool in addressing that threat or achieving the resolution objective
specified in point (b) of Article 12(2).
Article 22
Bridge institution tool
1.           Within the framework
decided by the Commission, the bridge institution tool shall consist of the
transfer to a bridge institution of any of the following:
(a)         
shares or other instruments of ownership issued
by one or more institutions under resolution; 
(b)         
all or any assets, rights or liabilities of one
or more institutions under resolution.
2.           With regard to the bridge
institution tool the resolution scheme referred to in Article 20 shall
establish in particular:
(a)         
the instruments, assets, rights and liabilities
to be transferred to a bridge institution by the national resolution authority
in accordance with Article 34(1) to (9) of Directive [ ];
(b)         
the arrangements for the setting up, the
operation and the termination of the bridge institution by the national
resolution authority in accordance with Article 35(1) to (3) and (5) to (8) of Directive
[ ];
(c)         
the arrangements for the marketing of the bridge
institution or its assets or liabilities by the
national resolution authority in accordance with Article 35(4) of Directive [ ].
3.           The Board shall make sure
that the total value of liabilities transferred by the national resolution
authority to the bridge institution does not exceed the total value of the
rights and assets transferred from the institution under resolution or provided
by other sources.
Article 23
Asset separation tool
1.           Within the framework
decided by the Commission, the asset separation tool shall consist of the
transfer of assets, rights or liabilities of an institution under resolution to
an asset management vehicle.
An asset management vehicle shall be a legal
entity that meets all of the following requirements:
(a)         
it is wholly or partially owned by or it is
controlled by one or more public authorities, which may include the resolution
authority or the resolution financing arrangement;
(b)         
it has been created for the purpose of receiving
some or all of the assets, rights and liabilities of one or more institutions
under resolution or a bridge institution.
2.           Concerning the asset separation
tool the resolution scheme referred to in Article 20 shall establish in
particular:
(a)         
the instruments, assets, rights and liabilities
to be transferred by the national resolution authority to an asset management
vehicle in accordance with Article 36(1) to (4) and (6) to (10) of Directive [
];
(b)         
the consideration for which the assets shall be
transferred by the national resolution authority to the asset management
vehicle, in accordance with the principles established in Article 17. This
provision does not prevent the consideration having nominal or negative value.
Article 24
Bail-in tool
1.           The bail-in tool may be
applied for either of the following purposes:
(a)         
to recapitalise an entity referred to in Article
2 that meets the conditions for resolution to the extent sufficient to restore
its ability to comply with the conditions for authorisation and to carry on the
activities for which is authorised under Directive 2013/36/EU or Directive
2004/39/EC;
(b)         
to convert to equity or reduce the principal
amount of claims or debt instruments that are transferred to a bridge
institution with a view to providing capital for that bridge institution.
Within the framework decided by the Commission
concerning the bail-in tool, the resolution scheme shall establish in particular:
(a)         
the aggregate amount by which eligible
liabilities must be reduced or converted, in accordance with paragraph 6;
(b)         
the liabilities that may be excluded in
accordance with paragraphs 5 to 13;
(c)         
the objectives and minimum content of the business
reorganisation plan to be submitted in accordance with paragraph 16.
2.           The bail-in tool may be
applied for the purpose referred to in point (a) of paragraph 1 only if there
is a realistic prospect that the application of that tool, in conjunction with
measures implemented in accordance with the business reorganisation plan
required by paragraph 16 will, in addition to achieving relevant resolution
objectives, restore the institution in question to financial soundness and
long-term viability.
If the condition set out in the first
subparagraph is not fulfilled, any of the resolution tools referred to in points
(a), (b) and (c) of paragraph 2 of Article 19, and the bail-in tool referred to
in point (d) of paragraph 2 of Article 19, shall apply, as appropriate.
3.           The following liabilities shall
not be subject to write down and conversion:
(a)         
covered deposits;
(b)         
secured liabilities including covered bonds;
(c)         
any liability that arises by virtue of the
holding by the entity referred to in Article 2 of client assets or client money,
or a fiduciary relationship between entity referred to in Article 2, as
fiduciary, and another person, as beneficiary, provided that such client or
beneficiary is protected under the applicable insolvency or civil law;
(d)         
liabilities to institutions, excluding entities
that are part of the same group, with an original maturity of less than seven
days;
(e)         
liabilities arising from a participation in a
system designated according to Directive 98/26/EC[23] which have a remaining
maturity of less than seven days;
(f)           
a liability to any one of the following:
(i)      an employee, in relation to accrued
salary, pension benefits or other fixed remuneration, except for the variable
component of remuneration that is not regulated by law or collective bargaining
agreement;
(ii)      a commercial or trade creditor
arising from the provision to the institution or entity referred to in points
(b), (c) or (d) of Article 1 of goods or services that are critical to the
daily functioning of its operations, including IT services, utilities and the
rental, servicing and upkeep of premises;
(iii)     tax and social security authorities,
provided that those liabilities are preferred under the applicable insolvency
or civil law.
4.           The scope of the bail in
tool set out in paragraph 3 shall not prevent, where appropriate, the exercise
of the bail-powers to any part of a secured liability or a liability for which
collateral has been pledged that exceeds the value of the assets, pledge, lien
or collateral against which it is secured. Covered bonds as defined in Article
52(4) of Directive 2009/65/EC[24]
may be exempted by this provision.
5.           In exceptional
circumstances, certain liabilities may be excluded or partially excluded from
the application of the write-down and conversion powers in any of the following
circumstances:
(a)         
Where it is not possible to bail-in that
liability within a reasonable time notwithstanding the good faith efforts of
the resolution authority; or
(b)         
Where the exclusion is strictly necessary and is
proportionate to achieve the continuity of critical functions and core business
lines in a manner that maintains the ability of the institution under
resolution to continue key operations, services and transactions; or
(c)         
Where the exclusion is strictly necessary and
proportionate to avoid giving rise to widespread contagion that would severely
disrupt the functioning of financial markets in a manner that could cause a
serious disturbance to the economy of a Member State or of the Union; or
(d)         
Where the application of the bail-in tool to
these liabilities would cause a destruction in value such that the losses borne
by other creditors would be higher than if these liabilities were excluded from
bail-in.
Where an eligible liability or class of
eligible liabilities is excluded, or partially excluded, the level of write
down or conversion applied to other eligible liabilities may be increased to
take account of such exclusions, provided that the level of write down and
conversion applied to other eligible liabilities respects the principle laid
down in point (f) of Article 13(1).
6.           Where an eligible
liability or class of eligible liabilities excluded or partially excluded, pursuant
to paragraph 5, and the losses that would have been borne by those liabilities
have not been passed on fully to other creditors, a contribution from the Fund
may be made to the institution under resolution to:
(a)         
cover any losses which have not been absorbed by
eligible liabilities and restore the net asset value of the institution under
resolution to zero in accordance with point (a) of paragraph 1;
(b)         
purchase shares or other instruments of
ownership or capital instruments in the institution under resolution, in order
to recapitalise the institution in accordance with point (b) of paragraph 1.
7.           The Fund may only make a
contribution referred to in paragraph 6 provided that the contribution meets
both the following criteria:
(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 at the time
of resolution action in accordance with the valuation provided for in Article 17,
has been made by shareholders and the holders of other instruments of
ownership, the holders of relevant capital instruments and other eligible
liabilities through write down, conversion or otherwise;
(b)         
the contribution from the Fund does not exceed
5% of the total liabilities including own funds of the institution under
resolution, measured at the time of resolution action in accordance with the
valuation provided for in Article 17.
8.           The contribution of the
Fund may be financed by:
(a)         
the amount available to the Fund which has been
raised through contributions by entities referred to in Article 2 in accordance
with Article 66;
(b)         
the amount that can be raised through ex post
contributions in accordance with Article 67 within a period of three years; and
(c)         
where the amounts referred to in points (a) and
(b) are insufficient, amounts raised from alternative financing sources in
accordance with Article 69.
9.           In extraordinary
circumstances, further funding may be sought from alternative financing sources
after:
(a)         
the 5% limit specified in point (b) of paragraph
7 has been reached; and
(b)         
all unsecured, non-preferred liabilities, other
than eligible deposits, have been written down or converted in full.
10.         As an alternative or in
addition, when the conditions in points (a) and (b) of paragraph 7 are met, a
contribution may be made from resources which have been raised through ex-ante
contributions in accordance with Article 66 and which have not yet been used.
11.         For the purposes of this
Regulation, subparagraph 5 of Article 38 (3cab) of Directive [ ] shall not
apply.
12.         When taking the decision
referred to in paragraph 5, due consideration shall be given to the following factors:
(a)         
the principle that losses should be borne first
by shareholders and next, in general, by creditors of the institution under
resolution in order of preference;
(b)         
the level of loss absorbing capacity that would
remain in the institution under resolution if the liability or class of
liabilities were excluded; 
(c)         
the need to maintain adequate resources for
resolution financing.
13.         The Board shall make its assessment
of the following points on the basis of a valuation that complies with the
requirements of Article 17:
(a)         
the aggregate amount by which eligible
liabilities must be written down in order to ensure that the net asset value of
the institution under resolution is equal to zero;
(b)         
where relevant, the aggregate amount by which
eligible liabilities must be converted into shares in order to restore the
Common Equity Tier 1 capital ratio of either the institution under resolution
or the bridge institution.
When the application of the bail-in tool for
the purpose referred to in point (a) of paragraph 1 is decided upon, the
assessment referred to in the first subparagraph shall establish the amount by
which eligible liabilities need to be converted in order to restore the Common
Equity Tier 1 capital ratio of the institution under resolution, or where
applicable the bridge institution taking into account any contribution of
capital by the resolution fund pursuant to point (d) of Article 71(1) and to
sustain sufficient market confidence in the institution under resolution or the
bridge institution and enable it to continue to comply with the conditions for
authorisation and to carry on the activities for which it is authorised under
Directive 2013/36/EU or Directive 2004/39/EC.
14.         Exclusions under paragraph
5 may be applied either to completely exclude a liability from write down or to
limit the extent of the write down applied to that liability.
15.         The write down and
conversion powers shall respect the requirements on the priority of claims set
out in Article 15.
16.         The national resolution
authority shall immediately forward to the Board the business reorganisation
plan received after the application of the bail-in tool from the administrator appointed
in accordance with Article 47(1) of Directive [ ].
Within 2 weeks from the date of submission of
the business reorganisation plan, the resolution authority shall provide the
Board with its assessment of the plan. Within 1 month from the date of
submission of the business reorganisation plan the Board shall assess the
likelihood that the plan, if implemented, restores the long term viability of
the entity referred to Article 2. The assessment shall be completed in
agreement with the competent authority.
Where the Board is satisfied that the plan
would achieve that objective, it shall allow the national resolution authority
to approve the plan in accordance with Article 47(5) of Directive [ ]. Where
the Board is not satisfied that the plan would achieve that objective, it shall
instruct the national resolution authority to notify the administrator of its
concerns and require the administrator to amend the plan in way that addresses
those concerns in accordance with Article 47(6) of Directive [ ]. This shall be
done in agreement with the competent authority.
The national resolution authority shall forward
to the Board the amended plan. The Board shall instruct the national resolution
authority to notify the administrator within one week whether it is satisfied
that the plan, as amended, addresses the concerns notified or whether further
amendment is required.
Article 25
Monitoring by the Board
1.           The Board shall closely
monitor the execution of the resolution scheme by the national resolution
authorities. For that purpose, the national resolution authorities shall:
(a)         
cooperate with and assist the Board in the
performance of its monitoring duty;
(b)         
provide, at regular intervals established by the
Board, accurate, reliable and complete information on the execution of the
resolution scheme, the application of the resolution tools and the exercise of
the resolution powers, that might be requested by the Board, including on the
following:
(i)      the operation and financial situation
of the institution under resolution, the bridge institution and the asset
management vehicle;
(ii)      the treatment that shareholders and
creditors would have received in the liquidation of the institution under
normal insolvency proceedings;
(iii)     any on-going court proceedings
related to the liquidation of the assets of failed institution, to challenges
to the resolution decision and to the valuation or related to applications for
compensation filed by the shareholders or creditors;
(iv)     the appointment, removal or
replacement of evaluators, administrators, accountants, lawyers and other
professionals that may be necessary to assist the national resolution authority,
and on the performance of their duties;
(v)     any other matter that may be referred
to by the Board;
(vi)     the extent to which and manner in
which the powers for the national resolution authorities listed in Chapter V of
Directive [ ] are exercised by them;
(vii)    the economic viability, feasibility,
and implementation of the business reorganisation plan provided for in Article
24(16).
The national resolution authorities shall
submit to the Board a final report on the execution of the resolution scheme.
2.           On the basis of the
information provided, the Board may give instructions to the national
resolution authorities as to any aspect of the execution of the resolution
scheme, and in particular the elements referred to in Article 20 and to the
exercise of the resolution powers.
3.           Where this is necessary in
order to achieve the resolution objectives, the Commission, following a
recommendation of the Board or on its own initiative, may review its decision
on the resolution framework and adopt the appropriate amendments.
Article 26
Implementation of resolution decisions
1.           National resolution
authorities shall take the necessary action to implement the resolution
decision referred to in Article 16(8), in particular by exercising control over
the entities referred to in Article 2, by taking the necessary measures in
accordance with Article 64 of Directive [ ] and by ensuring that the safeguards
provided for in that Directive [ ] are complied with. National resolution
authorities shall implement all decisions addressed to them by the Board.
For these purposes, they shall make use of
their powers under national law transposing the Directive [ ] and in accordance
with the conditions set out in national law. National resolution authorities
shall fully inform the Board about the exercise of these powers. Any action
they take shall comply with the decision referred to in Article 16(8).
2.           Where a national
resolution authority has not applied a decision referred to in Article 16, or
has applied it in a way which fails to achieve the resolution objectives under
this Regulation, the Board shall have the power to order an institution under
resolution:
(a)         
to transfer to another person specified rights,
assets or liabilities of an institution under resolution;
(b)         
to require the conversion of debt instruments
which contain a contractual term for conversion in the circumstances provided
for in Article 18.
3.           The institution under
resolution shall comply with any decision taken referred to in paragraph 2. Those
decisions shall prevail over any previous decision adopted by the national authorities
on the same matter.
4.           When taking action in
relation to issues which are subject to a decision taken pursuant to paragraph
2, national authorities shall comply with that decision.
Chapter 4
Cooperation
Article 27
Obligation to cooperate
1.           The Board shall inform the
Commission of any action it takes in order to prepare for resolution. With
regard to any information received from the Board, the members of the
Commission and Commission staff shall be subject to the professional secrecy
requirement laid down in Article 79.
2.           In the exercise of their
respective responsibilities under this Regulation, the Board, the Commission,
the ECB and the national competent authorities and resolution authorities shall
cooperate closely. The ECB and the national competent authorities shall provide
the Board and the Commission with all information necessary for the exercise of
their tasks.
3.           In the exercise of their
respective responsibilities under this Regulation, the Board, the Commission,
the ECB and the national competent authorities and resolution authorities shall
cooperate closely in the resolution planning, early intervention and resolution
phases pursuant to Articles 7 to 26. The ECB and the national competent
authorities shall provide the Board and the Commission with all information
necessary for the exercise of their tasks.
4.           For the purposes of this
Regulation, where the ECB invites a representative of the Board to participate
in the Supervisory Board of the ECB established in accordance with Article 19
of Council Regulation (EU)No[ ], the Board shall appoint a representative.
5.           For the purposes of this
Regulation, the Board shall appoint a representative which shall participate in
the Resolution Committee of the European Banking Authority established in
accordance with Article 113 of Directive [ ].
6.           The Board shall co-operate
closely with the European Financial Stability Facility (EFSF) and the European
Stability Mechanism (ESM), in particular where the EFSF or the ESM have granted
or are likely to grant, direct or indirect financial assistance to entities
established in a participating Member State, in particular in those
extraordinary circumstances referred to in Article 24(9).
7.           The Board and the ECB
shall conclude a memorandum of understanding describing the general terms how
they will cooperate under paragraph 2. The memorandum shall be reviewed on a
regular basis and shall be published subject to appropriate treatment of
confidential information.
Article 28
Information exchange within the SRM
1.           Both the Board and the
national resolution authorities shall be subject to a duty of cooperation in
good faith and an obligation to exchange information.
2.           The Board shall provide
the Commission with any information relevant for fulfilling its tasks under
this Regulation and, where applicable, Article 107 of the TFEU.
Article 29
Cooperation within the SRM and group treatment
Paragraphs 4, 5, 6 and 15 of Articles 12 and
Articles 80 to 83 in Directive [ ] shall not apply to relations between
national resolution authorities of participating Member States. The relevant provisions
of this Regulation shall apply instead.
Article 30
Cooperation with non-participating Member States
Where a group includes entities established
in participating Member States as well as in non-participating Member States, without
prejudice to any approval by the Commission required under this Regulation, the
Board shall represent the national resolution authorities of the participating
Member States, for the purposes of cooperation with non-participating Member
States in accordance with Articles 7, 8, 11, 12, 15, 50, and 80 to 83 of Directive
[ ].
Article 31
Cooperation with third country authorities
The Commission and the Board within each of
their respective responsibilities shall be exclusively responsible to conclude,
on behalf of the national resolution authorities of participating Member
States, the non-binding cooperation arrangements referred to in Article 88 (4) of
Directive [ ] and shall notify them in accordance with paragraph 6 of that
Article.
Chapter 5
Investigatory
powers
Article 32
Requests for information
1.           For the purpose of exercising
the tasks referred to in Articles 7, 8, 11, 16 and 17, the Board may, either directly
or through the national resolution authorities, require the following legal or
natural persons to provide all information that is necessary in order to carry
out the tasks conferred upon it by this Regulation:
(a)         
the entities referred to in Article 2;
(b)         
employees of the entities referred to in Article
2;
(c)         
third parties to whom the entities referred to
in Article 2 have outsourced functions or activities.
2.           The entities referred to
in Article 2 and any persons referred to in point (b) of paragraph 1 shall
supply the information requested pursuant to paragraph 1. Professional secrecy
provisions shall not exempt those entities and persons from the duty to provide
that information. The supply of the information requested shall not be deemed
to be a breach of professional secrecy.
3.           Where the Board obtains
information directly from those entities and persons, it shall make that
information available to the national resolution authorities concerned.
4.           The Board shall be able to
obtain on a continuous basis any information on capital, liquidity, assets and
liabilities concerning any institution subject to its resolution powers which
are material for resolution purposes. 
5.           The Board, the competent
authorities and the national resolution authorities may draw up memorandum of
understanding with a procedure concerning the exchange of information.
6.           Competent authorities,
including the ECB where relevant, and national resolution authorities shall
cooperate with the Board in order to verify whether some or all of the
information requested is already available. Where such information is
available, competent authorities, including the ECB where relevant, or national
resolution authorities shall provide that information to the Board.
Article 33
General investigations
1.           For the purpose of
exercising the tasks referred to in Articles 7, 8, 11, 16 and 17, and subject
to any other conditions set out in relevant Union law, the Board may conduct
all necessary investigations of any person referred to in Article 32(1)
established or located in a participating Member State.
To that end, the Board shall have the right to:
(a)         
require the submission of documents;
(b)         
examine the books and records of the persons
referred to in Article 32(1) and take copies or extracts from such books and records;
(c)         
obtain written or oral explanations from any
person referred to in Article 32(1) or their representatives or staff;
(d)         
interview any other person who consents to be
interviewed for the purpose of collecting information relating to the subject
matter of an investigation;
2.           The persons referred to in
Article 32(1) shall be subject to investigations launched on the basis of a
decision of the Board.
When a person obstructs the conduct of the
investigation, the national resolution authorities of the participating Member
State where the relevant premises are located shall afford, in compliance with
national law, the necessary assistance including facilitating the access by the
Board to the business premises of the legal persons referred to in Article 32(1),
so that the aforementioned rights can be exercised.
Article 34
On-site inspections
1.           For the purpose of
exercising the tasks referred to in Articles 7, 8, 11, 16 and 17, and subject
to other conditions set out in relevant Union law, the Board may, subject to
prior notification to the national resolution authorities concerned, conduct
all necessary on-site inspections at the business premises of the legal persons
referred to in Article 32(1). Where the proper conduct and efficiency of the
inspection so require, the Board may carry out the on-site inspection without
prior announcement to those legal persons.
2.           The officials of and other
persons authorised by the Board to conduct an on-site inspection may enter any
business premises and land of the legal persons subject to an investigation
decision adopted by the Board pursuant to Article 32 (2) and shall have all the
powers stipulated in Article 32(1).
3.           The legal persons referred
to in Article 32(1) shall be subject to on-site inspections on the basis of a
decision of the Board.
4.           Officials and other
accompanying persons authorised or appointed by the national resolution
authorities of the Member States where the inspection is to be conducted shall
under the supervision and coordination of the Board, actively assist the
officials of and other persons authorised by the Board. To that end, they shall
enjoy the powers set out in paragraph 2. Officials of the national resolution
authorities of the participating Member States concerned shall also have the
right to participate in the on-site inspections.
5.           Where the officials of and
other accompanying persons authorised or appointed by the Board find that a
person opposes an inspection ordered pursuant to paragraph 1, the national
resolution authorities of the participating Member States concerned shall
afford them the necessary assistance in accordance with national law. To the
extent necessary for the inspection, this assistance shall include the sealing
of any business premises and books or records. Where that power is not
available to the national resolution authorities concerned, it shall use its
powers to request the necessary assistance of other the national resolution
authorities.
Article 35
Authorization by a judicial authority
1.           If an on-site inspection
provided for in Article 34(1) and (2) or the assistance provided for in Article
34(5) requires authorisation by a judicial authority according to national
rules, such authorisation shall be applied for.
2.           Where authorisation as
referred to in paragraph 1 is applied for, the national judicial authority
shall control that the decision of the Board is authentic and that the coercive
measures envisaged are neither arbitrary nor excessive having regard to the
subject matter of the inspection. In its control of the proportionality of the
coercive measures, the national judicial authority may ask the Board for
detailed explanations, in particular relating to the grounds the Board has for
suspecting that an infringement of the acts referred to in Article 26 has taken
place and the seriousness of the suspected infringement and the nature of the
involvement of the person subject to the coercive measures. However, the
national judicial authority shall not review the necessity for the inspection
or demand to be provided with the information on the Board's file. The
lawfulness of the Board's decision shall be subject to review only by the Court
of Justice of the European Union.
Chapter 6
Sanctioning
powers
Article 36
Fines
1.           Where the Board finds that
an entity referred to in Article 2 intentionally or negligently committed one
of the infringements referred to in paragraph 2, the Board shall instruct the
national resolution authority concerned to impose a fine in respect of the
relevant entity referred to in Article 2 in accordance with Directive [ ].
An infringement by such an entity shall be
considered to have been committed intentionally if there are objective factors
which demonstrate that the entity or its senior management acted deliberately
to commit the infringement.
2.           The fines may be imposed on
entities referred to in Article 2 for the following infringements:
(a)         
Where they do not supply the information
requested in accordance with Article 32;
(b)         
Where they do not submit to a general
investigation in accordance with Article 33 or an on-site inspections and do
not provide the information requested in accordance with Article 32;
(c)         
Where they do not contribute to the Fund in accordance
with Articles 66 or 67;
(d)         
Where they do not comply with a decision
addressed to them by the Board pursuant to Article 24.
3.           The national resolution
authorities shall publish any fines imposed pursuant to paragraph 1. Where
publication would cause a disproportionate damage to the parties involved, the national
resolution authorities shall publish the sanction without revealing the
identity of the parties.
4.           The Board shall, with a
view to establishing consistent, efficient and effective enforcement practices,
and to ensuring the common, uniform and consistent application of this
Regulation, issue guidelines on the application of fines and periodic penalty
payments addressed to the national resolution authorities.
Article 37
Periodic penalty payments
1.           The Board shall instruct
the national resolution authority concerned to impose a periodic penalty
payment in respect of the relevant entity referred to in Article 2 in
accordance with Directive [ ]in order to compel:
(a)         
a credit institution to comply with a decision
adopted under Article 32;
(b)         
a person referred to in Article 32(1) to supply
complete information which has been required by a decision pursuant to that
Article;
(c)         
a person referred to in Article 33(1) to submit
to an investigation and in particular to produce complete records, data,
procedures or any other material required and to complete and correct other
information provided in an investigation launched by a decision taken pursuant
to that Article;
(d)         
a person referred to in Article 34(1) to submit
to an on-site inspection ordered by a decision taken pursuant to that Article.
2.           A periodic penalty payment
shall be effective and proportionate. The periodic penalty payment shall be
imposed on a daily basis until the credit institution or person concerned
complies with the relevant decisions referred to in points (a) to (d) of paragraph
1.
3.           A periodic penalty payment
may be imposed for a period of no more than six months.
PART III
INSTITUTIONAL FRAMEWORK
TITLE I
The Board
Article 38
Legal status
1.           A Single Resolution Board
is hereby established. The Board shall be a European Union agency with a specific
structure corresponding to its tasks. It shall have legal personality. 
2.           The Board shall enjoy in
each Member State the most extensive legal capacity accorded to legal persons
under national law. The Board may, in particular, acquire or dispose of movable
and immovable property and be a party to legal proceedings.
3.           The Board shall be
represented by its Executive Director.
Article 39
Composition
1.           The Board shall be
composed of:
(a)         
the Executive Director;
(b)         
the Deputy Executive Director;
(c)         
a member appointed by the Commission;
(d)         
a member appointed by the ECB;
(e)         
a member appointed by each participating Member
State, representing the national resolution authority.
2.           The term of office of the
Executive Director, the Deputy Executive Director and of the members of the
Board appointed by the Commission and the ECB shall be five years. Subject to
Article 53(6), that term shall not be renewable.
3.           The Board’s administrative
and management structure shall comprise:
(a)         
a plenary session of the Board, which shall exercise
the tasks set out in Article 47;
(b)         
an executive session of the Board, which shall
exercise the tasks set out in Article 51;
(c)         
an Executive Director, which shall exercise the
tasks set out in Article 53.
Article 40
Compliance with Union law
The Board shall act in compliance with
Union law, in particular with the Commission decisions pursuant to this
Regulation.
Article 41
Accountability
1.           The Board shall be
accountable to the European Parliament, the Council and the Commission for the
implementation of this Regulation, in accordance with paragraphs 2 to 8.
2.           The Board shall submit
each year a report to the European Parliament, the Council, the Commission and
the European Court of Auditors on the execution of the tasks conferred upon it
by this Regulation.
3.           The Executive Director
shall present that report in public to the European Parliament, and to the
Council.
4.           At the request of the
European Parliament, the Executive Director shall participate in a hearing on
the execution of its resolution tasks by the competent committees of the
Parliament.
5.           The Executive Director
may, at the request of the Council, be heard on the execution of its resolution
tasks by the Council.
6.           The Board shall reply
orally or in writing to questions addressed to it by the European Parliament or
by the Council, according to its own procedures, in the presence of
representatives from any participating Member States whose currency is not the
Euro.
7.           Upon
request, the Executive Director shall hold confidential oral discussions behind closed doors with
the Chair and Deputy-Chairs of the competent committee of the European
Parliament where such discussions are required for the exercise of the European
Parliament’s powers under the Treaty. An agreement shall be concluded between the
European Parliament and the Board on the detailed modalities of organising such
discussions, with a view to ensuring full confidentiality in accordance with
the confidentiality obligations imposed on the ECB as a competent authority
under relevant Union law.
8.           During any investigations
by the Parliament, the Board shall cooperate with the Parliament, subject to
the TFEU. The Board and the Parliament shall conclude appropriate arrangements
on the practical modalities of the exercise of democratic accountability and
oversight over the exercise of the tasks conferred on the Board by this
Regulation. Those arrangements shall cover, inter alia, access to information,
cooperation in investigations and information on the selection procedure of the
Executive Director.
Article 42
National Parliaments
1.           Due to the specific tasks
of the Board, national Parliaments of the participating Member States, through
their own procedures, may request the Board to reply in writing to any
observations or questions submitted by them to the Board in respect of the
functions of the Board under this Regulation.
2.           The national Parliament of
a participating Member State may invite the Executive Director to participate
in an exchange of views in relation to the resolution of credit institutions in
that Member State together with a representative of the national resolution
authority.
3.           This Regulation shall be
without prejudice to the accountability of national resolution authorities to
national Parliaments in accordance with national law for the performance of
tasks not conferred on the Board or on the Commission by this Regulation.
Article 43
Independence
1.           When carrying out the
tasks conferred upon it by this Regulation, the Board and the national
resolution authorities shall act independently and in the general interest.
2.           The members of the Board referred
to in Article 40(2) shall act independently and objectively in the interest of
the Union as a whole and shall neither seek nor take instructions from the
Union’s institutions or bodies, from any Government of a Member State or from
any other public or private body.
Article 44
Seat
The Board shall have its seat in Brussels,
Belgium.
TITLE II
Plenary Session of the Board
Article 45
Participation in plenary sessions
All members of the Board shall participate
in its plenary sessions.
Article 46
Tasks
1.           In its plenary session,
the Board shall:
(a)         
adopt, by 30 November of each year, the Board’s
annual work programme for the coming year in accordance with Article 49(1),
based on a draft put forward by the Executive Director and shall transmit it
for information to the European Parliament, the Council, the Commission, and
the European Central Bank;
(b)         
adopt the annual budget of the Board in
accordance with Article 59(2);
(c)         
decide on the voluntary borrowing between
financing arrangements in accordance with Article 68, the mutualisation of
national financing arrangements in accordance with Article 72 and on the
lending to deposit guarantee scheme in accordance with Article 73;
(d)         
adopt an annual activity report on the Board’s
activities referred to in Article 42. This report shall present detailed
explanations on the implementation of the budget;
(e)         
adopt the financial rules applicable to the
Board in accordance with Article 61;
(f)           
adopt an anti-fraud strategy, proportionate to
fraud risks taking into account the costs and benefits of the measures to be
implemented;
(g)         
adopt rules for the prevention and management of
conflicts of interest in respect of its members;
(h)         
adopt its rules of procedure;
(i)           
in accordance with paragraph 2, exercise, with
respect to the staff of the Board, the powers conferred by the Staff
Regulations on the Appointing Authority and by the Conditions of Employment of
Other Servants on the Authority Empowered to Conclude a Contract of Employment[25] ("the appointing
authority powers");
(j)           
adopt appropriate implementing rules for giving
effect to the Staff Regulations and the Conditions of Employment of Other
Servants in accordance with Article 110 of the Staff Regulations;
(k)         
appoint an Accounting Officer, subject to the
Staff Regulations and the Conditions of Employment of Other Servants, who shall
be functionally independent in the performance of his/her duties;
(l)           
ensure adequate follow-up to findings and
recommendations stemming from the internal or external audit reports and
evaluations, as well as from investigations of the European Anti-fraud Office
(OLAF);
(m)       
take all the decisions on the establishment of
the Board’s internal structures and, where necessary, their modification.
2.           In its plenary session,
the Board shall adopt, in accordance with Article 110 of the Staff Regulations,
a decision based on Article 2(1) of the Staff Regulations and on Article 6 of
the Conditions of Employment of Other Servants, delegating relevant appointing
authority powers to the Executive Director and defining the conditions under
which the delegation of powers can be suspended. The Executive Director shall
be authorised to sub-delegate those powers.
Where exceptional circumstances so require, the
Board in its plenary session may by way of a decision temporarily suspend the
delegation of the appointing authority powers to the Executive Director and
those sub-delegated by the latter and exercise them itself or delegate them to
one of its members or to a staff member other than the Executive Director.
Article 47
Meeting of the plenary session of the Board
1.           The Executive Director
shall convene meetings of the plenary session of the Board.
2.           The Board in its plenary
session shall hold at least two ordinary meetings a year. In addition, it shall
meet on the initiative of the Executive Director, at the request of the
Commission, or at the request of at least one-third of its members.
3.           The Board in its plenary
session may invite observers to attend its meetings on an ad hoc basis.
4.           The Board shall provide
for the secretariat of the plenary session of the Board.
Article 48
Decision-making process
1.           The Board, in its plenary
session, shall take its decisions by a simple majority of its members. However,
decisions referred to in point (c) of Article 47(1) shall be taken by a
majority of two-thirds of its members.
2.           The Executive Director
shall take part in the voting.
3.           The Board shall adopt and
make public its rules of procedure. The rules of procedure shall establish more
detailed voting arrangements, in particular the circumstances in which a member
may act on behalf of another member and including, where appropriate, the rules
governing quorums.
TITLE III
Executive session of the Board
Article 49
Participation in the executive sessions
1.           Subject to paragraphs 2
and 3, the members of the Board referred to in Article 40(1)(a) to (d) shall
participate in the executive sessions of the Board.
2.           When deliberating on an
entity referred to in Article 2 or a group of entities established only in one
participating Member State, the member appointed by that Member State shall
also participate in the deliberations and in the decision-making process in
accordance with Article 52(1) and (3).
3.           When deliberating on a
cross-border group the member appointed by the Member State in which the group
level resolution authority is situated, as well as the members appointed by the
Member States in which a subsidiary or entity covered by consolidated
supervision is established, shall participate in the deliberations and in the
decision-making process in accordance with Article 52(2) and (3).
Article 50
Tasks
1.           The Board, in its plenary
session, shall be assisted by an executive session of the Board.
2.           The Board, in its
executive session, shall:
(a)         
prepare decisions to be adopted by the Board in
its plenary session;
(b)         
take all decisions to implement this Regulation.
This includes:
(i)      providing the Commission, as early as
possible, with any relevant information allowing the Commission to assess and take
a reasoned decision pursuant to Article 16(6);
(ii)      deciding upon the Board’s part II of
the budget on the Fund.
3.           When necessary, because of
urgency, the Board, in its executive session may take certain provisional
decisions on behalf of the Board in its plenary session, in particular on
administrative management matters, including budgetary matters.
4.           The Board, in its
executive session, shall meet on the initiative of the Executive Director or at
the request of its members.
5.           The Board, in its plenary
session, shall lay down the rules of procedure of the Board in its executive
session.
Article 51
Decision-making
1.           When deliberating on an
individual entity or a group established only in one participating Member
State, the Board shall take its decisions in its executive sessions by a simple
majority of its participating members. In case of a tie the Executive Director
shall have a casting vote.
2.           When deliberating on a
cross-border group, the Board shall take its decisions in its executive
sessions by a simple majority of its participating members. The members of the
Board referred to in Article 40(2) and the member appointed by the Member State
in which the group level resolution authority is situated shall each have one
vote. The other participating members shall each have a voting right equal to a
fraction of one vote and the number of national resolution authorities of the
Member States in which a subsidiary or entity covered by consolidated
supervision is established. In case of a tie the Executive Director shall have
a casting vote.
3.           Until the target funding
level referred to in Article 65 is reached, a member appointed by a Member
State shall be able to require once a further deliberation of the Board where a
decision under discussion impinges on the fiscal responsibilities of that
Member State.
4.           The Board, in its
executive session, shall adopt and make public the rules of procedure for its
executive sessions.
Meetings of the Board in its executive session
shall be convened by the Executive Director on his own initiative or upon
request of two members, and shall be chaired by the Executive Director. The
Board may invite observers to attend its executive sessions on an ad hoc basis.
TITLE IV
Executive Director and Deputy
Executive Director
Article 52
Appointment and tasks
1.           The Board shall be headed
by a full-time Executive Director who shall not hold any offices at national
level.
2.           The Executive Director
shall be responsible for:
(a)         
preparing the work of the Board, in its plenary
and executive sessions, and convening and chairing its meetings;
(b)         
all staff matters;
(c)         
matters of day-to-day administration;
(d)         
implementation of the budget of the Board, in
accordance with Article 59(3).
(e)         
the management of the Board;
(f)           
the implementation of the annual work programme
of the Board;
(g)         
each year the Executive Director shall prepare a
draft report with a section on the resolution activities of the Board and a
section on financial and administrative matters.
3.           The Executive Director
shall be assisted by a Deputy Executive Director.
The Deputy Executive Director shall carry out
the functions of the Executive Director in his absence.
4.           The Executive Director and
the Deputy Executive Director shall be appointed on the basis of merit, skills,
knowledge of banking and financial matters, of experience relevant to financial
supervision and regulation.
5.           After hearing the Board,
in its plenary session, the Commission shall propose a list of candidates to
the Council for the appointment of the Executive Director and the Deputy
Executive Director. The Council shall appoint the Executive Director and the
Deputy Executive Director after hearing the European Parliament.
6.           By derogation from Article
40(2), the term of office of the first Deputy Executive Director appointed
after the entry into force of this Regulation shall be three years; this term
is renewable once for a period of five years. The Executive Director and the
Deputy Executive Director shall remain in office until their successors are
appointed.
7.           An Executive Director or
Deputy Executive Director whose term of office has been extended shall not
participate in another selection procedure for the same post at the end of the
overall period.
8.           If the Executive Director
or the Deputy Executive Director no longer fulfil the conditions required for
the performance of their duties or have been guilty of serious misconduct, the
Council may, on a proposal from the Commission and after hearing the European
Parliament, remove the Executive Director or the Deputy Executive Director from
office.
Article 53
Independence
1.           The Executive Director and
the Deputy Executive Director shall exercise their tasks in conformity with the
decisions of the Commission and of the Board.
When taking part in the deliberations and
decision-making processes within the Board, the Executive Director and the
Deputy Executive Director shall neither seek nor take instructions from the
Union institutions or bodies, but express their own views and vote
independently. In those deliberations and decision-making processes the Deputy
Executive Director shall not be under the authority of the Executive Director.
2.           Neither Member States nor
any other public or private body shall seek to influence the Executive Director
and the Deputy Executive Director in the performance of their tasks.
3.           In accordance with the
Staff Regulations referred to in Article 78(6), the Executive Director and the
Deputy Executive Director shall, after leaving service, continue to be bound by
the duty to behave with integrity and discretion as regards the acceptance of
certain appointments or benefits.
TITLE V
FINANCIAL PROVISIONS
Chapter 1
General
provisions
Article 54
Resources
The Board shall be responsible for devoting
the necessary financial and human resources to the exercise of the tasks
conferred upon it by this Regulation.
Article 55
Budget
1.           Estimates of all the
Board's revenue and expenditure shall be prepared for each financial year,
corresponding to the calendar year, and shall be shown in the Board's budget.
2.           The Board’s budget shall
be balanced in terms of revenue and expenditure.
3.           The budget shall comprise
two parts: Part I for the administration of the Board and Part II for the Fund.
Article 56
Part I of the budget on the administration of the Board
1.           The revenues of Part I of
the budget shall consist of the annual contributions necessary to cover the
administrative expenditure in accordance with Article 62(1) (a).
2.           The expenditure of Part I
of the budget shall include at least staff, remuneration, administrative,
infrastructure, professional training and operational expenses.
Article 57
Part II of the budget on the Fund
1.           The revenues of Part II of
the budget shall consist, in particular, of the following:
(a)         
contributions paid by institutions established
in the participating Member States in accordance with Article 62 except for the
annual contribution referred to in Article 62(1)(a);
(b)         
loans received from other resolution financing
arrangements in non-participating Member States in accordance with Article 68(1);
(c)         
loans received from financial institutions or
other third parties in accordance with Article 69;
(d)         
returns on the investments of the amounts held
in the Fund in accordance with Article 70.
2.           The expenditure of Part II
of the budget shall consist of the following:
(a)         
expenses for the purposes indicated in Article 71;
(b)         
investments in accordance with Article 70;
(c)         
interest paid on loans received from other
resolution financing arrangements in non-participating Member States in
accordance with Article 68(1);
(d)         
interest paid on loans received from financial
institutions or other third parties in accordance with Article 69.
Article 58
Establishment and implementation of the budget
1.           By 15 February each year,
the Executive Director shall draw up an estimate of the Board's revenue and
expenditure for the following year and shall send it to the Board, in its
plenary session, for approval, not later than 31 March each year.
2.           The budget of the Board
shall be adopted by the plenary session of the Board on the basis of the statement
of estimates. Where necessary, it shall be adjusted accordingly.
3.           The Executive Director
shall implement the Board’s budget.
Article 59
Audit and control
1.           An internal audit function
shall be set up within the Board, to be performed in compliance with the
relevant international standards. The internal auditor, appointed by the Board,
shall be responsible to it for verifying the proper operation of budget
implementation systems and procedures of the Board.
2.           The internal auditor shall
advise the Board on dealing with risks, by issuing independent opinions on the
quality of management and control systems and by issuing recommendations for
improving the conditions of implementation of operations and promoting sound
financial management.
3.           The responsibility for
putting in place internal control systems and procedures suitable for carrying
out his tasks shall lie with the Board.
Article 60
Presentation of accounts and discharge
1.           The Executive Director
shall act as authorising officer.
2.           By 1 March of the
following financial year, the Board’s Accounting Officer shall send the
provisional accounts to the Court of Auditors.
3.           By 31 March of each year
the Board, in its executive session, shall transmit to the European Parliament,
the Council, the Commission, and the Court of Auditors accounts of the Board's
provisional accounts for the preceding financial year.
4.           On receipt of the Court of
Auditors’ observations on the Board’s provisional accounts, the Executive
Director shall draw up the Board’s final accounts under his/her own
responsibility and shall send them to the Board in its plenary session, for
approval.
5.           The Executive Director
shall, by 1 July following each financial year, shall send the final accounts
to the European Parliament, the Council, the Commission, and the Court of
Auditors.
6.           The Executive Director
shall send the Court of Auditors a reply to its observations by 30 September.
7.           The final accounts shall
be published in the Official Journal of the European Union by 15 November of the
following year.
8.           The Board, in its plenary
session, shall give discharge to the Executive Director in respect of the
implementation of the budget.
9.           The Executive Director
shall submit to the European Parliament, at the latter’s request, any information
required in relation to the Board’s accounts.
Article 61
Financial rules
The Board shall, after consulting the Court
of Auditors of the Union and the Commission, adopt internal financial
provisions specifying, in particular, the procedure for establishing and
implementing its budget.
As far as is compatible with the particular
nature of the Board, the financial provisions shall be based on the framework
financial Regulation adopted for bodies set up under the TFEU in accordance
with Article 208 of Regulation (EU, Euratom) No 966/2012 of the European
Parliament and of the Council of 25 October 2012 on the financial rules
applicable to the general budget of the Union.[26]
Article 62
Contributions
1.           Entities referred to in
Article 2 shall contribute to the budget of the Board in accordance with this
Regulation and the delegated acts on contributions adopted pursuant to
paragraph 5. The contributions shall comprise the following:
(a)         
annual contributions necessary to cover the
administrative expenditures;
(b)         
annual ex-ante contributions necessary to reach
the target funding level of the Fund specified in Article 65, calculated in
accordance with Article 66; 
(c)         
extraordinary ex post contributions, calculated
in accordance with Article 67.
2.           The amounts of the
contributions shall be fixed at such a level as to ensure that the revenue in
respect thereof is in principle sufficient for the budget of the Board to be
balanced each year and for the missions of the Fund.
3.           The Board shall determine,
in accordance with the delegated acts referred to in paragraph 5, the
contributions due by each entity referred to in Article 2 in a decision
addressed to the entity concerned. The Board shall apply procedural, reporting
and other rules ensuring that contributions are fully and timely paid.
4.           The amounts raised in
accordance with paragraphs 1, 2, 3 shall only be used for the purposes of this
Regulation.
5.           The Commission shall be
empowered to adopt delegated acts on contributions in accordance with Article 82
in order to:
(a)         
determine the type of contributions and the
matters for which contributions are due, the manner in which the amount of the
contributions is calculated, the way in which they are to be paid;
(b)         
specify registration, accounting, reporting and
other rules referred to in paragraph 3 necessary to ensure that the
contributions are fully and timely paid;
(c)         
determine the contribution system for
institutions that have been authorized to operate after the Fund has reached
its target level;
(d)         
determine the annual contributions necessary to
cover the administrative expenditure of the Board before it becomes fully
operational.
Article 63
Anti-fraud measures
1.           In order to facilitate
combating fraud, corruption and any other unlawful activity under Regulation
(EC) No 1073/1999, within six months from the day the Board becomes
operational, it shall accede to the Interinstitutional Agreement of 25 May 1999
concerning internal investigations by European Anti-fraud Office OLAF and adopt
appropriate provisions applicable to all staff of the Board using the template
set out in the Annex to that Agreement.
2.           The European Court of
Auditors shall have the power of audit, on the basis of documents and on the
spot, over the beneficiaries, contractors and subcontractors who have received
Union funds from the Board.
3.           OLAF may carry out
investigations, including on-the-spot checks and inspections with a view to
establishing whether there has been fraud, corruption or other illegal activity
affecting the financial interests of the Union in connection with a contract
funded by the Board in accordance with the provisions and procedures laid down
in Regulation (EC) No 1073/1999 and Regulation (Euratom, EC) No 2185/96.
Chapter 2
The Single
Bank Resolution Fund
Section 1
CONSTITUTION OF THE FUND
Article 64
General provisions
1.           The Single Bank Resolution
Fund is hereby established.
2.           The Board shall use the
Fund only for the purpose of ensuring the efficient implementation of the
resolution tools and powers specified in Part II, Title I and in accordance with
the resolution objectives and the principles governing resolution set out in
Articles 12 and 13. Under no circumstances shall the Union budget be held
liable for expenses or losses of the Fund.
3.           The owner of the Fund
shall be the Board.
Article 65
Target funding level
1.           In a period no longer than
10 years after the entry into force of this Regulation, the available financial
means of the Fund shall reach at least 1% of the amount of deposits of all
credit institutions authorised in the participating Member States which are
guaranteed under Directive 94/19/EC.
2.           During the initial period
of time referred to in paragraph 1, contributions to the Fund calculated in
accordance with Article 66, and raised in accordance with Article 62 shall be
spread out in time as evenly as possible until the target level is reached
unless, depending on the circumstances, they can be advanced in consideration
of the favourable market conditions or the funding needs.
3.           The Board may extend the
initial period of time for a maximum of four years in case the Fund makes
cumulated disbursements superior to 0.5% of the total amount referred to in
paragraph 1.
4.           If, after the initial
period of time referred to in paragraph 1, the available financial means
diminish below the target level specified in paragraph 1, contributions
calculated in accordance with Article 66 shall be raised until the target level
is reached. Where the available financial means amount to less than half of the
target level, the annual contributions shall not be less than one fourth of the
target level.
5.           The Commission shall be
empowered to adopt delegated acts in accordance with Article 82 to specify the
following:
(a)         
criteria for the spreading out in time of the
contributions to the Fund calculated under paragraph 2;
(b)         
circumstances under which the payment of
contributions may be advanced under paragraph 2;
(c)         
criteria for determining the number of years by
which the initial period referred to in paragraph 1can be extended under
paragraph 3;
(d)         
criteria for establishing the annual
contributions provided for in paragraph 4.
Article 66
Ex-ante Contributions
1.           The individual
contribution of each institution shall be raised at least annually and shall be
calculated pro-rata to the amount of its liabilities excluding own funds and
covered deposits, with respect to the total liabilities, excluding own funds
and covered deposits, of all the institutions authorised in the territories of
the participating Member States.
It shall be adjusted in proportion to the risk
profile of each institution, in accordance with the criteria specified in the
delegated acts referred to in Article 94(7) of Directive [ ].
2.           The available financial
means to be taken into account in order to reach the target funding level
specified in Article 65 may include payment commitments which are fully backed
by collateral of low risk assets unencumbered by any third party rights, at the
free disposal and earmarked for the exclusive use by the Board for the purposes
specified in Article 71(1). The share of these irrevocable payment commitments
shall not exceed 30% of the total amount of contributions raised in accordance
with paragraph 1.
3.           The Commission shall be
empowered to adopt delegated acts in accordance with Article 82 to specify the
following:
(a)         
The method of calculation of individual
contributions referred to in paragraph 1;
(b)         
the quality of the collateral backing the
payment commitments in paragraph 2;
(c)         
the criteria for the calculation of the share of
payment commitments referred to in paragraph 2.
Article 67
Extraordinary ex post contributions
1.           Where the available
financial means are not sufficient to cover the losses, costs or other expenses
incurred by the use of the Fund, the Board shall raise in accordance with
Article 62 extraordinary ex post contributions from the institutions authorised
in the territories of participating Member States, in order to cover the
additional amounts. These extraordinary contributions shall be allocated
between institutions in accordance with the rules set out in Article 66.
2.           The Board may entirely or
partially exempt in accordance with the delegated acts referred to in paragraph
3, an institution from the obligation to pay ex post contributions in
accordance with paragraph 1 if the sum of payments referred to in Article 66 and
in paragraph 1 of this Article would jeopardize the settlement of claims of
other creditors against it. Such exemption shall not be granted for a longer
period than 6 months but may be renewed on request of the institution.
3.           The Commission shall be
empowered to adopt delegated acts in accordance with Article 82 to specify the
circumstances and conditions under which an entity referred to in Article 2 may
be partially or entirely exempted from ex post contributions under paragraph 2.
Article 68
Voluntary borrowing between financing arrangements
1.           The Board may make a
request to borrow for the Fund from all other resolution financing arrangements
within non-participating Member States, in the event that:
(a)         
the amounts raised under Article 66 are not
sufficient to cover the losses, costs or other expenses incurred by the use of
the Fund;
(b)         
the extraordinary ex post contributions foreseen
in Article 67 are not immediately accessible; 
(c)         
the alternative funding means foreseen in
Article 69 are not immediately accessible on reasonable terms.
2.           Those resolution financing
arrangements shall decide on such a request in accordance with Article 97 of Directive
[ ]. The borrowing conditions shall be subject to points (a), (b) and (c) of Article
97(3) of that Directive [ ].
Article 69
Alternative funding means
1.           The Board may contract for
the Fund borrowings or other forms of support from financial institutions or
other third parties, in the event that the amounts raised in accordance with
Articles 66 and 67 are not immediately accessible or sufficient to cover the
expenses incurred by the use of the Fund.
2.           The borrowing or other
forms of support referred to in paragraph 1 shall be fully recouped in
accordance with Article 62 within the maturity period of the loan.
3.           Any expenses incurred by
the use of the borrowings specified in paragraph 1 have to be borne by the
Board itself and not by the Union budget or the participating Member States.
Section 2
administration of the fund
Article 70
Investments
1.           The Board shall administer
the Fund and may request the Commission to perform certain tasks relating to
the administration of the Fund.
2.           The amounts received from
an institution under resolution or a bridge institution, the interests and
other earnings on investments and any other earnings shall benefit only the
Fund.
3.           The Board shall invest the
amounts held in the Fund in obligations of the participating Member States or intergovernmental
organisations, or in highly liquid assets of high credit worthiness. Investments
should be sufficiently geographically diversified. The return on those
investments shall benefit the Fund.
4.           The Commission shall be
empowered to adopt delegated acts on the detailed rules for the administration
of the Fund, in accordance with the procedure set out in Article 82.
Section 3
use of the fund
Article 71
Mission of the Fund
1.           Within the framework
decided by the Commission, when applying the resolution tools to entities
referred to in Article 2, the Board may use the Fund for the following
purposes:
(d)         
to guarantee the assets or the liabilities of
the institution under resolution, its subsidiaries, a bridge institution or an
asset management vehicle;
(e)         
to make loans to the institution under
resolution, its subsidiaries, a bridge institution or an asset management
vehicle;
(f)           
to purchase assets of the institution under
resolution;
(g)         
to contribute capital to a bridge institution or
an asset management vehicle;
(h)         
to pay compensation to shareholders or creditors
if, following an evaluation pursuant to Article 17(5), they have received less,
in payment of their credits, than what they would have received, following a
valuation pursuant to Article 17(16), in a winding up under normal insolvency
proceedings;
(i)           
to make a contribution to the institution under
resolution in lieu of the contribution which would have been achieved by the
write down of certain creditors, when the bail-in tool is applied and the
resolution authority decides to exclude certain creditors from the scope of
bail-in in accordance with Article 24(3);
(j)           
to take any combination of the actions referred
to in points (a) to (f).
2.           The Fund may be used to
take the actions referred to in points (a) to (g) also with respect to the
purchaser in the context of the sale of business tool.
3.           The Fund shall not be used
directly to absorb the losses of an institution or an entity referred to in
Article 2 or to recapitalise an institution or an entity referred to in Article
2. In the event that the use of the resolution financing arrangement for the
purposes in paragraph 1 indirectly results in part of the losses of an
institution or an entity referred to in Article 2 being passed on to the Fund,
the principles governing the use of the resolution financing arrangement set
out in Article 24 shall apply.
4.           The Board may not hold the
capital contributed to in accordance with point (f) of paragraph 1 for a period
exceeding 5 years.
Article 72
Mutualisation of national financing arrangements in the case of group
resolution
 involving institutions in non-participating Member States
In the case of a group resolution involving
institutions authorised in one or more participating Member States on the one
hand, and institutions authorised in one or more non-participating Member
States on the other hand, the Fund shall contribute to the financing of the
group resolution in accordance with the provisions laid down in Article 98 of Directive
[ ].
Article 73
Use of deposit guarantee schemes in the context of resolution
1.           Participating Member
States shall ensure that, when the Board takes resolution actions, and provided
that these actions ensure that depositors continue having access to their
deposits, the deposit guarantee scheme to which the institution is affiliated
shall be liable for the amounts specified in Article 99(1) and (4) of Directive
[ ].
2.           The determination of the
amount by which the deposit guarantee scheme is liable in accordance with
paragraph 1 shall comply with the conditions established in Article 17.
3.           Before deciding, in
accordance with paragraph 1 of this Article, the amount by which the deposit
guarantee scheme is liable in compliance with the conditions established in
Article 39(3)(d) of Directive [ ], the Board shall consult the deposit
guarantee scheme concerned, having full regard to the urgency of the matter.
4.           In the event resources of
a deposit guarantee scheme are not sufficient to cover the payments to be made
to depositors, and other resources are not immediately available from the
relevant participating Member State, the Fund may lend the necessary resources
to that deposit guarantee scheme provided that all the conditions under Article
10 of Directive 94/19/EC are met.
TITLE VI
Other provisions
Article 74
Privileges and Immunities
The Protocol (No 7) on the Privileges and
Immunities of the European Union annexed to the Treaty on European Union and to
the Treaty on the Functioning of the European Union shall apply to the Board
and its staff.
Article 75
Languages
1.           Council Regulation No 1[27] shall apply to the Board.
2.           The Board shall decide on
the internal language arrangements for the Board.
3.           The Board may decide which
of the official languages to use when sending documents to Union institutions
or bodies.
4.           The Board may agree with
each national resolution authority on the language or languages in which the
documents to be send to or by the national resolution authorities shall be
drafted.
5.           The translation services
required for the functioning of the Board shall be provided by the Translation
Centre of the bodies of the European Union.
Article 76
Staff of the Board
1.           The Staff Regulations and
the Conditions of Employment of Other Servants and the rules adopted by
agreement between the institutions of the Union giving effect to those Staff
Regulations and the Conditions of Employment of Other Servants, shall apply to
the staff of the Board, including the Executive Director and the Deputy
Executive Director.
2.           The Board, in agreement
with the Commission, shall adopt the appropriate implementing rules for giving
effect to the Staff Regulations and the Conditions of Employment
of Other Servants in accordance with Article 110 of the
Staff Regulations.
Article 77
Staff exchange
1.           The Board may make use of
seconded national experts or other staff not employed by the Board.
2.           The Board in its plenary
session shall adopt appropriate decision laying down rules on the exchange and
secondment of staff from and among the national resolution authorities of the
participating Member States to the Board.
3.           The Board may establish
internal resolution teams composed of staff of the national resolution
authorities of the participating Member States.
Article 78
Liability of the Board
1.           The Board’s contractual
liability shall be governed by the law applicable to the contract in question.
2.           The Court of Justice of
the European Union shall have jurisdiction to give judgement pursuant to any
arbitration clause contained in a contract concluded by the Board.
3.           In the case of
non-contractual liability, the Board shall, in accordance with the general principles
common to the laws concerning the liability of public authorities of the Member
States, make good any damage caused by it or by its staff in the performance of
their duties, in particular their resolution functions, including acts and
omissions in support of foreign resolution proceedings.
4.           The Board shall compensate
a national resolution authority for the damages to which it has been condemned
by a national court, or which it has, in agreement with the Board, committed to
pay in accordance with an amicable settlement, which are the consequences of an
act or omission committed by that national resolution authority in the course
of any resolution under this Regulation, unless that act or omission
constituted a violation of Union law, this Regulation, a Decision of the
Commission or a Decision of the Board, or constituted a manifest and serious
error of judgement.
5.           The Court of Justice of
the European Union shall have jurisdiction in any dispute related to paragraphs
3 and 4. Proceedings in matters arising from non-contractual liability shall be
barred after a period of five years from the occurrence of the event giving
rise thereto.
6.           The personal liability of
its staff towards the Board shall be governed by the provisions laid down in
the Staff Regulations or Conditions of Employment applicable to them.
Article 79
Professional secrecy and exchange of information
1.           Members of Board, staff of
the Board and staff exchanged with or seconded by participating Member States
carrying out resolution duties, even after their duties are ceased, shall be
subject to the requirements of professional secrecy pursuant to Article 339
TFEU and the relevant provisions in Union legislation, even after their duties
have ceased.
2.           The Board shall ensure
that individuals who provide any service, directly or indirectly, permanently
or occasionally, related to the discharge of its duties are subject to
equivalent professional secrecy requirements.
3.           For the purpose of
carrying out the tasks conferred upon it by this Regulation, the Board shall be
authorised, within the limits and under the conditions set out in relevant
Union law, to exchange information with national or European authorities and
bodies in the cases where relevant Union law allows national competent authorities
to disclose information to those entities or where Member States may provide
for such disclosure under the relevant Union law.
Article 80
Transparency
1.           Regulation (EC) No
1049/2001 of the European Parliament and of the Council [28] shall apply to documents held
by the Board.
2.           The Board shall, within
six months of the date of its first meeting, adopt the detailed rules for
applying Regulation (EC) No 1049/2001.
3.           Decisions taken by the
Board under Article 8 of Regulation (EC) No 1049/2001 may be the subject of a
complaint to the Ombudsman or of an action before the Court of Justice of the
European Union, following an appeal to the Authority of Appeal, as appropriate,
under the conditions laid down in Articles 228 and 263 TFEU respectively.
4.           The processing of personal
data by the Board shall be subject to Regulation (EC) No 45/2001 of the
European Parliament and of the Council [29].
The processing of personal data by the national resolution authorities shall be
subject to Directive 95/46/EC of the European Parliament and of the Council[30].
Article 81
Security rules on the protection of classified and sensitive non-classified
information
The Board shall apply the security
principles contained in the Commission’s security rules for protecting European
Union Classified Information (EUCI) and sensitive non-classified information,
as set out in the annex to Decision 2001/844/EC, ECSC, Euratom. Applying the
security principles shall include applying provisions for the exchange,
processing and storage of such information.
PART IV
POWERS OF EXECUTION AND FINAL PROVISIONS
Article 82
Exercise of the delegation
1.           The power to adopt
delegated acts is conferred on the Commission subject to the conditions laid
down in this Article.
2.           The delegation of powers
shall be conferred for an indeterminate period of time from the date referred
to in Article 88.
3.           The delegation of powers
referred to in Articles 62(5), 65(5), 66(3), 67(3) and 70(4) may be revoked at
any time by the European Parliament or by the Council. A decision of revocation
shall put an end to the delegation of the power specified in that decision. It
shall take effect the day following the publication of the decision in the
Official Journal of the European Union or at a later date specified therein. It
shall not affect the validity of any delegated acts already in force.
4.           As soon as it adopts a
delegated act, the Commission shall notify it simultaneously to the European
Parliament and to the Council.
5.           A delegated act adopted
pursuant to Articles 62(5), 65(5), 66(3), 67(3) and 70(4) shall enter into
force only if no objection has been expressed either by the European Parliament
or the Council within a period of two months of notification of that act to the
European Parliament and the Council or if, before the expiry of that period,
the European Parliament and the Council have both informed the Commission that
they will not object. That period shall be extended by two months at the
initiative of the European Parliament or the Council.
Article 83
Review
1.           By 31 December 2016, and
subsequently every five years thereafter, the Commission shall publish a report
on the application of this Regulation, with a special emphasis on monitoring
the potential impact on the smooth functioning of the internal market. That report
shall evaluate:
(a)         
the functioning of the SRM and the impact of the
its resolution activities on the interests of the Union as a whole and on the
coherence and integrity of the internal market in financial services, including
its possible impact on the structures of the national banking systems within
the Union, and regarding the effectiveness of cooperation and information
sharing arrangements within the SRM, between the SRM and the SSM, and between
the SRM and national resolution authorities and national competent authorities
of non-participating Member States;
(b)         
the effectiveness of independence and
accountability arrangements;
(c)         
the interaction between the Board and the
European Banking Authority;
(d)         
the interaction between the Board and the
national resolution authorities of non-participating Member States and the
effects of the SRM on these Member States.
2.           The report shall be
forwarded to the European Parliament and to the Council. The Commission shall
make accompanying proposals, as appropriate.
Article 84
Amendment to Regulation (EU) No 1093/2010
Regulation (EU) No 1093/2010 is amended as
follows:
1.           In Article 4 point (2) is
replaced by the following:
"(2) ‘competent authorities’ means:
(i)      competent authorities as defined in
in point 40 of Article 4(1) of Regulation (EU) No 575/2013 of the European
Parliament and of the Council and the Directive 2007/64/EC and as referred to
in Directive 2009/110/EC;
(ii)      with regard to Directives 2002/65/EC
and 2005/60/EC, the authorities competent for ensuring compliance with the
requirements of those Directives by credit and financial institutions;
(iii)     with regard to deposit guarantee
schemes, bodies which administer deposit-guarantee schemes pursuant to
Directive 94/19/EC, or, where the operation of the deposit-guarantee scheme is
administered by a private company, the public authority supervising those
schemes pursuant to that Directive; and
(iv)     with regard to 62(5), 65(5), 66(3), 67(4)
and 70(4), resolution authorities as defined in Article 3 of that Directive and
the Single Resolution Board established by Regulation (EU) No…/…of the European
Parliament and of the Council.
2.           In Article 25, the
following paragraph is inserted:
“1a.    The Authority may organise and conduct
peer reviews of the exchange of information and of the joint activities of the
Board referred to in SRM Regulation and national resolution authorities of
Member States non-participating in the SRM in the resolution of cross border
groups to strengthen effectiveness and consistency in outcomes. To that end,
the Authority shall develop methods to allow for objective assessment and
comparison.”
3.           In Article 40(6), the
following third subparagraph is added:
"For the purpose of acting within the
scope of 62(5), 65(5), 66(3), 67(4) and 70(4), the Executive Director of the
European Resolution Board shall be an observer to the Board of
Supervisors."
Article 85
Replacement of national resolution financing arrangements
From the date of application referred to in
the second subparagraph of Article 88, the Fund shall be considered the
resolution financing arrangement of the participating Member States under Title
VII of Directive [ ].
Article 86
Headquarters Agreement and operating conditions
1.           The necessary arrangements
concerning the accommodation to be provided for the Board in the host Member
State and the facilities to be made available by that the Member State together
with the specific rules applicable in the host Member State to the Executive
Director, members of the Board in its plenary session, Board staff and members
of their families shall be laid down in a Headquarters Agreement between the
Board and the host Member State, concluded after obtaining the approval of the
Board in its plenary session and no later than 2 years after the entry into force
of this Regulation.
2.           The Board’s host Member
State shall provide the best possible conditions to ensure the functioning of
the Board, including multilingual, European-oriented schooling and appropriate
transport connections.
Article 87
Start of the Board’s activities
1.           The Board shall become
fully operational by 1 January 2015.
2.           The Commission shall be
responsible for the establishment and initial operation of the Board until the
Board has the operational capacity to implement its own budget. For that
purpose:
(a)         
until the Executive Director takes up his duties
following his appointment by the Council in accordance with Article 53, the
Commission may designate a Commission official to act as interim Executive
Director and exercise the duties assigned to the Executive Director;
(b)         
by derogation from Article 47(1)(i) and until
the adoption of a decision as referred to in Article 47(2), the interim
Executive Director shall exercise the appointing authority powers;
(c)         
the Commission may offer assistance to the Board,
in particular by seconding Commission officials to carry out the activities of
the agency under the responsibility of the interim Executive Director or the
Executive Director;
(d)         
the Commission shall collect the annual
contributions referred to in Article 62(5)(d) on behalf of the Board.
3.           The interim Executive
Director may authorise all payments covered by appropriations entered in the Board's
budget and may conclude contracts, including staff contracts.
Article 88
Entry into force
This Regulation shall enter into force on
the twentieth day following that of its publication in the Official Journal
of the European Union.
Articles 7 to 23 and Articles 25 to 38 shall
apply from 1 January 2015.
Article 24 shall apply from 1 January 2018.
This Regulation shall be binding
in its entirety and directly applicable in all Member States.
Done at Brussels, 
For the European Parliament                       For
the Council
The President                                                 The
President
LEGISLATIVE FINANCIAL STATEMENT
1.           FRAMEWORK OF THE PROPOSAL/INITIATIVE
              1.1.    Title of the proposal/initiative
              1.2.    Policy
area(s) concerned in the ABM/ABB structure
              1.3.    Nature
of the proposal/initiative
              1.4.    Objective(s)
              1.5.    Grounds
for the proposal/initiative
              1.6.    Duration
and financial impact
              1.7.    Management
mode(s) envisaged
2.           MANAGEMENT MEASURES
              2.1.    Monitoring
and reporting rules
              2.2.    Management
and control system
              2.3.    Measures
to prevent fraud and irregularities
3.           ESTIMATED FINANCIAL IMPACT OF THE
PROPOSAL/INITIATIVE
              3.1.    Heading(s) of the multiannual financial
framework and expenditure budget line(s) affected
              3.2.    Estimated
impact on expenditure
              3.2.1. Summary of estimated
impact on expenditure
              3.2.2. Estimated impact
on operational appropriations
              3.2.3. Estimated impact
on appropriations of an administrative nature
              3.2.4. Compatibility
with the current multiannual financial framework
              3.2.5. Third-party
contributions
              3.3.    Estimated impact on revenue
LEGISLATIVE FINANCIAL STATEMENT
1.           FRAMEWORK OF THE PROPOSAL/INITIATIVE
1.1.        Title of the
proposal/initiative
Regulation of the European Parliament and of
the Council establishing a Single Resolution Mechanism and Single Bank
Resolution Fund
1.2.        Policy area(s) concerned
in the ABM/ABB structure[31]
Internal market – Financial Markets
1.3.        Nature of the
proposal/initiative
þ The proposal/initiative relates to a
new action
¨ The proposal/initiative relates to a
new action following a pilot project/preparatory action[32]
¨ The proposal/initiative relates to the
extension of an existing action
¨ The proposal/initiative relates to an
action redirected towards a new action
1.4.        Objective(s)
1.4.1.     The Commission's
multiannual strategic objective(s) targeted by the proposal/initiative
·              
Strengthen the internal market for banking
services while maintaining a level playing field.
·              
Maintain financial stability and confidence in
banks, ensure the continuity of essential financial services, avoid contagion
of problems.
·              
Minimise losses for society as a whole and in
particular for taxpayers, protect depositors, and reduce moral hazard.
1.4.2.     Specific objective(s) and
ABM/ABB activity(ies) concerned
In the light of the general objectives above,
the following specific objectives are sought:
Preparation and prevention:
·              
increase preparedness of supervisors and banks
for crisis situations and
·              
enable resolvability of all banks
Early intervention:
·              
improve early intervention arrangements for bank
supervisors.
Bank resolution:
·              
ensure resolution of banks that are subject to a
single supervisory mechanism in a timely and robust manner;
·              
ensure legal certainty for stakeholders of bank
resolution.
Financing:
·              
to create a single bank resolution fund which
can effectively absorb geographically asymetric losses in the Union banking
system;
·              
to ensure that resolution of failing banks is
fully covered from contributions of financial institutions, after bail-in of
shareholders and creditors has taken place.
1.4.3.     Expected result(s) and
impact
·              
To break the negative feedback loop between sovereign
states and their banks.
·              
To provide all businesses within the whole
banking union with the equitable conditions and access to bank financing.
·              
To minimise the losses to depositors,
governments and taxpayers due to recovery and resolution of large and
systemically important banks.
1.4.4.     Indicators of results and
impact
·              
Long-term sovereign bond spreads between Member States.
·              
Number of banks undergoing resolution.
·              
Cost of bank resolutions, including pay-outs
from a single resolution fund.
·              
Changes in the share of bail-inable debt in
banks.
1.5.        Grounds for the
proposal/initiative
1.5.1.     Requirement(s) to be met in
the short or long term
As outlined in the Commission’s Blueprint for a
Deep and Genuine Economic and Monetary Union and in the Four Presidents’ report
in 2012, an integrated financial framework or “Banking Union” is a vital part
of the policy measures to put Europe back on the path of economic recovery and
growth. Uncoordinated national responses to the failure of banks have
intensified the fragmentation of the internal market in lending and funding. As
a result the transmission of the common monetary policy is impaired and
ring-fencing jeopardises lending to businesses and consumers.
This is particularly damaging within the Euro
Area. With little room to use monetary tools to deal with weaknesses in the
banking sector, reliance on national fiscal resources in managing bank failures
continues to link banks and sovereigns in a negative feedback loop. Businesses
in Member States with a lowered perceived ability to rescue ailing banks in
their territory are at a severe competitive disadvantage. Moreover, as seen in
the crisis, problems in some Euro Area Member States can rapidly spread via
doubts and financial links to other perceived by markets to be vulnerable to
similar risks.
The European Council stated in its conclusions
of December 2012 that “In a context where bank supervision is effectively moved
to a single supervisory mechanism, a single resolution mechanism will be
required, with the necessary powers to ensure that any bank in participating
Member States can be resolved with the appropriate tools”.
Swift progress towards a Banking Union is
indispensable to ensure financial stability and growth in the Euro Area.
Building on the strong regulatory framework common to the 28 members of the internal
market (single rulebook), the European Commission has therefore taken an
inclusive approach and proposed a roadmap for the Banking Union with different
instruments and steps, potentially open to all Member States but in any case
including the 17 currently within the Euro Area.
The first step, the Single Supervisory
Mechanism (SSM) for Euro Area banks and those from the Member States that wish
to join empowers the ECB to exercise key supervisory tasks over such banks.
Another key aspect of the Banking Union, the
proposal for a Directive establishing a framework for the recovery and
resolution of credit institutions and investment firms (Bank Recovery and
Resolution Directive) adopted in 2012 is currently under negotiation by the
co-legislators. The Bank Recovery and Resolution Directive will establish the
rules for how resolution will be carried out across the internal market and
provide the national resolution authorities with powers and procedures allowing
for the resolution of banks.
In line with the conclusions of the European
Council, the integration of the Union banking markets requires a Euro Area-wide
resolution mechanism to deal with banks in distress and thus to manage
contagion risk in order to safeguard Euro Area financial stability to the
benefit of the whole internal market.
In line with the Commission’s Blueprint of
2012, the long-term objective is to build a Banking Union for the banks in all
Member States. Direct supervision by the ECB combined with a single resolution
mechanism for banks and effective and solid deposit guarantee schemes in all
Member States will contribute to keeping up confidence in the sustainable
stability of the Union.
1.5.2.     Added value of EU
involvement
Under the principle of subsidiarity set out in
Article 5.3 of the TEU, in areas which do not fall within its exclusive
competence, the Union should act only if and in so far as the objectives of the
proposed action cannot be sufficiently achieved by the Member States, either at
central level or at regional and local level, but can rather, by reason of the
scale or effects of the proposed action, be better achieved at Union level.
Only action at European level can ensure that
failing banks are resolved in a non-discriminatory manner and pursuant to a
single set of rules to improve the functioning of the Economic
and Monetary Union and that of the internal market. Despite the deep integration of the Union’s
banking sector, substantial differences between resolution decisions taken at
national level may result in unacceptable risks to financial stability.
The single currency compels single oversight
and resolution of banks for the Euro Area to avoid destructive economic
fragmentation. A Single
Resolution Mechanism will be more effective than a network of national
resolution authorities, in particular in respect of
cross-border banking groups for which speed and coordination are crucial to
minimise costs and restore confidence. It will also entail significant
economies of scale, and avoid the negative externalities that may derive from
purely national decisions.
1.5.3.     Compatibility and possible
synergy with other appropriate instruments
The first step, the Single Supervisory
Mechanism (SSM) for Euro Area banks and those from the Member States that wish
to join empowers the ECB to exercise key supervisory tasks over such banks.
Another key aspect of the Banking Union, the
proposal for a Directive establishing a framework for the recovery and
resolution of credit institutions and investment firms (Bank Recovery and
Resolution Directive) adopted in 2012 is currently under negotiation by the
co-legislators. The Bank Recovery and Resolution Directive will establish the
rules for how resolution will be carried out across the internal market and
provide the national resolution authorities with powers and procedures allowing
for the resolution of banks.
In line with the conclusions of the European
Council, the integration of the Union banking markets requires a Euro Area-wide
resolution mechanism to deal with banks in distress and thus to manage
contagion risk in order to safeguard Euro Area financial stability to the
benefit of the whole internal market.
In line with the Commission’s Blueprint of
2012, the long-term objective is to build a Banking Union for the banks in all
Member States. Direct supervision by the ECB combined with a single resolution
mechanism for banks and effective and solid deposit guarantee schemes in all
Member States will contribute to keeping up confidence in the sustainable
stability of the Union.
1.6.        Duration and financial
impact
¨ Proposal/initiative of limited
duration
–     
¨  Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY
–     
¨  Financial impact from YYYY to YYYY
þ Proposal/initiative of unlimited
duration
–     
Implementation with a start-up period from 2014
to end 2014,
–     
followed by full-scale operation.
1.7.        Management mode(s) planned[33] 
¨ Direct management by the Commission
–     
¨ by its departments, including by its staff in the Union
delegations;
–     
þ  by the executive agencies.
¨ Shared management with the Member States
¨ Indirect management by delegating implementation tasks to:
–     
¨ third countries or the bodies they have designated;
–     
¨ international organisations and their agencies (to be specified);
–     
¨the EIB and the European Investment Fund;
–     
þ bodies referred to in Articles 208 and 209 of the Financial
Regulation;
–     
¨ public law bodies;
–     
¨ bodies governed by private law with a public service mission to the
extent that they provide adequate financial guarantees;
–     
¨ bodies governed by the private law of a Member State that are
entrusted with the implementation of a public-private partnership and that
provide adequate financial guarantees;
–     
¨ persons entrusted with the implementation of specific actions in
the CFSP pursuant to Title V of the TEU, and identified in the relevant basic
act.
–     
If more than one management mode is
indicated, please provide details in the "Comments" section.
Comments
2.           MANAGEMENT MEASURES
2.1.        Monitoring and reporting
rules
Article 47 of the Regulation requires the Board
to be accountable to the European Parliament, the Council and the Commission for
the implementation of this Regulation, among other things, to submit each year
a report to the European Parliament, the Council, the Commission and the
European Court of Auditors on the execution of the tasks conferred upon it by
this Regulation.
2.2.        Management and control
system
2.2.1.     Risk(s) identified
The proposal would not bring about new risks in
relation to the legal, economical, efficient and effective use of budget
appropriations.
However, internal risk management should take
into account the specific nature of the financing mechanism of the Board. Differently
from many other bodies set up by the Communities, the services provided by the
Board will be exclusively financed by financial institutions.
Secondly, Board will be responsible for
ensuring the management of the Single Bank Resolution Fund. In this regard, a
set of internal control procedures will have to be developed and established.
2.2.2.     Information concerning the
internal control system set up
The framework and rules for internal control
should follow the pattern applied by other authorities established by the
Commission, except for the management of the Single Bank Resolution Fund, which
will require the establishment of a specif set of rules.
2.2.3.     Estimate of the costs and
benefits of the controls and assessment of the expected level of risk of error
Internal controls shall be embedded in the
Board’s procedures relevant to the discharge of its responsibility and the
implementation of the tasks conferred to it. The costs of such procedures shall
not exceed their benefits in avoiding material errors.
2.3.        Measures to prevent fraud
and irregularities
For the purposes of combating fraud, corruption
and any other illegal activity, the provisions of Regulation (EC) No 1073/1999
of the European Parliament and of the Council of 25 May 1999 concerning
investigations conducted by the European Anti-Fraud Office (OLAF) shall apply
to the Board without any restriction.
The Board shall accede to the
Interinstitutional Agreement of 25 May 1999 between the European Parliament,
the Council of the European Union and the Commission of the European
Communities concerning internal investigations by the European Anti-Fraud
Office (OLAF) and shall immediately adopt appropriate provisions for all Board
staff.
The funding decisions and the agreements and
the implementing instruments resulting from them shall explicitly stipulate
that the Court of Auditors and OLAF may, if need be, carry out on-the-spot
checks at the beneficiaries of money disbursed by Board as well as on the staff
responsible for allocating this money.
Articles 58-63 of the Regulation establishing
Board set out the provisions on implementation and control of the Board’s
budget and applicable financial rules.
3.           ESTIMATED FINANCIAL IMPACT OF THE
PROPOSAL/INITIATIVE
The analysis below provides an estimation of
the overall costs for the Board and its administration (hereafter – the Board)
as well as for the Commission from this proposal.
The expenses of the Board will be fully financed
by financial institutions covered by the European Resolution Mechanism. Around
6000 Eurozone banks, in addition to their annual contributions to the Single
Bank Resolution Fund, will pay a fixed prorata of this amount to fully cover
the Boards’ budgetary expenses. The contribution rate together with a Board’s
budget will be approved on the annual basis. The contribution rate to finance
the Board will be adapted each year to ensure a balanced budget of the Board.
The Board will carry out tasks related to the
preparation and execution of resolutions and the contributions to and the
management of the Resolution Fund. With respect to the preparation of
resolutions, the Board will draw up or review resolution plans, participate in
cross-border resolution colleges, and prepare an actual resolution. For a
significant number of institutions and groups the Board, in cooperation with
the (consolidating) supervisor and with the national resolution authorities,
will have to draw up resolution plans, which provide for the resolution actions
that may be taken when the conditions for resolution are met, and at least
annually review and where appropriate update the plans. The Board will also
have to assess the resolvability of the institutions and groups and address any
potential substantive impediment to the resolvability.
The national resolution authorities will also
have to draw up resolution plans for the other entities and groups, which the
Board will have to review. In case a group includes entities not only
established in participating Member States, the Board shall represent the
national resolution authorities of the participating Member States in the
resolution college. Resolution colleges are established to ensure cooperation
and coordination among relevant authorities and perform inter alia tasks
regarding the development of resolution plans, the assessment of resolvability
and actual resolution.
In case the Commission has decided to put an
entity under resolution, the Board will monitor the execution of the resolution
and it will also assess the feasibility of the entity's business reorganization
plan.
With respect to the Fund, the Board will have
to levy annual contributions on almost 6,000 institutions, will have to make
sure that the contribution basis in individual banks is correctly determined,
that the contributions are paid on time and that unpaid amounts are effectively
recovered. To this end, the Board will conduct inspections of bank records. The
amount to be collected and managed would exceed half of the yearly annual
Union’s budget. The Board will also have to manage funds in such a manner that
the risks are low and that it is possible, if necessary, to quickly make the
resources available to finance resolution. This implies a thought-out, long
term investment strategy, taking into account among other things the kind,
geography and maturity of the investments. Of course, these line functions of
the Board will have to be supported by the staff functions, including inter
alia information technology and communications.
Main assumptions
Estimated staff and costs structure of
the Board:
·       
The Board is expected to be at full capacity at
the end of its first year of operation, meaning that all the staff has to be
hired in the course of the first year: budget impact is estimated at 50% in the
first year and 100% as from the second year of operation.
·       
Given the lack of national resolution
authorities with a substantial historic record in Europe, an estimation of the
human resources needs for the Board has been derived from benchmarking the
tasks of the Board with those of the US Federal Deposit Insurance Corporation
(FDIC) – see table 1 below.
·       
In terms of the covered deposits and the target
size of the resolution funds, the amounts are comparable between the US and the
euro area, whereas the bank assets falling under a resolution mechanism are
substantially higher within the euro area than in the US.
·       
With respect to overhead costs, the comparison
has been made with European Supervisory Authorities (ESAs). However, given the
fact that the share of overhead cost in the ESAs has been higher than those
estimated under benchmarking with FDIC, the latter, i.e. a more conservative
ratio of 11,5%, has been used. Further assumptions and their clarifications on
benchmarking with FDIC are provided below in table 1. As of 2012, FDIC had
7,476 ftes.
·       
Since FDIC has a wider mandate than the Board,
only the relevant divisions of the FDIC have been taken into the benchmarking
exercise. 
·       
On the basis of the benchmarking exercise, the
number of required staff is estimated at 309. It should be noted that FDIC has
21% of non-permanent employees. Under the most conservative assumption that in
a non-crisis scenario the FDIC would have been left only with permanent staff,
would reduce the target size of the Board by 75 employees to 244 in a
non-crisis situation. Therefore it is important to ensure that the Board has
sufficient flexibility to contract additional staff or externalise the
workload.
·       
The following distribution of personnel is
suggested:
–     
80% of TAs (68% of ADs and 12% of ASTs);
–     
10% of ENDs;
–     
10% of CAs.
·       
Staff Regulation of EU institutions will be
applied, which is reflected in the used per head rates:
–     
average yearly cost of a TA: EUR 131,000;
–     
average yearly cost of an END: EUR 78,000;
–     
average yearly cost of a CA: EUR 70,000.
In addition to the salary, this cost
includes indirect costs such as building, training, IT and socio-medical
infrastructure costs. 
·       
Considering that the location of the Board is
not known at this stage, a salary correction coefficient of 1 has been used.
The different location of the Board would likely require the reassessment of
costs.
·       
The other staff, administrative and operating
expenditure have been estimated based on a benchmarking exercise with the
current costs structure of the ESAs.
·       
Operational expenditures are expected to amount
to 25% of total Board’s costs, notably for the development and maintenance of
information systems, building relationship and the common supervisory culture
with national resolution authorities in the light of the European Resolution
Mechanism, where there should be a close and effective relationship between the
Board and the national resolution authorities primarily involved in the
implementation of resolution decisions.
·       
The estimated costs structure of the Board is
summarized in the table 2 below.
Table 1. Estimation of required Board’s
staff on the basis of the structure and staffing of the US Federal Deposit
Insurance Corporation
   || FDIC1 || BOARD 
   Characteristics 
 Number of banks || 7,1812 || 6,0083 
 Total assets || $14,451 (bn, 2012) || €29,994 (bn, 2011) 
 Total covered deposits || $6,027 (bn, March 2013) || €5,514 (bn, 2011) 
 Target size fund || $81 (bn) || €55 (bn) 
 Ailing institutions 2008-2012 || 465 || 904 
   Staff 
 Total employees (fte, 2012; % at headquarter) || 7,476 (28.6%) ||   
 (a)                    Employees 'Division of Resolutions and Receiverships' (fte, 2012) || 1,428 || 82 (estimation)5 
 (b)                    Employees 'Division of Finance' (fte, 2012) || 176 || 88 (estimation)6 
 (c)                    Employees 'Office of complex institutions' (fte, 2012) || 148 || 74 (estimation)7 
 (d)                    Employees 'Legal division' (fte, 2012 / % of total employees) || 716 / 9.6% || 30 / 9.6% (estimation)8 
 (e)                    Total number of employees relevant divisions (fte, 2012) (sum of a, b, c, d) || 2,468 || 274 
 (f)                      Employees staff functions (IT, communications, etc.) (number/% of total employees) || 863 / 11.5% || 35 / 11,5% (estimation) 
 (g)                    Total number of employees Board (sum of e and f) ||   || 309 (estimation) 
 (h)                    Non-permanent employees (% of total employees, 2012) || 21%9 || 21% 
 (i)                      Total number of permanent employees Board ||   || 244 (estimation) 
 1               Source: www.fdic.gov. 2               Number of members of Deposit Insurance Fund, 2012. 3               Number of credit institution in EU-17 as of January 2013. Source: ECB. 4               Source: Commission Staff Working Paper 'Facts and figures on State aid in the EU Member States, 2012 Update'. The actual number of ailing institutions in the Euro area is higher, because institutions that have failed but did not receive State aid are not included. 5               It is assumed that 20% of employees are involved in resolutions and 80% in receiverships. The Board would only be involved in resolutions. On the basis of repartition between the central and regional levels in FDIC, it has been assumed that 28.6% of the employees involved in resolutions will work at the central Board level and 71.4% will work at the national level. This is a conservative assumption given the proposal foresees that all tasks linked to resolution will stay at the Board level while only the implementation of resolution decisions be conducted at the national level and monitored centrally. 6               The tasks of the FDIC's Division of finance take place at the central level. This division is not only involved in collecting contributions and managing the fund, but also in more general activities, like controlling, financial operations and financial planning. For this reason, it is assumed that 50% of the number of employees of the FDIC's Division of finance will be required at the central Board level to manage contributions and the fund. 7               Resolution planning of the large Euro area banks is a responsibility of the Board. The Board has the possibility to ask national authorities to provide a draft resolution plan. For that reason, it is assumed that 50% of employees will work at the central Board level. 8               The FDIC's Legal division is not only involved in resolutions and receiverships and the management of the Fund, but also for example in the FDIC's supervisory responsibilities. For that reason, the percentage of employees of the Legal division to total employees is used to estimate the number of employees necessary at the Board. 9               The percentage of non-permanent employees has been calculated on the basis of the total number of employees of the FDIC, excluding the employees of the Division of Resolutions and Receiverships, who are mostly employed on the regional level. 
Table 2. Estimated costs structure of the
Board on the basis of 309 employees
 Figures in million EUR || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 
   ||   ||   ||   ||   ||   ||   ||   
 Staff costs (including salaries and allowances and related expenses such as building and furniture costs and IT costs) || 18 || 37 || 38 || 38 || 39 || 40 || 41 
 Other HR costs (recruitment costs, mission expenses, other external staff costs (interim workers, external service providers) …) || 3 || 3 || 3 || 3 || 3 || 3 || 3 
 Sub - total HR and related expenditure || 22 || 40 || 41 || 42 || 43 || 43 || 44 
   ||   ||   ||   ||   ||   ||   ||   
 Administrative expenditure (telecommunications, information and publishing expenses, meeting expenses and others) || 3 || 5 || 5 || 5 || 5 || 5 || 5 
 Sub - total administrative expenditure || 3 || 5 || 5 || 5 || 5 || 5 || 5 
   ||   ||   ||   ||   ||   ||   ||   
 Other expenditure (governance, IT projects, liaison with relevant European and third country authorities, joint projects and workshops with national resolution authorities and other relevant bodies, etc.) ||   ||   ||   ||   ||   ||   ||   
 Sub - total other expenditure || 8 || 16 || 16 || 16 || 16 || 17 || 17 
   ||   ||   ||   ||   ||   ||   ||   
 Total expenditure || 33 || 61 || 62 || 63 || 64 || 65 || 66 
Single Bank Resolution Fund:
·       
The target size of the Single Bank Resolution
Fund is set at 1% of covered deposits in the banking system of the participating
Member States. On the basis of 2011 data on banks, an estimated target size of
the fund would be around 55 billion EUR.
·       
Participating banks will pay their risk-adjusted
share to the Single Bank Resolution Fund within 10 year period. Thus the annual
accumulation of resolution funds should reach around 5.5 billion EUR, not
taking into account returns and possible outflows.
·       
In absolute amounts, the largest banks will make
the biggest contributions to the Single Bank Resolution Fund. Roughly, without
taking into account the risk profile of banks, the estimations of Commission
services on the basis of 2011 data show that 17 largest European banks will
make up around 40% of all banks’ contributions to the Fund.
·       
With respect to the management of the Fund, it
should be noted that the costs estimation for the Board have only included the
human resource implications. Other costs, such as investment costs, have been
assumed to be directly deducted from the Fund.
Financial impact at Commission Level:
·       
It is estimated that a temporary allocation of 15
posts specialised in human resources issues, budgetary matters and other
administrative matters relevant for the establishment of the Board will be
necessary at Commission level in the first year of operation (2014) to set up
and accompany the start-up phase (estimated 6 months) of the Board, which has
been assumed to be based in Brussels. The financial assessment below might
change depending on the selected location of the Board.
·       
As from 2015, it is estimated that 10 posts could
be necessary within the Commission to implement the tasks conferred to it in
the Regulation, notably the preparation of resolution decisions. This will be
subject to a decision taking on the annual budgetary procedure.
3.1.        Heading(s) of the multiannual
financial framework and expenditure budget line(s) affected     
It is estimated that 15 posts will be necessary
at Commission level in the first year of operation (2014) to set up and
accompany the start-up phase of the Board.
As from 2015, 10 posts will be necessary within
the Commission to implement the tasks conferred to it in the Regulation,
notably the preparation of resolution decisions.
3.2.        Estimated impact on
expenditure 
3.2.1.     Summary of estimated impact
on expenditure 
EUR
million (to three decimal places)
 Heading of multiannual financial framework || Number || […][Heading……………...……………………………………………………………….] 
 DG: <…….> ||   ||   || Year N[34]   || Year N+1 || Year N+2 || Year N+3 || Enter as many years as necessary to show the duration of the impact (see point 1.6) || TOTAL 
  Operational appropriations ||   ||   ||   ||   ||   ||   ||   ||   
 Number of budget line || Commitments || (1) ||   ||   ||   ||   ||   ||   ||   ||   
 Payments || (2) ||   ||   ||   ||   ||   ||   ||   ||   
 Number of budget line || Commitments || (1a) ||   ||   ||   ||   ||   ||   ||   ||   
 Payments || (2a) ||   ||   ||   ||   ||   ||   ||   ||   
 Appropriations of an administrative nature financed from the envelope of specific programmes[35]   ||   ||   ||   ||   ||   ||   ||   ||   
 Number of budget line ||   || (3) ||   ||   ||   ||   ||   ||   ||   ||   
 TOTAL appropriations for DG <….> || Commitments || =1+1a +3 ||   ||   ||   ||   ||   ||   ||   ||   
 Payments || =2+2a +3 ||   ||   ||   ||   ||   ||   ||   ||   
  TOTAL operational appropriations || Commitments || (4) ||   ||   ||   ||   ||   ||   ||   ||   
 Payments || (5) ||   ||   ||   ||   ||   ||   ||   ||   
  TOTAL appropriations of an administrative nature financed from the envelope for specific programmes || (6) ||   ||   ||   ||   ||   ||   ||   ||   
 TOTAL appropriations for HEADING <….> of the multiannual financial framework || Commitments || =4+ 6 ||   ||   ||   ||   ||   ||   ||   ||   
 Payments || =5+ 6 ||   ||   ||   ||   ||   ||   ||   ||   
 Heading of multiannual financial framework || 5 || Administrative expenditure 
EUR
million (to three decimal places)
   ||   ||   || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 || TOTAL 
 Commission || 
  Human resources || 1.965 || 1.310 || 1.310 || 1.310 || 1.310 || 1.310 || 1.310 || 9.825 
  Other administrative expenditure – mission expenses || 0.150 || 0.100 || 0.100 || 0.100 || 0.100 || 0.100 || 0.100 || 0.750 
 TOTAL Commission || Appropriations || 2.115 || 1.410 || 1.410 || 1.410 || 1.410 || 1.410 || 1.410 || 10.575 
 TOTAL appropriations for HEADING 5 of the multiannual financial framework || (Total commitments = Total payments) || 2.115 || 1.410 || 1.410 || 1.410 || 1.410 || 1.410 || 1.410 || 10.575 
EUR
million (to three decimal places)
   ||   ||   || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 || TOTAL 
 TOTAL appropriations under HEADINGS 1 to 5 of the multiannual financial framework || Commitments || 2.115 || 1.410 || 1.410 || 1.410 || 1.410 || 1.410 || 1.410 || 10.575 
 Payments || 2.115 || 1.410 || 1.410 || 1.410 || 1.410 || 1.410 || 1.410 || 10.575 
3.2.2.     Estimated impact on
operational appropriations 
–     
¨  The proposal/initiative does not require the use of operational
appropriations 
–     
¨  The proposal/initiative requires the use of operational
appropriations, as explained below:
Commitment
appropriations in EUR million (to three decimal places)
 Indicate objectives and outputs   ò ||   ||   || Year N || Year N+1 || Year N+2 || Year N+3 || Enter as many years as necessary to show the duration of the impact (see point 1.6) || TOTAL 
 OUTPUTS 
 Type[36]   || Average cost || No || Cost || No || Cost || No || Cost || No || Cost || No || Cost || No || Cost || No || Cost || No total || Total cost 
 SPECIFIC OBJECTIVE No. 1[37]   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 - Output ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 - Output ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 - Output ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Subtotal for specific objective No 1 ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 SPECIFIC OBJECTIVE No 2 ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 - Output ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Subtotal for specific objective No. 2 ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 TOTAL COST ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
3.2.3.     Estimated impact on appropriations
of an administrative nature
3.2.3.1.  Summary
–     
¨  The proposal/initiative does not require the use of appropriations
of an administrative nature
–     
þ  The proposal/initiative requires the use of appropriations of an
administrative nature, as explained above
EUR million (to three decimal places)
   || Year N[38]   || Year N+1 || Year N+2 || Year N+3 || Enter as many years as necessary to show the duration of the impact (see point 1.6) || TOTAL 
–     
 
   || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 ||   
 HEADING 5 of the multiannual financial framework ||   ||   ||   ||   ||   ||   ||   ||   
 Human resources || 1.965 || 1.310 || 1.310 || 1.310 || 1.310 || 1.310 || 1.310 || 9.825 
 Other administrative expenditure || 0.150 || 0.100 || 0.100 || 0.100 || 0.100 || 0.100 || 0.100 || 0.750 
 Subtotal HEADING 5 of the multiannual financial framework || 2.115 || 1.410 || 1.410 || 1.410 || 1.410 || 1.410 || 1.410 || 10.575 
–     
 
 Outside HEADING 5[39] of the multiannual financial framework   || N/A || N/A || N/A || N/A || N/A || N/A || N/A || N/A 
 Human resources || N/A || N/A || N/A || N/A || N/A || N/A || N/A || N/A 
 Other expenditure of an administrative nature || N/A || N/A || N/A || N/A || N/A || N/A || N/A || N/A 
 Subtotal outside HEADING 5 of the multiannual financial framework || N/A || N/A || N/A || N/A || N/A || N/A || N/A || N/A 
–     
 
 TOTAL || 2.115 || 1.410 || 1.410 || 1.410 || 1.410 || 1.410 || 1.410 || 10.575 
The human resources appropriations required
will be met by appropriations from the DG that are already assigned to management
of the action and/or have been redeployed within the DG, together if necessary
with any additional allocation which may be granted to the managing DG under
the annual allocation procedure and in the light of budgetary constraints.
3.2.3.2.  Estimated requirements of
human resources
¨         The proposal/initiative does not require the use of human
resources.
þ         The proposal/initiative requires the use of human
resources, as explained below:
Estimate to be expressed in full time equivalent units
 ||   || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 
 ||  Establishment plan posts (officials and temporary staff) ||   ||   
 || XX 01 01 01 (Headquarters and Commission’s Representation Offices) || 15 || 10 || 10 || 10 || 10 || 10 || 10 
 || XX 01 01 02 (Delegations) ||   ||   ||   ||   ||   ||   ||   
 || XX 01 05 01 (Indirect research) ||   ||   ||   ||   ||   ||   ||   
 || 10 01 05 01 (Direct research) ||   ||   ||   ||   ||   ||   ||   
  External staff (in Full Time Equivalent unit: FTE)[40]   || 
 || XX 01 02 01 (CA, SNE, INT from the "global envelope") ||   ||   ||   ||   ||   ||   ||   
 || XX 01 02 02 (CA, LA, SNE, INT and JED in the delegations) ||   ||   ||   ||   ||   ||   ||   
 || XX 01 04 yy[41]   || - at Headquarters   ||   ||   ||   ||   ||   ||   ||   
 || - Delegations ||   ||   ||   ||   ||   ||   ||   || 
 || XX 01 05 02 (CA, SNE, INT - Indirect research) ||   ||   ||   ||   ||   ||   ||   
 || 10 01 05 02 (CA, INT, SNE - Direct research) ||   ||   ||   ||   ||   ||   ||   
 || Other budget lines (specify) ||   ||   ||   ||   ||   ||   ||   
 || TOTAL || 15 || 10 || 10 || 10 || 10 || 10 || 10 
XX is the policy area or budget title
concerned.
Description of tasks to be carried out:
 Officials and temporary staff || See description above 
 External staff ||   
3.2.4.     Compatibility with the
current multiannual financial framework 
–     
¨  Proposal/initiative is compatible the current multiannual
financial framework.
–     
¨  Proposal/initiative will entail reprogramming of the relevant
heading in the multiannual financial framework.
Explain what reprogramming is required,
specifying the budget lines concerned and the corresponding amounts.
–     
¨  Proposal/initiative requires application of the flexibility
instrument or revision of the multiannual financial framework[42].
Explain what is required, specifying the
headings and budget lines concerned and the corresponding amounts.
3.2.5.     Third-party contributions 
–     
The proposal/initiative does not provide for
co-financing by third parties.
–     
The proposal/initiative provides for the
co-financing estimated below:
Appropriations
in EUR million (to 3 decimal places)
   || Year N || Year N+1 || Year N+2 || Year N+3 || Enter as many years as necessary to show the duration of the impact (see point 1.6) || Total 
 Specify the co-financing body ||   ||   ||   ||   ||   ||   ||   ||   
 TOTAL appropriations cofinanced ||   ||   ||   ||   ||   ||   ||   ||   
3.3.        Estimated impact on
revenue 
–     
þ  Proposal/initiative has no financial impact on revenue.
–     
¨  Proposal/initiative has the following financial impact:
–                   
¨         on own resources
–                   
¨         on miscellaneous revenue
EUR
million (to three decimal places)
 Budget revenue line: || Appropriations available for the current financial year || Impact of the proposal/initiative[43]   
 Year N || Year N+1 || Year N+2 || Year N+3 || Enter as many years as necessary to show the duration of the impact (see point 1.6) 
 Article …………. ||   ||   ||   ||   ||   ||   ||   ||   
For miscellaneous ‘assigned’ revenue, specify
the budget expenditure line(s) affected.
Specify the method for calculating the impact
on revenue.
[1]               Communication from the Commission to the European
Parliament and the Council ‘A Roadmap towards a Banking Union’, COM(2012) 510,
12.9.2012.
[2]               Communication from the Commission “A blueprint for a
deep and genuine economic and monetary union Launching
a European Debate”, COM(2012) 777 final/2, 30.11.2012.
[3]               “Towards a genuine economic and monetary union”,
Report by President of the European Council, Herman Van Rompuy EUCO 120/12,
26.06.2012.
[4]               COM(2012) 511.
[5]               Proposal for a Directive of the European Parliament
and of the Council establishing a framework for the
recovery and resolution of credit institutions and investment firms and
amending Council Directives 77/91/EEC and 82/891/EC, Directives 2001/24/EC,
2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC and 2011/35/EC and Regulation
(EU) No 1093/2010 COM (2012) 280, 06.6.2012. 
[6]               Capital Requirements Regulation and Directive             
(CRR/CRDIV)http://ec.europa.eu/internal_market/bank/regcapital/index_en.htm    
[7]               Depending on the final outcome of the negotiations
between the Parliament and Council, the full entry into force of bail-in could
be subject to a further transition, potentially until 2018 as proposed by the
Commission.
[8]               See Council Conclusions on Enhancing the Arrangements
for Financial Stability in the EU of 9 October 2007
http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ecofin/96351.pdf
[9]               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. 
[10]             Directive 2013/36/EU of 26 June 2013 of the European
Parliament and of the Council on access to the activity of credit institutions
and the prudential supervision of credit institutions and investment firms,
amending Directive 2002/87/EC and repealing Directives 2006/48/EC and
2006/49/EC, OJ L 176, 27.6.2013, p. 338.
[11]             OJ C, , p. .
[12]             OJ C, , p. .
[13]             Directive of the European Parliament and of the Council
establishing a framework for the recovery and resolution of credit institutions
and investment firms and amending Council Directives 77/91/EEC and 82/891/EC,
Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC and
2011/35/EC and Regulation (EU) No 1093/2010. OJ C, , p. .
[14]             Council Regulation (EU) No …/… of ….. conferring
specific tasks on the European Central Bank concerning policies relating to the
prudential supervision of credit institutions. 
[15]             Directive 94/19/EC of the European Parliament and of
the Council of 30 May 1994 on deposit-guarantee schemes. OJ L 135, 31.5.1994, p. 5–14.
[16]             Regulation (EU) No 575/2013 of the European Parliament
and of the Council of 26 June 2013 on prudential requirements for credit
institutions and investment firms and amending Regulation (EU) No 648/2012, OJ
L 176, 27.6.2013, p.1.
[17]             Directive 2013/36/EU of 26 June 2013 of the European
Parliament and of the Council on access to the activity of credit institutions
and the prudential supervision of credit institutions and investment firms,
amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC,
OJ L 176, 27.6.2013, p. 338. 
[18]             Directive 94/18/EC of the European Parliament and of
the Council of 30 May 1994 amending Directive 80/390/EEC coordinating the
requirements for the drawing up, scrutiny and distribution of the listing
particulars to be published for the admission of securities to official
stock-exchange listing, with regard to the obligation to publish listing
particulars. OJ L 135, 31.5.1994, p. 1.
[19]             Directive 2013/36/EU of 26 June 2013 of the European
Parliament and of the Council on access to the activity of credit institutions
and the prudential supervision of credit institutions and investment firms,
amending Directive 2002/87/EC and repealing Directives 2006/48/EC and
2006/49/EC, OJ L 176, 27.6.2013, p. 338.
[20]             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.
[21]             Directive 97/9/EC of the European Parliament and of the
Council of 3 March 1997 on investor-compensation schemes. OJ L 084, 26.03.1997,
p.22.
[22]             Council Directive 2001/23/EC of 12 March 2001 on the
approximation of the laws of the Member States relating to the safeguarding of
employees' rights in the event of transfers of undertakings, businesses or
parts of undertakings or businesses. OJL 82, 22.3.2001, p. 16.
[23]             Directive 98/26/EC of the European Parliament and of
the Council of 19 May 1998 on settlement finality in payment and securities
settlement systems. OJ L 166, 11.6.1998, p. 45.
[24]             Directive 2009/65/EC of the European parliament and of
the Council of 13 July 2009 on the coordination of laws, regulations and
administrative provisions relating to undertakings for collective investment in
transferable securities (UCITS), OJ L302, 17.11.2009, p.32.
[25]                    
[26]             OJ L 298, 26.10.2012. p. 1.
[27]             OJ 17, 6.10.1958, p. 385.
[28]             Regulation (EC) N0 1049/2001 of the European Parliament
and of the Council of 30 May 2001 regarding public
access to European Parliament, Council and Commission documents, OJ L145, 31.5.2001, p. 43.
[29]             Regulation (EC) No 45/2001 of the European Parliament
and of the Council of 18 December 2000 on the
protection of individuals with regard to the processing of personal data by the
Community institutions and bodies and on the free movement of such data, OJ L 8, 12.1.2001, p. 1.
[30]             Directive 95/46/EC of the European Parliament and of
the Council of 24 October 1995 on the protection of individuals with regard to
the processing of personal data and on the free movement of such data, OJ L
281, 23.11.1995, p. 31.
[31]             ABM: activity-based management
– ABB: activity-based budgeting.
[32]             As referred to in
Article 54(2)(a) or (b) of the Financial Regulation.
[33]             Details of management modes and
references to the Financial Regulation may be found on the BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html
[34]             Year N is the year in which
implementation of the proposal/initiative starts.
[35]             Technical and/or administrative
assistance and expenditure in support of the implementation of EU programmes
and/or actions (former "BA" lines), indirect research, direct
research.
[36]             Outputs are products and
services to be supplied (e.g.: number of student exchanges financed, number of
km of roads built, etc.).
[37]             As described in point 1.4.2.
‘Specific objective(s)…’ 
[38]             Year N is the year in which implementation of the
proposal/initiative starts.
[39]             Technical and/or administrative assistance and
expenditure in support of the implementation of EU programmes and/or actions
(former "BA" lines), indirect research, direct research.
[40]             CA= Contract Staff; LA = Local
Staff; SNE= Seconded National Expert; INT = agency staff; JED= Junior Experts
in Delegations).
[41]             Sub-ceiling for external staff
covered by operational appropriations (former "BA" lines).
[42]             See points 19 and 24 of the
Interinstitutional Agreement (for the period 2007-2013).
[43]             As regards traditional own resources (customs duties,
sugar levies), the amounts indicated must be net amounts, i.e. gross amounts
after deduction of 25% for collection costs.