CELEX: 52012PC0280
Language: en
Date: 2012-06-06
Title: 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

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		52012PC0280
		
			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/2012/0280 final - 2012/0150 (COD) */
			
				
		
		
			
			   	EXPLANATORY MEMORANDUM
1.           CONTEXT OF THE PROPOSAL
The financial crisis severely tested the
ability of national and Union-level authorities to manage problems in banking
institutions. Meanwhile, financial markets in the Union have become integrated
to such an extent that domestic shocks in one Member State may be rapidly
transmitted to other Member States.
Against this background, the Commission
issued a Communication[1] in October 2010 setting out plans for a Union framework for crisis
management in the financial sector. The framework would equip authorities with
common and effective tools and powers to tackle bank crises pre-emptively,
safeguarding financial stability and minimising taxpayer exposure to losses in
insolvency.
At international level, G20-Leaders have
called for a “review of resolution regimes and bankruptcy laws in light of
recent experience to ensure that they permit an orderly wind-down of large
complex cross-border institutions.”[2]
In Cannes in November 2011, they endorsed the Financial Stability Board (FSB)
"Key Attributes of Effective Resolution Regimes for Financial
Institutions" ('Key Attributes")[3].
These set out the core elements that the FSB considers to be necessary for an
effective resolution regime. Their implementation should allow authorities to
resolve financial institutions in an orderly manner without taxpayer exposure
to loss from solvency support, while maintaining continuity of their vital
economic functions. In June 2012, the G20 is set to start work on evaluating
progress in implementing these provisions in the different jurisdictions. 
In June 2010, the European Parliament
adopted an own-initiative report on recommendations on cross-border crisis
management in the banking sector[4].
It stressed the need for a Union-wide framework to manage banks in financial
distress and recommended moving toward greater integration and coherence in the
resolution requirements and arrangements applicable to cross-border
institutions. In December 2010, the Council (ECOFIN) adopted conclusions[5] calling for a Union framework
for crisis prevention, management and resolution. The conclusions stress that
the framework should apply in relation to banks of all sizes, improve
cross-border cooperation and consist of three pillars (preparatory and preventative
measures, early intervention, and resolution tools and powers). These should
"aim at preserving financial stability by protecting public and market
confidence; putting prevention and preparation first; providing credible
resolution tools; enabling fast and decisive action; reducing moral hazard and
minimising to the fullest possible extent the overall costs to public funds, by
ensuring fair burden sharing among the financial institutions' stakeholders;
contributing to a smooth resolution of cross border groups; ensuring legal
certainty; and, limiting distortions of competition."
In addition, a high-level group is due to
report to the Commission in the second half of 2012 on whether, on top of
on-going regulatory reforms, structural reforms of Union banks would strengthen
financial stability and improve efficiency and consumer protection[6]. The group's proposals will be
assessed separately upon completion of the work.
Finally, on 30 May 2012 the Commission
indicated that it will initiate a process to "map out the main steps
towards full economic and monetary union (including), among other things,
moving towards a banking union including an integrated financial supervision
and a single deposit guarantee scheme"[7].
2.           RESULTS OF CONSULTATIONS WITH THE
INTERESTED PARTIES AND IMPACT ASSESSMENTS
In the period between 2008 and 2012 the
Commission services organised a number of consultations and discussions with
experts and key stakeholders concerning bank recovery
and resolution. As the last
public consultation before the adoption of the proposal, a Commission Staff Working Paper describing in detail the potential policy
options under consideration by the Commission services was published for
consultation in January 2011. The consultation ended on the 3rd of
March 2011. On one of the resolution tools, the so called bail-in or debt write
down tool, targeted discussions were organised with experts from Member States,
banking industry, academic world and legal firms in April 2012. The discussions
concerned the key parameters of the debt write-down tool, including in
particular the resolution triggers, the scope of bail-in, its potential minimum
level, resolution of groups as well as grandfathering. Documents
related to public consultations can be found on the website of the European
Commission.[8]

On this basis, the Commission has prepared
the attached legislative proposal. The Commission services have also prepared
an Impact Assessment (IA) for the proposal, which can be found on the website
of the European Commission.[9]
The comments by the Impact Assessment Board
(IAB) expressed in their first and second opinion in May and June 2011 have
been taken into account. In addition, the text of the IA has been updated
reflecting latest developments in international fora as well as incorporation
of results of the discussions on the bail-in tool that took place in April
2012. Concretely, the revised IA improves the presentation of the legal and
institutional context by describing the responsibilities of national
supervisors and resolution authorities and the relationships between the
proposal for bail-in and the planned CRD IV requirements. The text of the IA
better explains the content of options, in particular the one related to the
bail-in/debt-write down tool. Also the impacts of the bail-in tool on the costs
of funding for banks and non-financial firms (SMEs) have been added. A section
related to the coherence of the proposal with other regulatory proposals has
been completed. Finally, monitoring and evaluation arrangements were further
clarified by singling out the most relevant indicators to be monitored.
The IA concludes the following:
·                        
The proposed Union bank resolution framework
will achieve the objectives of enhancing financial stability, reducing moral
hazard, protecting depositors and critical banking services, saving public
money and protecting the internal market for financial institutions.
·                        
The framework is expected to have a positive
social impact: first, by reducing the probability of a systemic banking crisis
and avoiding losses in economic welfare that follow a banking crisis; and,
second, by minimising taxpayer exposure to losses from insolvency support to
institutions.
·                        
The costs of the framework derive from a
possible increase in funding costs for institutions due to the removal of the
implicit certainty of state support, and from the costs related to resolution
funds. Institutions might transmit those increased cost to customers or
shareholders by pushing rates on deposits lower, increasing lending rates and
banking fees or reducing returns on equity. However, competition might reduce
ability of institutions to pass on the costs in full. The potential benefits of
the framework in terms of economic welfare over the long term in terms of a
reduced likelihood of a systemic crisis are substantially higher than the
potential cost.
3.           general explanation: a recovery and
resolution framework
The need for an effective recovery and resolution framework
Banks and investment firms (hereinafter institutions) provide vital
services to citizens, businesses, and the economy at large (such as
deposit-taking, lending, and the operation of payment systems). They operate
largely based on trust, and can quickly become unviable if their customers and
counterparties lose confidence in their ability to meet their obligations. In
case of failures, banks should be wound down in accordance to the normal
insolvency procedures. However, the extent of interdependencies between
institutions creates the risk of a systemic crisis when problems in one bank
can cascade across the system as a whole. Because of this systemic risk and the
important economic function played by institutions, the normal insolvency
procedure may not be appropriate in some cases and the absence of effective
tools to manage institutions in crisis has too often required the use of public
funds to restore trust in even relatively small institutions so as to prevent a
domino effect of failing institutions from seriously damaging the real economy.
Accordingly, an effective policy framework is needed to manage bank
failures in an orderly way and to avoid contagion to other institutions. The
aim of such a policy framework would be to equip the relevant authorities with
common and effective tools and powers to address banking crises pre-emptively,
safeguarding financial stability and minimising taxpayers' exposure to losses.
Preparation and prevention, early intervention and resolution
To this end, the range of powers available to the relevant
authorities should consist of three elements: (i) preparatory steps and plans
to minimise the risks of potential problems (preparation and prevention[10]); (ii) in the event of
incipient problems, powers to arrest a bank's deteriorating situation at an
early stage so as to avoid insolvency (early intervention); and (iii) if
insolvency of an institution presents a concern as regards the general public
interest (defined in Articles 27 and 28), a clear means to reorganise or wind
down the bank in an orderly fashion while preserving its critical functions and
limiting to the maximum extent any exposure of taxpayers to losses in
insolvency (resolution). Together, these powers constitute an effective
framework for the recovery and, where appropriate, the resolution of
institutions. Since the risk posed by any individual bank to financial
stability cannot be fully ascertained in advance, these powers should be
available to the relevant authorities in relation to any bank, regardless of
its size or the scope of its activities.
Resolution - a special insolvency regime for institutions
In most countries, bank and non-bank companies in financial
difficulties are subject to normal insolvency proceedings. These proceedings
allow either for the reorganization of the company (which implies a reduction,
agreed with the creditors, of its debt burden) or its liquidation and
allocation of the losses to the creditors, or both. In all the cases creditors
and shareholders do not get paid in full. However, the experience from
different banking crises indicates that insolvency laws are not always apt to
deal efficiently with the failure of financial institutions insofar as they do
not appropriately consider the need to avoid disruptions to financial
stability, maintain essential services or protect depositors. In addition,
insolvency proceedings are lengthy and in the case of reorganization, they
require complex negotiations and agreements with creditors, with some potential
detriment for the debtors and the creditors in terms of delay, costs and
outcome. 
Resolution constitutes an alternative to normal insolvency
procedures and provides a means to restructure or wind down a bank that is
failing and whose failure would create concerns as regards the general public
interest (threaten financial stability, the continuity of a bank's critical
functions and/or the safety of deposits, client assets and public funds)[11]. Accordingly, resolution
should achieve, for institutions, similar results to those of normal insolvency
proceedings taking into account the Union State aid rules, in terms of allocation
of losses to shareholders and creditors, while safeguarding financial stability
and limiting taxpayer exposure to loss from solvency
support. In the process, it should also ensure legal
certainty, transparency and predictability regarding the treatment of
shareholders and bank creditors and preserve value which might otherwise be
destroyed in bankruptcy. In addition, by removing the implicit certainty of a
publicly-funded bail out for institutions, the option of resolution should
encourage uninsured creditors to better assess the risk associated with their
investments. Moreover, a design of the national financing arrangements for
resolution in line with State aid rules will ensure that the overall objectives
of the resolution framework can be met.
A balance between predictability for investors and discretion for
authorities
In order to safeguard existing property rights, a bank should enter
into resolution at a point very close to insolvency, i.e. when it is on the
verge of failure. However, the judgement on the point of entry into resolution
may depend on several variables and factors linked to prevailing market
conditions or idiosyncratic liquidity or solvency issues, implying the need for
a degree of discretion for the resolution authority. Likewise, the concrete
actions to be taken in resolution should not be pre-determined in relation to
any bank but should rather be taken on the basis of the concrete circumstances.
A Union framework with similar tools, principles and procedures is
needed to provide sufficient convergence in how national authorities implement
resolution. In designing this framework, a balance must be found between the
necessary discretion for supervisors to reflect the specificities of each particular
case and to ensure a level playing-field and to preserve the integrity of the
single market. The European Banking Authority (EBA) should be vested with a
clear role to issue guidelines and technical standards to ensure consistent
application of the resolution powers, to participate in resolution planning in
relation all cross-border institutions, and to carry out binding mediation
between national authorities in the event of disagreement on the application of
the framework.
Finally, successful resolution requires
sufficient funds, for example to issue guarantees or provide short-term loans
to help the critical parts of a resolved entity regain viability. These funds
should, as a matter of principle, be provided for by the banking sector in a
fair and proportionate manner and as far as possible (taking account of the
economic cost) contributed in advance. Taken together, these steps ensure that
regardless of the appropriate resolution action undertaken, its costs are
primarily borne by the institutions themselves and their owners and investors.
The internal market - Treatment of cross
border groups
Cross border groups are composed of
institutions established in different Member States. The resolution framework
recognises the existence of cross border groups in Europe as one of the key
drivers for the integration of the Union financial markets. The framework
establishes special rules for cross border groups covering preparation and
prevention Articles 7, 8, 11, 12 and 15), early intervention (Article 25) and
the resolution phase (Articles 80 to 83). It also establishes rules concerning
the transfer of assets between entities affiliated to a group in times of
financial distress (Articles 16 to 22).
The rules on groups aim at balancing the
interest of achieving, where necessary, an efficient resolution for the group
as a whole with the protection of financial stability in both the Member States
where the group operates and the Union. Efficient methods for the resolution of
cross border groups are the only way to achieve financial stability in the Union
and consequently improve the functioning of the Single market also in times of
crisis. In particular, and without disregarding the necessary safeguards for
the host member States, an efficient speedy resolution of a group that
minimises the loss of value for the group should be ensured by giving a
prominent role to the group level resolution authority.
Notwithstanding the prominent role given to
the group resolution authority, the interests of the host resolution
authorities will be sufficiently considered through: a) the establishment of
arrangements for cooperation between resolution authorities through the
creation of the colleges of resolution authorities; b) the recognition that the
financial stability in all Member States where the group operates has to be
considered when taking decisions relative to groups; c) the design of clear
decision making process that allow for all authorities to convey their views
whilst ensuring that a single decision is taken with regards to the resolution
of a group; and d) the establishment of mechanisms for the resolution of
conflicts between resolution authorities (EBA mediation).
The EBA[12] will
perform a binding mediation role as foreseen in Regulation N° 1093/2010 EBA
regulation, in particular Article 19. In this context, all the relevant rules
of that regulation apply, including articles 38 and 44 (1).
All those mechanisms should ensure that the
resolution of a group, or the provision of financial support between affiliated
institutions, is not detrimental to any parts of the groups and the financial
stability of the Member State where a subsidiary is located is not disregarded. 
4.           LEGAL ELEMENTS OF THE PROPOSAL
4.1.        Legal basis
The legal base for this proposal is Article
114 of the TFEU, which allows the adoption of measures for the approximation of
national provisions which have as their object the establishment and
functioning of the internal market.
The proposal harmonises national laws on
recovery and resolution of credit institutions and investment firms to the
extent necessary to ensure that Member States have the same tools and
procedures to address systemic failures. In this way, the harmonised framework
should foster financial stability within the Internal Market by ensuring a
minimum capacity for resolution of institutions in all Member States and by
facilitating cooperation between national authorities when dealing with the
failure of cross-border groups.
Article 114 of the TFEU is, therefore, the
appropriate legal base.
4.2.        Subsidiarity
Under the principle of subsidiarity set out
in Article 5.3 of the TEU, in areas which do not fall within its exclusive
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 Union level can ensure that
Member States use sufficiently compatible measures to deal with failing
institutions. Although the Union banking sector is highly integrated, systems
to deal with bank crises are nationally-based and differ significantly. Many
national legal systems do not currently confer the powers necessary for
authorities to wind down financial institutions in an orderly manner while
preserving those services essential for financial stability while minimising
taxpayers’ exposure to losses from solvency support. Such divergent national
legislation is ill-suited to dealing adequately with the cross-border dimension
of crises, complicating any arrangements for home-host cooperation..
Moreover, substantial differences in
national procedures for resolution could result in unacceptable risks to
financial stability and jeopardise the effective resolution of cross border
groups. As establishing adequate resolution arrangements at the Union-level
require a significant harmonisation of national practices and procedures, it is
appropriate that the Union should propose the necessary legislative action.
However, resolution is closely linked to non-harmonised areas of national law,
such as insolvency and property law. Therefore, a directive is the appropriate
legal instrument since transposition is necessary to ensure that the framework
is implemented in a way that achieves the intended effect, within the
specificities of relevant national law. 
4.3.        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 principle, a failed bank should be subject
to normal insolvency procedures like any other business. However, the banking
sector is different to most other business sectors insofar as it performs
critical functions in the economy and is particularly vulnerable to systemic
crises. Because of these features, the liquidation of a bank can have more
serious consequences than the exit of other businesses from the market. This
may justify recourse to special rules and procedures in the event of a banking
crisis. 
As the systemic importance of a bank failure
cannot be determined with full certainty in advance, the proposed crisis
management framework should apply in principle to all banking institutions,
irrespective of their size and complexity. If it is certain that the failure of
an institution of global size, market importance, and global interconnectedness
would cause significant disruption in the global financial system and adverse
economic consequences across a range of countries, it is also clear that the
simultaneous failure, in a widespread crisis, of many small institutions making
up a significant part of the banking sector in a country may have equally
devastating effects on the economy. The framework therefore ensures that
supervisors and resolution authorities have special rules and procedures at
their disposal for dealing efficiently with the failure or near-failure of any
bank in circumstances of systemic risk. However, the risk, size and
interconnectedness of a bank will be taken into account by national authorities
in the context of recovery and resolution plans and when using the different
tools at their disposal, making sure that the regime is applied in an
appropriate way.
The provisions are therefore proportionate
to what is necessary to achieve the objectives. Furthermore, limitations to the
right to property that the exercise of the powers proposed may entail must be
consistent with the Charter of Fundamental Rights as interpreted by the
European Court of Justice. It is for this reason that the point of entry into
resolution should be as close as possible to insolvency, and the use of the
resolution powers should be limited to the extent necessary in order to meet an
objective of general interest, namely preserving financial stability in the Union.
4.4.        Detailed explanation of
the proposal
4.4.1.     Subject matter and scope of
application (Article 1)
The proposal addresses crisis management
(preparation, recovery and resolution) in relation to all credit institutions and
certain investment firms. The scope of the proposal is identical with that of
the Capital Requirements Directive[13]
(CRD), which harmonises prudential requirements for institutions including
financial institutions included in a banking group, and investment firms.
Investment firms need to be part of the framework since, as shown by the
failure of Lehman Brothers, their failure can have serious systemic
consequences. . In addition, the powers of resolution authorities should also
apply to holding companies where one or more subsidiary credit institution or
investment firm meet the conditions for resolution and the application of the
resolution tools and powers in relation to the parent entity is necessary for
the resolution of one or more of its subsidiaries or for the resolution of the
group as a whole.
4.4.2.     Resolution authorities
(Article 3)
The proposal requires Member States to
confer resolution powers on public administrative authorities to ensure that
the objectives of the framework can be delivered in a timely manner. The
proposal does not specify the particular authority that should be appointed as
resolution authority, since this is not necessary to ensure effective resolution
and would interfere with the constitutional and administrative orders of Member
States. It is therefore open to Member States to designate as their resolution
authorities, for example, national central banks, financial supervisors,
deposit guarantee schemes, ministries of finance, or special authorities.
Resolution authorities will need to have
adequate expertise and resources to manage bank resolutions at national and
cross border level. Given the likelihood of conflicts of interest, functional
separation of resolution activities from the other activities of any designated
authority is mandated. 
4.4.3.     Recovery and resolution
plans (Articles 5 to 13)
Early action based on recovery plans can
prevent the escalation of problems and reduce the risk of a bank failure.
Institutions will be required to draw up recovery plans setting out
arrangements and measures to enable it to take early action to restore its long
term viability in the event of a material deterioration of its financial
situation. Groups will be required to develop plans at both group level and for
the individual institutions within the group. Supervisors will assess and
approve recovery plans. 
Resolution plans will allow an institution
to be resolved minimising taxpayer exposure to loss from solvency support while
protecting vital economic functions. A resolution plan, prepared by the
resolution authorities in cooperation with supervisors in normal times, will
set out options for resolving the institution in a range of scenarios,
including systemic crisis. Such plans should include details on the application
of resolution tools and ways to ensure the continuity of critical functions.
Group resolution plans will include a plan for the group as well as plans for
each institution within the group.
4.4.4.     Powers to address or remove
impediments to resolvability (Articles 14 to 16)
Based on the resolution plan, the resolution
authorities shall assess whether an institution or group is resolvable. If
resolution authorities identify significant impediments to the resolvability of
an institution or group, they may require the institution or groups to take
measures in order to facilitate its resolvability. 
Such measures might include inter alia:
reducing complexity through changes to legal or operational structures in order
to ensure that critical functions can be legally and economically separated
from other functions; drawing up service agreements to cover the provision of
critical functions; limiting maximum individual and aggregate exposures;
imposing reporting requirements; limiting or ceasing existing or proposed
activities; restricting or preventing the development of new business lines or
products; and issuing additional convertible capital instruments.
Assessment of resolvability for groups
rests upon coordination, consultation and joint assessment of group resolution
authorities with the resolution authorities of the subsidiaries, other relevant
competent authorities and the EBA.
To ensure that the assessment of
resolvability and the use of preventative powers by relevant authorities are
uniformly applied across the Member States, the EBA will play an important
role. Concretely, it will need to draft technical standards defining parameters
needed for the assessment of resolution plans' systemic impact and it will need
to draft technical standards specifying issues to be examined in order to
assess the resolvability of an institution or group.
4.4.5.     Intra-group financial
support (Articles 17-23)
The proposal aims to overcome current legal
restrictions to the provision of financial support from one entity within a
group to another. Institutions that operate in a group structure will be able
to enter into agreements to provide financial support (in the form of a loan,
the provision of guarantees, or the provision of assets for use as collateral
in transaction) to other entities within the group that experience financial
difficulties. Such early financial help can address developing financial
problems within individual group members. The agreement may be submitted for
approval in advance by the shareholders' meetings of all participating entities
in accordance with national law and will authorise the management bodies to
provide financial support if needed within the terms of the agreement. On this
basis, legal certainty will increase as it will be clear when and how such
financial support can be provided. The agreements are voluntary, allowing
banking groups to assess whether such arrangements would be in the group
interest (a group might be more or less integrated and pursue more or less
strongly a common strategy) and to identify the companies that should be party
to the agreement (it may be appropriate to exclude companies that pursue
riskier activities).
As a safeguard, the supervisor of the
transferor will have the power to prohibit or restrict financial support
pursuant to the agreement when that transfer threatens the liquidity or
solvency of the transferor or financial stability. 
4.4.6.     Early intervention –
Special management (Articles 23-26)
The proposal expands the powers of
supervisors to intervene at an early stage in cases where the financial
situation or solvency of an institution is deteriorating. The powers
contemplated in the proposal supplement those conferred on supervisors under
Article 136 of the CRD. These powers do not derogate any rights or procedural
obligations established in accordance with Company Law.
Powers of early intervention include the
power to request the institution to implement arrangements and measures set out
in the recovery plan; draw up an action program and a timetable for its
implementation; request the management to convene, or convene directly, a
shareholders' meeting, propose the agenda and the adoption of certain
decisions; and request the institution to draw up a plan for restructuring of
debt with its creditors. 
In addition, the supevisor would have the
power to appoint a special manager for a limited period, when the solvency of
an institution is deemed to be sufficiently at risk. The primary duty of a
special manager is to restore the financial situation of
the institution and the sound and prudent management of its business. A special manager will replace the management of the institution and
have all its powers without prejudice to ordinary shareholder rights. The power to appoint a special manager will serve as an element of discipline for the management and shareholders and as a
means to foster private sector solutions to problems which, if not addressed,
could lead to the failure of an institution.
4.4.7.     Resolution conditions
(Article 27)
The proposal
establishes common parameter for triggering the application of resolution
tools. The authorities shall be able to take an action when an institution is
insolvent or very close to insolvency to the extent that if no action is taken
the institution will be insolvent in the near future. 
At the same
time, it is necessary to ensure that intrusive measures are triggered only when
interference with the rights of stakeholders is justified. Therefore resolution
measures should be implemented only if the institution is failing or likely to
fail, and there is no other solution that would restore the institution within
an appropriate timeframe. In addition, the intervention by means of resolution
measures must be justified by reasons of public interest as defined under
Article 28.
4.4.8.     General principles – In
particular the no creditor worse off (article 29) 
The framework sets up a number of general
principles that will have to be respected by the resolution authorities. These
principles refer, inter alia, to the allocation of losses and the treatment of
shareholders and creditors and to the consequences that the use of the tools
could have on the management of the institution.
The framework establishes that the losses,
once identified through a valuation process (article 30) are to be allocated
between the shareholders and the creditors of the Institution in accordance
with the hierarchy of claims established by each national insolvency regime.
However, and as it has been pointed out above (see heading 3) normal insolvency
regimes do not sufficiently take into account financial stability or other
public interest concerns. Therefore, the resolution framework establishes
certain principles for the allocation of losses that would have to be respected
irrespective of what each national insolvency regime establishes. These
principles are: a) that the losses should first be allocated in full to the
shareholders and then to the creditors and b) that creditors of the same class
might be treated differently if it is justified by reasons of public interest
and in particular in order to underpin financial stability. These principles
apply to all the resolution tools. In addition, and with regards to the bail-in
tool, the framework establishes a more detailed hierarchy of claims (article 43).
This more detailed hierarchy will complement and where necessary supersede the
one established in each national insolvency law.
In those cases where the creditors receive
less in economic terms, than if the institution had been liquidated under
normal insolvency proceedings, the authorities have to ensure that they receive
the difference. This compensation, if any, shall be paid by the resolution
fund. The principle that losses have to be allocated to first to shareholders
and then to creditors together with the fact that resolution action has to be
taken prior to availing any extraordinary public financial support is, in
principle instrumental to ensuring the effectiveness of the objective of
minimising taxpayers’ exposure to losses (article 29).
4.4.9.     Valuation (Article 30) 
The implementation of the resolution tools
and powers is based on an assessment of the real value of the assets and
liabilities of the institution that is about to fail. To this end, the
framework incorporates a valuation based on the principle of 'market value'.
This will ensure that the losses are recognised at the moment when the
institution enters into resolution. 
The valuation should be done by an
independent expert, unless there are reasons of urgency, in which case the
resolution authorities would proceed with a provisional valuation that will,
afterwards, be complemented by a definitive valuation with the involvement of
an independent expert. The resolution authorities have been granted the
necessary powers to modify their resolution actions[14] in accordance with possible
discrepancies, if any, between the provisional and the definitive valuation. 
4.4.10.   Resolution tools and powers
(Articles 31-64)
When the
trigger conditions for resolution are satisfied, resolution authorities will
have the power to apply the following resolution tools:
(a)         
sale of business;
(b)         
bridge institution;
(c)         
asset separation;
(d)         
bail-in.
In order to apply those tools, resolution
authorities will have powers to take control of an institution that has failed
or is about to fail, take over the role of shareholders and managers, transfer
assets and liabilities and enforce contracts.
The resolution tools can be applied singly
or in conjunction. All entail a degree of restructuring of the bank. Such
restructuring is not a feature accompanying the bail-in only. The asset
separation tool has to be applied in all circumstances in conjunction with the
other tools (Article 32). When applicable, the use of any of the resolution
tools will need to be consistent with the Union State aid framework. In this
respect, any recourse to public support and/or the use of the resolution funds
to assist in the resolution of failing institutions will have to be notified to
the Commission and will be assessed in accordance with the relevant State aid
provisions in order to establish its compatibility with the internal market.
The proposal set out a minimum set of
resolution tools that all Member States should adopt. However, national
authorities will be able to retain, in addition, specific national tools and
powers to deal will failing institutions if they are compatible with the
principles and objectives of the Union resolution framework and the Treaty on
the functioning of the European Union and if they do not pose obstacles to
effective group resolution[15].
National resolution authorities would only be able to use those national tools
and powers if they justify that none of the tools (singly or in conjunction)
included in the Union framework allows them to take effective resolution
action.
The sale of business tool enables
resolution authorities to effect a sale of the institution or the whole or part
of its business on commercial terms, without requiring the consent of the
shareholders or complying with procedural requirements that would otherwise
apply. As far as possible in the circumstances, the resolution authorities
should market the institution or the parts of its
business that are to be sold.
The bridge
institution tool enables resolution authorities to transfer all or part of the
business of an institution to a publicly controlled entity. The bridge
institution must be licensed in accordance with the Capital Requirements
Directive and will be operated as a commercial concern within any limits
prescribed by the State aids framework. The operations of a bridge institution
are temporary, the aim being to sell the business to the private sector when
market conditions are appropriate.
The purpose of
the asset separation tool is to enable resolution authorities to transfer
impaired or problem assets to an asset management vehicle to allow them to be
managed and worked out over time. Assets should be transferred at market or long
term economic value (in accordance with Article 30) so that any losses are
recognised at the moment when the transfer takes place. In order to minimise
competitive distortions and risks of moral hazard, this tool should only be
used in conjunction with another resolution tool.
The bail-in
tool (articles 37 to 51)
The bail-in
tool will give resolution authorities the power to write down the claims of
unsecured creditors of a failing institution and to convert debt claims to
equity. The tool can be used to recapitalise an institution that is failing or
about to fail, allowing authorities to restructure it through the resolution
process and restore its viability after reorganisation and restructuring. This
would allow authorities greater flexibility in their response to the failure of
large, complex financial institutions. It would be accompanied by removal of
management responsible for the problems of the institution, and the
implementation of a business restoration plan. 
The resolution
authorities should have the power to bail-in all the liabilities of the
institution. There are, however some liabilities that would be excluded ex-ante
(such as secured liabilities, covered deposits and liabilities with a residual
maturity of less than one month). Exceptionally and where there is a justified
necessity to ensure the critical operations of the institution and its core
business lines or financial stability (Article 38) the resolution authority
could exclude derivatives' liabilities. Harmonised application of the possible
exclusion at Union level would be ensured by Commission delegated acts.
In order to
apply the bail in tool it is necessary that the resolution authorities can
ensure that institutions would have a sufficient amount of liabilities in their
balance sheet that could be subject to the bail in powers. The minimum amount
will be proportionate and adapted for each category of institutions on the
basis of their risk or the composition of its sources of funding (Article 39).
Harmonised application of the minimum requirement at Union level would be
ensured by Commission delegated acts. As an example, and on the basis of
evidence from the recent financial crisis and of performed model simulations,
an appropriate percentage of total liabilities which could be subject to bail
in could be equal to 10% of total liabilities (excluding regulatory capital).
As explained in
4.4.8, Articles 43 and 44 establish a detailed hierarchy that complements and
were necessary supersedes the one established in each national insolvency law.
In principle, Shareholders claims should be exhausted before those of
subordinated creditors. It is only when those claims are exhausted that the
resolution authorities can impose losses on senior claims (Articles 43 and 44).
However, there might be circumstances when the resolution authorities could
interfere on creditors’ rights without having exhausted shareholders’ claims.
These circumstances are specific to the bail in tool and could occur when an
institution under resolution might have some residual capital (according to the
conditions for resolution an institution would be failing or likely to fail if
it has depleted all or substantially all of its capital). In this case, the
resolution authorities could, after having allocated the losses to the
shareholders and reduced or cancelled most of the shareholders’ claims, convert
into capital subordinated and, if necessary, senior liabilities. This
conversion will have to take place in a manner that seriously dilutes the
remaining shareholders’ claims.
4.4.11.   Restrictions on termination
and safeguards for counterparties (Articles 68-73 and 77)
For the
effective application of resolution tools, it is necessary to allow resolution
authorities to impose a temporary stay on the exercise by creditors and
counterparties of rights to enforce claims and close out, accelerate or
otherwise terminate contracts against a failing institution. Such a temporary
suspension, which would last no longer than until 5pm on the next business day,
gives authorities a period of time to identify and value those contracts that
need to be transferred to a solvent third party, without the risk that
financial contracts would be changing in value and scope as counterparties
exercised termination rights. Termination rights for those counterparties
remaining with the failed institution would resume at the end of the stay.
However, transfer to a performing third party should not qualify as an event of
default that triggers termination rights.
These necessary
restrictions on contractual rights are balanced by safeguards for
counterparties to prevent authorities from splitting linked liabilities, rights
and contracts: under a partial property transfer, linked arrangements must
either all be transferred, or not at all. Arrangements include close out
netting agreements, set-off arrangements, title transfer financial collateral
arrangements, security arrangements and structured finance arrangements.
4.4.12.   Restriction on judicial
proceedings (Articles 78 and 77)
In accordance with Article 47 of the Charter of Fundamental Rights,
the concerned parties have a right to due process and to having an effective
remedy against the measures affecting them. Therefore, the decisions taken by
the resolution authorities should be subject to judicial review. However, in
order to protect third parties who have bought assets, rights and liabilities
of the institution under resolution by virtue of the exercise of the resolution
powers by the authorities and to ensure the stability of the financial markets,
the judicial review should not affect any administrative act and/or transaction
concluded on the basis of the annulled decision. Remedies for a wrongful
decision should therefore be limited to the award of compensation for the
damages suffered by the affected persons.
Furthermore, it is necessary to prevent the
opening or pursuit of other legal actions in relation to a bank that is under
resolution. To this effect, the framework provides that, before the national
judge opens the insolvency proceedings in relation to an institution, it
notifies the resolution authority of any application;
the resolution authority has then the right, within a period of 14 days form
the notification, to decide to take a resolution action with regard to the
institution concerned. 
4.4.13.   Cross border resolution
(Articles 80-83)
The recovery and resolution framework takes
into account the cross border nature of some banking groups, with an objective
to create a comprehensive and integrated framework for bank recovery and
resolution in the Union. 
Accordingly, recovery and resolution plans
need to be prepared agreed and implemented for the group as a whole while
taking into account the particularities of each group's structure and the
division between the responsibilities of host and home national authorities.
This will be done through measures that will require enhanced cooperation
between national authorities and creation of incentives for applying a group
approach in all phases of preparation, recovery and resolution. 
Resolution colleges will be established
with clearly designated leadership and with the participation of the European
Banking Authority (EBA). The EBA will facilitate cooperation of authorities and
mediate if necessary. The objective of the colleges is to coordinate
preparatory and resolution measures among national authorities to ensure
optimal solutions at Union level.
4.4.14.   Relations with third countries
(Articles 84-89)
Because many Union institutions and banking
groups are active in third countries, an effective framework for resolution
needs to provide for cooperation with third country authorities. The proposal
provides Union authorities with the necessary powers to support foreign
resolution actions of a failed foreign bank by giving effect to transfers of
its assets and liabilities that are located in or governed by the law of their
jurisdiction. However, such support would only be provided if the foreign
action ensured fair and equal treatment for local depositors and creditors and
did not jeopardise financial stability in the Member State. Union resolution
authorities should also have the power to apply resolution tools to national
branches of third country institutions where separate resolution is necessary
for reasons of financial stability or the protection of local depositors. The
proposal provides that support for foreign resolution actions will be given
where resolution authorities have a cooperation agreement with the foreign
resolution authority. Such agreements should be a means to ensure effective
planning, decision-making and coordination in respect of international groups. 
EBA should develop and enter into framework
administrative arrangements with authorities of third countries in accordance
with Article 33 of Regulation No 1093/2010 and national authorities should
conclude bilateral arrangements that are as far as possible in line with the EBA
framework arrangements. 
4.4.15.   Resolution funding (Articles
90-99)
Resolution allows a better burden sharing of
the resolution costs by the shareholders and creditors in the process of
resolution when insolvency procedures are deemed inappropriate in light of
possible risks to financial stability. However, this might not always be
sufficient and might have to be supplemented by additional funding in order,
for example, to provide liquidity to a bridge bank. Based on past experience,
it is necessary to establish funding arrangements financed by institutions
themselves in order to minimize taxpayer's exposure to losses from solvency
support. Articles 90 to 99 lay down the necessary provisions to that purpose.
Article 89 provides for the setting up of
financing arrangements in each Member State. The purposes for which they may be
used are listed under article 89, paragraph 2 and range from guarantees to
loans or contributions. Losses are primarily borne by shareholders and
creditors, but other financing arrangements cannot be excluded in principle.
Article 90 lays down the rules on the
contributions to the financing arrangements, and involves a mix of ex ante
contributions, supplemented by ex post contributions and, where indispensable,
borrowing facilities from financial institutions or the central bank. In order
to ensure that some funds are available at all times, and given the
pro-cyclicality associated with ex post funding, a minimum target fund level is
set, to be reached through ex ante contributions in a time span of 10 years.
Based on model-calculation, an optimal minimum target fund level is set at 1%
of covered deposits.
In order to enhance the resilience of
national financing arrangements, Article 97 provides for a right for national
arrangements to borrow from their counterparts in other Member States. In order
to reflect the distribution of competences among the various national
authorities in the resolution of groups, Article 98 lays down rules on the
respective contributions of national financing arrangements to the resolution
of groups. This contribution will be based on the one previously agreed in the
context of the group resolution plans. National financing arrangements,
together with borrowing mechanisms and the mutualisation of national
arrangements in the case of the resolution of cross border groups (Article 98)
make up a European system of financing arrangements.
Article 99 deals with the role of Deposit
Guarantee Schemes (DGS) in the resolution framework. DGS may be called to
contribute to resolution in two manners.
First, deposit guarantee schemes must
contribute for the purpose of ensuring continuous access to covered deposits.
Deposit Guarantee Schemes are currently established in all Member States in
accordance with Directive 94/19/EC. They compensate retail depositors up to EUR100,000
in respect of unavailable deposits, before being subrogated to them in
liquidation proceedings. By contrast, resolution avoids the unavailability of
covered deposits, which is preferable from the depositor's point of view. It is
therefore desirable that the DGS contributes for an amount equivalent to the
losses that it would have had to bear in normal insolvency proceedings, as
reflected in paragraph 1 of Article 99. In order to provide for sufficient
funding, the ranking of deposit guarantee schemes in the hierarchy of claims is
introduced, with DGS ranking pari passu with unsecured non-preferred claims.
The DGS contribution must be made in cash in order to absorb the losses
pertaining to covered deposits.
Secondly, while Member States must at least
use DGS for the purpose of providing cash to ensure continuous access to
covered deposits, they retain discretion as to how to fund resolution: they may
decide to create financing arrangements separate from the DGS, or use their DGS
also as financing arrangements under Article 91. Indeed, there are synergies
between deposit guarantee schemes and resolution. When a resolution framework
that limits contagion is in place, it reduces the number of bank failures, and
therefore the likeliness of DGS pay-outs. The proposal therefore allows Member
States to use DGS for resolution funding in order to reap economies of scale.
Where the two arrangements are separate, the DGS is liable for the protection
of covered depositors to the extent and in the conditions laid down in Article 99,
paragraphs 1 to 4, while supplementary funding is provided by separate
financing arrangements established under Article 91. By contrast, where they
opt for a single financing arrangement, it will cover both the losses affecting
covered deposits, and other purposes under Article 92. In that case, the DGS
has to comply with all the conditions on contributions, borrowing and
mutualisation laid down under Articles 93 to 98.
In any case, if following a contribution by
the DGS, the institution under resolution fails at a later stage and the DGS
does not have sufficient funds to repay depositors, the DGS must have
arrangements in place in order to raise the corresponding amounts immediately
from its members.
State aid is likely to be present in the
intervention of the resolution funds irrespective of the type of national
financial arrangements (i.e. a resolution fund separate from the Deposit
Guarantee Scheme or using the Deposit Guarantee Scheme as a resolution fund). 
4.4.16.   Compliance with Articles 290
and 291 TFEU
On 23 September 2009, the Commission
adopted proposals for Regulations establishing EBA, EIOPA, and ESMA[16]. In this respect the
Commission wishes to recall the Statements in relation to Articles 290 and 291
TFEU it made at the adoption of the Regulations establishing the European
Supervisory Authorities according to which: "As regards the process for
the adoption of regulatory standards, the Commission emphasises the unique
character of the financial services sector, following from the Lamfalussy
structure and explicitly recognised in Declaration 39 to the TFEU. However, the
Commission has serious doubts whether the restrictions on its role when
adopting delegated acts and implementing measures are in line with Articles 290
and 291 TFEU."
4.4.17.   Changes to the Winding Up
Directive, Company Law Directives and EBA Regulation (Articles 104 - 111)
Directive 2001/24/EC provides for the mutual recognition
and enforcement of reorganization or winding up measures in relation to credit
institutions that have branches in other Member States. The Directive seeks to ensure that a credit institution and its branches
in other Member States are reorganised or wound up according to the principles
of unity and universality ensuring that there is only one set of insolvency
proceedings in which the credit institution is treated as one entity. Unity and
universality of proceedings ensure the equal treatment of creditors
irrespective of their nationality, place of residence or domicile. In order to
ensure the equal treatment of creditors also in resolution processes, Directive
2001/24/EC is amended to extend its scope to investment firms and to the use of
the resolution tools to any entity covered by the resolution regime.
The Union Company
Law Directives contain rules for the protection of shareholders and creditors.
Some of these rules may hinder rapid action by resolution authorities.
The Second
Company Law Directive requires that any increase in capital in a public limited
liability company be agreed by the general meeting, while Directive 2007/36
(the Shareholders' Rights Directive) requires a 21 day convocation period for
that meeting. Restoring the financial situation of a credit institution rapidly
by means of capital increase is therefore not possible. The proposal therefore
amends the Shareholders' Rights Directive to allow the general meeting to
decide in advance that a shortened convocation period will apply for a general
meeting to decide on an increase of capital in emergency situations. Such authorisation
will be part of the recovery plan. This will allow rapid action while retaining
shareholders' decision-making powers.
Moreover,
Company Law Directives require that increase and decrease of capital, mergers
and divisions are subject to shareholders' agreement, and pre-emption rights
apply whenever the capital is increased by consideration in cash. In addition,
the Takeover Bids Directive requires mandatory bids when any person – including
the State - acquires shares in a listed company above the control threshold
(usually 30-50%). To address these obstacles, the proposal allows Member States
to derogate from those provisions that require consent from creditors or
shareholders or otherwise hinder the effective and rapid resolution.
In order to
ensure that the authorities responsible for resolution are represented in the European
System of Financial Supervision established by Regulation (EU), No 1093/2010
and to ensure that EBA has the expertise necessary to carry out the tasks
provided for in this directive, Regulation (EU) No 1093/2010 should be amended
in order to include national resolution authorities as defined in this Directive
in the concept of competent authorities established by that Regulation.
4.4.18.   Entry into force
The Directive will enter into force on the
twentieth day following its publication in the OJ.
In line with common practice, the
transposition deadline of the Directive is set at 18 months, i.e. 31 December
2014.
The provisions on the bail-in tool are
subject to a longer transposition period and should be applied as from 1
January 2018. That date takes into account the observed maturity cycles of
existing debt, the need to avoid deleveraging and the need for institutions to
implement new capital requirements by 2018.
In accordance with the Joint Political
Declaration of Member States and the Commission of 28 September 2011 on
explanatory documents, Member States should accompany the notification of the
implementing measures with correlation tables. This is justified in view of the
complexity of the Directive, which covers different subjects and is likely to
require a plurality of implementing measures and in view of the fact some
Member States have already adopted legislations partially implementing this
Directive.
5.           BUDGETARY IMPLICATION
The above policy options will have implications for the
budget of the Union.
The present proposal would require EBA to (i)
develop around 23 technical standards and 5 guidelines (ii) take part in
resolution colleges, make decisions in case of disagreement and exercise
binding mediation and (iii) provide for recognition of
third country resolution proceedings according to Article 85 and conclude
non-binding framework cooperation arrangements with third countries according
to Article 88. The delivery of technical standards is
due 12 months after the entry into force of the Directive which is estimated to
be between June and December 2013. The proposal of the Commission includes
long-term tasks for EBA that will require the establishment of 5 additional posts
(temporary agents) as from 2014. In addition, 11 seconded national experts
"SNE" are foreseen to carry out temporary tasks limited to 2014 and
2015 years.
2012/0150 (COD)
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
(Text with EEA relevance)
THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Article 114 thereof,
Having regard to the proposal from the
European Commission,[17]
After transmission of the draft legislative
act to the national Parliaments,
Having regard to the opinion of the
European Economic and Social Committee,[18]
Having regard to the opinion of the
European Central Bank,[19]
Acting in accordance with the ordinary
legislative procedure,
Whereas:
(1)       The financial crisis that
started in 2008 has shown that there is a significant lack of adequate tools at
Union level to effectively deal with unsound or failing credit institutions.
Such tools are, in particular, needed to prevent insolvency or, when insolvency
occurs, to minimize negative repercussions by preserving the systemically
important functions of the institution concerned. During the crisis, those
challenges were a major factor that forced Member States to save credit
institutions using public funds.
(2)       Union financial markets
are highly integrated and interconnected with many credit institutions
operating extensively beyond national borders. The failure of a cross-border
credit institution is likely to affect the stability of financial markets in
the different Member States in which it operates. The inability of Member
States to seize control of a failing credit institution and resolve it in a way
that effectively prevents broader systemic damage can undermine Member States'
mutual trust and the credibility of the internal market in the field of
financial services. The stability of financial markets is, therefore, an
essential condition for the establishment and functioning of the internal
market.
(3)       There is currently no harmonisation
of the procedures for resolving credit institutions at Union level. Some Member
States apply to credit institutions the same procedures that they apply to
other insolvent enterprises, which in certain cases have been adapted for
credit institutions. There are considerable substantial and procedural
differences between the laws, regulations and administrative provisions which
govern credit institutions' insolvency in the Member States. In addition, the
financial crisis has exposed that general corporate insolvency procedures may not
always be appropriate for credit institutions as they may not always ensure sufficient
speed of intervention, the continuation of the essential functions of credit
institutions and the preservation of financial stability.
(4)       A regime is, therefore, needed
to provide authorities with the tools to intervene sufficiently early and
quickly in an unsound or failing credit institution so as to ensure the
continuity of the credit institution's essential financial and economic
functions, while minimizing the impact of an institution's failure on the
financial system and ensuring that shareholders and creditors bear appropriate
losses. New powers should enable authorities to maintain uninterrupted access
to deposits and payment transactions, sell viable portions of the firm where appropriate,
and apportion losses in a manner that is fair and predictable. Those objectives
should help avoid destabilizing financial markets and minimize the costs for
taxpayers.
(5)       Some Member States have
already enacted legislative changes that introduce mechanisms to resolve
failing credit institutions; others have indicated their intention to introduce
such mechanisms if they are not adopted at Union level. National differences in
the conditions, powers and processes for the resolution of credit institutions
are likely to constitute barriers to the smooth operation of the internal
market and hinder cooperation between national authorities when dealing with
failing cross-border banking groups. This is particularly true where different
approaches mean that national authorities do not have the same level of control
or the same ability to resolve credit institutions. Those differences in
resolution regimes may also affect bank funding costs differently across Member
States and potentially create competitive distortions between banks. Effective
resolution regimes in all Member States are also necessary to ensure that
institutions cannot be restricted in the exercise of the single market rights
of establishment by the financial capacity of their home Member State to manage
their failure.
(6)       Those obstacles should be
eliminated and rules should be adopted in order to ensure that the internal
market provisions are not undermined. To that end, rules governing the
resolution of institutions should be made subject to common minimum
harmonisation rules.
(7)       Since the objectives of
the action to be taken, namely the harmonisation of the rules and processes for
the resolution of credit institutions, cannot be sufficiently achieved by the
Member States, and can therefore by reason of the effects of a failure of any
institution in the whole Union, be better achieved at Union level, the Union
may adopt measures, in accordance with the principle of subsidiarity as set out
in Article 5 of the Treaty on European Union. In accordance with the principle
of proportionality, as set out in that Article, this Directive does not go
beyond what is necessary in order to achieve those objectives.
(8)       In order to ensure
consistency with existing Union legislation in the area of financial services
as well as the greatest possible level of financial stability across the
spectrum of institutions, the resolution regime should not only apply to credit
institutions but also to investment firms subject to the prudential
requirements laid down by Directive 2006/49/EC of the European Parliament and
of the Council of 14 June 2006 on the capital adequacy of investment firms and
credit institutions[20]. The regime should also apply to financial holding companies, mixed
financial holding companies provided for in Directive 2002/87/EC of the European
Parliament and of the Council of 16 December 2002 on the supplementary
supervision of credit institutions, insurance undertakings and investment firms
in a financial conglomerate and amending Council Directives 73/239/EEC,
79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives
98/78/EC and 2000/12/EC of the European Parliament and of the Council[21],mixed-activity holding
companies and financial institutions, when the latter are subsidiaries of a
credit institution or an investment firm. The crisis has demonstrated that the
insolvency of an entity affiliated to a group can rapidly impact the solvency
of the whole group and, thus, even have its own systemic implications.
Authorities should, therefore, also possess effective means of action with
respect to these entities in order to prevent contagion and produce a
consistent resolution scheme for the group as a whole, as the insolvency of an
entity affiliated to a group could rapidly impact the solvency of the whole
group.
(9)       The use of resolution
tools and powers provided for in this Directive may disrupt the rights of
shareholders and creditors. In particular, the power of the authorities to
transfer the shares or all or part of the assets of an institution to a private
purchaser without the consent of shareholders affects the property rights of
shareholders. In addition, the power to decide which liabilities to transfer
out of a failing credit institution based upon the objectives of ensuring the
continuity of services and avoid adverse effect on financial stability may
affect the equal treatment of creditors.
(10)     National Authorities should
take into account the risk, size and interconnectedness of an institution in
the context of recovery and resolution plans and when using the different tools
at their disposal, making sure that the regime is applied in an appropriate
way.
(11)     In order to ensure the
required speed of action, to guarantee independence from economic actors and to
avoid conflicts of interest, Member States should appoint public administrative
authorities to perform the functions and tasks in relation to resolution pursuant
to this Directive. Member States should ensure that appropriate resources are
allocated to those resolution authorities. The designation of public
authorities should not exclude delegation under the responsibility of the
resolution authority. However, it is not necessary to prescribe the exact
authority that Member States should appoint as the resolution authority. While
harmonisation of that aspect may facilitate coordination, it would also
considerably interfere with the constitutional and administrative systems of
Member States. A sufficient degree of coordination can still be achieved with a
less intrusive requirement: all the national authorities involved in the
resolution of institutions should be represented in resolution colleges, where
coordination at cross-border or Union level should take place. Member States
should, therefore, be free to choose which authorities should be responsible
for applying the resolution tools and exercising the powers provided for in
this Directive.
(12)     In light of the
consequences that the failure of a credit institution or an investment firm may
have on the financial system and the economy of a Member State as well as the
possible need to use public funds to resolve a crisis, the Ministries of
Finance or other relevant ministries in the Member States should be closely
involved, at an early stage, in the process of crisis management and resolution.
(13)     Effective resolution of
institutions or groups operating across the Union requires cooperation among
competent authorities and resolution authorities within supervisory and
resolution colleges in all the stages covered by this Directive, from the
preparation of recovery and resolution plans to the actual resolution of an
institution. In the event of disagreement between national authorities on
decisions to be taken in accordance with this Directive with regard to
institutions, the European Banking Authority (EBA) should, as a last resort, play
a role of binding mediation. For that purpose, EBA should be empowered to take
decisions requiring national authorities to take or to refrain from specific
actions in accordance with the provisions of Regulation 1093/2010 of the European
Parliament and of the Council of 24 November 2010 establishing a European
Supervisory Authority (European Banking Authority), amending Decision
No 716/2009/EC and repealing Commission Decision 2009/78/EC[22].
(14)     In order to ensure uniform
and consistent approach in the area covered by this Directive, EBA should also
be empowered to adopt guidelines, and elaborate regulatory and technical
standards to be endorsed by the Commission by means of delegated acts pursuant
to Article 290 of the Treaty on the Functioning of the European Union.
(15)     In order to deal in an
efficient manner with failing institutions, authorities should have the power
to impose preparatory and preventative measures.
(16)     It is essential that all
institutions prepare and regularly update recovery plans that set out measures
to be taken by those institutions under different circumstances or scenarios. Such
plans should be detailed and based on realistic assumptions applicable in a
range of robust and severe scenarios. The requirement to prepare a recovery
plan should, however, be applied proportionately, reflecting the systemic
importance of the institution or group. In that vein, the required content
should also take into account the nature of the institution's sources of
funding and the degree to which group support would be credibly available.
Institutions should be required to submit their plans to supervisors for a complete
assessment, including whether the plans are comprehensive and could feasibly
restore an institution's viability, in a timely manner, even in periods of
financial stress.
(17)     Where an institution does
not present an adequate recovery plan, supervisors should be empowered to
require that institution to take any measure necessary to redress the
deficiencies of the plan, including making changes to its business model or to
its funding strategy. That requirement may affect the freedom to conduct a
business as guaranteed by Article 16 of the Charter of Fundamental Rights. The
limitation of that fundamental right is however necessary to meet the
objectives of financial stability and for protecting depositors and creditors.
More specifically, such a limitation is necessary in order to strengthen the
business of institutions and avoid that institutions grow excessively or take
excessive risks without being able to tackle setbacks and losses and to restore
their capital base. The limitation is also proportionate as only preventative
action can ensure that adequate precautions are taken and therefore complies with
Article 52 of the Charter of Fundamental Rights of the European Union.
(18)     Resolution planning is an
essential component of effective resolution. Authorities should have all the
information necessary in order to plan how the essential functions of an
institution or of a cross-border group may be isolated from the rest of the
business and transferred in order to ensure the preservation and continuance of
essential functions. The requirement to prepare a resolution plan should,
however, be simplified, reflecting the systemic importance of the institution
or group. 
(19)     Resolution authorities
should 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 authorities' discretion
should be limited to what is necessary in order 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 be neither directly nor indirectly discriminatory on ground of
nationality, and be justified by the overriding reason of being conducted in
the public interest in financial stability. To determine whether an action was
taken in the general public interest, resolution authorities, acting in the
general public interest, should be able to achieve their resolution objectives
without encountering impediments to the application of resolution tools or
their ability to exercise the powers conferred to them. Furthermore, an action
should not go beyond the minimum necessary to attain the objectives. When
determining the measures to be taken, resolution authorities should take into
account the warnings and recommendations of the European Systemic Risk Board
established under Regulation (EU) No 1092/2010 of the European Parliament
and of the Council of 24 November 2010 on European Union macro-prudential
oversight of the financial system and establishing a European Systemic Risk
Board.[23]
(20)     Measures proposed to
address or remove impediments to the resolvability of an institution or a group
should not prevent institutions from exercising the right of establishment
conferred by the Treaty on the Functioning of the European Union.
(21)     Recovery and resolution plans
should not assume access to extraordinary public financial support or expose
taxpayers to the risk of loss. Access to liquidity facilities provided by
central banks, including emergency liquidity facilities, should not be
considered as extraordinary public financial support provided that the
institution is solvent at the moment of the liquidity provision, and such
liquidity provision is not part of a larger aid package; that the facility is
fully secured by collateral to which haircuts are applied, in function of its
quality and market value, that the central bank charges a penal interest rate
to the beneficiary; and that the measure is taken at the central bank's own
initiative and, in particular, is not backed by any counter-guarantee of the
State.
(22)     The provision of financial
support from one entity of a cross-border group to another entity of the same
group is currently restricted by a number of provisions laid down by national
laws. Those provisions are designed to protect the creditors and shareholders
of each entity. Those provisions, however, do not take into account the
interdependency of the entities of the same group or the group interest. At the
international level, only in certain legal systems has the concept of group
interest been developed through jurisprudence or legal rules. That concept
takes into account, beside the interest of each individual group entity, the
indirect interest that each entity in a group has in the prosperity of the
group as a whole. However, it differs from Member State to Member State and
does not provide the necessary legal certainty. It is, therefore, appropriate
to set out under which conditions financial support may be transferred among
entities of a cross-border banking group with a view to ensuring the financial
stability of the group as a whole. Financial support between group entities
should be voluntary. It is appropriate that the exercise of the right of
establishment is not directly or indirectly made conditional by Member States
to the existence of an agreement to provide financial support.
(23)     In order to preserve
financial stability, it is important that competent authorities be able to
remedy the deterioration of an institution's financial and economic situation
before that institution reaches a point at which authorities have no other alternative
than to resolve it. To this end, competent authorities should be granted early
intervention powers, including the power to replace the management body of an
institution with a special manager; this would serve as a means of exerting
pressure on the institution in question to take measures to restore its
financial soundness and/or to reorganise its business so as to ensure its
viability at an early stage. The task of the special manager should be to take all
measures necessary and promote solutions in order to redress the financial
situation of the institution. The appointment of the special manager should not
however derogate from any rights of the shareholders or owners or procedural
obligations established under Union or national company law and should respect
international obligations of the Union or Member States, relating to investment
protection. The early intervention powers should include those already
specified under Directive 2006/48/EC of the European Parliament and of the
Council of 14 June 2006 relating
to the taking up and pursuit of the business of credit institutions[24] for circumstances other than those
considered as early intervention as well as other situations considered
necessary to restore the financial soundness of an institution.
(24)     The
resolution framework should provide for timely entry into resolution before a
financial institution is balance-sheet insolvent and before all equity has been
fully wiped out. Resolution should be initiated when a firm is no longer viable
or likely to be no longer viable and other measures have proved insufficient to
prevent failure. The fact that an institution does not meet the requirements
for authorization should not justify per-se the entry into resolution,
especially if the institution is still or likely to be still viable. An institution should be considered as failing or likely to fail
when it is or is to be in breach of the capital requirements for continuing
authorisation because it has incurred or is likely to incur in losses that are
to deplete all or substantially all of its own funds, when the assets of the
institution are or are to be less than its liabilities, when the institution is
or is to be unable to pay its obligations as they fall due, or when the
institution requires extraordinary public financial support. The need for emergency
liquidity assistance from a central bank should not in itself be a condition
that sufficiently demonstrates that an institution is or will be, in the
near-term, unable to pay its liabilities as they fall due. In order to preserve
financial stability, in particular in case of a systemic liquidity shortage,
State guarantees on liquidity facilities provided by central banks or State
guarantees on newly issued liabilities should not trigger the resolution framework
provided that a number of conditions are met. In particular the State guarantee
measures should to be approved under the State aid framework and should not be
part of a larger aid package, and the use of the guarantee measures should be
strictly limited in time. In both instances, the bank needs to be solvent.
(25)     The powers of resolution
authorities should also apply to holding companies where both the holding
company is failing or likely to fail and a subsidiary institution is failing or
likely to fail. In addition, notwithstanding the fact that a holding company
might not be failing or likely to fail, the powers of resolution authorities
should apply to the holding company where one or more subsidiary credit
institution or investment firm meet the conditions for resolution and the
application of the resolution tools and powers in relation to the holding
company is necessary for the resolution of one or more of its subsidiaries or
for the resolution of the group as a whole.
(26)     Where an institution is
failing or likely to fail, national authorities should have at their disposal a
minimum harmonised set of resolution tools and powers. Their exercise should be
subject to common conditions, objectives, and general principles. Once the resolution
authority has taken the decision to put the institution under resolution, normal
insolvency proceedings should be excluded. Member States should be able to
confer onto the resolution authorities powers and tools in addition to those
conferred onto them under this Directive. The use of these additional tools and
powers, however, should comply with the resolution principles and objectives as
set out in this Directive. In particular, the use of such tools or powers
should not impinge on the effective resolution of cross-border groups and
should ensure that shareholders bear losses.
(27)     In order to avoid moral
hazard, any insolvent institution should be able to exit the market, irrespective
of its size and interconnectedness, without causing systemic disruption. A failing
institution is in principle liquidated under normal insolvency proceedings.
However, liquidation under normal insolvency proceedings might jeopardise
financial stability, interrupt the provision of essential services, and affect
the protection of depositors. In such 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.
(28)     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
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 effect a
recapitalisation.
(29)     When applying resolutions tools
and exercising resolution powers, resolution authorities 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. When the use of the resolution tools
involves the granting of State aid, interventions should have to be assessed in
accordance with the relevant State aid provisions. State aid may be involved, inter
alia, where resolution funds or deposit guarantee funds intervene to assist
in the resolution of failing institutions.
(30)     The limitations on the rights of shareholders and creditors should be in accordance 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.
(31)     Interference with property
rights should not be disproportionate. In consequence, affected shareholders
and creditors should not incur greater losses than those which they would have
incurred if the institution had 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 bank, the residual part
of the institution under resolution should be wound up under normal insolvency
proceedings. In order to protect shareholders and creditors who are left in the
winding up proceedings of the institution, they should be entitled to receive in
payment of their claims in the winding up proceedings not less than what it is
estimated they would have recovered if the whole institution had been wound up under
normal insolvency proceedings.
(32)     For the purpose of protecting
the right of shareholders and creditors to receive not 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 properly estimate 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. Such valuation should be subject to judicial review only together
with the resolution decision. In addition, there should be an obligation to
carry out, after the resolution tools have been applied, an ex post
comparison between the treatment that shareholders and creditors have actually been
afforded and the treatment they would have received under normal insolvency
proceedings. If it is determined that shareholders and creditors have received,
in payment of their claims, less than the amount that they would have received
under normal insolvency proceedings, they should be entitled to the payment of
the difference. As opposed to the valuation prior to the resolution action, it
should be possible to challenge this comparison separately from the resolution
decision. Member States should be free to decide on the procedure as to how to
pay any difference of treatment that has been determined, to shareholders and
creditors. That difference, if any, should be paid by the financial
arrangements established in accordance with this directive. 
(33)     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 may be performed at the duly justified long term
economic value of assets and liabilities. It should be possible, for reasons of
urgency, that the resolution authorities make a rapid valuation of the assets
or the liabilities of a failing institution. That valuation should be
provisional and should apply until an independent valuation is carried out.
(34)     Rapid action is necessary
to sustain market confidence and minimise contagion. Once an institution is
deemed to be failing or likely to fail, resolution authorities should not delay
in taking appropriate action. The circumstances under which the failure of an
institution may occur, and in particular taking account of the possible urgency of the situation, should allow resolution
authorities to take resolution action without imposing an obligation to first
use the early intervention powers.
(35)     The resolution tools should
be applied before any public sector injection of capital or equivalent extraordinary
public financial support to an institution. This, however, should not impede
the use, for the purpose of financing resolution, of funds from the deposit
guarantee schemes or the resolution funds. In this respect, the use of
extraordinary public financial support or resolution funds, including deposit
guarantee funds, to assist in the resolution of failing institutions should be assessed
in accordance with relevant State aid provisions.
(36)     The resolution tools should
include the sale of the business to a private purchaser, the setting up of a bridge
institution, the separation of the good from the bad assets of the failing
institution, and the bail in of the failing institution.
(37)     Where the resolution tools
have been used to transfer the systemically important services or viable
business of an institution to a sound entity such as a private sector purchaser
or bridge institution, the residual part of the institution should be
liquidated within an appropriate time frame having regard to any need for the
failed institution to provide services or support to enable the purchaser or
bridge institution to carry on the activities or services acquired by virtue of
that transfer.
(38)     The sale of business tool
should enable authorities to effect a sale of the institution or parts of its
business to one or more purchasers without the consent of shareholders. When
applying the sale of business tool, authorities should make arrangements for
the marketing of that institution or part of its business in an open,
transparent and non-discriminatory process, while aiming at maximising as far
as possible the sale price.
(39)     For the purpose of protecting
the right of shareholders and creditors to receive not less than they would receive in normal insolvency proceedings, any proceeds from a partial transfer of assets should benefit the
institution under resolution. In the event of transfer of all of the shares or of
all of the assets, rights and liabilities of the institution, any proceeds from
the transfer should benefit the shareholders of the failed institution. The proceeds
should be calculated net of the costs arisen from the failure of the institution
and from the resolution process. 
(40)     In order to perform the
sale of business in a timely manner and protect financial stability, the
assessment of the buyer of a qualifying holding should be carried out without
delay by way of derogation from the time limits set out by Directive
2006/48/EC.
(41)     Information concerning the
marketing of a failed institution and the negotiations with potential acquirers
prior to the application of the sale-of-business tool is likely to be of
systemic importance. In order to ensure financial stability, it is important
that the disclosure to the public of such information required by Directive
2003/6/EC of the European Parliament and of the Council of 28 January 2003 on
insider dealing and market manipulation (market abuse)[25] may be delayed for the time
necessary to plan and structure the resolution of the institution in accordance
with delays permitted under the market abuse regime.
(42)     As an institution
controlled by the resolution authority a bridge institution would have as its main
purpose ensuring that essential financial services continue to be provided to
the clients of the insolvent institution and that essential financial
activities continue to be performed. The bridge institution should be operated
as a viable going concern and be put back on the market as soon as possible or
wound down if not viable.
(43)     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.
(44)     An effective resolution
regime should minimise the costs of the resolution of a failing institution borne
by the taxpayers. It should also ensure that also large and systemic institutions
can be resolved without jeopardising financial stability. The bail-in tool
achieves that objective by ensuring that shareholders and creditors of the
institution suffer appropriate losses and bear an appropriate part of those
costs. To this end, the Financial Stability Board recommended that statutory debt-write
down powers should be included in a framework for resolution, as an additional
option in conjunction with other resolution tools.
(45)     In order to ensure that
resolution authorities have the necessary flexibility to allocate losses to
creditors in a range of circumstances, it is appropriate that those authorities
be able to apply the bail-in tool both where the objective is to resolve the
failing institution as a going concern if there is a realistic prospect that
the institution 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 down.
(46)     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, the resolution through bail-in
should always be accompanied by 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. Where applicable, such plans
should be compatible with the restructuring plan that the institutions is
required to submit to the Commission under the Union State aid framework. In
particular, in addition to measures aiming at restoring the long term viability
of the institution, the plan should include measures limiting the aid to the
minimum and burden sharing, and measures limiting distortions of competition.
(47)     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 is desirable that it can be applied
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[26] of the European Parliament and
of the Council of 30 May 1994 on deposit-guarantee schemes, 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.
(48)     Depositors that hold
deposits guaranteed by the 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
foreseeing the involvement of those schemes in such cases would constitute an
unfair advantage with respect to the rest of creditors which would be subject
to the exercise of the powers by the resolution authority.
(49)     In general, resolution
authorities should apply the bail-in tool in a way that respects the pari passu
treatment of creditors and the statutory ranking of claims under the applicable
insolvency law. Losses should first be absorbed by regulatory capital
instruments and should be allocated to shareholders either through the
cancellation of shares or through severe dilution. Where those instruments are
not sufficient, subordinated debt should be converted or written down. Finally,
senior liabilities should be converted or written down if the subordinate
classes have been converted or written down entirely.
(50)     To avoid institutions structuring
their liabilities in a manner that impedes the effectiveness of the bail in tool
it is appropriate to establish that the institutions should have at all times
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 Directive 2006/48/EC
or Directive 2006/49/EC. Resolution authorities should also be able to require
that this percentage is totally or partially composed of own funds and
subordinated debt.
(51)     Member States should ensure
that Additional Tier 1 and Tier 2 capital instruments fully absorb losses at
the point of non-viability of the issuing institution. Accordingly, resolution
authorities should be required at that point to write down those instruments in
full, or to convert them to Common Equity Tier 1 instruments, at the point of
non-viability and before any other resolution action is taken. For this
purpose, the point of non-viability should be understood as the point at which
the relevant national authority determines that the institution meets the
conditions for resolution or the point at which the authority decides that the
institution ceases to be viable if those capital instruments are not written
down. The fact that the instruments are to be written down or converted by
authorities in the circumstances required by this Directive should be
recognised in the terms governing the instrument, and in any prospectus or
offering documents published or provided in connection with the instruments.
(52)     The bail-in tool, maintaining
the institution as a going concern, should maximise the value of the creditors'
claims, improve market certainty and reassure counterparties. In order to
reassure investors and market counterparties and to minimise its impact it is
necessary to allow not to apply the bail-in tool until 1 January 2018.
(53)     Resolution authorities
should have all the legal powers that, in different combinations, may be
exercised when applying the resolution tools. Those should include the powers
to transfer shares in, or assets, rights or liabilities of, a failing institution
to another entity such as another institution or a bridge institution, powers
to write off or cancel shares, or write down or convert debt of a failing
institution, the power to replace the management and power to impose a
temporary moratorium on the payment of claims. Supplementary powers may also be
needed, including a power to require continuity of essential services from
other parts of a group.
(54)     It is not necessary to
prescribe the exact means through which the resolution authorities should
intervene in the insolvent institution. The resolution authorities should have
the choice between taking control through a direct intervention in the
institution or through executive order. They should decide according to the
circumstances of the case. It does not appear necessary for efficient
cooperation between Member States to impose a single model at this stage.
(55)     The resolution framework
should include procedural requirements to ensure that resolution measures are
properly notified and made public. However, as information obtained by resolution
authorities and their professional advisers during the resolution process is
likely to be sensitive, before the resolution decision is made public, that information
should be subject to an effective confidentiality regime.
(56)     National authorities should
have ancillary powers to ensure the effectiveness of the transfer of shares or
debt instruments and assets, rights and liabilities. Those powers should
include the power to remove third parties rights from the transferred
instruments or assets, the power to enforce contracts and to provide for the
continuity of arrangements vis-à-vis the recipient of the transferred assets
and shares. However the rights of employees to terminate a contract of
employment should not be affected. The right of a party to terminate a contract
for reasons other than the mere substitution of the failing institution with
the new institution should not be affected either. Resolution authorities
should also have the ancillary power to require the residual institution that
is being wound up under normal insolvency proceeding, to provide services that
are necessary to enable the institution to which assets or shares have been
transferred by virtue of the application of the sale of business tool or the
bridge institution tool, to operate its business.
(57)     In
accordance with Article 47 of the Charter of Fundamental Rights, the concerned parties have a right to due
process and to having an effective remedy against the measures affecting them.
Therefore, the decisions taken by the resolution authorities
should be subject to judicial review. However, since this Directive aims to
cover situations of extreme urgency, and since the suspension of any decision
of the resolution authorities might impede the continuity of essential
functions, it is necessary to provide that the lodging of any application for
review and any interim court order cannot suspend the enforcement of the
resolution decisions. In addition, in order to protect third parties who have
bought assets, rights and liabilities of the institution under resolution by
virtue of the exercise of the resolution powers by the authorities and to
ensure the stability of the financial markets, the judicial review should not affect
any administrative act or transaction concluded on the basis of an annulled
decision. Remedies for a wrongful decision should therefore
be limited to the award of compensation for the damages suffered by the
affected persons.
(58)     It
is in the interest of an efficient resolution, and in order to avoid conflicts
of jurisdiction, that no normal insolvency proceedings for the failing institution
be opened or continued whilst the resolution authority is exercising its
resolution powers or applying the resolution tools. It is also useful and
necessary to suspend for a limited period of time certain contractual
obligations so that the resolution authority has time to put into practice the
resolution tools.
(59)     In
order to ensure that resolution authorities, when transferring assets and
liabilities to a private sector purchaser or bridge institution, have an
adequate period to identify contracts that need to be transferred, it is
appropriate to impose proportionate restrictions on counterparties' rights to
close out, accelerate or otherwise terminate financial contracts before the transfer
is made. Such a restriction is necessary to allow authorities to obtain a true
picture of the balance sheet of the failing institution, without the changes in
value and scope that extensive exercise of termination rights would entail. In
order to interfere with the contractual rights of counterparties to the minimum
extent necessary, the restriction on termination rights should apply only in
relation to the resolution action, and rights to terminate arising from any
other default, including failure to pay or deliver margin, should remain.
(60)     In order to preserve
legitimate capital market arrangements in the event of a transfer of some, but
not all, of the assets, rights and liabilities of a failing institution, it is
appropriate to include safeguards to prevent the splitting of linked
liabilities, rights and contracts. Such a restriction on selected practices in
relation to linked contracts should extend to contracts with the same
counterparty covered by security arrangements, title transfer financial
collateral arrangements, set-off arrangements, close out netting agreements,
and structured finance arrangements. Where the safeguard applies, resolution authorities
should be bound to transfer all linked contracts within a protected
arrangement, or leave them all with the residual failed bank. Those safeguards
should ensure that the regulatory capital treatment of exposures covered by a
netting agreement for the purposes of Directive 2006/48/EC is not affected.
(61)     When resolution authorities
intend to transfer a set of linked contracts, and that transfer cannot be
effective in relation to all the contracts comprised in the set because some rights
or liabilities covered by the contracts are governed by the law of a territory
outside the Union, the transfer should not be made. Any transfer in breach of
this rule, should be void.
(62)     While ensuring that
resolution authorities have the same tools and powers at their disposal will
facilitate coordinated action in the event of a failure of a cross-border group,
further action appears necessary to promote cooperation and prevent fragmented
national responses. Resolution authorities should be required to consult each
other and cooperate when resolving affiliated entities in resolution colleges
with a view to agreeing a group resolution scheme. Resolution colleges should
be established around the core of the existing supervisory colleges through the
inclusion of resolution authorities, and the involvement, where appropriate, of
Ministries of Finance, for group entities. In the event of a crisis, the
resolution college should provide a forum for the exchange of information and
the coordination of resolution measures.
(63)     Resolution of cross border
groups should strike the balance between the need, on the one hand, for
procedures that take into account the urgency of the situation and allow for efficient,
fair and timely solutions for the group as a whole and, on the other hand, the necessity
to protect financial stability in all the Member States where the group operates.
The different resolution authorities should share their views in the resolution
college. Resolution actions proposed by the group level resolution authority
should be prepared and discussed amongst different national resolution
authorities in the context of the group resolution plans. Resolution colleges
should incorporate the views of the resolution authorities of all the Member
States in which the group is active, in order to facilitate swift and joint
decisions wherever possible. Resolution actions by the group level resolution
authority should always take into account their impact on the financial
stability in the Member States where the group operates. This should be ensured
by the possibility for the resolution authorities of the Member State in which
a subsidiary is established to object to the decisions of the group resolution
authority, not only on appropriateness of resolution actions and measures but
also on ground of the need to protect financial stability in that Member State.
Any dispute regarding, among others, whether the financial stability in all the
different Member States where the group operates is sufficiently safeguarded
should be resolved by EBA. EBA should ensure in particular that the final
decision on the resolution action to be taken considers adequately the
interests of all the resolution authorities in protecting financial stability
in the Union as well as in all the Member States where the group operates.
(64)     The production of a group
resolution scheme should facilitate coordinated resolution that is more likely
to deliver the best result for all institutions of a group. The group
resolution scheme should be proposed by the group resolution authority and
should be binding for the members of the resolution college. National
resolution authorities that disagreed with the scheme should have the
possibility to refer the matter to EBA. EBA should be enabled to settle the
disagreement on the basis of an assessment as to whether independent action by
the Member State concerned is necessary for reasons of national financial
stability, having regard to the impact of that action on financial stability in
other Member States and the maximisation of the value of the group as a whole.
(65)     As part of a group
resolution scheme, national authorities should be invited to apply the same
tool to legal entities meeting the conditions for resolution. National
authorities should not have the power to object to resolution tools applied at
group level which falls within the responsibility of the group resolution
authority, such as application of bridge bank tool at parent level, sell of
assets of the parent credit institution, debt conversion at parent level. The
group level resolution authorities should also have the power to apply the
bridge bank institution at group level (which may involve, where appropriate,
burden sharing arrangements) to stabilise a group as a whole. Ownership of
subsidiaries could be transferred to the bridge bank with a view to onward
sale, either as a package or singly, when market conditions are right. In
addition, the group level resolution authority should have the power to apply
the bail-in tool at parent level.
(66)     Effective resolution of
internationally active institutions and groups requires cooperation agreements
between the Union and third country resolution authorities. Cooperation will be
facilitated if the resolution regimes of third countries are based on common
principles and approaches that are being developed by the Financial Stability
Board and the G20. For this purpose EBA should develop and enter into framework
administrative arrangements with authorities of third countries in accordance
with Article 33 of Regulation No 1093/2010 and national authorities should
conclude bilateral arrangements in line, as far as possible, with EBA framework
arrangements. The development of these arrangements between national
authorities responsible for managing the failure of global firms should be a
means to ensure effective planning, decision-making and coordination in respect
of international groups. EBA should also be entrusted with recognition of
measures taken by resolution authorities in third countries. Member States
should be responsible for implementing EBA's recognition decisions.
(67)     Cooperation should take
place both with regard to subsidiaries of Union or third country groups and with
regard to branches of Union or third country institutions. Subsidiaries of
third country groups are enterprises established in the Union and therefore are
fully subject to Union law, including the resolution tools provided for in this
Directive. It is however necessary that Member States maintain the right to
apply the resolution tools also to branches of institutions having their head
office in third countries, when the recognition and application of third
country proceedings related to a branch would endanger the financial stability in
the Union or when Union depositors would not receive equal treatment with third
country depositors. For this reasons, EBA should have the right, after
consulting the national resolution authorities, to refuse recognition of third
country proceedings with regard to Union branches of third countries
institutions.
(68)     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. Notwithstanding the role of central banks in
providing liquidity to the financial system even in times of stress, it is
important that Member States set up financing arrangements to avoid that the
funds needed for such purposes come from the national budgets. It should be the
financial industry, as a whole, that finances the stabilisation of the
financial system.
(69)     As a principle,
contributions should be collected from the 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 financing arrangements, additional
contributions should be collected to bear the additional cost or loss.
(70)     In order to reach a
critical mass and to avoid pro-cyclical effects which would arise if financing
arrangements had to rely solely on ex post contributions in a systemic
crisis, it is indispensable that the ex-ante available financial means
of the national financing arrangements amount to a certain target level. 
(71)     In order to ensure a fair
calculation of contributions and provide incentives to operate under a less
risky model, contributions to national financing arrangements should take
account of the degree of risk incurred by credit institutions.
(72)     Ensuring effective
resolution of failing financial institutions within the Union is an essential
element in the completion of the internal market. The failure of such
institutions has an effect not only on the financial stability of the markets
where it directly operates but also on the whole Union financial market. With
the completion of the internal market in financial services the interplay between
the different national financial systems is reinforced. Institutions operate
outside their Member State of establishment and are interrelated to each other
through the interbank and other markets which, in essence are pan-European.
Ensuring effective financing of the resolution of those institutions at equal
conditions across Member States is in the best interest of the Member States in
which they operate but also of all the Member States in general as a means to ensure
equal conditions of competition and improve the functioning of the single Union
financial market. Setting up a European System of Financing Arrangements should
ensure that all institutions that operate in the Union are subject to equally
effective resolution funding arrangements and contribute to the stability of
the single market.
(73)     In order to build up the
resilience of the European System of Financing Arrangements, and in line with
the objective requiring that financing should come primarily from the industry
rather than from public budgets, national arrangements should be able to borrow
from each other in case of need.
(74)     While financing
arrangements are set up at national level, they should be mutualised in the
context of group resolution. When a resolution action ensures that depositors
continue having access to their deposits, Deposit Guarantee Schemes to which an
institution under resolution is affiliated should be liable, up to the amount
of covered deposits, for the amount of losses that they would have had to bear
if the institution had been wound up under normal insolvency proceedings.
(75)     In addition to ensuring
payout of depositors or the continuous access to covered deposits, Member
States should retain the discretion to decide whether deposit guarantee schemes
could also be used as arrangements for the financing of other resolution
actions. Such flexibility should not be used in a way that would endanger the
financing of deposit guarantee schemes or the function of guaranteeing the
payout of covered deposits. 
(76)     Where deposits are
transferred to another institution in the context of the resolution of a credit
institution, depositors should not be insured beyond the level of coverage
provided in Directive 94/19/EC. Therefore claims with regard to deposits
remaining in the credit institution under resolution should be limited to the
difference between the funds transferred and the coverage level provided for by
Directive 94/19/EC. Where transferred deposits are superior to the coverage
level, the depositor should have no claim against the deposit guarantee scheme
with regard to deposits remaining in the credit institution under resolution.
(77)     The
setting up of financing arrangements establishing the European System of
Financing Arrangements laid down in this Directive should ensure coordination of
the use of funds available at national level for resolution.. 
(78)     Technical standards in financial services should ensure consistent
harmonisation and adequate protection of depositors, investors and consumers
across the Union. As a body with highly specialised expertise, it would be
efficient and appropriate to entrust EBA, with the elaboration of draft regulatory
and implementing technical standards which do not involve policy choices, for
submission to the Commission.
(79)     The Commission should adopt
the draft regulatory technical standards developed by EBA by means of delegated
acts pursuant to Article 290 of the Treaty on the Functioning of the European Union
and in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.
(80)     The Commission should be
empowered to adopt delegated acts in accordance with Article 290 of the Treaty
on the Functioning of the European Union in order to: specify the definitions
of "critical functions" and "core business lines", specify
the circumstances when an institution is failing or likely to fail, specify the
circumstances when the asset separation tool should be applied, specify the liabilities
excluded from the scope of application of the bail-in tool, specify the
circumstances when exclusion from the bail-in tool is necessary to ensure the
continuation of critical operations and core business lines, specify the criteria
for the determination of the minimum amount of eligible liabilities required
from institutions for the purposes of the bail in tool, specify the circumstances
when, in application of the bail-in tool, existing shares should be cancelled
and liabilities should be converted into shares, specify the circumstances when
third country resolution proceedings should not be recognised, further specify
the conditions under which it should be considered that the target level of the
financing arrangements has significantly deviated from the initial level, adopt
criteria aimed at adjusting the contributions to the financing arrangements to
the risk profile of institutions, define obligations aimed at ensuring the
effective payment of the contributions to the financing arrangements and
specify the conditions for the mutual borrowing between national financing
arrangements. It is of particular importance that the Commission carry out
appropriate consultations during its preparatory work, including at expert
level.
(81)     It is appropriate that in
certain cases EBA first promote convergence of the practice of national
authorities through guidelines and at a later stage, on the basis of the
convergence developed in the application of EBA guidelines, the Commission be
empowered to adopt delegated acts. 
(82)     When preparing and drawing
up delegated acts, the Commission should ensure the early and on-going
transmission of information on relevant documents to the n Parliament and the
Council.
(83)     The European Parliament and
the Council should have two months from the date of notification to object to a
delegated act. It should be possible for the European Parliament and the
Council to inform the other institutions of their intention not to raise
objections.
(84)     In the Declaration on
Article 290 of the Treaty on the Functioning of the Union, annexed to the Final
Act of the Intergovernmental Conference which adopted the Treaty of Lisbon, the
Conference took note of the Commission's intention to continue to consult
experts appointed by the Member States in the preparation of draft delegated
acts in the financial services area, in accordance with its established
practice.
(85)     The Commission should also be empowered to adopt implementing
technical standards by means of implementing acts pursuant to Article 291 of
the Treaty on the Functioning of the European Union and in accordance with Article
15 of Regulation (EU) No 1093/2010. EBA should be entrusted with drafting
implementing technical standards for submission to the Commission.
(86)     Directive
2001/24/EC of the European Parliament and of the
Council of 4 April 2001 on the reorganisation and winding-up of credit
institutions[27] provides for
the mutual recognition and enforcement in all Member States of decisions
concerning the reorganization or winding up of credit institutions having
branches in Member States other than those in which they have their head
offices. That directive ensures that all assets and liabilities of the credit
institution, regardless of in which country they are situated, are dealt with
in a single process in the home Member State and that creditors in the host
States are treated in the same way as creditors in the home Member State; in
order to achieve an effective resolution, Directive 2001/24/EC should apply also
in the event of use of the resolution tools both when these instruments are
applied to credit institutions and when they are applied to other entities covered
by the resolution regime. Directive 2001/24/EC should therefore be amended accordingly.
(87)     Union company law
directives contain mandatory rules for the protection of shareholders and
creditors of credit institutions falls within the scope of those directives. In
a situation where resolution authorities need to act rapidly, those rules may
hinder their effective action and use of resolution tools and powers and
derogations should be provided. In order to guarantee the maximum degree of legal
certainty for the stakeholders, the derogations should be clearly and narrowly
defined, and they should only be used in the public interest and when resolution
triggers are met. The use of resolution tools presupposes that the resolution
objectives and the conditions for resolution laid down in this Directive are
respected. 
(88)     Second Council Directive
77/91/EEC of 13 December 1976 on coordination of safeguards which, for the
protection of the interests of members and others, are required by Member
States of companies within the meaning of the second paragraph of Article 58 of
the Treaty, in respect of the formation of public limited liability companies
and the maintenance and alteration of their capital, with a view to making such
safeguards equivalent[28],
contains rules on the shareholders' right to decide on the capital increase and
decrease, on their right to participate in any new share issue for cash consideration,
on creditor protection in the event of capital reduction and the convening of
shareholders' meeting in the event of serious loss of capital. Those rules may
hinder the rapid action of resolution authorities and derogations from them
should be provided for.
(89)     Directive 2011/35/EU of the
European Parliament and of the Council of 5 April 2011 concerning mergers
of public limited liability companies[29],
lays down rules inter alia on the approval of mergers by the general meeting of
each of the merging companies, on the requirements concerning the draft terms
of merger, management report and expert report, and on the creditor protection.
Sixth Council Directive 82/891/EEC of 17 December 1982 based on Article
54(3)(g) of the Treaty, concerning the division of public limited liability
companies[30]
contains similar rules on the division of public limited liability companies.
Directive 2005/56/EC of the European Parliament and of the Council of 26
October 2005 on cross-border mergers of limited liability companies[31] provides for corresponding
rules concerning cross-border mergers of limited liability companies.
Derogation from those directives should be provided in order to allow a rapid
action of resolution authorities.
(90)     Directive 2004/25/EC of the
European Parliament and of the Council of 21 april 2004 on takeover bids[32], sets out an obligation to
launch a mandatory takeover bid on all shares of the company for the equitable
price, as defined in the directive, if someone acquires, directly or indirectly
and alone or in concert with others, a certain percentage of shares of that
company, which gives him control of that company and is defined by national
law. The purpose of the mandatory bid rule is to protect minority shareholders
in case of change of control. However, the prospect of such a costly obligation
might deter possible investors in the affected institution, thereby making it
difficult for resolution authorities to make use of all their resolution
powers. Derogation should be provided from the mandatory bid rule, to the
extent necessary for the use of the resolution powers, while after the
resolution period the mandatory bid rule should be applied to anyone acquiring
control in the affected institution.
(91)     Directive 2007/36/EC of the
European Parliament and of the Council of 11 July 2007 on the exercise of
certain rights of shareholders in listed companies[33], provides for on the
procedural shareholders' rights related to the general meeting. Directive 2007/36/EC
provides inter alia on the minimum convocation period to the general meeting
and the content of the convocation. Those rules may hinder the rapid action of
resolution authorities and derogation from the directive should be provided
for. Prior to resolution there may be a need for a rapid increase of capital
when the institution does not meet or is likely not to meet the requirements of
Directives 2006/48/EC and 2006/49/EC and an increase of capital is likely to
restore the financial situation and avoid a situation where the threshold
condition for the resolution are met. In such situations a possibility for
convening a general meeting in a shortened convocation period should be provided.
However, the shareholders should retain the decision making power on the
increase and on the shortening of the convocation period of the general
meeting. Derogation from Directive 2007/36/EC should be provided for the
establishment of that mechanism.
(92)     In order to ensure that the
authorities responsible for resolution are represented in the European System
of Financial Supervision established by Regulation (EU), No 1093/2010 and to
ensure that EBA has the expertise necessary to carry out the tasks provided for
in this directive, Regulation (EU) No 1093/2010 should be amended in order to
include national resolution authorities as defined in this Directive in the
concept of competent authorities established by that Regulation.Such
assimilation between resolution authorities and competent authorities pursuant
to Regulation N° 1093/2010 is consistent with the functions attributed to EBA
pursuant to Article 25 of Regulation N° 1093/2010 to contribute and participate
actively in the development and coordination of recovery and resolution plans
and to aim at the facilitiation of the resolution of failing institutions and
in particular cross border groups.
(93)     In order to ensure
compliance by institutions, those who effectively control their business and
the members of the institutions' management body with the obligations deriving
from this Directive and to ensure that they are subject to similar treatment
across the Union, Member States should be required to provide for
administrative sanctions and measures which are effective, proportionate and
dissuasive. Therefore, administrative sanctions and measures set out by Member
States should satisfy certain essential requirements in relation to addressees,
criteria to be taken into account when applying a sanction or measure,
publication of sanctions or measures, key sanctioning powers and levels of administrative
pecuniary sanctions.
(94)     This Directive refers to
both administrative sanctions and measures in order to cover all actions
applied after a violation is committed, and which are intended to prevent
further infringements, irrespective of their qualification as a sanction or a
measure under national law.
(95)     This Directive should be
without prejudice to any provisions in the law of Member States relating to
criminal sanctions.
(96)     In accordance with the
Joint Political Declaration of Member States and the Commission of 28 September
2011 on explanatory documents[34],
Member States have undertaken to accompany, in justified cases, the
notification of their transposition measures with one or more documents
explaining the relationship between the components of a directive and the
corresponding parts of national transposition instruments. With regard to this
Directive, the legislator considers the transmission of such documents to be
justified.
(97)     This Directive respects the
fundamental rights and observes the rights, freedoms and principles recognised
in particular by the Charter of Fundamental Rights of the European Union, and
notably the right to property, the right to an effective remedy and to a fair
trial and the right of defence.
HAVE ADOPTED THIS DIRECTIVE:
TITLE I
SCOPE, DEFINITIONS AND AUTHORITIES
Article 1
Subject matter and scope
This Directive lays down rules and
procedures relating to the recovery and resolution of the following:
(a)         
credit institutions and investment firms;
(b)         
financial institutions when the financial institution
is a subsidiary of a credit institution or investment firm, or of a company
referred to in points (c) and (d), and is covered by the supervision of the
parent undertaking on a consolidated basis in accordance with Subsection I of Section
2 of Chapter 2 of Title V of Directive 2006/48/EC;
(c)         
financial holding companies, mixed financial
holding companies, mixed-activity holding companies; 
(d)         
parent financial holding companies in a Member
State, Union parent financial holding companies, parent mixed financial holding
companies in a Member State, Union parent mixed financial holding companies;
(e)         
branches of institutions having their head
office outside the Union in accordance with the specific conditions laid down
in this Directive.
Article 2
Definitions
For the purposes of this Directive the
following definitions apply:
(1)              
'resolution' means the restructuring of an
institution in order to ensure the continuity of its essential functions,
preserve financial stability and restore the viability of all or part of that
institution;
(2)              
'credit institution' means a credit institution
as defined in Article 4(1) of Directive 2006/48/EC;
(3)              
'investment firm' means an investment firm as
defined in Article 3(1)(b) of Directive 2006/49/EC that are subject to the
initial capital requirement specified in Article 9 of that Directive;
(4)              
'financial institution' means a financial
institution as defined in Article 4(5) of Directive 2006/48/EC;
(5)              
'subsidiary' means subsidiary as defined in
Article 4(13) of Directive 2006/48/EC;
(6)              
'parent undertaking' means a parent undertaking
as defined in Article 4(12) of Directive 2006/48/EC;
(7)              
‘consolidated basis’ means on the basis of the
consolidated financial situation of a group subject to supervision on a
consolidated basis in accordance with Subsection I of Section 2 of Chapter 2 of
Title V of Directive 2006/48/EC or sub-consolidation in accordance with Article
73(2) of that Directive;
(8)              
'financial holding company' means a financial
institution, the subsidiary undertakings of which are either exclusively or mainly
institutions or financial institutions, at least one of such subsidiaries being
an institution, and which is not a mixed financial holding company within the
meaning of Article 2(15) of Directive 2002/87/EC;
(9)              
'mixed financial holding company' means a mixed
financial holding company as defined in Article 2(15) of Directive 2002/87/EC;
(10)          
'mixed-activity holding company' means a
mixed-activity holding company as defined in Article 4(20) of Directive
2006/48/EC, or a mixed-activity holding company as defined in Article 3(3(b) of
Directive 2006/49/EC;
(11)          
'parent financial holding company in a Member
State' means a financial holding company which is not itself a subsidiary of an
institution authorised in the same Member State, or of a financial holding
company or mixed financial holding company set up in the same Member State;
(12)          
'Union parent financial holding company’ means a
parent financial holding company which is not a subsidiary of an institution
authorised in any Member State or of another financial holding company or mixed
financial holding company set up in any Member State;
(13)          
'parent mixed financial holding company in a
Member State' means a mixed financial holding company which is not itself a
subsidiary of an institution authorised in the same Member State, or of a
financial holding company or mixed financial holding company set up in the same
Member State;
(14)          
‘Union parent mixed financial holding company’
means a parent mixed financial holding company which is not a subsidiary of a
credit institution authorised in any Member State or of another financial
holding company or mixed financial holding company set up in any Member State;
(15)          
'resolution objectives' means the objectives
specified in Article 26(2);
(16)          
'branch' means a branch as defined in Article 4
(3) of Directive 2006/48/EC;
(17)          
'resolution authority' means an authority
designated by a Member States in accordance with Article 3;
(18)          
'resolution tool' means the sale of business
tool, the bridge institution tool, the asset separation tool or the bail-in
tool;
(19)          
'resolution power' means a power as referred to in
Article 56(1);
(20)          
'competent authority' means competent authority
as defined in Article 4(4) of Directive 2006/48/EC or as defined in Article
3(3)( c) of Directive 2006/49/EC;
(21)          
'competent ministries' means the finance
ministries or other ministries responsible for economic, financial and
budgetary decisions according to national competencies;
(22)          
'control' means the relationship between a
parent undertaking and a subsidiary, as defined in Article 1 of Directive
83/349/EEC, or a similar relationship between any natural or legal person and
an undertaking;
(23)          
'institution' means a credit institution or an
investment firm;
(24)          
'management' means the persons who effectively
direct the business of the credit institution in accordance with Article 11 of
Directive 2006/48/EC;
(25)          
'group' means a parent undertaking and its
subsidiaries;
(26)          
'extraordinary public financial support' means
State Aid within the meaning of Article 107 (1) of the Treaty on the
Functioning of the European Union, that is provided in order to preserve or
restore the viability, liquidity or solvency of an institution;
(27)          
'group entity' means a legal entity that is part
of a group;
(28)          
'recovery plan' means a plan drawn up and
maintained by an institution in accordance with Article 5;
(29)          
'critical functions' means those activities,
services and operations the discontinuance of which would be likely to result
in a disruption of the economy of, or the financial markets in, one or more
Member States;
(30)          
'core business lines' means business lines and
associated services which represent material source of revenue, profit or
franchise value for an institution;
(31)          
'consolidating supervisor' means the competent
authority responsible for supervision on a consolidated basis as defined in
Article 4(48) of Directive 2006/48/EC;
(32)          
'own funds' means own funds within the meaning
of Chapter 2 of Title V of Directive 2006/48/EC;
(33)          
'conditions for resolution' means the conditions
specified in Article 27(1);
(34)          
'resolution action' means the decision to place
an institution under resolution pursuant to Article 27, the application of a
resolution tool to, or the exercise of one or more resolution power in relation
to an institution;
(35)          
'resolution plan' means a plan drawn up for an
institution by the relevant resolution authority in accordance with Article 9;
(36)          
'group resolution' means one of the following:
(a)         
the taking of a resolution action at the level
of the parent undertaking or institution subject to consolidated supervision,
or
(b)         
the coordination of the application of resolution
tools and the exercise of resolution powers by resolution authorities in
relation to group entities that meet the conditions for resolution;
(37)          
'group resolution plan' means a plan for group
resolution drawn up in accordance with Articles 11 and 12;
(38)          
'group level resolution authority' means the
resolution authority in the Member State in which the consolidating supervisor
is situated;
(39)          
'resolution college' means a college established
in accordance with Article 80 to carry out the tasks required by Articles 12, 13
and 83;
(40)          
'normal insolvency proceedings' mean the
collective insolvency proceedings which entail the partial or total divestment
of a debtor and the appointment of a liquidator, normally applicable to
institutions under national law and either specific for those institutions or
generally applicable to any natural or legal person;
(41)          
'debt instruments' referred to in points (d),
(i), (l) and (m) of Article 56 means bonds and other forms of transferable
debt, any instrument creating or acknowledging a debt, and instruments giving
rights to acquire debt instruments;
(42)          
'parent institution in a Member State' means a
parent credit institution in a Member State as defined in Article 4(14) of
Directive 2006/48/EC, or a parent investment firm in a Member State as defined
in Article 3(f) of Directive 2006/49/EC;
(43)          
'Union parent institution' means a Union parent
credit institution as defined in Article 4(16) of Directive 2006/48/EC, or an Union
parent investment firm as defined in Article 3(g) of Directive 2006/49/EC;
(44)          
'own funds requirements' means the requirements
of Article 75 of Directive 2006/48/EC;
(45)          
'supervisory colleges' means a college of
supervisors established in accordance with Article 131a of Directive
2006/48/EC;
(46)          
'Union State aid framework' means the framework
established by Articles 107 and 108 of the Treaty on the Functioning of the European
Union and regulations made or adopted pursuant to Article 107 or Article 106(4)
of the Treaty on the Functioning of the European Union;
(47)          
'winding up' means the realisation of assets of
an institution;
(48)          
'asset separation tool' means the transfer by a
resolution authority exercising the transfer powers of assets and rights of an
institution that meets the conditions for resolution to an asset management
vehicle in accordance with Article 36;
(49)          
'bail-in tool' means the exercise by a
resolution authority of the write-down and conversion powers in relation to
liabilities of an institution that meets the conditions for resolution in
accordance with Article 37;
(50)          
'sale of business tool' means the transfer by a
resolution authority 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, in accordance with Article 32;
(51)          
'bridge institution tool' means the power to
transfer the assets, rights or liabilities of an institution that meets the
conditions for resolution to a bridge institution, in accordance with Article 34;
(52)          
'bridge institution' means a legal entity that
is wholly owned by one or more public authorities (which may include the
resolution authority) and that is created for the purpose of receiving some or
all of the assets, rights and liabilities of an institution under resolution
with a view to carrying out some or all of its services and activities;
(53)          
'instruments of ownership' means shares,
instruments that confer ownership in mutual associations, instruments that are
convertible into or give the right to acquire shares or instruments of
ownership, and instruments representing interests in shares or instrument of
ownership;
(54)          
'transfer powers' means the powers specified in
points (c), (d) or (e) of Article 56(1) to transfer shares, other instruments
of ownership, debt instruments, assets, rights or liabilities, or any combination
of those items from an institution under resolution to a recipient;
(55)          
'central counterparty' means a legal entity that
interposes itself between the counterparties to a trade within one or more
financial markets, becoming the buyer to every seller and the seller to every
buyer;
(56)          
'derivatives', means a financial instrument listed
in points (4) to (10) of Section C of Annex I to Directive 2004/39/EC of the
European Parliament and of the Council[35];
(57)          
'write-down and conversion powers' means the
powers specified in points (f) to (l) of Article 56(1);
(58)          
'secured liability' means a liability where the
right of the creditor to payment is secured by a charge over assets, a pledge
or lien, or collateral arrangements including liabilities arising from
repurchase transactions and other title transfer collateral arrangements;
(59)          
'Additional Tier 1 instruments' means capital
instruments that qualify as own funds under Article 57(ca) of Directive
2006/48/EC;
(60)          
'aggregate amount' means the aggregate amount by
which the resolution authority has assessed that eligible liabilities must be
written down or converted, in accordance with Article 41(1);
(61)          
'Common Equity Tier 1 instruments' means capital
instruments that qualify as own funds in accordance with Article 57(a) of
Directive 2006/48/EC;
(62)          
'eligible liabilities' means the liabilities of
an institution that are not excluded from the scope of the write-down tool by
virtue of Article 38(2);
(63)          
'deposit guarantee scheme' means a deposit
guarantee scheme introduced and officially recognised by a Member State pursuant
to Article 3 of Directive 94/19/EC;
(64)          
'Tier 2 instruments' means capital instruments
that qualify as own funds under Article 56(f) and (h) of Directive 2006/48/EC;
(65)          
'relevant capital instruments' for the purposes
of Sections 5 and 6 of Chapter III of Title IV, means Additional Tier 1
instruments and Tier 2 instruments;
(66)          
'conversion rate' means the factor that
determines the number of ordinary shares into which a liability of a specific
class will be converted, by reference either to a single instrument of the
class in question or to a specified unit of value of a debt claim;
(67)          
'affected creditor' means a creditor whose claim
relates to a liability that is reduced or converted to shares by exercise of a
write down or conversion power;
(68)          
'affected shareholder" means a shareholder
whose shares are cancelled by means of the power referred to in point (j) of
Article 56(1);
(69)          
'appropriate authority', means authority of the
Member State identified in accordance with Article 54 that is responsible under
the national law of that State for making the determinations referred to in
Article 51(1);
(70)          
'relevant parent institution' means a parent
institution in a Member State, a Union parent institution, a financial holding
company, a mixed financial holding company, a mixed-activity holding, a parent
financial holding company in a Member State, a Union parent financial holding
company, a parent mixed financial holding company in a Member State, or a Union
parent mixed financial holding company, in relation to which the bail-in tool
is applied;
(71)          
'recipient' means the entity to which the
shares, other instruments of ownership, debt instruments, assets, rights or
liabilities, or any combination of those items from an institution under
resolution are transferred;
(72)          
'business day' means any day other than
Saturday, Sunday and any day which is a public holiday in the home Member State
of the institution;
(73)          
'termination right' means a right to terminate a
contract on an event of default as defined in or for the purposes of the contract,
and includes any related right to accelerate, close out, set-off or net
obligations or any related provision that suspends, modifies or extinguishes an
obligation of a party to the contract to make a payment;
(74)          
'institution under resolution' means an
institution, a financial institution, a financial holding company, a mixed
financial holding company, a mixed-activity holding company, a parent financial
holding company in a Member State, a Union parent financial holding company, a
parent mixed financial holding company in a Member State, or a Union parent
mixed financial holding company, in respect of which a resolution action is
taken;
(75)          
'domestic subsidiary institution' means an
institution which is established in a Member State that is a subsidiary of a
third country institution or financial holding company;
(76)          
'Union parent undertaking' means a Union parent
institution, an Union parent financial holding company or a Union parent mixed
financial holding company;
(77)          
'third country institution' means an entity, the
head office of which is established in a third country, that is authorised or
licensed under the law of that third country to carry on any of the activities
listed in Annex I to Directive 2006/48/EC or Section A of Annex I to Directive
2004/39/EC;
(78)          
'third country resolution proceeding' means an
action under the law of a third country to manage the failure of a third
country institution that is comparable, in terms of results, to resolution
actions under this Directive;
(79)          
'domestic branch' means a branch of a third
country institution that is established in a Member State;
(80)          
‘relevant third country authority’ means a third
country authority responsible for carrying out functions comparable to those of
resolution authorities or competent authorities pursuant to this Directive;
(81)          
'group financing arrangement' means the
financing arrangement or arrangements of the Member State of the group level
resolution authority;
(82)          
'back to back transaction' means a transaction
entered into between two group entities for the purpose of transferring, in
whole or in part, the risk generated by another transaction entered into
between one of those group entities and a third party;
(83)          
'intra-group guarantee' means a contract by
which one group entity guarantees the obligations of another group entity to a
third party.
Where this Directive refers to Regulation (EU)
No 1093/2010, resolution authorities, shall, for the purpose of that
Regulation, be considered competent authorities within the meaning of Article
4(2) of that Regulation.
The Commission shall be empowered to adopt
delegated acts in accordance with Article 103 in order to specify the
definitions of "critical functions" and "core business
lines" provided for in points (29) and (30) in order to ensure uniform
application of this Directive. 
Article 3
Designation of authorities responsible
for resolution
1.           Each Member States shall
designate one or more resolution authorities that are empowered to apply the
resolution tools and exercise the resolution powers.
2.           Resolution authorities
shall be public administrative authorities.
3.           Resolution authorities may
be the competent authorities for supervision for the purposes of Directives
2006/48/EC and 2006/49/EC, central banks, competent ministries or other public
administrative authorities, provided that Member States adopt rules and
arrangements necessary to avoid conflicts of interest between the functions of
supervision pursuant to Directives 2006/48/EC and 2006/49/EC or the other
functions of the relevant authority and the functions of resolution authorities
pursuant to this Directive. In particular, Member States shall ensure that,
within the competent authorities, central banks, competent ministries or other
public administrative authorities there is a separation between the resolution
function and the supervisory or other functions of the relevant authority.
4.           Where the resolution
authority and the competent authority pursuant to Directive 2006/48/EC are
separate entities, Member States shall require that they cooperate closely in the
preparation, planning and application of resolution decisions.
5.           Where the designated
authority in accordance with paragraph 1 is not the competent ministry in a
Member State, any decision of the designated authority pursuant to this
Directive shall be taken in consultation with the competent ministry.
6.           Member States shall ensure
that the authorities designated in accordance paragraph 1 have the expertise,
resources and operational capacity to apply resolution measures, and are able
to exercise their powers with the speed and flexibility that are necessary to
achieve the resolution objectives.
7.           Where a Member State
designates more than one authority to apply the resolution tools and exercise
the resolution powers, it shall allocate functions and responsibilities clearly
between these authorities, ensure adequate coordination between them and
designate a single authority as a contact authority for the purposes of
cooperation and coordination with the relevant authorities of other Member
States.
8.           Member States shall inform
European Banking Authority (EBA) of the national authority or authorities
appointed as resolution authorities and contact authority and, where relevant,
their specific functions and responsibilities. EBA shall publish the list of
those resolution authorities.
TITLE II
PREPARATION
Chapter I
Recovery and Resolution Planning
Section 1
General Provisions
Article 4
Simplified obligations for certain
institutions
1.           Having regard to the
impact that the failure of the institution 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, on
funding conditions, Member States shall ensure that competent and resolution
authorities determine the extent to which the following apply to institutions:
(a)         
the contents and details of recovery and resolution
plans provided for in Articles 5, 7, 9 and 11;
(b)         
the contents and details of the information
required from institutions as provided for in Articles 5 (5) and Articles 10
and 11. 
2.           The Commission shall be
empowered to adopt delegated acts in accordance with Article 103 in order to
specify the criteria referred to in paragraph 1, for assessing, in accordance
with paragraph 1, the impact of an institution failure on financial markets, on
other institutions and on funding conditions.
3.           Competent and resolution
authorities shall inform EBA of the way they have applied the requirement
referred to in paragraph 1 to institutions in their jurisdiction. EBA shall report
to the Commission by 1st January 2018 at the latest on the
implementation of the requirement referred to in paragraph 1. In particular EBA
shall report to the Commission whether there are divergences regarding the
implementation at national level of that requirement.
Section 2
Recovery Planning
Article 5
Recovery plans
1.           Member States shall ensure
that each institution draws up and maintains a recovery plan providing, through
measures taken by the management of the institution or by a group entity, for
the restoration of its financial situation following significant deterioration.
Recovery plans shall be considered as a governance arrangement within the
meaning of Article 22 of Directive 2006/48/EC.
2.           Member States shall ensure
that the institutions update their recovery plans at least annually or after
change to the legal or organisational structure of the institution, its
business or its financial situation, which could have a material effect on, or
necessitates a change to the recovery plan. Competent authorities may require
institutions to update their recovery plans more frequently.
3.           Recovery plans shall not
assume any access to or receipt of extraordinary public financial support but
shall include, where applicable, an analysis of how and when an institution may
apply for the use of central bank facilities in stressed conditions and
available collateral.
4.           Member States shall ensure
that the recovery plans include the information listed in Section A of the
Annex.
5.           The competent authorities
shall ensure that institutions include in recovery plans appropriate conditions
and procedures to ensure the timely implementation of recovery actions as well
as a wide range of recovery options. Competent authorities shall ensure
that firms test their recovery plans against a range of scenarios of financial
distress, varying in their severity including system wide events, legal-entity
specific stress and group-wide stress. 
6.           EBA, in consultation with
the European Systemic Risk Board (ESRB), shall develop draft technical
standards specifying the range of scenarios to be used for the purposes of
paragraph 5 of this Article in accordance with Article 25(3) of Regulation (EU)
No 1093/2010.
EBA shall submit those draft regulatory technical
standards to the Commission within twelve months from the date of entry into
force of this Directive.
Power is delegated to the Commission to adopt
the regulatory technical standards referred to in the first subparagraph in
accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU)
No 1093/2010.
7.           EBA shall develop draft
regulatory technical standards specifying the information to be contained in
the recovery plan referred to in paragraph 4.
EBA shall submit those draft regulatory
technical standards to the Commission within twelve months from the date of
entry into force of this Directive.
Power is delegated to the Commission to adopt
the regulatory technical standards referred to in the first subparagraph in
accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU)
No 1093/2010.
Article 6
Assessment of recovery plans
1.           Member States shall
require institutions to submit recovery plans to the competent authorities for
review.
2.           The competent authorities
shall review those plans and assess the extent to which each plan satisfies the
requirements set out in Article 5 and the following criteria:
(a)         
the implementation of the arrangements proposed
in the plan would be likely to restore the viability and financial soundness of
the institution, taking into account the preparatory measures that the
institution has taken or has planned to take;
(b)         
the plan or specific options could be
implemented effectively in situations of financial stress and without causing
any significant adverse effect on the financial system, including in the event
that other institutions implemented recovery plans within the same time period.
3.           Where competent
authorities assess that there are deficiencies in the recovery plan, or
potential impediments to its implementation, they shall notify the institution
of their assessment and require the institution to submit, within three months,
a revised plan demonstrating how those deficiencies or impediments have been
addressed.
4.           If the institution fails to
submit a revised recovery plan, or if the competent authority determines that
the revised recovery plan does not adequately remedy the deficiencies or
potential impediments identified in its original assessment, the competent
authorities shall require the institution to take any measure it considers
necessary to ensure that the deficiencies or impediments are removed. In
addition to the measures that may be required in accordance with Article 136 of
Directive 2006/48/EC, the competent authorities may, in particular, require the
institution to take actions to:
(a)         
facilitate the reduction of the risk profile of
the institution;
(b)         
enable timely recapitalisation measures;
(c)         
make changes to the firm strategy;
(d)         
make changes to the funding strategy so as to
improve the resilience of the core business lines and critical operations;
(e)         
make changes to the governance structure of the
institution.
5.           EBA shall develop draft regulatory
technical standards specifying the matters that the competent authority must
assess for the purposes of the assessment of paragraph 2 of this Article.
EBA shall submit those draft regulatory
technical standards to the Commission within twelve months from the date of
entry into force of this Directive.
Power is delegated to the Commission to adopt the
regulatory technical standards referred to in the first subparagraph in
accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU)
No 1093/2010.
Article 7
Group recovery plans
1.           Member States shall ensure
that parent undertakings or institutions that are subject to consolidated
supervision pursuant to Articles 125 and 126 of Directive 2006/48/EC draw up
and submit to the consolidating supervisor a group recovery plan that includes
a recovery plan for the whole group, including for the companies referred to in
points (c) and (d) of Article 1, as well as a recovery plan for each
institution that is part of the group.
2.           The consolidating
supervisor shall transmit the group recovery plans to the relevant competent
authorities referred to in Article 131a of Directive 2006/48/EC and to EBA.
3.           The group recovery plan
shall aim to achieve the stabilisation of the group as a whole, or any
institution of the group, when it is in a situation of stress so as to address
or remove the causes of the distress and restore the financial situation of the
group or the institution in question.
The group recovery plan shall include
arrangements to ensure the coordination and consistency of measures to be taken
at the level of the parent undertaking or relevant institution subject to
consolidated supervision, and at the level of the companies referred to in points
(c) and (d) of Article 1 as well as measures to be taken at the level of
individual institutions.
4.           The group recovery plan
shall include for the whole group and for each of its entities the elements and
arrangements provided in Article 5. It shall also include, where applicable,
arrangements for possible intra-group financial support adopted in accordance
with any agreement for group financial support that has been concluded in
accordance with Article 16.
5.           The consolidating
supervisor shall ensure that the parent undertaking or the institution subject
to consolidated supervision referred to in paragraph 1 provide a range of
recovery options setting out actions to address those scenarios provided for in
Article 5(5). 
For each of the scenarios, the group recovery
plan shall identify whether there are obstacles to the implementation of
recovery measures within the group, and whether there are substantial practical
or legal impediments to the prompt transfer of own funds or the repayment of
liabilities or assets within the group.
6.           The management body of the
parent undertaking or institution subject to consolidated supervision referred
to in paragraph 1 and the management body of institutions that are part of the
group shall approve the group recovery plan before submitting it to the consolidating
supervisor.
Article 8
Assessment of group recovery plans
1.           The consolidating
supervisor shall review the group recovery plan, including the recovery plans
for individual institutions that are part of the group, and assess the extent
to which it satisfies the requirements and criteria set out in Articles 6 and
7. That assessment shall be made in accordance with the procedure established
in Article 6 and the provisions of this Article.
The consolidating supervisor shall carry out
the review and assessment of the group recovery plan, including the recovery
plans for individual institutions that are part of the group, in consultation
and cooperation with the competent authorities referred to in Article 131a of
Directive 2006/48/EC. The review and assessment in accordance with Article 6(2)
of this Directive of the group recovery plan and, if necessary, the request to
take measures in accordance with Article 6(4) of this Directive shall take the
form of joint decisions by the authorities referred to in Article 131a of
Directive 2006/48/EC.
2.           The competent authorities
shall endeavour to reach the joint decision within a period of four months.
In the absence of a joint decision between the
competent authorities within four months, the consolidating supervisor shall make
its own decision on the review and assessment of the group recovery plan or on
the measures required in accordance with Article 6(4). The decision shall be
set out in a document containing the fully reasoned decision and should take
into account the views and reservations of the other competent authorities
expressed during the four-month period. The consolidating supervisor shall
notify the decision to the parent undertaking of the institution subject to
consolidated supervision and to the other competent authorities.
EBA may on its own initiative assist the
competent authorities in reaching an agreement in accordance with Article 19 of Regulation (EU) No 1093/2010.
3.           Any competent authority
that disagrees with the assessment of the group recovery plan or any action
that the parent undertaking or institution would be required to take as a
result of that assessment in accordance with Article 6(2) and (4) of this
Directive, may refer the matter to EBA in accordance with Article 19 of
Regulation (EU) No 1093/2010. The matter may not be referred to EBA after the
end of the four-month period or after a joint decision has been reached.
4.           EBA shall take its
decision within one month, and the four-month period referred to in paragraph 3
will be treated as the conciliation period within the meaning of Regulation (EU) No 1093/2010.
5.           If any competent authority
has referred the matter to EBA in accordance with paragraph 3, the
consolidating supervisor shall defer its decision and await any decision that
EBA may take. The subsequent decision of the consolidating supervisor shall
comply with the decision of EBA. 
Section 3
Resolution Planning
Article 9
Resolution plans
1.           Resolution authorities, in
consultation with competent authorities, shall draw up a resolution plan for
each institution that is not part of a group subject to consolidated
supervision pursuant to Articles 125 and 126 of Directive 2006/48/EC. The
resolution plan shall provide for the resolution actions which the resolution
and competent authorities may take where the institution meets the conditions
for resolution.
2.           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 system wide events. The resolution plan shall not assume any
extraordinary public financial support besides the use of the financing
arrangements established in accordance with Article 91. 
3.           Resolution plans shall be
reviewed, and where appropriate updated, at least annually and after any
material changes to the legal or organisational structure of the institution or
to its business or its financial situation that could have a material effect on
the effectiveness of the plan.
4.           The resolution plan shall
set out options for applying the resolution tools and resolution powers
referred to in Title IV to the institution. It shall include:
(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 on 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 13;
(f)           
a description of any measures required pursuant
to Article 14 to address or remove impediments to resolvability identified as a
result of the assessment carried out in accordance with Article 13;
(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 11 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 on options for preserving access
to payments and clearing services and other infrastructures;
(n)         
a plan for communicating with the media and the
public.
5.           EBA, in consultation with
the ESRB, shall develop draft regulatory technical standards specifying a range
of scenarios for the event of failure for the purposes of paragraph 2.
EBA shall submit those draft regulatory technical
standards to the Commission within twelve months from the date of entry into
force of this Directive.
Power is delegated to the Commission to adopt
the regulatory technical standards referred to in the first subparagraph in
accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU)
No 1093/2010.
Article 10
Information for the purpose of
resolution plans
1.           Member States shall ensure
that resolution authorities have the power to require institutions to provide
them with all of the information necessary to draw up and implement resolution
plans. In particular the resolution authorities shall have the power to
require, among other information, the information and analysis specified in
Section B of the Annex.
2.           Competent authorities in
the relevant Member States shall cooperate with resolution authorities in order
to verify whether some or all of the information referred to in paragraph 1 is
already available. Where such information is available, competent authorities
shall provide that information to the resolution authorities.
3.           EBA shall develop draft
implementing technical standards on standard forms, templates and procedures
for such provision of information.
EBA shall submit those draft implementing
technical standards to the Commission within twelve months from the date of
entry into force of this Directive.
Power is conferred on the Commission to adopt
the implementing technical standards referred to in the first subparagraph in
accordance with Article 15 of Regulation (EU) No 1093/2010.
Article 11
Group resolution plans
1.           Member States shall ensure
that resolution authorities draw up group resolution plans. Group resolution
plans shall include both a plan for resolution at the level of the parent
undertaking or institution subject to consolidated supervision pursuant to
Article 125 and 126 of Directive 2006/48/EC and the resolution plans for the
individual subsidiary institutions drawn up in accordance with Article 9 of
this Directive. The group resolution plans shall also include plans for the
resolution of the companies referred to in points (c) and (d) of Article 1 and plans
for the resolution of institutions with branches in other Member States in
compliance with the provisions of Directive 2001/24/EC.
2.           The group resolution plan
shall be drawn up on the basis of the information provided pursuant to Article
10.
3.           The group resolution plan
shall:
(a)         
set out the resolution actions to be taken with
regards to the group as a whole or part of the group, including individual
subsidiaries, both through resolution actions in respect to the companies
referred to in Article 1(d), the parent undertaking and subsidiary institutions
and through coordinated resolution actions in respect of subsidiary
institutions, in those scenarios provided for in Article 9(2);
(b)         
examine the extent to which the resolution tools
and powers could be applied and exercised in a coordinated way to group
entities located in the Union, including measures to facilitate the purchase by
a third party of the group as a whole, or separate business lines or activities
that are delivered by a number of group entities, or particular group entities,
and identify any potential impediments to a coordinated resolution;
(c)         
where a group includes entities incorporated in
third countries, identify arrangements for cooperation and coordination with
the relevant authorities of those third countries;
(d)         
identify measures, including the legal and
economic separation of particular functions or business lines, that are
necessary to facilitate group resolution when the conditions for resolution are
met;
(e)         
identify how the group resolution actions could be
financed and, where appropriate, set out principles for sharing responsibility
for that financing between sources of funding in different Member States. The
plan shall not assume extraordinary public financial support besides the use of
the financing arrangements established in accordance with Article 91. Those principles
shall be set out on the basis of equitable and balanced criteria and shall take
into account, in particular, the economic impact of the resolution in the
Member States affected and the distribution of the supervisory powers between
the different competent authorities.
Article 12
Requirement and procedure for group
resolution plans
1.           Parent undertakings and
institutions that are subject to consolidated supervision pursuant to Articles
125 and 126 of Directive 2006/48/EC shall submit the information required in
accordance with Article 11 of this Directive to the group level resolution
authority. That information shall concern the parent undertaking or institution
subject to consolidated supervision and all the legal entities that are part of
the group. Institutions subject to consolidated supervisions pursuant to
Articles 125 and 126 of Directive 2006/48/EC shall also provide the information
required pursuant to Article 11 of this Directive concerning the companies
referred to in points (c) and (d) of Article 1.
The group level resolution authority shall
transmit the information provided in accordance with this paragraph to EBA, to
the resolution authorities of the subsidiaries institutions, to the relevant
competent authorities referred to in Articles 130 and 131a of Directive
2006/48/EC and to the resolution authorities of the Member States where the
companies referred to in points (c) and (d) of Article 1 are established.
2.           Member States shall ensure
that group level resolution authorities, acting jointly with the resolution
authorities referred to in the second subparagraph of paragraph 1, in
resolution colleges and in consultation with the relevant competent
authorities, draw up and maintain group resolution plans. Group level
resolution authorities may, at their discretion, involve in the drawing up and
maintenance of group resolution plans third country resolution authorities of
jurisdictions in which the group has established subsidiaries or financial
holding companies or significant branches as referred to in Article 42a of
Directive 2006/48/EC.
3.           Member States shall ensure
that group resolution plans are updated at least annually, and after any change
to the legal or organisational structure of the institution or of the group, to
its business or to its financial situation that could have a material effect on
or require a change to the plans.
4.           The group resolution plan
shall take the form of a joint decision of the group level resolution authority
and the other relevant resolution authorities. The resolution authorities shall
make a joint decision within a period of four months from the date of the
transmission by the group level resolution authority of the information referred
to in the second subparagraph of paragraph 1.
In the absence of such a joint decision between
the resolution authorities within four months, the group level resolution
authority shall make its own decision. The decision shall be set out in a
document containing the fully reasoned decisions and shall take into account
the views and reservations of the other competent authorities expressed during
the four-month period. The group level resolution authority shall provide the
decision to the parent undertakings or institution which is subject to
consolidated supervision and to other resolution authorities.
EBA may on its own initiative assist the
competent authorities in reaching an agreement in accordance with Article 19 of Regulation (EU) No 1093/2010.
5.           A resolution authority
that disagrees with any element of the group resolution plan may refer the
matter to EBA in accordance with Article 19 of Regulation (EU) No 1093/2010.
The matter may not be referred to EBA after the end of the four-month period or
after a joint decision has been reached.
6.           EBA shall take a decision
within one month, and the four-month period shall be treated as the
conciliation period within the meaning of that Regulation. The subsequent
decision of the group level resolution authority shall comply with the decision
of EBA.
7.           Where any of the
resolution authorities concerned has referred the matter to EBA in accordance
with paragraph 5, the group level resolution authority shall defer its decision
and await any decision that EBA may take.
Chapter II
Assessment of Resolvability
and Preventative Powers
Article 13
Assessment of resolvability
1.           Member States shall ensure
that resolution authorities, in consultation with competent authorities, assess
the extent to which institutions and groups are resolvable without the
assumption of extraordinary public financial support besides the use of the
financing arrangements established in accordance with Article 91. An
institution or group 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 the different resolution tools and
powers to the institution and group without giving rise to significant adverse
consequences for the financial systems, including in circumstances of broader
financial instability or system wide events, of the Member State in which the
institution is situated, having regard to the economy or financial stability in
that same or other Member State or the Union and with a view to ensure the
continuity of critical functions carried out by the institution or group either
because they can be easily separated in a timely manner or by other means. 
2.           For the purposes of the
assessment of resolvability referred to in paragraph 1, resolution authorities
shall, as a minimum, examine the matters specified in Section C of the Annex.
3.           EBA, in consultation with
ESRB, shall develop draft regulatory technical standards to specify the matters
to be examined for the assessment of the resolvability of institutions or
groups provided for in paragraph 2. EBA shall submit those draft regulatory
technical standards to the Commission within twelve months from the date of
entry into force of this Directive.
4.           Power is conferred on the
Commission to adopt the draft regulatory technical standards referred to in the
first subparagraph in accordance with the procedure laid down in Articles 10 to
14 of Regulation (EU) No 1093/2010.
Article 14
Powers to address or remove impediments
to resolvability
1.           Member States shall ensure
that when, pursuant to an assessment of resolvability carried out in accordance
with Article 13, a resolution authority determines that there are potential substantive
impediments to the resolvability of an institution, the resolution authority
shall notify in writing that determination to the institution.
2.           Within four months of the date
of receipt of a notification made in accordance with paragraph 1, the
institution shall propose to the resolution authority measures to address or
remove the impediments identified in the notification. The resolution
authority, in consultation with the competent authorities, shall assess whether
those measures effectively address or remove the impediments in question.
3.           Where the resolution authority
assesses that the measures proposed by an institution in accordance with
paragraph 2 do not effectively reduce or remove the impediments in question, it
shall, in consultation with the competent authorities, identify alternative
measures that may achieve that objective, and notify in writing those measures
to the institution.
4.           For the purposes of
paragraph 3, measures identified by a resolution authority may, where necessary
and proportionate to reduce or remove the impediments to resolvability in question,
include the following:
(a)         
requiring the institution to draw up service
agreements (whether intra-group or with third parties) to cover the provision
of critical economic functions or services;
(b)         
requiring the institution to limit its maximum
individual and aggregate exposures;
(c)         
imposing specific or regular information
requirements relevant for resolution purposes;
(d)         
requiring the institution to divest specific
assets;
(e)         
requiring the institution to limit or cease
specific existing or proposed activities;
(f)           
restricting or preventing the development or
sale of new business lines or products;
(g)         
requiring changes to legal or operational
structures of the institution so as to reduce complexity in order to ensure
that critical functions may be legally and economically separated from other
functions through the application of the resolution tools;
(h)         
requiring a parent undertaking to set up a
parent financial holding company in a Member State or a Union parent financial holding
company;
(i)           
requiring a parent undertaking, or a company
referred to in points (c) and (d) of Article 1 to issue the debt instruments or
loans referred to in Article 39 (2);
(j)           
where an institution is the subsidiary of a
mixed-activity holding company, requiring that the mixed-activity holding
company set up a separate financial holding company to control the institution,
if this is necessary in order to facilitate the resolution of the institution
and to avoid the application of the resolution tools and powers specified in
Title IV having an adverse effect on the non-financial part of the group.
5.           Resolution authorities
shall not base a determination in accordance with paragraph 1 on impediments
resulting from factors beyond the control of the institution, including the
operational and financial capacity of the resolution authority.
6.           A notification made
pursuant to paragraph 1 or 3 shall meet the following requirements:
(a)         
it shall be supported by reasons for the
assessment or determination in question;
(b)         
it shall indicate how that assessment or
determination complies with the requirement for proportionate application set
out in Article 9.
7.           Before indentifying any
measure referred to in paragraph 3, resolution authorities shall duly consider
the potential effect of those measures on the stability of the financial system
in other Member States.
8.           EBA shall develop draft
regulatory technical standards for specifying the measures provided for in
paragraph 4 and the circumstances in which each measure may be applied.
EBA shall submit those draft regulatory technical
standards to the Commission within twelve months from the date of entry into
force of this Directive.
Power is delegated to the Commission to adopt
the regulatory technical standards referred to in the first subparagraph in
accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU)
No 1093/2010.
Article 15
Powers to address or remove impediments
to resolvability: group treatment
1.           The group level resolution
authorities and the resolution authorities of the subsidiaries, in consultation
with the relevant competent authorities, shall consult each other within the
resolution college and shall take all reasonable steps to reach a joint
decision in regards to the application of measures identified in accordance
with Article 14(3).
2.           The group level resolution
authority, in cooperation with the consolidating supervisor and EBA in
accordance with Article 25(1) of Regulation (EU)
No 1093/2010, shall prepare and submit a report to the parent undertakings
or institution subject to consolidated supervision and to the resolution
authorities of the subsidiaries. The report shall be prepared in consultation
with the competent authorities, and shall analyse the substantive impediments
to the effective application of the resolution tools and the exercising of the
resolution powers in relation to the group. The report shall also recommend any
measures that, in the authorities' view, are necessary or appropriate to remove
those impediments.
3.           Within four months after the
date of receipt of the notification, the parent undertaking or institution
subject to consolidated supervision may submit observations and propose to the
group level resolution authority alternative measures to remedy the impediments
identified in the report.
4.           The group level resolution
authority shall communicate any measure proposed by the parent undertakings or
institution subject to consolidated supervision to the consolidating
supervisor, EBA and the resolution authorities of the subsidiaries. The group
level resolution authorities and the resolution authorities of the
subsidiaries, in consultation with the competent authorities, shall do
everything within their power to reach a joint decision within the resolution
college regarding the identification of the material impediments, and if
necessary, the assessment of the measures proposed by the parent undertakings
or institution subject to consolidated supervision and the measures required by
the authorities in order to address or remove the impediments.
5.           The joint decision shall be
reached within four months from the submission of the report. It shall be
reasoned and set out in a document which shall be provided to the parent
undertakings or institution which is subject to consolidated supervision by the
group level resolution authority.
EBA may on its own initiative assist the
resolution authorities in reaching an agreement in accordance with Article 19
of Regulation (EU) No 1093/2010.
6.           In the absence of a joint
decision within four months from the date of submission of the report referred
to in paragraphs 1 or 2, the group level resolution authority shall make its
own decision on the appropriate measures to be taken in accordance with Article
14(3) in relation to the group as a whole.
The decision shall be set out in a document containing
a full reasoning and shall take into account the views and reservations of the
other resolution authorities expressed during the four months period. The
decision shall be provided to the parent undertaking or institution which is
subject to consolidated supervision by the group level resolution authority.
The decision referred to in the first
subparagraph shall be recognised as conclusive and applied by the competent
authorities in the Member States concerned. 
Where, at the end of the four-month period, any
of the resolution authorities concerned has referred the matter to EBA in
accordance with Article 19 of Regulation (EU) No 1093/2010, the group level
resolution authority shall defer its decision and await any decision that EBA
may take in accordance with Article 19(3) of that Regulation. EBA shall take
its decision within one month and the four-month period shall be deemed the
conciliation period within the meaning of that Regulation. The subsequent
decision of the group level resolution authority shall be in conformity with
the decision of EBA. The matter shall not be referred to EBA after the end of
the four month period or after a joint decision has been reached.
Chapter III
Intra Group Financial Support
Article 16
Group financial support agreement
1.           Member States shall ensure
that a parent institution in a Member State, or a Union parent institution, or
a company referred to in points (c) and (d) of Article 1and its subsidiaries
that are institutions or financial institutions covered by the supervision of
the parent undertaking, may enter into an agreement to provide financial
support to any other party to the agreement that experiences financial
difficulties, provided that the conditions laid down in this chapter are
satisfied.
2.           The agreement may:
(a)         
cover one or more subsidiaries of the group, and
may provide for financial support from the parent undertaking to subsidiaries,
from subsidiaries to the parent undertaking, between subsidiaries of the group
that are party to the agreement, or any combination of those entities ; 
(b)         
provide for financial support in the form of a
loan, the provision of guarantees, or the provision of assets for use as
collateral in transaction between the beneficiary of the support and a third
party, or any combination of those entities.
3.           Where in accordance with the
terms of the agreement, a subsidiary agrees to provide financial support to the
parent undertaking, the agreement shall include a reciprocal agreement by the
parent undertaking to provide financial support to that subsidiary.
4.           The agreement shall
specify the consideration payable, or set out principles for the calculation of
the consideration, for any transaction made under it.
5.           The agreement may only be
concluded if, at the time the proposed agreement is made, in the opinion of the
supervisory authority, none of the parties is in breach of, or likely to be in
breach of, any requirement of Directive 2006/48/EC relating to capital or
liquidity or is at risk of insolvency.
6.           Member States shall ensure
that any right, claim or action arising from the agreement may be exercised
only by the parties to the agreement, with the exclusion of third parties.
Article 17
Review of proposed agreement by
supervisors and mediation 
1.           The parent undertakings
and institutions which are subject to consolidated supervision pursuant to
Articles 125 and 126 of Directive 2006/48/EC shall submit to the consolidating
supervisor an application for authorisation of any proposed group financial
support agreement. The application shall contain the text of the proposed
agreement and identify the group entities that propose to be parties.
2.           The consolidating
supervisor shall grant the authorisation if the terms of the proposed agreement
are consistent with the conditions for financial support set out in Article 19.
3.           The consolidating
supervisor shall forward without delay the application to the competent
authorities of each subsidiary that proposes to be a party to the agreement.
4.           The competent authorities
shall do everything within their power to reach a joint decision on whether the
terms of the proposed agreement are consistent with the conditions for
financial support set out in Article 19 within four months from the date of
receipt of the application by the consolidating supervisor. The joint decision
shall be set out in a document containing the fully reasoned decision, which
shall be provided to the applicant by the consolidating supervisor.
5.           In the absence of a joint
decision between the competent authorities within four months, the
consolidating supervisor shall make its own decision on the application. The
decision shall be set out in a document containing the full reasoning and shall
take into account the views and reservations of the other competent authorities
expressed during the four-month period. The consolidating supervisor shall
notify the decision to the applicant and the other competent authorities.
6.           If, at the end of the four-month
period, any of the competent authorities concerned has referred the matter to EBA
in accordance with Article 19 of Regulation (EU) No 1093/2010, the
consolidating supervisor shall defer its decision and await any decision that
EBA may take in accordance with Article 19(3) of that Regulation, and shall
take its decision in conformity with the decision of EBA. The four-month period
shall be deemed the conciliation period within the meaning of that Regulation.
EBA shall take its decision within one month. The matter shall not be referred
to EBA after the end of the four-month period or after a joint decision has
been reached.
Article 18
Approval of proposed agreement by
shareholders
1.           Member States may require
that any proposed agreement that has been authorised by the competent
authorities be submitted for approval to the shareholders meeting of every
group entity that proposes to enter into the agreement. In this case, the
agreement shall be valid only in respect of those parties whose shareholders'
meeting has approved the agreement.
2.           Where Member States avail
themselves of the option provided for in paragraph 1, they shall require that in
accordance with the group financial support agreement, the shareholders of
every group entity that will be a party to the agreement authorise the
respective management body referred to in Article 11 of Directive 2006/48/EC to
make a decision that the entity shall provide financial support in accordance
with the terms of the agreement and in accordance with the conditions set out
in this Chapter. No further approval by the shareholders nor any additional
meeting for any specific transaction undertaken in accordance with the
agreement shall be required.
3.           The management body of each
entity that is party to an agreement shall report each year to the shareholders
on the performance of the agreement, and on the implementation of any decision
taken pursuant to the agreement.
Article 19
Conditions for group financial support
1.           Financial support may only
be provided in accordance with a group financial support agreement if the
following conditions are met:
(a)         
there is a reasonable prospect that the support
provided redresses the financial difficulties of the entity receiving the
support;
(b)         
the provision of financial support has the
objective of preserving or restoring the financial stability of the group as a
whole;
(c)         
the financial support is provided for
consideration;
(d)         
it is reasonably certain, on the basis of the
information available to the management body at the time when the decision to
grant financial support is taken, that the loan is reimbursed or the consideration
for the support is paid at an appropriate price by the entity receiving the
support;
(e)         
the financial support does not jeopardize the
liquidity or solvency of the entity providing the support nor, as a result, does
it create a threat to financial stability;
(f)           
the entity providing the support complies at the
time the support is provided, and shall continue to comply after the support is
provided, with the own funds requirements and any requirements imposed pursuant
to Article 136(2) of Directive 2006/48/EC.
2.           EBA shall develop draft
implementing technical standards to specify the conditions set out in paragraph
1.
EBA shall submit those draft implementing
technical standards to the Commission within twelve months from the date of
entry into force of this Directive.
Power is conferred on the Commission to adopt
the implementing technical standards submitted by EBA in accordance with
Article 15 of Regulation (EU) No 1093/2010.
Article 20
Decision to provide financial support
The decision to provide group financial
support in accordance with the agreement is taken by the management body as
referred to in Article 11 of Directive 2006/48/EC of the entity providing
financial support. That decision shall be reasoned and shall indicate the
objective of the proposed financial support. In particular, the decision shall
indicate:
(a)         
how the financial support preserves or restores
the financial stability of the group as a whole;
(b)         
that the financial support does not exceed the
financial capacities of the legal entity providing the financial support;
(c)         
that the entity providing financial support shall
continue to meet the own funds requirements and any requirements imposed
pursuant to Article 136(2) of Directive 2006/48/EC.
Article 21
Right of opposition of competent
authorities
1.           Before providing support in
accordance with a group financial support agreement, the management body of an
entity that intends to provide financial support shall notify its competent
authority and EBA. The notification shall include details of the proposed
support.
2.           Within two days from the
date of receipt of a notification, the competent authority may prohibit or
restrict the provision of financial support set out in Article 19 if the
conditions for group financial support are not met. A decision of the competent
authority to prohibit or restrict the financial support shall be reasoned.
3.           The competent authority
shall immediately inform EBA, the consolidating supervisor and the competent
authorities identified in Article 131a of Directive 2006/48/EC, of its decision
to prohibit or restrict the financial support.
4.           Where the consolidating supervisor or the competent authority responsible for
the entity receiving support has objections regarding the decision to prohibit
or restrict the financial support, they may refer the matter to EBA and request
its assistance in accordance with Article 19 of Regulation 1093/2010. In that
case, EBA may act in accordance with the powers conferred on it by that
Article. By way of derogation from the time limit provided for by Article 39,
paragraph 1 of Regulation 1093/2010, EBA shall take any decision in accordance
with Article 19(3) of Regulation 1093/2010 within 48 hours.
5.           If the competent authority
does not prohibit or restrict the financial support within the period indicated
in paragraph 2, financial support may be provided in accordance with the terms
submitted to the competent authority.
Article 22
Disclosure
3.           Member States shall ensure
that institutions that have entered into a group financial support agreement
pursuant to Article 16 to make public a description of the agreement and the
names of the entities that are party to it and update that information at least
annually.
Articles 145 to 149 of Directive 2006/48/EC
shall apply.
4.           EBA shall develop draft
regulatory technical standards to specify the form and content of the
description provided for in paragraph 1. EBA shall submit those draft
regulatory technical standards to the Commission within twelve months from the
date of entry into force of this Directive.
5.           Power is conferred on the
Commission to adopt the draft regulatory technical standards referred to in the
first subparagraph in accordance with the procedure laid down in Articles 10 to
14 of Regulation (EU) No 1093/2010.
TITLE III
EARLY INTERVENTION
Article 23
Early intervention measures
1.           Where an institution does
not meet or is likely to breach the requirements of Directive 2006/48/EC, Member
States shall ensure that competent authorities, , have at their disposal, in
addition to the measures referred to in Article 136 of Directive 2006/48/EC
where applicable, in particular, the following measures:
(a)         
require the management of the institution to
implement one or more of the arrangements and measures set out in the recovery
plan;
(b)         
require the management of the institution to
examine the situation, identify measures to overcome any problems identified
and draw up an action program to overcome those problems and a timetable for
its implementation;
(c)         
require the management of the institution to
convene, or if the management fails to comply with this requirement convene
directly, the shareholders meeting of the institution, propose the agenda and
the adoption of certain decisions;
(d)         
require the management of the institution to
remove and replace one or more board members or managing directors if these
persons are found unfit to perform their duties pursuant to Article 11 of
Directive 2006/48/EC;
(e)         
require the management of the institution to
draw up a plan for negotiation on restructuring of debt with some or all of its
creditors;
(f)           
acquire, including through on-site inspections,
all the information necessary in order to prepare for the resolution of the
institution, including carrying out an evaluation of the assets and liabilities
of the institution;
(g)         
contact potential purchasers in order to prepare
for the resolution of the institution, subject to the conditions laid down in
article 33(2) and the confidentiality provisions laid down in Article 77. 
2.           EBA shall develop draft implementing
technical standards in order to ensure consistent application of the measures
provided for in paragraph 1 of this Article. 
EBA shall submit those draft implementing
technical standards to the Commission within twelve months from the date of
entry into force of this Directive.
Power is conferred on the Commission to adopt
the implementing technical standards referred to in the first subparagraph in
accordance with Article 15 of Regulation (EU) No 1093/2010.
Article 24
Special management
1.           Where there is a
significant deterioration in the financial situation of an institution or where
there are serious violations of law, regulations or bylaws or serious
administrative irregularities, and other measures taken in accordance with
Article 23 are not sufficient to reverse that deterioration, Member States
shall ensure that competent authorities may appoint a special manager to
replace the management of the institution. Competent authorities shall make
public the appointment of a special manager. Member States shall further ensure
that the special manager has the qualifications, ability and knowledge required
to carry out his or her functions.
2.           The special manager shall
have all the powers of the management of the institution under the statutes of
the institution and under national law, including the power to exercise all the
administrative functions of the management of the institution. However, the
special manager may only exercise the power to convene the general meeting of
the shareholders of the institution and to set the agenda with the prior
consent of the competent authority.
3.           The special manager shall
have the statutory duty to take all the measures necessary and to promote
solutions in order to redress the financial situation of the institution and
restore the sound and prudent management of its business and organization.
Where necessary, that duty shall override any other duty of management in
accordance with the statutes of the institution or national law, insofar as
they are inconsistent. Those solutions may include an increase of capital,
reorganisation of the ownership structure of the institution or takeovers by
institutions that are financially and organisationally sound.
4.           Competent authorities may
set limits to the action of a special manager or require that certain acts of the
special manager be subject to the competent authority's prior consent. The
competent authorities may remove the special manager at any time.
5.           Member States shall
require that a special manager draw up reports for the appointing competent
authority on the economic and financial situation of the institution and on the
acts performed in the conduct of his duties, at regular intervals set by the
competent authority and at the beginning and the end of its mandate.
6.           Special management shall
not last more than one year. This period can be exceptionally renewed if the
conditions for appointing a special manager continue to be met. The competent
authority shall be responsible for determining whether conditions are
appropriate to maintain a special manager and justifying any such decision to
shareholders.
7.           Subject to the provisions
in paragraphs 1 to 6 the appointment of the special manager shall not prejudice
the rights of the shareholders or owners provided for in accordance Union or
national company law.
8.           The appointment of a
special manager shall not be recognised as an enforcement event within the
meaning of Directive 2002/47/EC of the European Parliament and of the Council[36] or as insolvency proceedings
within the meaning of Directive 98/26/EC of the European Parliament and of the
Council[37].
Article 25
Coordination of early intervention
measures and appointment of special manager in relation to groups
1.           Where the conditions for
the imposition of requirements under Article 23 of this Directive or the appointment
of a special manager in accordance with Article 24 of this Directive are met in
relation to a parent undertaking or an institution subject to consolidated
supervision pursuant to Articles 125 and 126 of Directive 2006/48/EC or any of
its subsidiaries, the competent authority that intends to take a measure in
accordance with those Articles shall notify other relevant competent
authorities within the supervisory college and EBA of its intention.
2.           The consolidating
supervisor and the other relevant competent authorities shall consider whether
it is necessary to take measures in accordance with Article 23 or appoint a
special manager in accordance with Article 24 in relation to other group
entities and whether the coordination of the measures to be taken is desirable.
The consolidating supervisor and other relevant authorities shall consider
whether any alternative measure would be more likely to restore the viability
of the individual entities and preserve the financial soundness of the group as
a whole. Where more than one competent authority intends to appoint a special
manager in relation to an entity affiliated to a group, authorities shall
consider whether it is more appropriate to appoint the same special manager for
all the entities concerned or for the whole group in order to facilitate
solutions redressing the financial soundness of the group as a whole.
The assessment shall take the form of a joint
decision of the consolidating supervisor and the other relevant competent
authorities. The joint decision shall be reached within five days from the date
of the notification referred to in paragraph 1. The joint decision shall be
reasoned and set out in a document, which shall be provided by the
consolidating supervisor to the parent undertaking or institution that is
subject to consolidated supervision.
3.           EBA may on its own
initiative assist the competent authorities in reaching an agreement in
accordance with Article 19 of Regulation (EU) No 1093/2010.
4.           In the absence of a joint
decision within five days the consolidating supervisor and the competent
authorities responsible for supervising the subsidiaries may take individual
decisions.
5.           The decision of each
competent authority shall be reasoned. The decision shall take into account the
views and reservations of the other competent authorities expressed during the five
day period and the potential impact of the decision on the financial stability
in other Member States. The decisions shall be provided by the consolidating
supervisor to the parent undertaking or institution which is subject to
consolidated supervision and to the subsidiaries by the respective competent
authorities.
Where, at the end of the five-day period, any
of the competent authorities concerned has referred the matter to EBA in accordance
with Article 19 of Regulation (EU) No 1093/2010, the consolidating supervisor
and the other competent authorities shall defer their decisions and await any
decision that EBA may take in accordance with Article 19(3) of that Regulation,
and shall take their decision in conformity with the decision of EBA. The five-day
period shall be deemed the conciliation period within the meaning of that
Regulation. EBA shall take its decision within five days. The matter shall not
be referred to EBA after the end of the five-day period or after a joint
decision has been reached.
6.           Before taking their own
decisions in accordance with paragraph 4, the competent authorities shall
consult EBA. The decision shall consider the advice of EBA and explain any
significant deviation from that advice.
TITLE IV
RESOLUTION
Chapter I
Objectives, Conditions and General Principles
Article 26
Resolution objectives
1.           When applying the
resolution tools and exercising the resolution powers, resolution authorities
shall have regard to the resolution objectives, and choose the tools and powers
that best achieve the objectives that are relevant in the circumstances of the
case.
2.           The resolution objectives referred
to in paragraph 1 are:
(a)         
to ensure the continuity of critical functions;
(b)         
to avoid significant adverse effects on
financial stability, including by preventing contagion, and maintaining market
discipline;
(c)         
to protect public funds by minimising reliance
on extraordinary public financial support;
(d)         
to avoid unnecessary destruction of value and to
seek to minimise the cost of resolution;
(e)         
to protect depositors covered by Directive
94/19/EC and investors covered by Directive 97/9/EC;
(f)           
to protect client funds and client assets.
3.           Subject to different
provisions of this Directive, the resolution objectives are of equal
significance, and resolution authorities shall balance them as appropriate to
the nature and circumstances of each case. 
Article 27
Conditions for resolution
1.           Member States shall ensure
that resolution authorities shall take a resolution action in relation to an
institution referred to in Article 1(a) only if all of the following conditions
are met:
(a)         
the competent authority or resolution authority
determines that the institution 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, other than a resolution action taken in respect
of the institution, would prevent the failure of the institution within reasonable
timeframe;
(c)         
a resolution action is necessary in the public
interest pursuant to paragraph 3.
2.           For the purposes of point
(a) of paragraph 1, an institution is deemed failing or likely to fail in one
or more of the following circumstances:
(a)         
the institution 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 capital requirements for continuing
authorisation in a way that would justify the withdrawal of the authorisation
by the competent authority because the institution has incurred or is likely to
incur in losses that will deplete all or substantially all of its own funds;
(b)         
the assets of the institution are or there are
objective elements to support a determination that the assets of the
institution will be, in the near future, less than its liabilities;
(c)         
the institution is or there are objective
elements to support a determination that the institution will be, in the near
future, unable to pay its obligations as they fall due;
(d)         
the institution requires extraordinary public
financial support except when, in order to
preserve financial stability, it requires any of the following:
(i)      a State guarantee to back liquidity
facilities provided by central banks according to the banks' standard
conditions (the facility is fully secured by collateral to which haircuts are
applied, in function of its quality and market value, and the central bank
charges a penal interest rate to the beneficiary); or
(ii)      a State guarantee on newly issued
liabilities in order to remedy a serious disturbance in the economy of a Member
State.
In both cases mentioned in points (i) and (ii),
the guarantee measures shall be confined to solvent financial institutions,
shall not be part of a larger aid package, shall be conditional to approval
under State aid rules, and shall be used for a maximum duration of three
months.
3.           For the purposes of point
(c) of paragraph 1, 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 26 and winding up of the institution or
parent undertaking under normal insolvency proceedings would not meet those
resolution objectives to the same extent.
4.           EBA shall issue guidelines,
in accordance with Article 16 of Regulation (EU) No 1093/2010 to promote the
convergence of supervisory and resolution practices regarding the
interpretation of the different circumstances when an institution shall be considered
as failing or likely to fail. EBA shall develop these guidelines at the latest
by the date provided for in the first subparagraph of Article 115(1) of this Directive.
5.           The Commission, taking
into account, where appropriate, the experience acquired in the application of EBA
guidelines, shall adopt delegated acts in accordance with Article 103 aimed at specifying
the circumstances when an institution shall be considered as failing or likely
to fail. 
Article 28
Conditions for resolution with regard to
financial institutions and holding companies
1.           Member States shall ensure
that resolution authorities may take a resolution action in relation to a
financial institution or firm referred to in point (b) of Article 1, when the
conditions specified in Article 27(1), are met with regard to both the
financial institution or firm and with regard to the parent institution subject
to consolidated supervision. 
2.           Member States shall ensure
that resolution authorities shall take a resolution action in relation to a
company referred to in points (c) or (d) of Article 1, when the conditions
specified in Article 27(1) are met with regard to both the company referred to
in points (c) or (d) of Article 1 and with regard to one or more subsidiaries
which are institutions.
3.           Where the subsidiary
institutions of a mixed-activity holding company are held directly or
indirectly by an intermediate financial holding company, Member States shall
ensure that resolution actions for the purposes of group resolution are taken
in relation to the intermediate financial holding company, and shall not take
resolution actions for the purposes of group resolution in relation to the
mixed-activity holding company.
4.           Subject to paragraph 3 and
by way of derogation from the provisions of paragraph 1, notwithstanding the
fact that a company referred to in point(c) or (d) of Article 1 may not meet
the conditions established in Article 27 (1) resolution authorities may take
resolution action with regards to a company referred to in point (c) or (d) of Article
1 when one or more of the subsidiaries which are institutions comply with the
conditions established in Article 27 (1), (2) and (3) and action with regard to
the company referred to in points (c) or (d) of Article 1 is necessary for the
resolution of one or more subsidiaries which are institutions or for the
resolution of the group as a whole.
Article 29
General principles governing resolution
1.           Member States shall ensure
that, when applying the resolution tools and exercising the resolution powers,
resolution authorities 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 this Directive;
(c)         
senior management of the institution under
resolution is replaced;
(d)         
senior managers of the institution under
resolution bear losses that are commensurate under civil or criminal law with
their individual responsibility for the failure of the institution;
(e)         
except where otherwise provided in this
Directive, creditors of the same class are treated in an equitable manner;
(f)           
no creditor incurs greater losses that would be
incurred if the institution would have been wound down under normal insolvency
proceedings.
2.           Where an institution is a
group entity, resolution authorities shall apply resolution tools and exercise
resolution powers in a way that minimises the impact on affiliated institutions
and on the group as a whole and minimises the adverse effect on financial
stability in the Union and, in particular, in the countries where the group
operates.
3.           When applying the resolution
tools and exercising the resolution powers, Member States shall ensure that they
comply with the Union State aid framework, where applicable.
Chapter II
Valuation
Article 30
Preliminary valuation
1.           Before taking resolution
action and in particular, for the purposes of Articles 31, 34, 36, 41, 42 and 65,
resolution authorities shall ensure that a fair and realistic valuation of the
assets and liabilities of the institution is carried out by a person
independent from any public authority, including the resolution authority, and
the institution. The resolution authority shall endorse that valuation. Where
independent valuation is not possible due to the urgency in the circumstances
of the case, resolution authorities may carry out the valuation of the assets
and liabilities of the institution.
2.           Without prejudice to the
Union State aid framework, where applicable, the valuation required by
paragraph 1 shall be based on prudent and realistic assumptions, including as
to rates of default and severity of losses, and its objective shall be to
assess the market value of the assets and liabilities of the institution that
is failing or is likely to fail so that any losses that could be derived are
recognised at the moment the resolution tools are exercised. However, where the
market for a specific asset or liability is not functioning properly the
valuation may reflect the long term economic value of those assets or
liabilities. Valuation shall not assume the provision of extraordinary public
support to the institution, regardless of whether it is actually provided.
3.           The valuation shall be
supplemented by the following information as appearing in the accounting books and
records of the institution:
(a)         
an updated balance sheet and a report on the
economic and financial situation of the institution;
(b)         
a note providing an analysis and an estimate of
the value of the assets;
(c)         
the list of outstanding liabilities shown in the
books and records of the institution, with an indication of the respective
credits and priority level under the applicable insolvency law;
(d)         
the list of assets held by the institution for
account of third parties who have ownership rights on those assets.
4.           The valuation shall
indicate the subdivision of the creditors in classes in accordance with their
priority level under the applicable insolvency law and an estimate of the
treatment that each class could be expected to receive in winding up
proceedings.
5.           Where due to the urgency
in the circumstances of the case, it is not possible to comply with the
requirements laid down in paragraphs 3 and 4, the valuation either by an
independent person or by a resolution authority shall be carried out in
compliance with the requirements laid down in paragraph 2. That valuation shall
be considered as provisional until the resolution authority has carried out a
valuation that complies with all the requirements under this article. That
definitive valuation may be carried out separately or together with the
valuation referred to in Article 66.
6.           The valuation shall be
integrant part of the decision to apply a resolution tool or exercise a
resolution power. The valuation shall not be subject to separate judicial
review and shall be subject to judicial review only together with the decision
in accordance with the provisions of Article 78.
7.           EBA shall develop draft
regulatory technical standards to specify the following criteria for the
purposes of paragraphs 1 and 2 of this Article, and for the purposes of Article
66:
(a)         
under which circumstances a person is
independent from both the resolution authority and the institutions, and
(b)         
under which circumstances a valuation by an
independent person may be considered as not possible;
(c)         
the methodology for assessing the market value
of the assets and liabilities of the institution that is failing or likely fail;
(d)         
the circumstances where the market for a
specific asset or liability can be considered as not functioning properly;
(e)         
the methodology for assessing the long term
economic value of the assets and liabilities of the institution that is failing
or likely fail
EBA shall submit those draft regulatory
technical standards to the Commission within twelve months from the date of
entry into force of this Directive.
Power is delegated to the Commission to adopt
the regulatory technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.
Chapter III
Resolution Tools
Section I
General Principles
Article 31
General principles of resolution tools
1.           Member States shall ensure
that resolution authorities have the necessary powers to apply the resolution
tools to an institution, a financial institution or a company referred to in points
(c) and (d) of Article 1 that meets the applicable conditions for resolution.
2.           The resolution tools referred
to in paragraph 1 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.           Subject to paragraph 4,
resolution authorities may apply the resolution tools either singly or in
conjunction.
4.           Resolution authorities may
apply the asset separation tool only in conjunction with another resolution
tool.
5.           When the resolution tools referred
to in points (a), (b) or (c) of paragraph 2are applied, and they are used to
partially transfer assets, rights or liabilities of the institution under
resolution, the residual part of the institution from which the assets, rights
or liabilities have been transferred, shall be wound up under normal insolvency
proceedings within a time frame that is appropriate having regard to any need
for that institution to provide services or support pursuant to Article 58 in
order to enable the transferee to carry on the activities or services acquired
by virtue of that transfer.
6.           Member States shall ensure
that rules under national insolvency law relating to the voidability or
unenforceability of legal acts detrimental to creditors do not apply to
transfers of assets, rights or liabilities from an institution under resolution
to another entity by virtue of the application of a resolution tool or exercise
of a resolution power.
7.           Member States shall not be
prevented from conferring upon resolution authorities additional powers
exercisable where an institution meets the conditions for resolution, provided
that those additional powers do not pose obstacles to effective group
resolution and that they are consistent with the resolution objectives and the
general principles governing resolution set out in Articles 26 and 29. 
Section 2
The Sale of Business Tool
Article 32
The sale of business tool
1.           Member States shall ensure
that resolution authorities have the power to transfer to a purchaser that is
not a bridge institution the following:
(a)         
shares or other instruments of ownership of an
institution under resolution;
(b)         
all or specified assets, rights or liabilities
of an institution under resolution;
(c)         
any combination of some or all of the assets,
rights and liabilities of an institution under resolution,
The transfer referred to in the first
subparagraph shall take place without obtaining the consent of the shareholders
of the institution under resolution or any third party other than the purchaser,
and without complying with any procedural requirements under company or
securities law that would otherwise apply.
2.           A transfer made pursuant
to paragraph 1 shall be made on commercial terms, having regard to the
circumstances, and in accordance with Union State aid rules.
3.           In the case of a partial
transfer of assets of the institution, any proceeds received from the transfer shall
benefit the institution under resolution. 
Where that all of the shares or other
instruments of ownership are transferred or where all the assets, rights and
liabilities of the institution are transferred, any proceeds received from the
transfer shall benefit the shareholders of the institution under resolution, who
have been divested of their rights.
Member States shall calculate the proceeds
referred to in paragraph 2 of this Article, net of the amount of expenses,
administrative or of other nature, occurred in the context of the resolution
process, including costs and expenses incurred by the financing arrangements
pursuant to Article 92.
4.           Resolution authorities
shall take all reasonable steps to obtain commercial terms for the transfer in
accordance with paragraph 2 of this Article that are in conformity with the fair
and realistic valuation conducted under Article 30, having regard to the
circumstances of the case.
5.           When applying the sale of
business tool the resolution authorities may exercise the transfer power more
than once in order to make supplemental transfers of shares or other
instruments of ownership or, as the case may be, assets, rights or liabilities
of the institution under resolution.
6.           Following an application
of the sale of business tool, resolution authorities may, with the consent of
the purchaser, exercise the transfer powers in respect of shares or other
instruments of ownership or, as the case may be, assets, rights or liabilities
transferred to the purchaser in order to transfer the property back to the
institution under resolution.
7.           A purchaser must have the appropriate
authorisation to carry on the activities or services that it acquires by virtue
of a transfer made pursuant to paragraph 1.
8.           By way of derogation from
Article 19(1) of Directive 2006/48, where a transfer of shares or other
instruments of ownership by virtue of an application of the sale of business
tool would result in the acquisition or increase of a qualifying holding of a
kind referred to in Article19(1) of Directive 2006/48, competent authorities
shall carry out the assessment required under that Article in a timely manner
that does not delay the application of the sale of business tool and prevent
the resolution action from achieving the relevant resolution objectives.
9.           Transfers made by virtue
of the sale of business tool which involves the transfer of some, but not all,
of the assets, rights or liabilities of an institution shall be subject to the
safeguards for partial property transfers specified in Chapter V.
10.         For the purposes of
exercising the rights to provide services or to establish itself in another
Member State in accordance with Directive 2006/48/EC or Directive 2004/39/EC,
the purchaser shall be considered to be a continuation of the institution under
resolution, and may continue to exercise any such right that was exercised by
the institution under resolution in respect of the assets, rights or
liabilities transferred, including the rights of membership and access to
payment, clearing and settlement systems.
11.         Shareholders or creditors of
the institution under resolution and other third parties whose property, rights
or liabilities are not transferred shall not have any rights over or in
relation to the assets, rights or liabilities transferred.
Article 33
Sale of business tool: procedural
requirements
1.           Subject to paragraph 3,
when applying the sale of business tool to an institution a resolution
authority shall market, or make arrangements for the marketing of that
institution or those of its assets, rights or liabilities that the authority
intends to transfer. Pools of rights, assets, and liabilities may be marketed
separately.
2.           Without prejudice to the
Union State aid framework, where applicable, the marketing referred to in paragraph
1 shall be carried out in accordance with the following criteria:
(a)         
it shall be as transparent as possible, having
regard to the circumstances and in particular the need to maintain financial
stability;
(b)         
it shall not favour or discriminate between
potential purchasers;
(c)         
it shall be free from any conflict of interest;
(d)         
it shall not confer any unfair advantage on a
potential purchaser;
(e)         
it shall take account of the need to effect a
rapid resolution action;
(f)           
it shall aim at maximising, as far as possible,
the sale price for the assets and liabilities involved.
The principles set out in this paragraph shall
not prevent the resolution authority from soliciting particular potential
purchasers.
Any public disclosure of the marketing of the
institution that would otherwise be required in accordance with Article 6(1) of
Directive 2003/6/EC may be delayed in accordance with Article 6(2) of this
Directive 2003/6/EC.
3.           Resolution authorities may
apply the sale of business tool without complying with the marketing
requirements set out in paragraph 1 when they determine that compliance with
those requirements would be likely to undermine one or more of the resolution
objectives and in particular if the following conditions are met:
(a)         
the resolution authority considers that there is
a material threat to financial stability arising from or aggravated by the
failure of the institution under resolution; and
(b)         
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 26(2).
4.           EBA shall develop draft
regulatory technical standards to specify the factual circumstances amounting
to a material threat and the elements related to the effectiveness of the sale
of business tool provided for in points (a) and (b) of paragraph 3.
EBA shall submit those draft regulatory
technical standards to the Commission within twelve months from the date of
entry into force of this Directive.
Power is delegated to the Commission to adopt the
regulatory technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.
Section 3
The Bridge Institution Tool
Article 34
Bridge institution tool
1.           In order to give effect to
the bridge institution tool, Member States shall ensure that resolution
authorities have the power to transfer all or specified assets, rights or
liabilities of an institution under resolution, and any combination of those
assets, rights and liabilities, to a bridge institution without obtaining the
consent of the shareholders of the institution under resolution or any third
party, and without complying with any procedural requirements under company or
securities law that would otherwise apply.
2.           Except where the bail-in
tool is applied for the purpose specified in point (b) of Article 37(2), for
the purposes of the bridge institution tool a bridge institution shall be a
legal entity that is wholly or partially owned by one or more public
authorities (which may include the resolution authority) and that is created
for the purpose of carrying out some or all of the functions of an institution
under resolution and for holding some or all of the assets and liabilities of
an institution under resolution.
The application of the bail-in tool for the
purpose specified in point (b) of Article 37(2) shall not interfere with the
ability of the resolution authority to control the bridge institution to the
extent necessary to effect the resolution and accomplish the resolution objectives.
3.           When applying the bridge
institution tool, a resolution authority shall ensure that the total value of
liabilities transferred 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. 
4.           When applying the bridge
institution tool, a resolution authority may transfer any assets, rights or
liabilities of the institution as it considers appropriate in pursuance of one
or more of the resolution objectives.
5.           When applying the bridge
institution tool, the resolution authorities may:
(a)         
transfer rights, assets or liabilities from the
institution under resolution to the bridge institution on more than one
occasion; and
(b)         
transfer rights, assets or liabilities back from
the bridge institution to the institution under resolution provided that the
conditions specified in paragraph 6 are met;
(c)         
transfer rights, assets or liabilities from the bridge
institution to a third party.
6.           Resolution authorities
shall only transfer rights, assets or liabilities back from the bridge
institution to the institution under resolution in one of the following
circumstances:
(a)         
the possibility that the specific rights, assets
or liabilities might be transferred back is stated expressly in the instrument
by which the transfer referred to in point (a) of paragraph 5 was made;
(b)         
the specific rights, assets or liabilities do
not in fact fall within the classes of, or meet the conditions for, rights,
assets or liabilities specified in the instrument by which the transfer referred
to in point (a) of paragraph 5 was made.
In either of the cases referred to in points
(a) and (b), the transfer back is made within any time period, and complies
with any other conditions, stated in that instrument for the relevant purpose.
7.           Transfers made by virtue
of the bridge institution tool which involves the transfer of some, but not
all, of the assets, rights or liabilities of an institution shall be subject to
the safeguards for partial property transfers specified in Chapter IV.
8.           For the purposes of
exercising the rights to provide services or to establish itself in another
Member State in accordance with Directive 2006/48/EC or Directive 2004/39/EC, a
bridge institution shall be considered to be a continuation of the institution
under resolution, and may continue to exercise any such right that was
exercised by the institution under resolution in respect of the assets, rights
or liabilities transferred, including the rights of membership and access to payment,
clearing and settlement systems.
9.           Shareholders or creditors of
the institution under resolution and other third parties whose property, rights
or liabilities are not transferred to the bridge institution shall not have any
rights over or in relation to the bridge institution or its property.
Article 35
Operation of a bridge institution 
1.           Member States shall ensure
that the operation of a bridge institution respects the following provisions:
(a)         
the contents of the bridge institution's its
constitutional documents are specified by the resolution authority;
(b)         
the resolution authority appoints the bridge
institution's board of directors, approves the relevant salaries and determines
the appropriate responsibilities;
(c)         
the bridge institution is authorised in
accordance with Directive 2006/48/EC or Directive 2004/39/EC, as applicable,
and has the necessary authorisation under the applicable national law to carry
on the activities or services that it acquires by
virtue of a transfer made pursuant to Article 56 of this Directive;
(d)         
the bridge institution complies with the
requirements of, and be subject to supervision in accordance with, Directives
2006/48/EC, 2006/49/EC and 2004/39/EC, as applicable.
2.           Subject to any
restrictions imposed in accordance with Union or national competition rules,
the directors shall operate the bridge institution with a view to selling the
institution, its assets, rights or liabilities, to one or more private sector
purchasers when conditions are appropriate and within the period specified in paragraph
5.
3.           The resolution authority
shall terminate the operation of a bridge institution in any of the following
cases, whichever occurs first:
(a)         
the bridge institution merges with another
institution;
(b)         
the acquisition of the majority of the bridge
institution's capital by a third party;
(c)         
the assumption of all or substantially all of
its assets, rights or liabilities by another person;
(d)         
the expiry of the period specified in paragraph 5
or, where applicable, paragraph 6.
4.           When seeking to sell the
bridge institution or its assets or liabilities, Member States shall ensure
that the institution or the relevant assets or liabilities are marketed openly
and transparently, and that the sale does not favour or discriminate between
particular potential purchasers.
Any such sale, shall be made on commercial
terms, having regard to the circumstances and in accordance with the Union
State Aid framework.
5.           If none of the outcomes referred
to in points (a), (b) or (c) of paragraph 3 applies, the resolution authority
shall terminate the operation of a bridge institution at the end of a two- year
period following the date on which the last transfer from an institution under
resolution pursuant to the bridge institution tool was made.
6.           The resolution authority may
extend the period referred to in paragraph 5 for up to three additional one-year
periods where:
(a)         
such extension is likely to achieve one of the
outcomes referred to in points (a), (b) or (c) of paragraph 3; or
(b)         
such extension is necessary to ensure the continuity
of essential banking or financial services.
7.           Where the operations of a
bridge institution are terminated in the circumstances referred to in points
(c), and (d) of paragraph 3, the institution shall be wound up and liquidated.
Any proceeds generated as a result of the
termination of the operation of the bridge institutions as specified in paragraph
3 shall benefit the institution under resolution.
Member States may calculate the proceeds net of
the amount of expenses administrative or of other nature occurred in the context
of the resolution process.
8.           Wherea bridge institution
is used for the purpose of transferring assets and liabilities of more than one
institution the obligation referred to in paragraph 7 shall refer to the
liquidation of the assets and liabilities transferred from each of the
institutions and not to the bridge institution itself.
Section 4
The Asset Separation Tool
Article 36
Asset separation tool
1.           In order to give effect to
the asset separation tool, Member States shall ensure that the resolution
authorities have the power to transfer assets, rights or liabilities of an
institution under resolution to an asset management vehicle.
2.           For the purposes of the
asset separation tool, an asset management vehicle shall be a legal entity that
is wholly owned by one or more public authorities, which may include the
resolution authority.
3.           The resolution authority
shall appoint asset managers to manage the assets transferred to the asset
management vehicle with a view to maximising their value through eventual sale
or otherwise ensuring that the business is wound down in an orderly manner.
4.           Resolution authorities may
exercise the power specified in paragraph 1 to transfer assets only if the
situation of the particular market for those assets is of such a nature that
the liquidation of those assets under normal insolvency proceedings could have
an adverse effect on the financial market.
5.           When applying the asset
separation tool, resolution authorities shall determine the consideration for
which assets are transferred to the asset management vehicle in accordance with
the principles established in Article 30 and in accordance with the Union State
aid framework.
6.           Resolution authorities
may:
(c)         
transfer assets, rights or liabilities from the
institution under resolution to the asset management vehicle on more than one
occasion; transfer assets, rights or liabilities back from the asset management
vehicle to the institution under resolution provided that the conditions
specified in paragraph 7 are met.
7.           Resolution authorities
shall only transfer rights, assets or liabilities back from the asset
management vehicle to the institution under resolution in one of the following
circumstances:
(a)         
the possibility that the specific rights, assets
or liabilities might be transferred back is stated expressly in the instrument
by which the transfer refereed to in point (a) of paragraph 6 was made;
(b)         
the specific rights, assets or liabilities do
not in fact fall within the classes of, or meet the conditions for, rights,
assets or liabilities specified in the instrument by which the transfer
referred to in point (a) of paragraph6 was made.
In either of the cases referred in points (a)
and (b), the transfer back is made within any time period, and complies with
any other conditions, stated in that instrument for the relevant purpose.
8.           Transfers between the
institution under resolution and the asset management vehicle shall be subject
to the safeguards for partial property transfers specified in this Directive.
9.           Shareholders and creditors
of the institution under resolution and other third parties whose property,
rights or liabilities are not transferred to the asset management vehicle shall
not have any rights over or in relation to the asset management vehicle, it
property or its managers.
10.         The objectives of the
managers appointed in accordance with paragraph 3 shall not imply any duty or
responsibility to the shareholders of the institution under resolution, and the
managers shall have no liability to those shareholders arising from action
taken or not taken in discharge or purported discharge of their functions
unless the act or omission implies gross negligence or serious misconduct in
accordance with national law.
11.         EBA shall develop guidelines,
in accordance with Article 16 of Regulation (EU) No 1093/2010 to promote the
convergence of supervisory and resolution practices regarding the determination
when, in accordance to paragraph 4 of this Article the liquidation of the
assets or liabilities under normal insolvency proceeding could have an adverse
effect on the financial market. EBA shall develop these guidelines at the
latest by the date established in the first subparagraph of Article 115(1) of
this Directive.
12.         The Commission, taking into
account, where appropriate, the experience acquired in the application of EBA
guidelines, shall adopt delegated acts in accordance with Article 103 aimed at
specifying the circumstances when the liquidation of the assets or liabilities
under normal insolvency proceeding could have an adverse effect on the
financial market.
Section 5
The Bail-In Tool 
Subsection 1
Objective and Scope of the Bail-In Tool
Article 37
The bail-in tool
1.           In order to give effect to
the bail-in tool, Member States shall ensure that resolution authorities have
the resolution powers specified in points (f) to (l) of Article 56(1).
2.           Member States shall ensure
that resolution authorities may apply the bail-in tool for either of the
following purposes:
(a)         
to recapitalise an institution 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 2006/48/EC 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.
3.           Member States shall ensure
that resolution authorities may apply the bail-in tool for the purpose referred
to in point (a) of paragraph 2 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 Article 47 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, Member States shall apply any of the resolution tools referred
to in points (a), (b) and (c) of Article 31 (2), and the bail-in tool referred
to in point (b) of paragraph 2 of this Article, as appropriate.
Article 38
Scope of bail-in tool
1.           Member States shall ensure
that the bail-in tool may be applied to all liabilities of an institution that
are not excluded from the scope of that tool pursuant to paragraph 2.
2.           Resolution authorities
shall not exercise the write down and conversion powers in relation to the
following liabilities:
(a)         
deposits that are guaranteed in accordance with
Directive 94/19/EC;
(b)         
secured liabilities, 
(c)         
any liability that arises by virtue of the
holding by the institution of client assets or client money, or a fiduciary
relationship between the institution (as fiduciary) and another person (as
beneficiary);
(d)         
liabilities with an original maturity of less
than one month;
(e)         
a liability to any one of the following:
(i)      an employee, in relation to accrued
salary, pension benefits or other fixed remuneration, except for variable
remuneration of any form;
(ii)      a commercial or trade creditor
arising from the provision to the institution of goods or services that are
essential 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
law.
Points (a) and (b) of paragraph 2 shall not
prevent resolution authorities, where appropriate, from exercising those powers
in relation 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. Member States may exempt from this
provision covered bonds as defined in Article 22(4) of Council Directive 86/611/EEC[38].
Point (c) of paragraph 2 shall not prevent
resolution authorities, where appropriate, from exercising those powers in
relation to any amount of a deposit that exceeds the coverage under that
Directive.
3.           Where resolution
authorities apply the bail-in tool, they may exclude from the application of
the write-down and conversion powers liabilities arising from derivatives that
do not fall within the scope of point (d) of paragraph 2, if that exclusion is
necessary or appropriate to achieve the objectives specified in points (a) and
(b) of Article 26(2). 
4.           The Commission shall be
empowered to adopt delegated acts adopted in accordance with Article 103 in
order to specify further:
(a)         
specific classes of liabilities covered by point
(d) of paragraph 2, and. 
(b)         
the circumstances when exclusion is necessary or
appropriate to achieve the objectives specified in points (a) and (b) of
Article 26(2), having regard to the following factors:
(i)      the systemic impact of closing out
derivative positions in order to apply the debt write-down tool;
(ii)      the effect on the operation of a
Central Counterparty of applying the debt write-down tool to liabilities
arising from derivatives that are cleared by the Central Counterparty; and
(iii)     the effect of applying the debt
write-down tool to liabilities arising from derivatives on the risk management
of counterparties to those derivatives.
Subsection 2
Minimum Requirement for Eligible Liabilities
Article 39
Minimum requirement for liabilities
subject to the write-down and conversion powers
1.           Member States shall ensure
that the institutions maintain, at all times, a sufficient aggregate amount of
own funds and eligible liabilities expressed as a percentage of the total
liabilities of the institution that do not qualify as own funds under Section 1
of Chapter 2 of Title V of Directive 2006/48/EC or under Chapter IV of
Directive 2006/49/EC.
2.           Subordinated debt
instruments and subordinated loans that do not qualify as Additional Tier 1 or
Tier 2 capital may be included in the aggregate amount of eligible liabilities
referred to in paragraph 1 only if they satisfy the following conditions:
(a)         
the instruments are issued and fully paid up;
(b)         
the instruments are not purchased by any of the
following:
(i)      the institution or its subsidiaries;
(ii)      an undertaking in which the
institution has participation in the form of ownership, direct or by way of
control, of 20% or more of the voting rights or capital of the undertaking;
(c)         
the purchase of the instrument is nor funded or
directly or indirectly by the institution;
(d)         
the instruments are not secured or guaranteed by
any entity which is part of the same group as the institution;
(e)         
the instruments have an original maturity of at
least one year.
3.           The minimum aggregate
amount pursuant to paragraph 1 shall be determined on the basis of the
following criteria:
(a)         
the need to ensure that the institution 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 has sufficient eligible liabilities to ensure that, if the bail
in tool were to be applied the Common Equity Tier 1 ratio of the institution
could be restored to a level necessary to sustain sufficient market confidence
in the institution and enable it to continue to comply with the conditions for
authorisation and to carry on the activities for which is authorised under
Directive 2006/48/EC or Directive 2006/49/EC;
(c)         
the size, the business model and the risk
profile of the institution; 
(d)         
the extent to which the Deposit Guarantee Scheme
could contribute to the financing of resolution in accordance with Article 99;
(e)         
the extent to which the failure of the institution
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.
4.           Subject to the provisions
of Article 40, institutions shall comply with the requirements laid down in
paragraph 2 of this Article on an individual basis.
Subject to the provisions of Article 40,
liabilities held by other entities that are part of the group shall be excluded
from the aggregate amount specified in paragraph 1of this Article.
5.           Resolution authorities
shall require and verify that institutions maintain the aggregate amount provided
for in paragraph 1, and take any decision pursuant to paragraph 4 in the course
of developing and maintaining resolution plans. 
6.           Resolution authorities
shall inform EBA of the minimum amount they have determined for each
institution under their jurisdiction. EBA shall report to the Commission by 1
January 2018 at the latest on the implementation of the requirement under
paragraph 1. In particular EBA shall report to the Commission whether there are
divergences regarding the implementation at national level of that requirement.

7.           The Commission shall, by
means of delegated acts in accordance with Article 103, adopt measures to
specify the criteria provided for in points (a) to (e) of paragraph 3 with
possible references to different categories of institutions and related ranges
of percentages.
Article 40
Application of minimum requirement to
groups
1.           Resolution authorities may
choose to apply the minimum requirement established in Article 39(1) and (3) on
a consolidated basis to groups which are subject to consolidated supervision,
provided that the following conditions are satisfied:
(a)         
the percentage referred to in Article 39(1) is
calculated on the basis of the consolidated level of the liabilities and of the
own funds held by the group;
(b)         
the debt instruments or loans referred to in Article
39, (2), are issued by the parent undertaking, or by a company referred to in points
(c) or (d) of Article 1;
(c)         
the parent undertaking or the company referred
to in points (c) or (d) of Article 1 distributes adequately and
proportionately, in the form of credit, the funds collected through the
issuance of the debt instruments or loans referred to in Article 39 (2), among
the institutions which are subsidiaries;
(d)         
each institution, which is a subsidiary, shall
comply with the minimum requirement set out in Article 39, paragraph 1.
However, by way of exemption from the second subparagraph of Article 39(4),,
liabilities which are held by the parent undertaking or the company referred to
in points (c) or (d) of Article 1 shall be included in the aggregate amount of
own funds and eligible liabilities that the subsidiary is required to maintain
pursuant to Article 39(1);
(e)         
where the group level resolution authority or
other competent resolution authority, as appropriate, applies the bail-in tool
to the parent undertaking or the company referred to in points (c) or (d) of Article
1, the resolution authorities of the subsidiaries shall apply the bail-in tool,
in the first place, to the liabilities of the subsidiaries with regards to the
parent undertaking or the company referred to in points (c) or (d) of Article 1,
as appropriate, before applying it, if needed, to any other eligible liability
of the subsidiary.
2.           When making a decision in
accordance with paragraph 1, resolution authorities shall take into account the
way in which the group structures its operations and in particular the extent
to which funding, liquidity and risk are centrally managed.
3.           Resolution authorities
shall take the decision to apply the minimum requirement on a consolidated
basis pursuant to paragraph 1 of this Article in the course of developing and
maintaining resolution plans pursuant to Article 9 of this Directive. For
groups subject to consolidated supervision in accordance with Articles 125 and
126 of Directive 2006/48/EC, resolution authorities shall take the decision to
apply the minimum requirement on a consolidated basis in accordance with the
procedure laid down in Article 12 of this Directive.
Subsection 3
Implementation of the Bail-In Tool
Article 41
Assessment of amount of bail-in
1.           Member States shall ensure
that, when applying the bail-in tool, resolution authorities assess the
aggregate amount by which eligible liabilities must be reduced or converted on
the basis of a valuation that complies with the requirements of Article 30.
2.           Where resolution
authorities apply the bail-in tool for the purpose referred to in point (a) of Article
37(2), the assessment referred to in paragraph 1 of this Article shall
establish the amount by which eligible liabilities need to be reduced in order
to restore the Common Equity Tier 1 capital ratio of the institution under resolution
and the amount that the resolution authority considers necessary to sustain
sufficient market confidence in the institution and enable it to continue to
comply with the conditions for authorisation and to carry on the activities for
which is authorised under Directive 2006/48/EC or Directive 2004/39/EC.
3.           Resolution authorities
shall establish and maintain arrangements to ensure that the assessment and
valuation is based on information about the assets and liabilities of the
institution under resolution that is as updated and comprehensive as is
reasonably possible.
Article 42
Treatment of shareholders
1.           Member States shall ensure
that, when applying the bail-in tool, resolution authorities take in respect of
shareholders one or both of the following actions:
(a)         
cancel existing shares;
(b)         
exercise the power referred to in point (h) of Article
56(1) to convert eligible liabilities into shares of the institution under
resolution at a rate of conversion that severely dilutes existing
shareholdings.
2.           The actions provided for
in paragraph 1 shall apply in respect of shareholders where the shares in
question were issued or conferred in the following circumstances:
(a)         
pursuant to conversion of debt instruments to shares
in accordance with contractual terms of the original debt instruments on the
occurrence of an event that preceded or occurred at the same time as the
assessment by the resolution authority that the institution met the conditions
for resolution;
(b)         
pursuant to the conversion of relevant capital
instruments to Common Equity Tier 1 instruments pursuant to Article 52.
3.           When considering which
action to take in accordance with paragraph 1, resolution authorities shall
have regard to the likely amount of losses relative to assets before the
exercise of the bail-in tool, with a view to ensuring that the action taken in
respect of shareholders is consistent with that reduction in equity value; the
valuation carried out in accordance with Articles 30 and 31 and in particular
to the likelihood that shareholders would have recovered any value if the
institution had been wound up on the basis of that valuation.
4.           When resolution
authorities apply the bail-in tool, the provisions of Article 30 and 31 shall
apply. 
5.           EBA shall develop
guidelines, in accordance with Article 16 of Regulation (EU) No 1093/2010, on
the circumstances in which each of the actions referred to in paragraph 1 would
be appropriate, having regard to the factors specified in paragraph 2 of this article.
EBA shall develop these guidelines at the latest by the date provided for in the
first subparagraph of Article 115(1) of this Directive.
6.           The Commission, taking
into account, where appropriate, the experience acquired in the application of EBA
guidelines, may adopt delegated acts in accordance with Article 103 aimed at
specifying the circumstances in which each of the actions mentioned in
paragraph 1 would be appropriate, having regard to the factors specified in
paragraph 2 of this Article.
Article 43
Hierarchy of claims
1.           Member States shall ensure
that, when applying the bail-in tool, resolution authorities exercise the write
down and conversion powers respecting the following requirements:
(a)         
Common Equity Tier 1 instruments are written
down first in proportion to the losses and up to their capacity and the
relevant shares are cancelled in accordance with Article 42;
(b)         
if, and only if, the writing down pursuant to
point (a) is less than the aggregate amount, authorities reduce to zero the
principal amount of Additional Tier 1 instruments that are liabilities and Tier
2 instruments in accordance with sub-section 2;
(c)         
if, and only if, the total reduction of
liabilities pursuant to points (a) and (b) is less than the aggregate amount,
authorities reduce the principal amount of subordinated debt that is not
Additional Tier 1 or Tier 2 capital to the extent required, in conjunction with
the write down pursuant to points (a)and (b) to produce the aggregate amount;
(d)         
if, and only if, the total reduction of
liabilities pursuant to points (a), (b) or (c) of this paragraph is less than
the aggregate amount, authorities reduce the principal amount of, or
outstanding amount payable in respect of, the rest of eligible liabilities,
pursuant to Article 38, that are senior debt to the extent required,in
conjunction with the write down pursuant to points (a), (b) or (c) of this
paragraph to produce the aggregate amount.
2.           When applying the write
down and conversion powers in compliance with points (c) and (d) of paragraph
1, resolution authorities shall allocate the losses represented by the
aggregate amount equally between liabilities of the same rank by reducing the
principal amount of, or outstanding amount payable in respect of, those
liabilities to the same extent pro rata to their value.
3.           Resolution authorities shall
reduce the principal amount of the instrument or convert it in accordance with
those terms referred to in points (b) or (c) of paragraph 1 before exercising
the write-down and conversion powers to the liabilities referred to in points
(d) of paragraph 1 and when those terms have not taken effect where an
institution has issued instruments, other than those referred to in point (b)
of paragraph 1, that contain either of the following terms:
(a)         
terms that provide for the principal amount of
the instrument to be reduced on the occurrence of any event that refers to the
financial situation, solvency or levels of own funds of the institution;
(b)         
terms that provide for the conversion of the
instruments to shares or other instruments of ownership on the occurrence of
any such event.
4.           Where the principal amount
of an instrument has been reduced, but not to zero, in accordance with terms of
the kind referred to in point (a) of paragraph 3 before the application of the bail-in
or pursuant to paragraph 3, resolution authorities shall apply the write-down
and conversion powers to the residual amount of that principal in accordance
with paragraph 1.
Article 44
Derivatives
1.           Member States shall ensure
that the provisions of this Article are respected when resolution authorities
apply the write-down and conversion powers to liabilities arising from
derivatives.
2.           Where transactions are
subject to a netting agreement, resolution authorities shall determine the
liability arising from those transactions on a net basis in accordance with the
terms of the agreement.
3.           Resolution authorities
shall determine the value of liabilities arising from derivatives in accordance
with the following: 
(a)         
appropriate methodologies for determining the value
of classes of derivatives, including transactions that are subject to netting
agreements; 
(b)         
principles for establishing the relevant point in
time at which the value of a derivative position should be established.
4.           EBA
shall develop draft regulatory technical standards specifying methodologies and
the principles referred to in points (a) and (b) of paragraph 3 on the
valuation of liabilities arising from derivatives.:
EBA shall submit those draft regulatory technical
standards to the Commission by within twelve months from the entry into force
of this Directive.
Power is delegated to the Commission to adopt the
regulatory technical standards referred to in the first subparagraph of this
Directive in accordance with the procedure laid down in Articles 10 to 14 of
Regulation (EU) No 1093/2010.
Article 45
Rate of conversion of debt to equity
1.           Member States shall ensure
that, when applying the debt restructuring by exercising the power referred to
in point (h) of Article 56(1) to convert eligible liabilities into ordinary
shares or other instruments of ownership, resolution authorities may apply a
different conversion rate to different classes of liability in accordance with
one or both of the principles set out in paragraphs 2 and 3 of this Article.
2.           The conversion rate shall
represent appropriate compensation to the affected creditor for the loss
incurred by virtue of the exercise of the write down and conversion power.
3.           The conversion rate
applicable to senior liabilities shall be higher than the conversion rate
applicable to subordinated liabilities, where that is appropriate to reflect
the priority of senior liabilities in winding up under applicable insolvency
law.
4.           EBA shall develop
guidelines, in accordance with Article 16 of Regulation (EU) No 1093/2010, on
the setting of conversion rates. EBA shall develop these guidelines at the
latest by the date provided for in the first subparagraph of Article 115(1) of
this Directive.
The guidelines shall indicate, in particular,
how affected creditors may be appropriately compensated by means of the
conversion rate, and the relative conversion rates that might be appropriate to
reflect the priority of senior liabilities under applicable insolvency law.
Article 46
Recovery and reorganisation measures to
accompany bail-in
1.           Member States shall ensure
that, where resolution authorities apply the bail-in tool arrangements are
adopted to ensure that a business reorganisation plan for that institution is
drawn up and implemented in accordance with Article 47.
2.           The arrangements referred
to in paragraph 1 of this Article shall include the appointment of an
administrator with the objective of drawing up and implementing the business
reorganisation plan required by Article 47.
Article 47
Business reorganisation plan
1.           Member States shall
require that, within [one month] after the application of the bail-in tool to
an institution in accordance with point (a) of Article 37(2), the administrator
appointed under Article 46 shall draw up and submit to the resolution authority,
the Commission and EBA a business reorganisation plan that satisfies the
requirements of paragraphs 2 and 3 of this Article. Where the Union State aid
framework is applicable, Member States shall ensure that such plan is
compatible with the restructuring plan that the institution is required to
submit to the Commission under that framework. 
2.           A business reorganisation
plan shall set out measures aimed at restoring the long term viability of the
institution or parts of its business within a reasonable timescale no longer
than two years. Those measures shall be based on realistic assumptions as to
the economic and financial market conditions under with the institution will
operate.
The business reorganisation plan shall take
account, inter alia, of the current state and future prospects of the financial
markets, reflecting best-case and worst-case assumptions. Stress-testing shall consider
a ranged of scenarios, including a combination of events of stress and a
protracted global recession. Assumptions shall be compared with appropriate
sector-wide benchmarks.
3.           A business reorganisation
plan shall include the following elements:
(a)         
a detailed diagnosis of the factors and problems
that caused the institution to fail or to be likely to fail, and the
circumstances that led to its difficulties;
(b)         
a description of the measures aimed at restoring
the long-term viability of the institution that are to be adopted;
(c)         
a timetable for the implementation of those
measures.
4.           Measures aimed at
restoring the long-term viability of an institution may include:
(a)         
 the reorganisation of the activities of the
institution;
(b)         
the withdrawal from loss-making activities;
(c)         
the restructuring of existing activities that
can be made competitive;
(d)         
the sale of assets or of business lines.
5.           Within one month from the
date of submission of the business reorganisation plan, the resolution
authority shall assess the likelihood that the plan, if implemented, restores
the long term viability of the institution.
If the resolution authority is satisfied that
the plan would achieve that objective, it shall approve the plan.
6.           If the resolution
authority is not satisfied that the plan would achieve that objective the
resolution authority shall notify the administrator of its concerns and require
the administrator to amend the plan in way that addresses those concerns.
7.           Within two weeks from the
date of receipt of such a notification, the administrator shall submit an
amended plan to the resolution authority for approval. The resolution authority
shall assess the amended plan, and shall 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.
8.           The administrator shall
implement the reorganisation plan as agreed by the resolution authority, and
shall report every six months to the resolution authority on the progress in
the implementation of the plan.
9.           The administrator shall
revise the plan if that is necessary to achieve the aim set out in paragraph 2,
and shall submit any such revision to the resolution authority for approval.
10.         EBA
shall develop draft regulatory technical standards to specify further:
(a)         
the elements that should be included in a business
reorganisation plan pursuant to paragraph 3; and
(b)         
the contents of the reports pursuant to paragraph 8.
EBA shall submit those draft regulatory technical
standards to the Commission within twelve months from
the date of entry into force of this Directive.
Power is delegated to the Commission to adopt the
regulatory technical standards referred to in the first subparagraph in accordance
with the procedure laid down in Articles 10 to 14 of Regulation (EU) No
1093/2010.
Subsection 4
Bail-In Tool: Ancillary Provisions
Article 48
Effect of bail-in
1.           Member States shall ensure
that where a resolution authority exercises a power referred to in points (f)
to (l) of Article 56(1), the reduction of principal or outstanding amount due,
conversion or cancellation takes effect and is immediately binding on the
institution under resolution and affected creditors and shareholders.
2.           Member States shall ensure
that all the administrative and procedural tasks necessary to give effect to
the exercise of a power referred to in points (f) to (l) of Article 56(1) are
completed, including:
(a)         
the amendment of all relevant registers;
(b)         
the delisting or removal from trading of shares
or debt instruments;
(c)         
the listing or admission to trading of new
shares.
3.           Where a resolution
authority reduces to zero the principal amount of, or outstanding amount
payable in respect of, a liability by means of the power referred to in pint
(g) of Article 56(1), that liability and any obligations or claims arising in
relation to it that are not accrued at the time when the power is exercised
shall be treated as discharged for all purposes, and shall not be provable in
any subsequent proceedings in relation to the institution under resolution or
any successor institution in any subsequent winding up.
4.           Where a resolution
authority reduces in part, but not in full, the principal amount of, or outstanding
amount payable in respect of, a liability by means of the power referred to in point
(g) of Article 56(1):
(a)         
the liability shall be discharged to the extent
of the amount reduced; 
(b)         
the relevant instrument or agreement that
created the original liability shall continue to apply in relation to the
residual principal amount of, or outstanding amount payable in respect of the
liability, subject to any modification of the amount of interest payable to
reflect the reduction of the principal amount, and any further modification of
the terms that the resolution authority might make by means of the power referred
to in point (m) of Article 56(1).
Article 49
Removal of procedural obstacles to bail
in
1.           Member States shall, in
appropriate cases, require institutions to maintain at all times
sufficient authorised share capital so that, in the event that the resolution
authority exercised the powers referred to in points (f), (g) and (h) of Article
56(1) in relation to an institution or its subsidiaries, the institution is not
be prevented from issuing sufficient new shares or instruments of ownership to
ensure that the conversion of liabilities into ordinary shares or other
instruments of ownership could be carried out effectively.
2.           Resolution authorities
shall assess whether it is appropriate to impose the requirement set out in
paragraph 1 in the case of a particular institution in the context of the
development and maintenance of the resolution plan for that institution, having
regard, in particular, to the resolution actions contemplated in that plan. If
the resolution plan provides for the possible application of the bail-in tool,
authorities shall verify that the authorised share capital is sufficient to
cover the aggregate amount referred to in Article 41.
3.           Member States shall
require institutions to ensure that there are no procedural impediments to the
conversion of liabilities to ordinary shares or other instruments of ownership
existing by virtue of their instruments of incorporation or statutes, including
pre-emption rights for shareholders or requirements for the consent of shareholders
to an increase in capital.
4.           The provisions of this article
are without prejudice to the amendments to Directives 77/91/EEC, 82/891/EEC,
2004/25/EC, 2005/56/EC, 2007/36/EC and 2011/35/EU set out in Title VIII of this
Directive.
Article 50
Contractual recognition of bail-in
1.           Member States shall
require institutions to include in the contractual provisions governing any
eligible liability, Additional Tier 1 instrument or Tier 2 instrument that is
governed by the law of a jurisdiction that is not a Member State a term by
which the creditor or party to the agreement creating the liability recognises
that the liability may be subject to the write down and conversion powers and
agrees to be bound by any reduction of principal or outstanding amount due,
conversion or cancellation that is effected by the exercise of the those powers
by a resolution authority.
2.           If an institution fails to
include in the contractual provisions governing a relevant liability a term
required in accordance paragraph 1, that failure shall not prevent the
resolution authority from exercising the write down and conversion powers in
relation to that liability.
3.           The Commission may, by
means of delegated acts adopted in accordance with Article 103, adopt measures
to specify further the contents of the term required by paragraph 1 of this Article.
Chapter IV
Write Down of Capital Instruments
Article 51
Requirement to write down capital
instruments
1.           Member States shall
require that before any resolution action is taken, resolution authorities exercise
the write down power, in accordance with the provisions of Article 52 and
without delay, in relation to relevant capital instruments issued by an institution
when one or more of the following circumstances apply:
(a)         
the appropriate authority determines that the
institution meets the conditions for resolution;
(b)         
the appropriate authority determines that unless
that power is exercised in relation to the relevant capital instruments, the
institution will no longer be viable;
(c)         
a decision has been made in a Member State to
provide extraordinary public support to the institution or parent undertaking
and the appropriate authority makes a determination that without the provision
of such support the institution would no longer be viable;
(d)         
the relevant capital instruments are recognised
for the purposes of meeting the own fund requirements on an individual and a
consolidated basis, or on a consolidated basis, and the appropriate authority
of the Member State of the consolidating supervisor makes a determination that
unless the write down power is exercised in relation to those instruments, the
consolidated group will no longer be viable.
2.           Where an appropriate
authority makes a determination referred to in paragraph 1, it shall immediately
notify the resolution authority responsible for the institution in question, if
different.
3.           Before making a
determination referred to in point (d) of paragraph 1of this article in relation
to an institution that issues relevant capital instruments that are recognised
for the purposes of meeting the own fund requirements on an individual and a
consolidated basis, the appropriate authority shall comply with the
notification and consultation requirements set out in Article 52.
4.           Resolution authorities
shall comply with the requirement set out in paragraph 1 irrespective of
whether they also apply a resolution tool or exercise any other resolution
power in relation to that institution.
Article 52
Provisions governing the write down of
capital instruments
1.           When complying with the
requirement set out in Article 51, resolution authorities shall exercise the
write down power in a way that produces the following results:
(a)         
Common Equity Tier 1 instruments are written
down first in proportion to the losses and up to their capacity;
(b)         
the principal amount of relevant capital
instruments is reduced to zero;
(c)         
the reduction to zero of that principal amount
is permanent;
(d)         
no liability to the holder of the relevant
capital instrument remains under or in connection with that instrument, except
for any liability already accrued, and any liability for damages that may arise
as a result of judicial review of the legality of the exercise of the
write-down power;
(e)         
no compensation is paid to any holder of the
relevant capital instruments other than in accordance with paragraph 4.
Point (d) shall not prevent the provision of
Common Equity Tier 1 instruments to a holder of relevant capital instruments in
accordance with paragraph 2.
2.           Resolution authorities may
accompany the exercise of power referred to in Article 51(1) with the
requirement for institutions to issue Common Equity Tier 1 instruments to the
holders of the relevant capital instruments that are written down in accordance
with paragraph 1of this Article, provided that the following conditions are
met:
(a)         
those Common Equity Tier 1 instruments are
issued by the institution referred to in paragraph 1 or by a parent undertaking
of the institution;
(b)         
those Common Equity Tier 1 instruments are
issued prior to any issuance of shares or instruments of ownership by that
institution for the purposes of provision of own funds by the State or a
government entity;
(c)         
those Common Equity Tier 1 instruments are
awarded and transferred without delay following the exercise of the write down
power;
(d)         
the conversion rate that determines the number
of Common Equity Tier 1 instruments that are provided in respect of each
relevant capital instrument complies with the principles set out in Article 45 and
any guidelines developed by EBA pursuant to Article 45(5).
3.           For the purposes of the
provision of Common Equity Tier 1 instruments in accordance with paragraph 2,
resolution authorities may require institutions to maintain at all times the
necessary prior authorisation to issue the relevant number of Common Equity
Tier 1 instruments.
4.           Where an institution meets
the conditions for resolution and the resolution authority decides to apply a resolution
tool to that institution, the resolution authority shall comply with the
requirement set out in Article 51(1) before applying the resolution tool.
5.           Member States shall
require institutions to ensure that the exercise by resolution authorities of
the write down power in compliance with Article 51(1) does not constitute an
event of default or credit event under the relevant capital instruments.
6.           In order to ensure
consistent application of paragraph 5, EBA and ESMA shall jointly develop draft
regulatory technical standards to specify the meaning of 'credit event' for the
purposes of that paragraph.
EBA and ESMA shall submit those draft
regulatory technical standards to the Commission within twelve months from the
date of entry into force of this Directive.
Power is delegated to the Commission to adopt
the regulatory technical standards referred to in the first subparagraph of
this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No
1093/2010 and Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 53
Contractual write down or conversion of
capital instruments
Provided that those contractual terms take
effect when the authority makes a determination referred to in Article 51(1), the
requirement set out in Article 51(1) does not apply in relation to relevant
capital instruments where the terms of those instruments satisfy the following
conditions:
(a)                   
the contractual terms of the relevant capital
instrument provide that the principal amount of the instrument will be reduced
to zero, or that the instrument will convert into one or more Common Equity
Tier 1 instruments, automatically when any appropriate authority makes a
determination in accordance with Article 51(1);
(b)                   
the reduction of the principal amount of the
relevant capital instrument or the conversion of the relevant capital instrument
into one or more Common Equity Tier 1 instruments complies with the conditions
set out in Article 52(1);
(c)                   
where the terms of the relevant capital instrument
provides that the instrument will convert into one or more Common Equity Tier 1
instruments, the conversion rate is set out in those terms and complies with
the principles set out in Article 45 and any guidelines developed by EBA
pursuant to Article 45(5).
Article 54
Authorities responsible for
determination
1.           Member States shall ensure
that the authorities responsible for making the determinations referred to in Article
51(1) are those set out in this Article.
2.           Where the relevant capital
instruments are recognised for the purposes of meeting the own funds
requirements on an individual basis in accordance with Article 52 of Directive
2006/48/EC, the authority responsible for making the determination referred to
in Article 51(1) of this Directive shall be the competent authority or
resolution authority of the Member State where the institution has been
authorised in accordance with Title II of Directive 2006/48/EC.
3.           Where relevant capital
instruments are issued by an institution that is a subsidiary and are
recognised for the purposes of meeting the own funds requirements on an
individual and a consolidated basis, the authorities responsible for making the
determinations referred to in Articles 53(1) shall be the following:
(a)         
the competent authority or resolution authority
of the Member State where the institution that issued those instruments has
been established in accordance with Title II of Directive 2006/48/EC shall be
responsible for making the determinations referred to in points (a), (b) or (c)
of Article 51(1) of this Directive;
(b)         
the competent authority or resolution authority
of the Member State of the consolidating supervisor or the competent authority
that performs the sub-consolidation shall be responsible for making the
determination referred to in point (d) of Article 51(1).
Article 55
Consolidated application: procedure
for determination
1.           Member States shall ensure
that, before making a determination referred to in point (a), (b), (c) or (d)
of Article 51(1) in relation to an institution that issues relevant capital
instruments that are recognised for the purposes of meeting the own fund
requirements on an individual and a consolidated basis, appropriate authorities
comply with the following requirements:
(a)         
an appropriate authority that is considering
whether to make a determination referred to in points (a), (b) or (c) of Article
51(1) shall notify the consolidating supervisor without delay;
(b)         
an appropriate authority that is considering
whether to make a determination referred to in points (a), (b), (c) or (d) of Article
51(1) shall without delay notify the competent authority responsible for each
institution that has issued the relevant capital instruments in relation to
which the write down power must be exercised if that determination were made.
2.           An appropriate authority
shall accompany a notification made pursuant to paragraph 1 with an explanation
of the reasons why it is considering making the determination in question.
3.           Where a notification has
been made pursuant to paragraph 1, the appropriate authority, in consultation
with the competent authorities notified, shall assess the following matters:
(a)         
whether an alternative measure to the exercise
of the write down power in accordance with Article 51(1) is available;
(b)         
if such an alternative measure is available,
whether it can feasibly be applied;
(c)         
if such an alternative measure could feasibly be
applied, whether there is a realistic prospect that it would address, in an
adequate timeframe, the circumstances that would otherwise require a
determination referred to in Article 51(1) to be made.
4.           For the purposes of
paragraph 3 of this Article, alternative measures mean early intervention
measures referred to in Article 23 of this Directive, measures referred to in
Article 136(1) of Directive 2006/48/EC or a transfer of funds or capital from
the parent undertaking.
5.           Where, pursuant to paragraph
3, the appropriate authority and the competent authorities assess that one or
more alternative measures are available, can feasibly be applied and would
deliver the outcome referred to in point (c) of that paragraph, they shall
ensure that those measures are applied.
6.           Where, pursuant to
paragraph 3 of this article, the appropriate authority and the competent
authorities assess that no alternative measures are available that would
deliver the outcome referred to in point (c) of that paragraph, the appropriate
authority shall decide whether the determination referred to in Article 51(1)
under consideration is appropriate.
7.           Resolution authorities
shall comply promptly with the requirements of paragraphs 1 to 6, having proper
regard to the urgency of the circumstances.
Chapter V
Resolution Powers
Article 56
General powers
1.           Member States shall ensure
that the resolution authorities have all the powers necessary to apply the
resolution tools. In particular, the resolution authorities shall have the following
resolution powers, which they shall be able to exercise singly or in
conjunction:
(a)         
the power to require any person to provide any
information necessary for the resolution authority to decide upon and prepare a
resolution action, including updates and supplements of information provided in
the resolution plans;
(b)         
the power to take control of an institution
under resolution and exercise all the rights conferred upon the shareholders or
owners of the institution;
(c)         
the power to transfer shares and other instruments
of ownership issued by an institution under resolution;
(d)         
the power to transfer debt instruments issued by
an institution under resolution;
(e)         
the power to transfer to another person
specified rights, assets or liabilities of an institution under resolution;
(f)           
the power to write down or convert the
instruments referred to in Article 51 into shares or other instruments of
ownership of the institution under resolution or of a relevant parent
institution under resolution;
(g)         
the power to reduce, including to reduce to
zero, the principal amount of or outstanding amount due in respect of eligible
liabilities, of an institution under resolution;
(h)         
the power to convert eligible liabilities of an
institution under resolution into ordinary shares or other instruments of
ownership of that institution, a relevant parent institution or a bridge
institution to which assets, rights or liabilities of the institution are
transferred;
(i)           
the power to cancel debt instruments issued by
an institution under resolution;
(j)           
the power to cancel shares or other instruments
of ownership of an institution under resolution;
(k)         
the power to require an institution under
resolution to issue new shares, or other instruments of ownership, or other
capital instruments, including preference shares and contingent convertible
instruments;
(l)           
the power to require the conversion of debt
instruments which contain a contractual term for conversion in the
circumstances provided for in Article 51;
(m)       
the power to amend or alter the maturity of debt
instruments issued by an institution under resolution or amend the amount of
interest payable under such instruments, including by suspending payment for a
temporary period;
(n)         
the power to remove or replace the senior
management of an institution under resolution.
2.           Member States shall take
all necessary measures to ensure that, when applying the resolution tools and
exercising the resolution powers, resolution authorities are not subject to any
of the following requirements that would otherwise apply by virtue of national law
or contract or otherwise:
(a)         
requirements to obtain approval or consent from
any person either public or private, including the shareholders or creditors of
the institution under resolution;
(b)         
procedural requirements to notify any person.
In particular, Member States shall ensure that
resolution authorities can exercise the powers under this Article irrespective
of any restriction on, or requirement for consent for, transfer of the
financial instruments, rights, assets or liabilities in question that might otherwise
apply.
Point (b) of this paragraph is without
prejudice to the requirements set out in Article 75 and any notification
requirements under the Union State aid framework.
Article 57
Powers ancillary to the transfer power
1.           Member States shall ensure
that, when exercising a transfer power, resolution authorities have the power
to do the following:
(a)         
provide for the relevant transfer to take effect
free from any liability or encumbrance affecting the financial instruments,
rights, assets or liabilities transferred;
(b)         
remove rights to acquire further shares or other
instruments of ownership;
(c)         
discontinue the admission to trading on a
regulated market as defined in Article 4(14) of Directive 2004/39/EC or the
official listing of financial instruments pursuant to Directive 2001/34/EC;
(d)         
provide for the recipient to be treated as if it
were the institution under resolution for the purposes of any obligations,
contracts or arrangements made by, or actions taken by, the institution under
resolution;
(e)         
require the institution under resolution or the
recipient to provide the other with information and assistance;
(f)           
cancel or modify the terms of a contract to
which the credit institution under resolution is a party or to substitute a
transferee as a party;
(g)         
enforce contracts entered into by a subsidiary,
the obligations under which are guaranteed or otherwise supported by the parent
undertaking, notwithstanding any contractual right to cause the termination,
liquidation or acceleration of such contracts based solely on the insolvency or
financial condition of the parent undertaking, if such guarantee or other
support and all the related assets and liabilities have been transferred to and
assumed by the recipient, or the resolution authority provides in any other way
adequate protection for such obligations.
2.           Resolution authorities
shall exercise the powers specified in points (a) to (g) of paragraph 1 where
it is considered by the authority to be appropriate to help to ensure that a
resolution action is effective or to achieve one or more resolution objectives.
3.           Member States shall ensure
that, when exercising a transfer power or the power to write down debt,
resolution authorities have the power to provide for continuity arrangements
necessary to ensure that the resolution action is effective and the business
transferred may be operated by the recipient. Such continuity arrangements
shall include, in particular:
(a)         
the continuity of contracts entered into by the
institution under resolution, so that the recipient assumes the rights and
liabilities of the institution under resolution relating to any financial
instrument, right, asset or liability that has been transferred and is
substituted for the institution under resolution (whether expressly or
impliedly) in all relevant contractual documents;
(b)         
the substitution of the recipient for the
institution under resolution in any legal proceedings relating to any financial
instrument, right, asset or liability that has been transferred.
4.           The powers in point (d) of
paragraph 1 and point (b) of paragraph 3 shall not affect the following:
(a)         
the right of an employee of the institution
under resolution to terminate a contract of employment; 
(b)         
any right of a party to a contract to exercise
rights under the contract, including the right to terminate, where entitled to
do so in accordance with the terms of the contract by virtue of an act or
omission by the institution under resolution prior to the relevant transfer, or
by recipient after the relevant transfer.
5.           Where a resolution
authority determines that the conditions for resolution are met, applies a
resolution tool or exercises a resolution power, the resolution action shall in
itself not make it possible for anyone to:
(a)         
exercise any right or power to terminate,
accelerate or declare a default or credit event under any contract or agreement
to which the institution under resolution is a party;
(b)         
obtain possession or exercise control over any
property of the institution under resolution; 
(c)         
affect any contractual rights of the institution
under resolution.
The first subparagraph does not affect the
right of a person to take an action referred to in points (a), (b) and (c) of
the first subparagraph where that right arises by virtue of an event of default
or state of affairs that is not the resolution action or the result of the
exercise of a resolution power under this Article.
Article 58
Power to require the provision of
services and facilities 
1.           Member States shall ensure
that resolution authorities have the power to require an institution under resolution,
including where it is subject to normal insolvency proceedings, and any entity
which is part of the same group as the institution to provide any services or
facilities that are necessary to enable a recipient to operate effectively the
business transferred to it.
2.           Member States shall ensure
that their resolution authorities have powers to enforce obligations imposed,
pursuant to paragraph 1, on affiliated entities established in their territory
by resolution authorities in other Member States.
3.           The services and
facilities referred to in paragraphs 1 and 2 are restricted to operational
services and facilities and do not include any form of financial support.
4.           The services and
facilities provided in accordance with paragraphs 1 and 2 shall be on the
following terms:
(a)         
where the services and facilities were provided
to the institution under resolution immediately before the resolution action
was taken, on the same terms;
(b)         
where point (a) does not apply, on commercial
terms.
5.           EBA shall develop draft
regulatory technical standards to specify the services or facilities that are
necessary to enable a recipient to operate effectively a business transferred
to it. 
EBA shall submit those draft regulatory
technical standards to the Commission within twelve months from the date of
entry into force of this Directive.
Power is delegated to the Commission to adopt
the regulatory technical standards referred to in the first sub-paragraph of
this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No
1093/2010.
Article 59
Power to enforce resolution actions by
other Member States
1.           Member States shall ensure
that, where a transfer of shares, other instruments of ownership, or assets,
rights or liabilities includes assets that are located in a Member State other
than the State of the resolution authority or rights or liabilities under the
law of a Member State other than the State of the resolution authority, the
transfer has effect in or under the law of that other Member State.
2.           Member States shall
provide the resolution authority that has made or intends to make the transfer
with all reasonable assistance to ensure that the shares or other instruments
of ownership or assets, rights or liabilities are transferred to the recipient
in accordance with any applicable requirements of national law.
3.           Member States shall ensure
that creditors and third parties that are affected by the transfer of assets,
rights or liabilities referred to in paragraph 1 are not entitled to prevent,
challenge, or set aside the transfer under any provision of law of the Member
State where the assets are located or of the law governing the rights or
liabilities.
4.           Where a resolution
authority of a Member State (Member State A) exercises the write-down or
conversion powers, including in relation to capital instruments in accordance
with Article 51, and the eligible liabilities or relevant capital instruments
of the institution under resolution include the following:
(a)         
instruments or liabilities that are governed by
the law of a Member State other than the State of the resolution authority that
exercised the write down or conversion powers (Member State B);
(b)         
liabilities owed to creditors located in Member
State B.
Member State B shall ensure that the principal
amount of those liabilities or instruments is reduced, or liabilities or
instruments are converted, in accordance with the exercise of the write-down or
conversion power by the resolution authority of Member State A.
5.           Member States shall ensure
that creditors that are affected by the exercise of write-down or conversion
powers referred to in paragraph 4 are not entitled to challenge the reduction
of the principal amount of the instrument or liability or its conversion, as
the case may be, under any provision of law of Member State B.
6.           Each Member State shall
ensure that the following are determined in accordance with the law of the
Member State of the resolution authority:
(a)         
the right for creditors and third parties to
challenge by judicial review, pursuant to Article 78, a transfer of assets,
rights or liabilities referred to in paragraph 1 of this article that are
located in its territory or governed by the law of its territory;
(b)         
the right for creditors to challenge by judicial
review, pursuant to Article 78, the reduction of the principal amount, or the
conversion, of an instrument or liability covered by points (a) or (b) of
paragraph 4 of this Article;
(c)         
the safeguards for partial transfers, as referred
to in Chapter V, in relation to assets, rights or liabilities referred to in
paragraph 1 that are located in its territory or governed by the law of its
territory.
Article 60
Power to request transfer of property
located in third countries
Member States shall provide that, in cases
in which resolution action involves action taken in respect of property located
in a third country or rights and liabilities under the law of a third country,
resolution authorities may require that:
(a)                   
the administrator, receiver or other person
exercising control of the institution under resolution and the recipient are
required to take all necessary steps to ensure that the transfer becomes
effective;
(b)                   
the administrator, receiver or other person
exercising control of the institution under resolution is required to hold the
assets or rights or discharge the liability on behalf of the recipient until
the transfer becomes effective; 
(c)                   
the expenses of recipient in carrying out any
action required under points (a) and (b) are met from the assets of the
institution under resolution.
Article 61
Power to suspend certain obligations
1.           Member States shall ensure
that resolution authorities have the power to suspend any payment or delivery
obligations pursuant to any contract to which an institution is a party from
the publication of a notice of the suspension in accordance with Article 75(7)
until 5 pm on the business day following that publication.
2.           Any suspension under paragraph
1 shall not apply to eligible deposits within the meaning of Directive
94/19/EC.
Article 62
Power to restrict the enforcement of
security interests
1.           Member States shall ensure
that resolution authorities have the power to restrict secured creditors of an
institution under resolution from enforcing security interests in relation to
any assets of that institution for a limited period that the authority
determines necessary to achieve the resolution objectives.
2.           Resolution authorities
shall not exercise the power set out in paragraph 1 in relation to any security
interest of a central counterparty over assets pledged by way of margin or collateral
by the institution under resolution.
3.           Where Article 72 applies,
resolution authorities shall ensure that any restrictions imposed pursuant to
the power set out in paragraph 1 are consistent for all affiliated entities in
relation to which a resolution action is taken.
4.           The Commission shall, by
means of delegated acts adopted in accordance with Article 103, adopt measures
specifying the time period for which a restriction on the enforcement of
specified classes of security interest should apply.
Article 63
Power to temporarily suspend termination
rights
1.           Subject to Article 77, Member
States shall ensure that resolution authorities have the power to suspend the
termination rights of any party under a financial contract with a failing
institution that arise solely by reason of an action by the resolution
authority, from the notification of the notice pursuant to Article 74 (5) and
(6) util no later than 5 pm on the business day following that notification.
For the purposes this paragraph, the relevant
time is that in the home Member State of the institution under resolution.
2.           Where a resolution
authority exercises the power set out in paragraph 1 to suspend termination
rights, it shall make all reasonable efforts to ensure that all margin, collateral
and settlement obligations of the failing institution that arise under
financial contracts during the period of suspension are met.
3.           A person may exercise a
termination right under a financial contract before the end of the period referred
to in paragraph 1 if that person receives notice from the resolution authority
that the rights and liabilities covered by the netting arrangement shall not be
transferred to another entity.
4.           Where a resolution
authority exercises the power specified in paragraph 1 to suspend termination
rights, those rights may be exercised on the expiry of the period of suspension
as follows:
(a)         
if the rights and liabilities covered by the
financial contract have been transferred to another entity, or the bail-in tool
has been applied to the institution under resolution for the purpose referred
to in point (b) of Article 37(2):
(i)      A person may not exercise termination
rights as a result of the resolution action in any case covered by Article 77(1);
(ii)      A person may exercise termination
rights in accordance with the terms of that contract on the occurrence of any
subsequent default by the recipient where the contract has been transferred to
another entity, or by the institution where the bail-in tool has been applied;
(b)         
if the rights and liabilities covered by the
financial contract remain with the institution under resolution, and the
resolution authority is not applying the bail in tool in accordance with
Article 37(2) (a) with regards to that institution, a person may immediately
exercise termination rights in accordance with the terms of that contract.
5.           Competent authorities or
resolution authorities may require an institution to maintain detailed records
of financial contracts when they consider that there is a material possibility
that the institution meets the conditions for resolution.
6.           For the purposes of
paragraph 1, financial contracts shall include the following contracts and
agreements:
(a)         
securities contracts, including:
(i)      contracts for the purchase, sale or
loan of a security, a group or index of securities,
(ii)      an option on a security or group or
index of securities,
(iii)     a repurchase or reverse repurchase
transaction on any such security, group or index;
(b)         
commodities contracts, including:
(i)      contracts for the purchase or sale of
a commodity for future delivery, 
(ii)      an option on a commodity;
(c)         
futures and forwards contracts, including
contracts (other than a commodities contract) for the purchase, sale or
transfer of a commodity or property of any other description, service, right or
interest for a specified price at a future date,
(d)         
repurchase agreements relating to securities;
(e)         
swap agreements, including:
(i)      swaps, options, futures or forward
agreements relating to interest rates; spot or other foreign exchange, precious
metals or commodity agreements; currency; an equity index or equity; a debt
index or debt; commodity indexes or commodities; weather; emissions or
inflation,
(ii)      total return, credit spread or
credit swaps,
(iii)     any agreement or transaction that is
similar to an agreement referred to in points (i) or (ii) of this point which
is the subject of recurrent dealing in the swaps or derivatives markets;
(f)           
master agreements for any of the contracts or
agreements referred to in points (a) to (e).
7.           EBA
shall develop draft regulatory technical standards specifying the following
elements for the purposes of paragraph 6:
(a)         
the information on financial contracts that should
be contained in the detailed records;
(b)         
the circumstances in which the requirement should
be imposed.
EBA shall submit those draft regulatory technical
standards to the Commission within twelve months from
the date of entry into force of this Directive.
Power is delegated to the
Commission to adopt the regulatory technical standards referred to in the first
subparagraph in accordance with the procedure laid down in Articles 10 to 14 of
Regulation (EU) No 1093/2010.
Article 64
Exercise of the resolution powers
1.           Member States shall ensure
that, in order to take a resolution action, resolution authorities are able to
exercise control over the institution under resolution, so as to:
(a)         
operate the institution under resolution with
all the powers of the members or shareholders, directors and officers of institution
and conduct its activities and services; 
(b)         
manage and dispose of the assets and property of
the institution under resolution.
The control provided for in the first subparagraph
may be exercised directly by the resolution authority or indirectly by a person
appointed by the authority, including an administrator or a special
administrator.
2.           Member States shall also
ensure that resolution authorities are able to take a resolution action through
executive order in accordance with national administrative competences and
procedures, without exercising control over the institution.
3.           Resolution authorities
shall decide in each particular case whether it is appropriate to carry out the
resolution action through the means specified in paragraph 1 or in paragraph 2,
having regard to the resolution objectives and the general principles governing
resolution, the specific circumstances of the institution in question and the
need to facilitate the effective resolution of cross border groups.
Chapter VI
Safeguards
Article 65
Treatment of shareholders and creditors
in case of partial transfers and application of the bail-in tool 
1.           After the resolution tools
have been applied and, in particular for the purposes of Article 67, Member
States shall ensure that:
(a)         
where resolution authorities transfer only parts
of the rights, assets and liabilities of the institution, the shareholders and
the creditors whose claims have not been transferred, receive in payment of
their claims at least as much as what they would have received if the
institution had been wound up under normal insolvency proceedings immediately
before the transfer,
(b)         
where resolution authorities apply the bail-in
tool, the shareholders and creditors whose claims have been written down or
converted to equity receive in payment of their claims at least as much as what
they would have received if the institution had been wound up under normal
insolvency proceedings immediately before the writing down or conversion. 
Article 66
Valuation 
For the purposes of Article 65, Member States
shall ensure that a valuation is carried out by an independent person after the
partial transfers or write down or conversion has been effected. That valuation
shall be distinct from the valuation carried out under Article 30 unless it
replaces a provisional valuation carried out under Article 30(5). The valuation
may be carried out by the authority responsible for the normal insolvency
proceedings under which the institution is wound up, within those proceedings
or through separate proceedings in accordance with national law. 
2.           The valuation shall
determine:
(a)         
the treatment that shareholders and creditors
would have received if the institution 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, are receiving or are likely to receive in the winding
up of the institution;
(c)         
if there is any difference between the treatment
referred to in point (a) and the treatment referred to in point (b).
3.           The valuation shall be in
accordance with the provisions and the methodology laid down in Article 30(1)
to (5), and shall:
(a)         
assume that the institution in connection to
which the partial transfer, write down or conversion has been made would have
entered normal insolvency proceedings immediately after the transfer, write
down or conversion 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 institution.
Article 67
Safeguard for shareholders and creditors

1.           Member States shall ensure
that if the evaluation carried out under Article 66 determines that the
shareholders and creditors referred to in Article 65(2) have received less, in
payment of their credits, than what they would have received in a winding up under
normal insolvency proceedings, they are entitled to the payment of the difference
from the resolution authority. 
2.           Member States may choose
the mechanisms and arrangements through which the payment is to be made. 
Article 68
Safeguard for counterparties in partial
transfers
1.           Member States shall ensure
that the protections specified in this Chapter apply in the following
circumstances:
(a)         
a resolution authority transfers some but not
all of the property, rights or liabilities of an institution to another entity
or from a bridge institution or asset management vehicle to another person; 
(b)         
a resolution authority exercises the powers
specified in point (f) of Article 57(1).
2.           Member States shall ensure
appropriate protection of the following arrangements and of the counterparties
to the following arrangements:
(a)         
security arrangements, under which a person has
by way of security an actual or contingent interest in the property or rights
that are subject to transfer, irrespective of whether that interest is secured
by specific property or rights or by way or a floating charge or similar arrangement;
(b)         
title transfer financial collateral arrangements
under which collateral to secure or cover the performance of specified
obligations is provided by a transfer of full ownership of assets from the
collateral provider to the collateral taker, on terms providing for the
collateral taker to transfer assets if those specified obligations are performed;
(c)         
set-off arrangements under which two or more
claims or obligations owed between the bank and a counterparty can be set off
against each other;
(d)         
netting arrangements under which a number of
claims or obligations can be converted into a single net claim, including
close-out netting arrangements under which, on the occurrence of an enforcement
event (however or wherever defined) the obligations of the parties are
accelerated so as to become immediately due or are terminated, and in either
case are converted into or replaced by a single net claim;
(e)         
structured finance arrangements, including
securitisations and covered bonds, which involve the granting and holding of
security by a party to the arrangement or a trustee, agent or nominee.
The form of protection that is appropriate, for
the classes of arrangements specified in points (a) to (e) of this paragraph is
further specified in Articles 70 to 73, and shall be subject to the
restrictions specified in Articles 61, 62 and 77.
3.           The requirement under
paragraph 2 applies irrespective of the number of parties involved in the
arrangements and of whether the arrangements:
(a)         
are created by contract, trusts or other means,
or arise automatically by operation of law; 
(b)         
arise under or are governed in whole or in part
by the law of another jurisdiction.
4.           The Commission shall, by
means of delegated acts adopted in accordance with Article 103, adopt measures
further specifying the classes of arrangement that fall within the scope of
points (a) to (e) of paragraph 2 of this Article.
Article 69
Protection for financial collateral, set
off and netting agreements
Member States shall ensure that there is
appropriate protection for title transfer financial collateral arrangements and
set-off and netting arrangements so as to prevent the transfer of some, but not
all, of the rights and liabilities that are protected under a title transfer
financial collateral arrangement, a set-off arrangement or a netting
arrangement between the institution and another person and the modification or
termination of rights and liabilities that are protected under such a title
transfer financial collateral arrangement, a set-off arrangement or a netting arrangement
through the use of ancillary powers.
For the purposes of the first subparagraph,
rights and liabilities are to be treated as protected under such an arrangement
if the parties to the arrangement are entitled to set-off or net those rights
and liabilities.
Article 70
Protection for security arrangements
Member States shall ensure that there is
appropriate protection for liabilities secured under a security arrangement so
as to prevent one of the following:
(a)                   
the transfer of assets against which the liability
is secured unless that liability and benefit of the security are also
transferred;
(b)                   
the transfer of a secured liability unless the
benefit of the security are also transferred;
(c)                   
the transfer of the benefit unless the secured
liability is also transferred;
(d)                   
the modification or termination a security
arrangement through the use of ancillary powers, if the effect of that
modification or termination is that the liability ceases to be secured.
Article 71
Protection for structured finance
arrangements
1.           Member States shall ensure
that there is appropriate protection for structured finance arrangements so as
to prevent either of the following:
(a)         
the transfer of some, but not all, of the
property, rights and liabilities which constitute or form part of a structured
finance arrangement to which the credit institution under resolution is a
party; 
(b)         
the termination or modification through the use
of ancillary powers of the property, rights and liabilities which constitute or
form part of a structured finance arrangement to which the institution under
resolution is a party.
2.           The protections specified
in paragraph 1 shall not apply where only property, rights and liabilities that
relate to deposits are transferred or not transferred, terminated or modified.
Article 72
Partial transfers: protection of
trading, clearing and settlement systems
1.           Member States shall ensure
that transfer, cancellation or modification shall not affect the operation of
systems and rules of systems covered by Directive 98/26/EC, where resolution
authority:
(a)         
transfers some but not all of the property,
rights or liabilities of an institution to another entity; 
(b)         
uses powers under Article 57 to cancel or amend the
terms of a contract to which the institution under resolution is a party or to
substitute a recipient as a party.
2.           In particular, such a
transfer, cancellation or amendment may not revoke a transfer order in
contravention of Article 5 of Directive 98/26/EC; and may not modify or negate
the enforceability of transfer orders and netting as required by Articles 3 and
5 of Directive 98/26/EC, the use of funds, securities or credit facilities as
required by Article 4 of Directive98/26/EC or protection of collateral security
as required by Article 9 of Directive 98/26/EC.
Article 73
Property, rights and liabilities
governed by the law of a territory outside the Union
Where a resolution authority purports to
transfer or transfers all of the property, rights and liabilities of an
institution to another entity, but the transfer is or may not be effective in
relation to certain property because it is outside the Union, or to certain
rights or liabilities because they are under the law of a territory outside the
Union, the resolution authority shall not proceed to the transfer or, if it has
already ordered the transfer, that transfer shall be void, and all property,
rights and liabilities covered by the relevant arrangement specified in Article
69(2) are not transferred from, or revert to, the institution under resolution.
Chapter VII
Procedural Obligations 
Article 74
Notification requirements
1.           Member States shall
require the management body of an institution to notify the competent authority
where they consider that the institution is failing or likely to fail, within
the meaning specified in Article 27(2).
2.           Competent authorities
shall inform the relevant resolution authorities of any measures they require
an institution to take under Article 22 of this Directive or Article 136(1) of
Directive 2006/48/EC.
3.           Where a competent
authority assesses that the conditions referred to in points (a) and (b) of Article
27(1) are met in relation to an institution, it shall communicate that
assessment without delay to the following authorities:
(a)         
the resolution authority for that institution,
if different;
(b)         
the central bank, if different;
(c)         
where applicable, the group level resolution authority;
(d)         
competent ministries;
(e)         
where the institution is subject to supervision
on consolidated basis under section 1 of Chapter 4, Title V of Directive
2006/48/EC, the consolidating supervisor.
4.           On receiving a
communication from the competent authority pursuant to paragraph 3 of this Article,
the resolution authority shall assess whether the conditions established in Article
27 are met in respect of the institution in question.
5.           A decision that the
conditions for resolution are met in relation to an institution shall be set
out in a notice, which shall contain the following information:
(a)         
the reasons for that decision; 
(b)         
the action that the resolution authority intends
to take.
The action referred to in point (b) may include
a resolution action, or an application for winding up, the appointment of an
administrator or any other measure under applicable national insolvency law.
The authority or authorities responsible for
that decision shall notify the institution in question. A notification pursuant
to this paragraph may take the form of the public notification referred to in
paragraph 6.
6.           Where the resolution
authority takes a resolution action, it shall make that action public and shall
take reasonable steps to notify all known shareholders and creditors, in
particular retail investors, affected by the exercise of the resolution power.
The measures specified in Article 75(4) shall be deemed reasonable steps for
the purposes of this paragraph.
7.           A resolution authority
shall publish a notice specifying the terms and period of that suspension in
accordance with the procedure specified in Article 75(4) where it exercises resolution
powers, and in particular:
(a)         
the power under Article 61 to suspend payment or
delivery obligations;
(b)         
the power under Articles 63 to suspend
termination rights.
8.           EBA shall develop draft
regulatory technical standards in order to specify the procedures, contents and
conditions related to the following requirements:
(a)         
the notifications referred to in paragraphs 1 to
5,
(b)         
the notice of a suspension referred to in paragraph
7.
EBA shall submit those draft regulatory
technical standards to the Commission within twelve months from the date of
entry into force of this Directive.
Power is delegated to the Commission to adopt
the regulatory technical standards referred to in the first subparagraph in
accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU)
No 1093/2010.
Article 75
Procedural obligations of resolution
authorities
1.           Member States shall ensure
that, as soon as reasonably practicable after taking a resolution action,
resolution authorities comply with the requirements set out in paragraphs 2, 3
and 4.
2.           The resolution authority
shall notify the institution under resolution and EBA of the resolution action.
A notification according to this paragraph
shall include a copy of any order or instrument by which the relevant powers
are exercised and shall indicate the date from which the resolution actions are
effective.
3.           The notification referred
to in paragraph 2 shall include a copy of any order or instrument by which the
relevant powers are exercised and indicate the date from which the tool is or
powers are effective.
4.           The resolution authority
shall publish or ensure the publication of either a copy of the order or
instrument by which the resolution action is taken, or a notice summarising the
effects of the resolution action, and in particular the effects on retail
investors, by the following means:
(a)         
on its official website;
(b)         
on the website of the competent authority, if
different from the resolution authority, or on the website of EBA;
(c)         
on the website of the institution under
resolution; 
(d)         
where the shares or other instruments of
ownership of the institution under resolution are admitted to trading on a
regulated market, the means used for the disclosure of regulated information
concerning that institution in accordance with Article 21(1) of Directive
2004/109/EC of the European Parliament and of the Council.[39]
5.           The resolution authority
shall ensure that the documents providing proof of the instruments referred to
in paragraph 4 are sent to the known shareholders and creditors of the
institution under resolution.
Article 76
Confidentiality
1.           The requirements of
professional secrecy shall be binding in respect of the following persons:
(a)         
resolution authorities;
(b)         
competent authorities and EBA;
(c)         
competent ministries;
(d)         
employees or former employees of the authorities
referred to in points (a) and (b);
(e)         
special managers appointed under Article 24;
(f)           
potential acquirers that are contacted by the
competent authorities or solicited by the resolution authorities, irrespective
of whether that contact or solicitation was made as preparation for the use of
the sale of business tool, and irrespective of whether the solicitation
resulted in an acquisition;
(g)         
auditors, accountants, legal and professional
advisors, valuers and other experts engaged by the resolution authorities or by
the potential acquirers referred to in point (f);
(h)         
bodies which administer the deposit guarantee
schemes;
(i)           
central banks and other authorities involved in
the resolution process;
(j)           
any other persons who provide or have provided
services to the resolution authorities.
2.           Without prejudice to the
generality of the requirements under paragraph 1, the persons referred to in that
paragraph shall be prohibited from divulging confidential information received during
the course of their professional activities, or from a resolution authority in
connection with its functions, to any person or authority unless it is in
summary or collective form such that individual institutions cannot be
identified or with the express and prior consent of the resolution authority.
3.           The confidentiality
requirements set out in paragraphs 1 and 2 of this Article shall not prevent
resolution authorities, including their employees, from sharing information
with other Union resolution authorities, competent authorities, central banks, EBA,
or, subject to Article 90, third country authorities that carry out equivalent
functions to resolution authorities for the purposes of planning or carrying
out a resolution action. 
4.           The provisions of this Article
are without prejudice to cases covered by criminal law.
5.           EBA shall develop draft implementing
technical standards to specify how information should be provided in summary or
collective form for the purposes of paragraph 2.
EBA shall submit those draft implementing technical
standards to the Commission within twelve months from the date of entry into
force of this Directive.
Power is delegated to the Commission to adopt
the implementing technical standards referred to in the first sub-paragraph of
this paragraph in accordance with Article 15 of Regulation (EU) No 1093/2010.
Chapter VIII
Right of Appeal and Exclusion of Other Actions
Article 77
Exclusion of termination and set-off
rights in resolution
1.           Member States shall ensure
that counterparties under a financial contract as defined in Article 63 entered
into originally with the institution under resolution cannot exercise
termination rights under that contract or rights under a walk-away clause unless the resolution action is the sale of business
tool or the bridge institution tool and the rights and liabilities covered by
the financial contract are not transferred to a third party or bridge
institution, as the case may be.
For the purposes of this paragraph, a walk-away
clause includes a provision in a financial contract that suspends, modifies or
extinguishes an obligation of the non-defaulting party to make a payment, or
prevents such an obligation from arising that would otherwise arise.
2.           Member States shall ensure
that creditors of the institution under resolution are not entitled to exercise
statutory rights to set-off unless the resolution action is the sale of
business tool or the bridge institution tool and the rights and liabilities
covered by the financial contract are not transferred to a third party or
bridge institution, as the case may be.
Article 78
Rights to challenge resolution
1.           Member States shall ensure
that all persons affected by the decision to open resolution proceedings
provided in Article 74(5) or by a decision of the resolution authorities to
take a resolution action, have the right to apply for a judicial review of that
decision.
2.           The right to judicial
review required by paragraph 1 shall be subject to the following restrictions:
(a)         
the lodging of the application for judicial
review or for any interim measure shall not entail any automatic suspension of
the effects of the challenged decision; 
(b)         
the decision of the resolution authority shall
be immediately enforceable and shall not be subject to a suspension order
issued by a court; 
(c)         
the review shall be restricted to one or more of
the following matters:
–              
to the legality of the decision referred to in paragraph
1, including a review of whether the conditions for resolution were met,
–              
the legality of the way in which that decision
was implemented, and
–              
the adequacy of any compensation granted;
(d)         
The annulment of a decision of a resolution
authority shall not affect any subsequent administrative acts or transactions
concluded by the resolution authority concerned which were based on the
annulled decision of the resolution authority where this is necessary to
protect the interest of third parties acting in good faith having bought
assets, rights and liabilities of the institution under resolution by virtue of
the exercise of the resolution powers by the resolution authorities. Remedies
for a wrongful decision or action by the resolution authorities shall be
limited to compensation for the loss suffered by the applicant as a result of
the decision or act.
Article 79
Restrictions on other judicial
proceedings
1.           Member States shall ensure
that normal insolvency proceedings under national law may not be commenced with
respect to an institution under resolution or an institution in relation to
which the conditions for resolution have been determined to be met.
2.           For the purposes of paragraph
1, Member States shall ensure that:
(a)         
competent authorities and resolution authorities
are notified of any application for the opening of normal insolvency proceedings
in relation to an institution, irrespective of whether the institution is under
resolution or a decision has been made public in accordance with Article 74(6);

(b)         
the application may not be determined unless the
court has received confirmation that the notifications referred to in point (a)
have been made and either of the following occur:
(i)      the resolution authority has notified
the court that it does not intend to take any resolution action in relation to
the institution; 
(ii)      a period of 14 days beginning with
the date on which the notifications referred to in point (a) were made has
expired.
3.           Without prejudice to any
restriction on the enforcement of security interests imposed pursuant to Article
63 or to paragraph 1 of this Article, Member States shall ensure that, if
necessary for the effective application of the resolution tools and powers, resolution
authorities can request the court to apply a stay for an appropriate period of
time in accordance with the objective pursued, on any judicial action or
proceeding in which an institution under resolution is or becomes a party.
Title v
GROUP RESOLUTION
Article 80
Resolution colleges
1.           Group level resolution
authorities shall establish resolution colleges to carry out the tasks referred
to in Articles 11, 15 and 83, and, where appropriate, to ensure cooperation and
coordination with third countries resolution authorities.
In particular, resolution colleges shall
provide a framework for the group level resolution authority, the other
resolution authorities and, where appropriate, competent authorities and
consolidating supervisors concerned to perform the following tasks:
(a)         
exchanging information relevant for the
development of group resolution plans, for the application to groups of
preparatory and preventative powers and for group resolution;
(b)         
developing group resolution plans pursuant to Article
11;
(c)         
assessing the resolvability of groups pursuant
to Article 13;
(d)         
exercising powers to address or remove
impediments to the resolvability of groups pursuant to Article 15;
(e)         
deciding on the need to establish a group
resolution scheme as provided for in Article 83;
(f)           
securing the agreement on group resolution
schemes proposed in accordance with Article 83;
(g)         
coordinating public communication of group resolution
strategies and schemes;
(h)         
coordinating the use of financing arrangements established
under Title VII.
2.           The group level resolution
authority, the resolution authorities of each Member State in which a
subsidiary covered by consolidated supervision is established and EBA shall be
members of the resolution college.
Where the parent undertaking of one or more
institutions is a company referred to in Article 1(d), the resolution authority
of the Member State where that company is established shall be member of the
resolution college.
Where the resolution authorities which are
members of the resolution college are not the competent ministries, the competent
ministries shall be members, in addition to the resolution authorities, of the
resolution colleges and may attend meetings of the resolution colleges, in
particular, where the issues to be discussed concern matters which may have
implications for public funds.
Where a parent undertaking or an institution
established in the Union has subsidiary institutions situated in third
countries, the resolution authorities of those third countries may also be
invited to participate, as observers, in the resolution college, on request of
the group level resolution authority, provided that they are subject to
confidentiality requirements equivalent to those established by Article 76.
3.           The public bodies participating
in the colleges shall cooperate closely. The group level resolution authority
shall coordinate all activities of resolution colleges and convene and chair
all its meetings. The group level resolution authority shall keep all members
of the college and EBA fully informed in advance of the organisation of such
meetings, of the main issues to be discussed and of the activities to be
considered. The group level resolution authority shall decide which authorities
and ministries should participate in particular meetings or activities of the
college, on the basis of the specific needs. The group level resolution
authority shall also keep all the members of the college informed in a timely
manner, of the actions and decisions taken in those meetings or the measures
carried out.
The decision of the group level resolution
authority shall take account of the relevance of the issue to the discussed,
the activity to be planned or coordinated and the decisions to be taken for
those resolution authorities, in particular the potential impact on the
stability of the financial system in the Member States concerned.
4.           EBA shall contribute to
promoting and monitoring the efficient, effective and consistent functioning of
resolution colleges. To that end, EBA may participate in particular meetings or
particular activities as it deems appropriate, but it shall not have voting
rights.
5.           The group level resolution
authority, after consulting the other resolution authorities, shall establish written
arrangements and procedures for the functioning of the resolution college.
6.           Notwithstanding paragraph
2, for the purposes of performing the tasks referred to in point (e) of the
second subparagraph of paragraph 1 the resolution authority or authorities of
each Member State in which a subsidiary is established shall participate at the
meetings or activities of the resolution college.
7.           Notwithstanding paragraph
2, for the purposes of performing the tasks referred to in points (f) and (h) of
the second subparagraph of paragraph 1 the resolution authority or authorities
of each Member State in which a subsidiary that meets the conditions for
resolution shall participate at the meetings or activities of the resolution
colleges.
8.           Group level resolution
authorities may not establish resolution colleges if other groups or colleges
perform the same functions and carry out the same tasks specified in this Article
and comply with all the conditions and procedures established in this Section. In
this case all references to resolution colleges in this Directive shall also be
understood as reference to those other groups or colleges.
9.           EBA shall develop draft
regulatory standards in order to specify the operational functioning of the resolution
colleges for the performance of the tasks provided for in paragraphs 1, 3, 5, 6
and 7.
EBA shall submit those draft regulatory
technical standards to the Commission within twelve months from the date of
entry into force of this Directive.
Power is delegated to the Commission to adopt
the regulatory standards referred to in the first subparagraph in accordance
with the procedure laid down in Articles 10 to 14 of Regulation (EU) No
1093/2010.
Article 81
European resolution colleges
1.           Where a third country
institution or third country parent undertaking has two or more subsidiary
institutions established in the Union, the resolution authorities of Member
States where those domestic subsidiary institutions in the Union are established
shall establish a European resolution college if no arrangements as the ones
foreseen in Article 89 have been established.
2.           The European resolution
college shall perform the functions and carry out the tasks specified in Article
80 with respect to the domestic subsidiary institutions.
3.           Where the domestic
subsidiaries are held by a financial holding company established within the
Union in accordance with the third subparagraph of Article 143(3) of Directive
2006/48/EC, the European resolution college shall be chaired by the resolution
authority of the Member State where the consolidating supervisor is located for
the purposes of consolidated supervision under that Directive.
Where the first sub-paragraph does not apply,
the members of the European resolution college shall nominate and agree the
chair.
4.           Subject to paragraph 3 of
this Article, the European resolution college shall otherwise function in
accordance with Article 81.
Article 82
Information exchange
The resolution authorities shall provide
one another with all the information relevant for the exercise of the other
authorities' tasks under this Directive. 
The resolution authorities shall
communicate on request all relevant information. In particular, the group level
resolution authority shall provide the resolution authorities in other Member
States with all the relevant information in a timely manner in view of
facilitating the exercise of the tasks referred to in points (b) to (h ) of the
second subparagraph of Article 80(1).
Information shared pursuant to this Article
may also be shared with competent ministries.
Article 83
Group resolution
1.           Where a resolution authority
decides, or is notified pursuant to Article 74(3), that an institution that is
a subsidiary in a group is failing or likely to fail, that authority shall notify
the following information without delay to the group level resolution authority,
if different, and to the resolution authorities that are members of the
resolution college for the group in question:
(a)         
the decision that the institution is failing or
likely to fail;
(b)         
the resolution actions or other insolvency
measures that the resolution authority considers appropriate for that
institution.
2.           On receiving a notification
under paragraph 1, the group level resolution authority, in consultation with
the other members of the relevant resolution college, shall assess the likely
impact of the failure of the institution in question, or the resolution action
or other measures notified in accordance with point (b) of paragraph 1, on the
group or on affiliated institutions in other Member States.
3.           If the group level
resolution authority, after consultation with the other resolution authorities
in accordance with paragraph 2, assesses that the failure of the institution in
question, or the resolution action or other measures notified in accordance
with point (b) of paragraph 1, would not have a detrimental impact on the group
or on affiliated institutions in other Member States, the resolution authority
responsible for that institution may take the resolution action or other
measures that it notified in accordance in accordance with point (b) of paragraph
1.
4.           If the group level
resolution authority, after consultation with the other resolution authorities
in accordance with paragraph 2, assesses that the failure of the institution in
question, or the resolution action or other measures notified in accordance with
point (b) of paragraph 1, would have a detrimental impact on the group or on
affiliated institutions in other Member States, the group level resolution
authority shall, no later than 24 hours after receiving the notification under
paragraph 1, propose a group resolution scheme and submit it to the resolution college.
5.           A group resolution scheme
required under paragraph 4 shall:
(a)         
outline the resolution actions that should be
taken by the relevant resolution authorities in relation to the Union parent undertaking
or particular group entities with the objective of preserving the value of the
group as a whole, minimising the impact on financial stability in the Member
States in which the group operates and minimising the use of extraordinary
public financial support;
(b)         
specify how those resolution actions should be
coordinated;
(c)         
establish a financing plan. The financing plan
shall take into account the principles for sharing responsibility as established
in accordance with point (e) of Article 11(3).
6.           If any member of the
resolution college disagrees with the group resolution scheme proposed by the
group level resolution authority and considers that it needs to take
independent resolution actions or measures other than those proposed in the
scheme in relation to an institution or group entity for reasons of financial
stability, it may refer within 24 hours the matter to EBA in accordance with
Article 19 of Regulation (EU) No 1093/2010.
7.           By way of derogation from Article 19 (2)
of Regulation (EU) No 1093/2010, EBA shall take a decision within
24 hours. The subsequent action or measure of the resolution authority shall be
in conformity with the decision of EBA.
8.           Where a group level
resolution authority decides, or is notified pursuant to Article 74(3), that a
Union parent undertaking for which it is responsible is failing or likely to
fail, it shall notify the information referred to in points (a) and (b) of
paragraph 1 of this article to resolution authorities that are members of the
resolution college of the group in question. The resolution actions for the
purposes of point (b) of paragraph 1 of this Article may include a group
resolution scheme drawn up in accordance with paragraph 5 of this Article.
9.           Authorities shall perform
all actions under paragraphs 2 to 8 without delay, and with due regard to the
urgency of the situation.
10.         In any case where a group
resolution scheme is not implemented and resolution authorities take resolution
actions in relation to affiliated institutions, those authorities shall cooperate
closely within the resolution colleges with a view to achieving a coordinated
resolution strategy for all the institutions that are failing or likely to
fail.
11.         Resolution authorities that
take any resolution action in relation to group entities shall inform the
resolution college regularly and fully about those actions or measures and
their on-going progress.
TITLE VI
RELATIONS WITH THIRD COUNTRIES
Article 84
Agreements with third countries
1.           The Commission may submit
proposals to the Council, either at the request of a Member State or on its own
initiative, for the negotiation of agreements with one or more third countries
regarding the means of cooperation between resolution authorities in the
resolution planning and process of institutions and parent undertakings, in
particular with regard to the following situations:
(a)         
in cases where a domestic subsidiary institution
is established in the Member States; 
(b)         
in cases where a third country institution
operates a significant branch in the Member States; 
(c)         
in cases where a parent institution and, or a
company referred to in points (c) and (d) of Article 1 established in the
Member States has one or more third country subsidiary institutions; 
(d)         
in cases where an institution established in the
Member States has one or more significant branches in one or more third
countries.
2.           The agreements referred to
in paragraph 1 shall, in particular, seek to ensure the establishment of
processes and arrangements between resolution authorities for cooperation in
carrying out some or all of the tasks and exercising some or all of the powers
indicated in Article 89.
Article 85
Recognition of third country resolution
proceedings 
1.           Until an international
agreement provided for under Article 84 with a third country is concluded and
to the extent that the subject matter is not governed by that agreement the
following provisions shall apply.
2.           EBA shall recognise,
except as provided for in Article 86, third country resolution proceedings
relating to a third country institution that:
(a)         
has a domestic branch; 
(b)         
otherwise has assets, rights or liabilities
located in or governed by the law of a Member State.
3.           The recognition by EBA of third
country resolution proceedings as referred in paragraph 2 shall imply the
obligation for national resolution authorities to give effect to such
resolution proceedings in their territory. 
4.           The implementation of EBA's
decision to recognise third country resolution proceedings shall be effected by
the resolution authorities. For this purpose, Member States shall ensure that
resolution authorities are, as a minimum, empowered to do the following, without
the appointment of an administrator or of any official under national
insolvency law, an order, approval or consent from the court, or any other form
of judicial procedure:
(a)         
exercise the transfer powers in relation to the
following:
–              
assets of a third country institution that are
located in their Member State or governed by the law of their Member State;
–              
rights or liabilities of a third country institution
that are booked by the domestic branch in their Member State or governed by the
law of their Member State, or where claims in relation to such rights and
liabilities are enforceable in their Member State.
(b)         
perfect, including to require another person to
take action to perfect, a transfer of shares or instruments of ownership in a
domestic subsidiary institution established in the designating Member State.
Article 86
Right to refuse recognition of third
country resolution proceedings
1.           EBA shall refuse, after
consulting the national resolution authorities concerned, to recognise pursuant
to Article 85(2) third country resolution proceedings if it considers :
(a)         
that the third country resolution proceeding
would have an adverse effect on financial stability in the Member State in
which the resolution authority is based or considers that the proceeding may
have an adverse effect on the financial stability of another Member State;
(b)         
that independent resolution action under Article
87 in relation to a domestic branch is necessary to achieve one or more of the
resolution objectives;
(c)         
that creditors, including in particular
depositors located or payable in a Member State, would not receive equal
treatment with third country creditors under the third country resolution
proceedings.
2.           The Commission shall, by
means of delegated acts adopted in accordance to Article 103, shall specify the
circumstances referred to in points (a) and (b) of paragraph 1 of this Article.
Article 87
Resolution of Union branches of third
country institutions
1.           Member States shall ensure
that resolution authorities have the powers necessary to take a resolution
action in relation to a domestic branch that is independent of any third
country resolution procedure in relation to the third country institution in
question.
2.           Member States shall ensure
that the powers required in paragraph 1 may be exercised by resolution
authorities where the resolution authority considers that resolution action is
necessary in the public interest and one or more of the following conditions is
met:
(a)         
the branch no longer meets, or is likely not to
meet, the conditions imposed by national law for its authorisation and
operation within that Member State and there is no prospect that any private
sector, supervisory or relevant third country action would restore the branch
to compliance or prevent failure in reasonable timeframe;
(b)         
the third country institution is unable, or is
unlikely to be unable, to pay its obligations to domestic creditors, or
obligations that have been created or booked through the branch, as they fall
due and the resolution authority is satisfied that no third country resolution
proceeding or insolvency proceeding has been or will be initiated in relation
to that institution;
(c)         
the relevant third country authority has
initiated a resolution proceeding in relation to the third country institution,
or has notified to the resolution authority its intention to initiate such a
proceeding, and one of the circumstances specified in Article 86 applies.
3.           Where a resolution
authority takes an independent resolution action in relation to a domestic
branch, it shall have regard to the resolution objectives and take the
resolution action in accordance with the following principles and requirements,
insofar as they are relevant:
(a)         
the principles set out in Article 29;
(b)         
the requirements relating to the application of
the resolution tools in Chapter II of Title IV.
Article 88
Cooperation with third country
authorities
1.           Until an international
agreement provided for under Article 84 with third countries is concluded and
to the extent that the subject matter is not governed by that agreement the
following provisions shall apply.
2.           EBA shall conclude non-binding
framework cooperation arrangements with the following relevant third country
authorities:
(a)         
in cases where a domestic subsidiary institution
is established in the Union, the relevant authorities of the third country
where the parent undertaking or a company referred to in points (c) and (d) of Article
1 are established;
(b)         
in cases where a third country institution
operates a significant branch in the Union, the relevant authority of the third
country where that institution is established;
(c)         
in cases where a parent institution and, or a company
referred to in points (c) and (d) of Article 1 established in the Union has one
or more third country subsidiary institutions, the relevant authorities of the
third countries where those subsidiary institutions are established;
(d)         
in cases where an institution established in the
Union has one or more significant branches in one or more third countries, the
relevant authorities of the third countries where those branches are
established.
Cooperation arrangements under this paragraph
may relate to single institutions or to groups that include institutions. 
3.           The framework cooperation
agreements referred to in paragraph 1 shall establish processes and
arrangements between the participating authorities for cooperation in carrying out
some or all or the following tasks and exercising some or all of the following
powers in relation to institutions referred to in points (a) to (d) of
paragraph 1 or groups including such institutions:
(a)         
the development of resolution plans in
accordance with Articles 9 and 12 and similar requirements under the law of the
relevant third countries;
(b)         
the assessment of the resolvability of such
institutions and groups, in accordance with Article 13 and similar requirements
under the law of the relevant third countries;
(c)         
the application of powers to address or remove
impediments to resolvability pursuant to Articles 14 and 15 and any similar
powers under the law of the relevant third countries;
(d)         
the application of early intervention measures
pursuant to Article 23 and similar powers under the law of the relevant third
countries; 
(e)         
the application of resolution tools and exercise
of resolution powers and similar powers exercisable by the relevant third
country authorities.
4.           Competent authorities or
resolution authorities, where appropriate, shall conclude non-binding cooperation
arrangements in line with EBA framework arrangement with the relevant third
country authorities indicated in paragraph 2.
5.           Cooperation arrangements concluded
between resolution authorities of Member States and third countries in accordance
with this paragraph shall include provisions on the following matters:
(a)         
the exchange of information necessary for the
preparation and maintenance of resolution plans;
(b)         
consultation and cooperation in the development
of resolution plans, including principles for the exercise of powers under
Articles 87 and 88 and similar powers under the law of the relevant third
countries;
(c)         
the exchange of information necessary for the
application of resolution tools and exercise of resolution powers and similar
powers under the law of the relevant third countries;
(d)         
early warning to or consultation of parties to
the cooperation arrangement before taking any significant action under this
Directive or relevant third country law affecting the institution or group to
which the arrangement relates;
(e)         
the coordination of public communication in case
of joint resolution actions;
(f)           
procedures and arrangements for the exchange of
information and cooperation under points (a) to (e), including, where
appropriate, through the establishment and operation of crisis management
groups.
6.           Member States shall notify
to EBA any cooperation arrangements that resolution authorities and competent
authorities have concluded in accordance with this article.
Article 89
Confidentiality
1.           Member States shall ensure
that resolution authorities, competent authorities and competent ministries
exchange confidential information with relevant third country authorities only
if the following conditions are met:
(a)         
those third country authorities are subject to
requirements and standards of professional secrecy at least equivalent to those
imposed by Article 76;
(b)         
the information is necessary for the performance
by the relevant third country authorities of their functions under national law
that are comparable to those under this Directive.
2.           Where confidential
information originates in another Member State, resolution authorities or
competent authorities may not disclose that information to relevant third
country authorities unless the following conditions are met:
(a)         
the relevant authority of the Member State where
the information originated (the originating authority) agrees to that
disclosure;
(b)         
the information is disclosed only for the
purposes permitted by the originating authority.
3.           For the purposes of this Article,
information is deemed confidential if it is subject to confidentiality
requirements under Union law.
TITLE VII
EUROPEAN SYSTEM OF FINANCING ARRANGEMENTS
Article 90
European System of Financing
Arrangements
The European System of Financing
Arrangements shall consist of:
(a)         
national financing arrangements established in
accordance with Article 91;
(b)         
the borrowing between national financing
arrangements as specified in Article 97, 
(c)         
the mutualisation of national financing
arrangements in the case of a group resolution as referred to in Article 98.
Article 91
Requirement to establish resolution
financing arrangements
1.           Member States shall
establish financing arrangements for the purpose of ensuring the effective
application by the resolution authority of the resolution tools and powers. The
financing arrangements shall be used only in accordance with the resolution
objectives and the principles set out in Articles 26 and 29.
2.           Member States shall ensure
that the financing arrangements have adequate financial resources.
3.           For the purpose provided
for in paragraph 2, financing arrangements shall in particular have:
(a)         
the power to raise ex ante contributions as
specified in Article 94 with a view to reaching the target level specified in
Article 93; 
(b)         
the power to raise ex post extraordinary
contributions as specified in Article 95, and 
(c)         
the power to contract borrowings and other forms
of support as specified in Article 96.
Article 92
Use of the resolution financing
arrangements
1.           The financing arrangements
established in accordance with Article 91 may be used by the resolution
authority when applying the resolution tools, for the following purposes:
(a)         
to guarantee the assets or the liabilities of
the institution under resolution, its subsidiaries, a bridge institution or an
asset management vehicle;
(b)         
to make loans to the institution under
resolution, its subsidiaries, a bridge institution or an asset management
vehicle;
(c)         
to purchase assets of the institution under
resolution;
(d)         
to make contributions to a bridge institution;
(e)         
to take any combination of the actions referred
to in points (a) to (e).
The financing arrangements may be used to take
the actions referred to in points (a) to (e) also with respect to the purchaser
in the context of the sale of business tool. 
2.           Member States shall ensure
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. Only if the resources from shareholders
and creditors are exhausted, the losses, costs or other expenses incurred in
connection with the use of the resolution tools shall be borne by the financing
arrangements.
Article 93
Target funding level
1.           Member States shall ensure
that, in a period no longer than 10 years after the entry into force of this
directive, the available financial means of their financing arrangements reach
at least 1% of the amount of deposits of all the credit institutions authorised
in their territory which are guaranteed under Directive 94/19/EC.
2.           During the initial period
of time referred to in paragraph 1, contributions to the financing arrangements
raised in accordance with Article 94 shall be spread out in time as evenly as
possible until the target level is reached.
Member States may extend the initial period of
time for a maximum of four years in case the financing arrangements make
cumulated disbursements superior to 0.5% of covered deposits.
3.           If, after the initial
period of time referred to in paragraph 1, the available financial means diminish
below the target level specified in paragraph 2, contributions raised in
accordance with Article 94 shall resume 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 0.25% of covered
deposits.
Article 94
Ex ante contributions
1.           In order to reach the
target level specified in Article 93, Member States shall ensure that contributions
are raised at least annually from the institutions authorised in their territory.
2.           Contributions shall be calculated
in accordance with the following rules:
(a)         
if a Member State has availed itself of the
option provided for in Article 99(5) of this Directive to use the funds of
Deposit Guarantee Scheme for the purposes of Article 92 of this Directive, the
contribution from each institution shall be pro-rata to the amount of its
liabilities excluding own funds and deposits guaranteed under Directive
94/19/EC with respect to the total liabilities, excluding own funds and deposits
guaranteed under Directive 94/19/EC, of all the institutions authorised in the
territory of the Member State.
(b)         
if a Member State has not availed itself of the
option provided for in Article 99(5) to use the funds of the Deposit Guarantee
Scheme for the purposes of Article 92, the contribution from each institution
shall be pro-rata to the total amount of its liabilities, excluding own funds,
with respect to the total liabilities, excluding own funds, of all the
institutions authorised in the territory of the Member State.
(c)         
the contributions calculated under (a) and (b) shall
be adjusted in proportion to the risk profile of institutions, in accordance
with the criteria adopted under paragraph 7 of this Article.
3.           The available financial
means to be taken into account in order to reach the target level specified in
Article 93 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 resolution authorities for the
purposes specified in the first paragraph of Article 92. The share of
irrevocable payment commitments shall not exceed 30% of the total amount of
contributions raised in accordance with this Article.
4.           Member States shall ensure
that the obligation to pay the contributions specified in this Article is
enforceable under national law, and that due contributions are fully paid.
Member States shall set up appropriate
regulatory, accounting; reporting and other obligations to ensure that due
contribution are fully paid. Member States shall also ensure measures for the
proper verification of whether the contribution has been paid correctly. Member
States shall ensure measures to prevent evasion, avoidance and abuse.
5.           The amounts raised in
accordance with this Article shall only be used for the purposes specified in
Article 92 of this Directive, and, where Member States have availed themselves
of the option provided for under Article 99(5) of this Directive, for the
purposes specified in Article 92 of this Directive or for the repayment of
deposits guaranteed under Directive 94/19/EC.
6.           The amounts received from
the institution under resolution or the bridge institution, the interest and
other earnings on investments and any other earnings shall benefit the
financing arrangements.
7.           The Commission shall be
empowered to adopt delegated acts in accordance with Article 103 in order specify
the notion of adjusting contributions in proportion to the risk profile of institutions
as referred to in paragraph 2 (c) of this Article, taking into account the
following:
(a)         
the risk exposure of the institution, including
the importance of its trading activities, its off-balance sheet exposures and
its degree of leverage;
(b)         
the stability and variety of the company's
sources of funding;
(c)         
the financial condition of the institution;
(d)         
the probability that the institution enters into
resolution;
(e)         
the extent to which the institution has
previously benefited from State support;
(f)           
the complexity of the structure of the
institution and the resolvability of the institution, and
(g)         
its systemic importance for the market in
question.
8.           The Commission shall be
empowered to adopt delegated acts in accordance with Article 103 in order to:
(a)         
specify the registration, accounting, reporting
obligations and other obligations referred to in paragraph 4 intended to ensure
that the contributions are effectively paid;
(b)         
specify the measures referred to in paragraph 4 to
ensure proper verification of whether the contribution has been paid correctly;
(c)         
specify the measures referred to in paragraph 4
to prevent evasion, avoidance and abuse.
Article 95
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 financing arrangements, Member States shall ensure
that extraordinary ex post contributions are raised from the institutions
authorised in their territory, in order to cover the additional amounts. These
extraordinary contributions shall be allocated between institutions in
accordance with the rules set out in Article 94(2).
2.           The provisions of Article 94(4)
to (8) shall be applicable to the contributions raised under this article.
Article 96
Alternative funding means
Member States shall ensure that financing
arrangements under their jurisdiction are enabled to contract borrowings or
other forms of support from financial institutions, the central bank, or other
third parties, in the event that the amounts raised in accordance with Article 94
are not sufficient to cover the losses, costs or other expenses incurred by the
use of the financing arrangements, and the extraordinary contributions provided
for in Article 95 are not immediately accessible.
Article 97
Borrowing between financing arrangements
1.           Member States shall ensure
that financing arrangements under their jurisdiction shall have the right to
borrow from all other financing arrangements within the Union, in the event
that the amounts raised under Article 94 are not sufficient to cover the
losses, costs or other expense incurred by the use of the financing
arrangements, and the extraordinary contributions foreseen in Article 95 are
not immediately accessible.
2.           Member States shall ensure
that financing arrangements under their jurisdiction are obliged to lend to
other financing arrangements within the Union in the circumstances specified
under paragraph 1.
Subject to the first subparagraph, national
financing arrangements shall not be obliged to lend to another national
financing arrangement in those circonstances when the resolution authority of
the Member State of the financing arrangement considers that it would not have
sufficient funds to finance any foreseeable resolution in the near future. In any
case they should not be obliged to lend more than half of the funds that the
national financing arrangement has available at the moment when the borrowing
request is formalised.
3.           The Commission shall be
empowered to adopt delegated acts in accordance with Article 103 in order to
specify the conditions that have to be met in order for a financing arrangement
to be able to borrow from other financing arrangements as well as the
conditions applicable to the borrowing and in particular the criteria for the
assessment of whether there will be sufficient funds for financing a
foreseeable resolution in the near future, the repayment period and the
interest rate applicable.
Article 98
Mutualisation of national financing
arrangements in the case of a group resolution
1.           Member States shall ensure
that, in the case of a group resolution as established in Article 83, each
national financial arrangement of each of the institutions that are part of a
group contributes to the financing of the group resolution in accordance with this
Article.
2.           For the purposes of
paragraph 1, the group level resolution authority, in consultation to the
resolution authorities of the institutions that are part of the group, shall
establish, if necessary before taking any resolution action, a financing plan
determining the total financial needs for the financing of the group resolution
as well as the modalities for that financing. 
3.           The modalities referred to
in paragraph 2 may include:
(a)         
contributions from the national financing
arrangements of the institutions that are part of the group,
(b)         
borrowings or other forms of support from
financial institutions or the Central Bank.
The financing plan shall be part of the group
resolution scheme as specified in Article 83. The financing plan shall
establish the contribution from each national financing arrangement.
4.           Provided that the
requirements under paragraph 2 of this article and Article 83 are fulfilled,
Member States shall establish rules and procedures to ensure that each national
financing arrangement under their jurisdiction effects its contribution to the
financing plan immediately after their resolution authorities receive a request
from the group level resolution authority.
5.           For the purpose of this Article,
Member States shall ensure that the group financing arrangements are allowed, under
the conditions laid down in article 96, to contract borrowings or other forms
of support, from financial institutions, the Central Bank or other third
parties, for the total amount needed to finance the resolution of the group in
accordance with the financing plan referred to in paragraph 2 of this Article.
6.           Member States shall ensure
that each national financing arrangement under its jurisdiction guarantees any
borrowing contracted by the group financing arrangement in accordance with
paragraph 4. The guarantee by each national financing arrangement shall not
exceed the part of its participation to the financing plan established in
accordance to paragraph 2.
7.           Member States shall ensure
that any proceeds or benefits that arise from the use of the financing
arrangements shall benefit all national financing arrangements in accordance to
their contribution to the financing of the resolution as established in
paragraph 2.
8.           The Commission shall be
empowered to adopt delegated acts in accordance with Article 103 in order to
specify further:
(a)         
the form and content of the financing plan
specified in paragraph 2;
(b)         
the modalities for the disbursement of the
contributions to the financing plan referred to in paragraph 3;
(c)         
the modalities of the guarantees referred to in paragraph
5;
(d)         
the criteria for determining when all resolution
actions have finalised;
Article 99
Use of deposit guarantee schemes in the
context of resolution
1.           Member States shall ensure
that, where the resolution authorities take resolution action, and provided
that this action ensures that depositors continue having access to their
deposits, the deposit guarantee scheme to which the institution is affiliated
is 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.
2.           Member States shall ensure
that, under the national law governing normal insolvency proceedings, the
deposit guarantee schemes rank pari passu with unsecured non- preferred claims.
3.           Member States shall ensure
that the determination of the amount by which the deposit guarantee scheme is
liable in accordance with paragraph 1 of this Article complies with the
conditions established in Article 30 (2).
4.           The contribution from the
deposit guarantee scheme for the purpose of paragraph 1 shall be made in cash.
5.           Member States may also provide
that the available financial means of deposit guarantee schemes established in
their territory may be used for the purposes of Article 92(1), provided that the
deposit guarantee schemes comply, where applicable, with the provisions laid
down in Articles 93 to 98.
6.           Member States shall ensure
that the deposit guarantee scheme has arrangements in place to ensure that,
following a contribution made by the deposit guarantee scheme under paragraphs
1 or 5 and where the depositors of the institution under resolution need to be
reimbursed, the members of the scheme can immediately provide the scheme with the
amounts that have to be paid.
7.           Where Member States avail
themselves of the option provided for under paragraph 5 of this Article, the deposit
guarantee schemes shall be considered as financing arrangements for the purpose
of Article 91. In that case Member States may abstain from establishing
separate funding arrangements.
8.           Where a Member State
avails itself of the option provided for in paragraph 5, the following priority
rule shall apply to the use of available financial means of the deposit guarantee
scheme.
If the deposit guarantee scheme is, at the same
time, requested to use its available financial means for the purposes specified
in Article 92 or for the purpose of the first paragraph of this Article, and
for the repayment of depositors under Directive 94/19/EC, and the available
financial means are insufficient to satisfy all these requests, priority shall
be given to the repayment of depositors under Directive 94/19/EC and to the actions
specified under paragraph 1 of this Article, over the payments for the purposes
provided for in Article 92 of this Directive.
9.           Where eligible deposits
with an institution under resolution are transferred to another entity through
the sale of business tool or the bridge institution tool, the depositors have
no claim under Directive 94/19/EC against the deposit guarantee scheme in
relation to any part of their deposits with the institution under resolution
that are not transferred, provided that the amount of funds transferred is
equal to or more than the aggregate coverage level laid down in Article 7 of
Directive 94/19/EC.
TITLE VIII
SANCTIONS
Article 100
Administrative sanctions and measures
1.           Member States shall ensure
that appropriate administrative sanctions and measures are taken where the
national provisions adopted in the implementation of this Directive have not
been complied with, and shall ensure that they are applied. The sanctions and
measures shall be effective, proportionate and dissuasive.
2.           Member States shall ensure
that where obligations apply to financial institutions and Union parent
undertakings, in case of a breach sanctions can be applied to the members of
the management, and to any other individuals who under national law are responsible
for the breach.
3.           Resolution authorities and
competent authorities shall be given all investigatory powers that are
necessary for the exercise of their functions. In the exercise of their
sanctioning powers, resolution authorities and competent authorities shall
cooperate closely to ensure that sanctions or measures produce the desired
results and coordinate their action when dealing with cross border cases.
Article 101
Specific provisions 
1.           This Article shall apply in
all the following circumstances:
(a)         
an institution or parent undertaking fails to draw
up, maintain and update recovery plans and group recovery plans, in breach of
Articles 5 or 7;
(b)         
an entity fails to notify an intention to
provide group financial support to its competent authorities in breach of Article
22;
(c)         
an institution or parent undertaking fails to
provide all the information necessary for the development of resolution plans
in breach of Article 10; 
(d)         
the management of an institution fails to notify
the competent authority when the institution is failing
or likely to fail in breach of Article 73(1).
2.           Without prejudice to the
powers of competent authorities or resolution authorities in accordance with
other provisions of this Directive, Member States shall ensure that in the
cases referred to in paragraph 1, the administrative sanctions and measures
that can be applied include at least the following:
(a)         
a public statement, which indicates the natural
or legal person responsible and the nature of the breach;
(b)         
a temporary ban against any member of the
institution's or parent undertaking's management or any other natural person,
who is held responsible, to exercise functions in institutions;
(c)         
in case of a legal person, administrative
pecuniary sanctions of up to 10 % of the total annual turnover of that legal
person in the preceding business year; where the legal person is a subsidiary
of a parent undertaking, the relevant total annual turnover shall be the total
annual turnover resulting from the consolidated account of the ultimate parent
undertaking in the preceding business year;
(d)         
in case of a natural person, administrative
pecuniary sanctions of up to EUR 5 000 000, or in the Member States
where the Euro is not the official currency, the corresponding value in the
national currency on the date of entry into force of this Directive;
(e)         
administrative pecuniary sanctions of up to
twice the amount of the profits gained or losses avoided because of the breach
where those can be determined.
Article 102
Effective application of sanctions and
exercise of sanctioning powers by competent authorities 
Member States shall ensure that when
determining the type of administrative sanctions or measures and the level of
administrative pecuniary sanctions, the competent authorities shall take into
account all relevant circumstances, including:
(e)                   
the gravity and the duration of the breach;
(f)                     
the degree of responsibility of the responsible
natural or legal person;
(g)                   
the financial strength of the responsible
natural or legal person, as indicated by the total turnover of the responsible
legal person or the annual income of the responsible natural person;
(h)                   
the importance of profits gained or losses
avoided by the responsible natural or legal person, insofar as they can be
determined;
(i)                     
the losses for third parties caused by the
breach, insofar as they can be determined;
(j)                     
the level of cooperation of the responsible
natural or legal person with the competent authority;
(k)                   
previous breaches by the responsible natural or
legal person.
TITLE IX
POWERS OF EXECUTION
Article 103
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
116.
3.           The delegation of powers referred
to in Articles 2, 4, 28, 37, 39, 43, 86, 94, 97 and 98 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 2, 4, 28, 37, 39, 43, 86, 94, 97 and 98 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.
TITLE X
AMENDMENTS TO DIRECTIVES 77/91/EEC, 82/891/EEC, 2001/24/EC,
2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU and to Regulation
(EU) No 1093/2010
Article 104
Amendment to Directive 77/91/EEC
In Article 41 of Directive 77/91/EEC, the
following paragraph 3 is added:
"3. Member States shall ensure that
Articles 17(1), 25(1), 25(3), 27(2) first paragraph, 29, 30, 31 and 32 of this
Directive do not apply in case of use of the resolution tools, powers and
mechanisms provided in Title IV of Directive XX/XX/EU of the European
Parliament and of the Council(*)[Directive on Recovery and Resolution] provided
that the resolution objectives laid down in Article 27 of Directive XX/XX/EU
and the conditions for resolution laid down in Article 28 of that Directive are
met.
_______
(*) O L….. …. p.."
Article 105
Amendment to Directive 82/891/EEC
Article 1(4) of Directive of 82/891/EEC is
replaced by the following:
"4. Article 1(2), (3) and (4) of
Directive 2011/35/EU of the European Parliament and of the Council (*) shall
apply.
________
(*) OJ L 110,
29.4.2011, p. 1."
Article 106
Amendments to Directive 2001/24/EC
Directive 2001/24/EC is amended as follows:
1.           In Article 1 the
following paragraphs 3 and 4 are added:
"3. This Directive shall also apply to
investment firms as defined in point (b) of Article 3(1) of Directive
2006/49/EC of the European Parliament and of the Council (*) and their branches
set up in Member States other than those in which they have their head offices.
4. In the event of application of the
resolution tools and exercise of the resolution powers provided for by
Directive XX/XX/EU of the European Parliament and of the Council(**), the provisions
of this Directive shall also apply to the financial institutions, firms and
parent undertakings falling within the scope of Directive XX/XX/EU. 
__________
(*) OJ L 177, 30.6.2006, p.201
(**) OJ L….,…p."
2.           In Article 2, the seventh
indent is replaced by the following:
"- ‘reorganisation measures’ shall mean
measures which are intended to preserve or restore the financial situation of a
credit institution and which could affect third parties' pre-existing rights,
including measures involving the possibility of a suspension of payments,
suspension of enforcement measures or reduction of claims; these measures
include the application of the resolution tools and the exercise of resolution powers
provided for by Directive XX/XX/EU;"
Article 107
Amendment to Directive 2002/47/EC
In Article 7 of Directive 2002/47/EC, the
following paragraph 1a is added:
"1a. Paragraph 1 does not apply to any
restriction on the effect of a close out netting provision that is imposed by
virtue of Article 77 of Directive xx/xx/EU
or by the exercise by the resolution authority of the power to impose a
temporary stay in accordance with Article 63 of that Directive.
__________
(*) OJ L …… …. p. …"
Article 108
Amendment to Directive 2004/25/EC
In Article 4(5) of Directive 2004/25/EC,
the following third subparagraph is added:
"Member States shall ensure that Article
5(1) of this Directive does not apply in case of use of resolution tools,
powers and mechanisms provided in Title IV of Directive XX/XX/EU of the
European Parliament and of the Council (*)[Directive on Recovery and Resolution.
_________
(*) OJ L …. p. … "
Article 109
Amendment to Directive 2005/56/EC
In Article 3 of Directive 2005/56/EEC, the
following paragraph 4 is added:
"(4)      Member States shall ensure
that this Directive does not apply to the company or companies that are the
subject of the use of resolution tools, powers and mechanisms provided in Title
IV of Directive XX/XX/EU [Directive on Recovery and Resolution], of the
European Parliament and of the Council (*).
_________
(*) OJ L …… …. p. …"
Article 110
Amendments to Directive 2007/36/EC
Directive 2007/36/EC is amended as follows:
1.           In Article 1, the
following paragraph 4 is added:
"4. Member States shall ensure that this
Directive does not apply in case of the use of resolution tools, powers and
mechanisms provided in Title IV of Directive XX/XX/EU [Directive on Recovery
and Resolution], of the European Parliament and of the Council (*) .
___________
(*) OJ L …… …. p. …"
2.           In Article 5, the
following paragraphs 5 and 6 are added:
"5. Member States shall ensure that for
the purposes of Directive XX/XX/EU [Directive on Recovery and Resolution]the
general meeting may decide by a majority of two-thirds of the votes validly
cast that a convocation to a general meeting to decide on a capital increase
may be called at shorter notice than provided in paragraph 1 of this Article,
provided that this meeting does not take place within ten calendar days of the
convocation and that the conditions of Article 23 or 24 of Directive XX/XX/EU (early
intervention triggers)are met and that the capital increase is necessary to
avoid the conditions for resolution laid down in Article 27 of that Directive.
6. For the purposes of paragraph 5, Article 6
(3) and (4) and Article 7(3) shall not apply."
Article 111
Amendment to Directive 2011/35/EU
In Article 1 of Directive 2011/35/EU, the
following paragraph 4 is added:
"4. Member States shall ensure that this
Directive does not apply to the company or companies which are the subject of
the use of resolution tools, powers and mechanisms provided in Title IV of
Directive XX/XX/EU of the European Parliament and of the Council (*) [Directive
on Recovery and Resolution].
________
(*) OJ L …… …. p. …"
Article 112
Amendment to Regulation (EU) No 1093/2010
Regulation (EU) No 1093/2010 is amended
as follows:
6.           In Article 4 point (2) is
replaced by the following:
"(2) ‘competent authorities’ means:
(i)      competent authorities as defined in
Directives 2006/48/EC, 2006/49/EC and 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 Directive …/… [Directive
on Recovery and Resolution] resolution authorities as defined in that
Directive.
_________
(*) OJ L …… …. p. …"
7.           In Article 40(6), the
following second subparagraph is added:
"For the purpose of acting within the
scope of Directive XX/XX/EU of the European Parliament and the council(*)[Directive
on Recovery and Resolution], the member of the Board of Supervisors referred to
in point (b) of paragraph 1 may, where appropriate, be accompanied by a representative
from the resolution authority in each Member State, who shall be
non-voting."
_________
(*) OJ L …… …. p. …"
TITLE XI
FINAL PROVISIONS 
Article 113
EBA Resolution Committee
EBA shall create a permanent internal
committee pursuant to Article 41 of Regulation (EU) No 1093/2010 for the
purpose of preparing the EBA decisions provided for in this Directive. That internal
committee shall be at least composed of the resolution authorities referred to
in Article 3 of this Directive. 
For the purposes of this Directive, EBA
shall cooperate with ESMA and EIOPA within the framework of the Joint Committee
of the European Supervisory Authorities established in Article 54 of Regulation
(EU) No 1093/2010.
Article 114
Review
By 1 June 2018, the Commission shall review
the general application of this Directive and assess the need for amendments in
particular: 
(a)         
on the basis of the report from EBA provided for
in Article 39(6), the need for amendments with regard to minimising divergences
at national level. This report and any accompanying proposals, as appropriate,
shall be forwarded to the European Parliament and to the Council;
(b)         
on the basis of the report from EBA provided for
in Article 4(3), the need for amendments with regard to minimising divergences
at national level. That report and any accompanying proposals, as appropriate,
shall be forwarded to the European Parliament and to the Council.
Article 115
Transposition
1.           Member States shall adopt
and publish by 31 December 2014 at the latest the laws, regulations and
administrative provisions necessary to comply with this Directive. They shall
forthwith communicate to the Commission the text of those provisions.
Member States shall apply those provisions from
1 January 2015.
However, Member States shall apply provisions
adopted in order to comply with Section 5 of Chapter III of Title IV from 1 January
2018 at the latest.
2.           When Member States adopt
those provisions, they shall contain a reference to this Directive or be
accompanied by such a reference on the occasion of their official publication.
Member States shall determine how such reference is to be made.
3.           Member States shall
communicate to the Commission and to EBA the text of the main provisions of
national law which they adopt in the field covered by this Directive.
Article 116
Entry into force
This Directive shall enter into force on
the twentieth day following that of its publication in the Official Journal
of the European Union.
Article 117
Addressees
This Directive is addressed to the Member
States.
Done at Brussels, 
For the European Parliament                       For
the Council
The President                                                 The
President
ANNEX
SECTION A
Information to be included in recovery plans
The recovery plan shall include the
following information:
(1)                   
A summary of the key elements of the plan, strategic
analysis, and summary of overall recovery capacity; 
(2)                   
a summary of the material changes to the institution
since the most recently filed recovery plan;
(3)                   
a communication and disclosure plan outlining
how the firm intends to manage any potentially negative market reactions;
(4)                   
a range of capital and liquidity actions
required to maintain operations of, and funding for, the institution's critical
functions and business lines;
(5)                   
an estimation of the timeframe for executing
each material aspect of the plan;
(6)                   
a detailed description of any material
impediment to the effective and timely execution of the plan, including
consideration of impact on the rest of the group, customers and counterparties;
(7)                   
identification of critical functions;
(8)                   
a detailed description of the processes for
determining the value and marketability of the core business lines, operations
and assets of the institution;
(9)                   
a detailed description of how recovery planning
is integrated into the corporate governance structure of the institution as
well as the policies and procedures governing the approval of the recovery plan
and identification of the persons in the organisation responsible for preparing
and implementing the plan;
(10)               
arrangements and measures to conserve or restore
the institution's own funds;
(11)               
arrangements and measures to ensure that the
institution has adequate access to contingency funding sources, including
potential liquidity sources, an assessment of available collateral and an
assessment of the possibility to transfer liquidity across group entities and
business lines, to ensure that it can carry on its operations and meet its
obligations as they fall due;
(12)               
arrangements and measures to reduce risk and
leverage;
(13)               
arrangements and measures to restructure
liabilities;
(14)               
arrangements and measures to restructure
business lines;
(15)               
arrangements and measures necessary to maintain
continuous access to financial markets infrastructures;
(16)               
arrangements and measures necessary to maintain
the continuous functioning of the institution's operational processes, including
infrastructure and IT services;
(17)               
preparatory arrangements to facilitate the sale
of assets or business lines in a timeframe appropriate for the restoration of
financial soundness;
(18)               
other management actions or strategies to
restore financial soundness and the anticipated financial effect of those
actions or strategies;
(19)               
preparatory measures that the institution has
taken or plans to take in order to facilitate the implementation of the
recovery plan, including those necessary to enable the timely recapitalisation
of the institution.
SECTION B
Information that resolution authorities may request
institutions to provide for the purposes of drawing up and maintaining
resolution plans
Resolution authorities may request
institutions to provide for the purposes of drawing up and maintaining
resolution plans the following information:
(1)                   
A detailed description of the institution's
organisational structure including a list of all legal entities; 
(2)                   
identification of the direct holder and the
percentage of voting and non-voting rights of each legal entity;
(3)                   
the location, jurisdiction of incorporation,
licensing and key management associated with each legal entity;
(4)                   
a mapping of the institution's critical
operations and core business lines including material asset holdings and
liabilities related to such operations and business lines, by reference to
legal entities;
(5)                   
a detailed description of the components of the
institution's and all its legal entities' liabilities, separating, at a minimum
by types and amounts of short term and long term debt, secured, unsecured and
subordinated liabilities;
(6)                   
a detail of those liabilities of the institution
that are eligible liabilities;
(7)                   
an identification of the processes needed to
determine to whom the institution has pledged collateral, the person that holds
the collateral and the jurisdiction in which the collateral is located;
(8)                   
a description of the off balance sheet exposures
of the institution and its legal entities, including a mapping to its critical
operations and core business lines;
(9)                   
the material hedges of the institution including
a mapping to legal entity;
(10)               
identification of the major or most critical
counterparties of the institution as well as an analysis of the impact of the
failure of major counterparties in the institution's financial situation;
(11)               
each system on which the institution conducts a
material number or value amount of trades, including a mapping to the
institution's legal entities, critical operations and core business lines;
(12)               
each payment, clearing or settlement system of which
the institution is directly or indirectly a member, including a mapping to the
institution's legal entities, critical operations and core business lines;
(13)               
a detailed inventory and description of the key
management information systems, including those for risk management, accounting
and financial and regulatory reporting used by the institution including a
mapping to the institution's legal entities, critical operations and core
business lines;
(14)               
an identification of the owners of the systems
identified in (m), service level agreements related thereto, and any software
and systems or licenses, including a mapping to its legal entities, critical
operations and core business lines;
(15)               
an identification and mapping of the legal
entities and the interconnections and interdependencies among the different
legal entities such as:
–              
common or shared personnel, facilities and
systems;
–              
capital, funding or liquidity arrangements;
–              
existing or contingent credit exposures;
–              
cross guarantee agreements, cross-collateral
arrangements, cross-default provisions and cross-affiliate netting
arrangements;
–              
risks transfers and back to back trading
arrangements; service level agreements;
(16)               
the supervisory and resolution authority for
each legal entity;
(17)               
the senior management official responsible for
the resolution plan of the institution as well as those responsible, if
different, for the different legal entities, critical operations and core business
lines;
(18)               
a description of the arrangements that the institution
has in place to ensure that, in the event of resolution, the resolution
authority will have all the necessary information, as determined by the
resolution authority, for applying the resolution tools and powers;
(19)               
all the agreements entered into by the
institutions and its legal entities with third parties whose termination may be
triggered by a decision of the authorities to apply a resolution tool and whether
the consequences of termination may affect the application of the resolution
tool;
(20)               
A description of possible liquidity sources for supporting
resolution;
(21)               
Information on asset encumbrance, liquid assets,
off-balance sheet activities, hedging strategies and booking practices.
SECTION C
Matters that the resolution authority must assess
when assessing the resolvability of an institution
When assessing the resolvability of an
institution, the resolution authority shall consider the following:
(1)                   
The extent to which the institution or the group
are able to map core business lines and critical operations to legal entities.
(2)                   
The extent to which legal and corporate
structures with respect to the core business lines and critical operations are
aligned.
(3)                   
The extent to which there are arrangements in
place to provide for essential staff, infrastructure, funding, liquidity and
capital to support and maintain the core business lines and the critical
operations.
(4)                   
The extent to which the service agreements that
the institution or the group maintains are fully enforceable in the event of
resolution of the institution or the group.
(5)                   
The extent to which the governance structure of
the institution or the group is adequate for managing and ensuring compliance
with the institution or group's internal policies with respect to its service
level agreements.
(6)                   
The extent to which the institution or the group
has a process for transitioning the services provided under service level
agreements to third parties in the event of the separation of critical
functions or of core business lines.
(7)                   
The extent to which there are contingency plans
in place to ensure continuity in access to payment and settlement systems.
(8)                   
The adequacy of the management information
systems in ensuring that the resolution authorities are able to gather accurate
and complete information regarding the core business lines and critical
operations so as to facilitate rapid decision making.
(9)                   
The capacity of the management information
systems to provide the information essential for the effective resolution of
the institution or the group at all times even under rapidly changing
conditions.
(10)               
The extent to which the institution or the group
has tested its management information systems under stress scenarios defined by
the resolution authority.
(11)               
The extent to which the institution or the group
can ensure the continuity of its management information systems both for the affected
institution and the new institution in the case that the critical operations
and core business lines are separated from the rest of the operations and
business lines.
(12)               
The extent to which the institution or group has
established adequate processes to ensure that it provides the resolution
authorities the information necessary to identify depositors and the amounts
covered by the deposit guarantee schemes;
(13)               
Where the group uses intra-group guarantees, the
extent to which those guarantees are provided at market conditions and the risk
management systems concerning those guarantees are robust.
(14)               
Where the group engages in back to back
transactions, the extent to which those transactions are performed at market
conditions and the risk management systems concerning those transactions
practices are robust.
(15)               
The extent to which the use of intra-group
guarantees or back to back booking transactions increases contagion across the
group.
(16)               
The extent to which the legal structure of the
group inhibits the application of the resolution tools as a result of the
number of legal entities, the complexity of the group structure or the
difficulty in aligning business lines to group entities.
(17)               
The amount or proportion of eligible liabilities
of the institution.
(18)               
Where the assessment involves a mixed activity
holding company, the extent to which the resolution of group entities that are institutions
or financial institutions could have a negative impact on the non-financial
part of the group.
(19)               
The existence and robustness of service level
agreements.
(20)               
Whether third country authorities have the
resolution tools necessary to support resolution actions by Union resolution
authorities, and the scope for co-ordinated action between Union and third
country authorities.
(21)               
The feasibility of using resolution tools in
such a way which meets the resolution objectives, given the tools available and
the institution’s structure.
(22)               
The extent to which the group structure allows
the resolution authority to resolve the whole group or any or more of its entities
without causing a significant direct or indirect adverse impact on the
financial system, market confidence or the economy and with a view to
maximising the value of the group as a whole;
(23)               
The arrangements and means through which
resolution could be facilitated in the cases of groups that have subsidiaries
established in different jurisdictions.
(24)               
The credibility of using resolution tools in
such a way which meets the resolution objectives, given possible impacts on
creditors, counterparties, customers and employees and possible actions that
third country authorities may take.
(25)               
The impact of the institution's resolution on
the financial system and on financial market's confidence can be adequately
evaluated.
(26)               
The resolution of the institution could have a significant
direct or indirect adverse impact on the financial system, market confidence or
the economy.
(27)               
Contagion to other financial institutions or to
the financial markets can be contained through the application of the
resolution tools and powers.
(28)               
The resolution of the institution could have a
significant effect in the operation of payment and settlement systems.
LEGISLATIVE FINANCIAL STATEMENT
1.           FRAMEWORK OF THE PROPOSAL
              1.1.    Title of the proposal
              1.2.    Policy
area(s) concerned in the ABM/ABB structure
              1.3.    Nature
of the proposal
              1.4.    Objective(s)
              1.5.    Grounds
for the proposal
              1.6.    Duration
and financial impact
              1.7.    Management
method(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
              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
participation in financing
              3.3.    Estimated impact on revenue
LEGISLATIVE FINANCIAL STATEMENT
1.           FRAMEWORK OF THE PROPOSAL 
1.1.        Title of the proposal 
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, 82/891/EC,
2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC and 2011/35/EC and
Regulation (EU) No 1093/2011
1.2.        Policy area(s) concerned
in the ABM/ABB structure[40] 
Internal Market – Financial markets
1.3.        Nature of the proposal 
ý The
proposal relates to a new action
¨ The
proposal/initiative relates to a new action following a pilot
project/preparatory action[41]
¨ 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.        Objectives
1.4.1.     The Commission's
multiannual strategic objective(s) targeted by the proposal/initiative 
·              
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;
·              
Strengthen the internal market for banking
services while maintaining a level playing field (i.e. same conditions for all
players to compete in the financial markets of the EU).
1.4.2.     Specific objective(s) and
ABM/ABB activity(ies) concerned 
Specific objectives:
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
supervisors
Bank resolution:
·              
ensure resolution of banks in a timely and
robust manner
·              
ensure legal certainty for bank resolution
Cross border crisis management:
·              
foster efficient cooperation of authorities in
cross border resolution
Financing
·              
ensure that funds from private source are
available to finance resolution of failing banks
1.4.3.     Expected result(s) and
impact
Specify the effects
which the proposal/initiative should have on the beneficiaries/groups targeted.
The proposed crisis management framework at Union
level intends to further enable financial stability, reduce moral hazard, and
protect depositors, crucial banking services and taxpayers' money. In addition
it aims to protect and further develop the internal market for financial
institutions.
Benefits of the framework arise firstly from
the expected reduction in the probability of a systemic banking crisis and the
avoidance of the fall in GDP that follows a banking crisis. Secondly, the bank
resolution framework aims to reduce the possibility that taxpayers' money being
used again in a potential future crisis to bail out banks. The cost of banking
crises, if they happen, should be borne by banks' equity and debt holders in
the first instance. As a result funding cost of Member States' debt should also
decrease reflecting the removal of the implicit state guarantee of banks' debt.
1.4.4.     Indicators of results and
impact 
Specify the
indicators for monitoring implementation of the proposal/initiative.
Since bank failures are unpredictable and hopefully
avoided, the functioning of bank resolution cannot be regularly monitored on
the basis of how real bank failures are handled. However, some of the measures
could be monitored using the following possible indicators:
·              
Number of resolution colleges set up.
·              
Number of recovery and resolution plans
submitted and approved by resolution authorities and resolution colleges.
·              
Number of cases where adjustments in the
operation of banks (and banking groups) has been demanded by resolution
authorities.
·              
Number of intra-group financing agreements
concluded.
·              
Number of banks where minimum loss absorbing
capacity (capital + bail-inable debt) is required.
·              
Overall level of loss absorbing capacities of
banks in Member states and the UNION.
·              
Number of banks undergoing resolution.
·              
Number of application of different resolution
tools and powers (e.g.sale of business, bridge bank, bail-in).
·              
Cost of bank resolution on an individual MS and
EU aggregated level (EUR million) (cost includes bail-in cost,
recapitalisation, contribution of DGS/RF, other costs).
The involvement of EBA in all phases of the
bank recovery and resolution framework is proposed and supported by the
stakeholders, even if EBA regulation presently does not give competence to EBA
in a resolution process. Based on its involvement, EBA could carry out related
monitoring tasks. The transposition of any new Union legislation will be
monitored under the Treaty on the functioning of the Union
1.5.        Grounds for the proposal
1.5.1.     Requirement(s) to be met in
the short or long term 
 The financial crisis severely tested the ability of authorities to manage problems in banking institutions. Union Financial markets have become integrated to such an extent that domestic shocks may be rapidly transmitted to firms and markets in other Member States. At international level, G20-Leaders have called for a “review of resolution regimes and bankruptcy laws in light of recent experience to ensure that they permit an orderly wind-down of large complex cross-border institutions.”[42] At the Pittsburgh summit on 25 September 2009, they committed to act together to "...create more powerful tools to hold large global firms to account for the risks they take" and, more specifically, to "develop resolution tools and frameworks for the effective resolution of financial groups to help mitigate the disruption of financial institution failures and reduce moral hazard in the future." In Seoul in November 2010, the G20 endorsed the FSB SIFI Report[43] which recommended that “all jurisdictions should undertake the necessary legal reforms to ensure that they have in place a resolution regime which would make feasible the resolution of any financial institution without taxpayer exposure to loss from solvency support while protecting vital economic functions through mechanisms which make it possible for shareholders and unsecured and uninsured creditors to absorb losses in their order of seniority”. In October 2011, the Financial Stability Board adopted Key Attributes of Effective Resolution Regimes for Financial Institutions ('Key Attributes)[44] that set out the core elements that the FSB considers to be necessary for an effective resolution regime. Their implementation should allow authorities to resolve financial institutions in an orderly manner without taxpayer exposure to loss from solvency support, while maintaining continuity of their vital economic functions. 
1.5.2.     Added value of Union
involvement
 Under the principle of subsidiarity set out in Article 5.3 of the TFEU, 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 Union level can ensure that Member States use compatible measures to deal with failing banks. Although the Union banking sector is highly integrated, systems to deal with bank crises are nationally based. Many national legal systems do not currently confer the powers necessary for authorities to wind down financial institutions in an orderly manner while preserving those services essential for financial stability without relying on taxpayers' money. Divergent national legislation is ill-suited to dealing adequately with the cross-border dimension of crises and arrangements for home-host cooperation are insufficient. Limited resolution options increase the risk of moral hazard and generate an expectation that large, complex and interconnected banks would again need public financial assistance in the event of problems. It is therefore clear that an effective framework for recovery and resolution in an integrated market cannot be achieved by Member States and needs to be set out at Union level. 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. The present proposal aims at maintaining financial stability and confidence in banks, minimising losses for taxpayers and strengthening the internal market for banking services while maintaining a level playing field. This requires the convergence of national laws to provide authorities with a consistent set of crisis management and resolution tools. Only Union action can deliver this objective. The provisions are proportionate to what is necessary to achieve the objectives. The limitations to the right to property that the exercise of the powers proposed may entail are consistent with the Charter of Fundamental Rights as interpreted by the European Court of Human Rights. These restrictions are limited to the extent necessary in order to meet an objective of general interest, namely preserving financial stability in the Union. Resolution is closely linked to non-harmonised areas of national law, such as insolvency and property law. A directive is, therefore, the appropriate legal instrument since transposition is necessary to ensure that the framework is implemented in a way that achieves the intended effect, within the specificities of relevant national law. 
1.5.3.     Lessons learned from
similar experiences in the past
N.A.
1.5.4.     Coherence and possible
synergy with other relevant instruments
The crisis management framework is in strong relation with the deposit
guarantee scheme system in the Union. The modification of the relevant
Directive 94/19/EC is currently discussed in the Council and the Parliament.
Synergies between DGS funds and bank resolution measures are significant,
especially when it relates to financing issues. When a resolution framework
that stops contagion is in place, the DGS fund will only finance a few banks
that default initially. In contrast, when no resolution measures are available
and contagion spreads through the financial system, the amount of money that
the DGS needs to pay out in a MS is considerably higher.
The proposal also relates to the Capital Requirements Directive
(CRD), which sets prudential requirements for banks and investment
firms. Recent amendments to the CRD aim to increase the quantity and quality of
capital that banks hold, so that they could actually absorb potential losses.
New liquidity requirements intend to make sure that banks remain liquid even in
a stressed market period and develop a liability structure that provides
further stability. All these measure will make the banking sector safer and
decrease the chances of bank failure and the need for public interventions.
Despite all these measures, the failure of banks in the future cannot be
excluded. Hence there is a need to develop a complementary legal framework
(bank recovery and resolution) that ensures that financial stability is
maintained even in the negative scenarios.
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 
ý Proposal of unlimited duration
–     
Implementation with a start-up period from 2013
to 2015,
–     
followed by full-scale operation.
1.7.        Management mode(s)
envisaged[45] 
¨ Centralised direct management by the Commission 
¨ Centralised indirect management with the delegation of implementation tasks to:
–     
¨  executive agencies 
–     
ý  bodies set up by the Communities[46]
–     
¨  national public-sector bodies/bodies with public-service mission 
–     
¨  persons entrusted with the implementation of specific actions
pursuant to Title V of the Treaty on European Union and identified in the
relevant basic act within the meaning of Article 49 of the Financial Regulation

¨ Shared management with the Member States 
¨ Decentralised management with third countries 
¨ Joint management with international organisations (to be specified)
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
Specify frequency
and conditions.
Article 81 of the Regulation establishing the European Banking
Authority (EBA) requires the Commission by 2 January 2014, and every 3 years
thereafter, to publish a general report on the experience acquired as a result
of the operation of EBA. To this end, the Commission will publish a general
report that will be forwarded to the European Parliament and to the Council.
2.2.        Management and control
system
2.2.1.     Risk(s) identified 
 In relation to the legal, economical, efficient and effective use of appropriations resulting from the proposal it is expected that the proposal would not bring about new risks that would not be currently covered by an EBA existing internal control framework. 
2.2.2. Control
method(s) envisaged
-
2.3.        Measures to prevent fraud
and irregularities 
Specify existing or
envisaged prevention and protection measures.
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 EBA without
any restriction.
EBA 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 EBA 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 on the
beneficiaries of monies disbursed by EBA as well as on the staff responsible
for allocating these monies.
Articles 64 and 65 of the Regulation
establishing the European Banking Authority (EBA) set out the provisions on
implementation and control of EBA budget and applicable financial rules.
3.           ESTIMATED FINANCIAL IMPACT OF THE
PROPOSAL
3.1.        Heading(s) of the
multiannual financial framework and expenditure budget line(s) affected 
·      Existing expenditure budget lines
In order of multiannual financial framework
headings and budget lines.
 Heading of multiannual financial framework || Budget line || Type of expenditure || Contribution 
 Number [Description………………………...……….] || Diff./non-diff. ([47]) || from EFTA[48] countries || from candidate countries[49] || from third countries || within the meaning of Article 18(1)(aa) of the Financial Regulation 
   || 12.0402.01 EBA – Subsidy under Titles 1, 2 and 3 || Diff || Yes || NO || NO || NO 
·      New budget lines requested
In order of multiannual financial framework
headings and budget lines.
 Heading of multiannual financial framework || Budget line || Type of expenditure || Contribution 
 Number [Heading……………………………………..] || Diff./non-diff. || from EFTA countries || from candidate countries || from third countries || within the meaning of Article 18(1)(aa) of the Financial Regulation 
   || [XX.YY.YY.YY]   ||   || YES/NO || YES/NO || YES/NO || YES/NO 
3.2.        Estimated impact on
expenditure 
3.2.1.     Summary of estimated impact
on expenditure
EUR million (to 3 decimal places)
 Heading of multiannual financial framework: || 1A || Competitiveness for Growth and Employment 
 DG: MARKT ||   ||   || Year 2013[50] || Year 2014 || Year 2015 ||   ||   || TOTAL 
  Operational appropriations ||   ||   ||   ||   ||   ||   ||   ||   
 12.0402.01 || Commitments || (1) || 0 || 1,080 || 999 ||   ||   ||   ||   || 2,079 
 Payments || (2) || 0 || 1,080 || 999 ||   ||   ||   ||   || 2,079 
 Appropriations of an administrative nature financed  from the revenues from fees ||   ||   ||   ||   ||   ||   ||   ||   
 Number of budget line ||   || (3) ||   ||   ||   ||   ||   ||   ||   ||   
 TOTAL appropriations for DG MARKT || Commitments || =1+1a +3 || 0 || 1,080 || 999 ||   ||   ||   ||   || 2,079 
 Payments || =2+2a+3 || 0 || 1,080 || 999 ||   ||   ||   ||   || 2,079 
  TOTAL operational appropriations || Commitments || (4) || 0 || 1,080 || 999 ||   ||   ||   ||   || 2,079 
 Payments || (5) || 0 || 1,080 || 999 ||   ||   ||   ||   || 2,079 
  TOTAL appropriations of an administrative nature financed from revenues from fees || (6) ||   ||   ||   ||   ||   ||   ||   ||   
 TOTAL appropriations under HEADING 1A of the multiannual financial framework || Commitments || =4+ 6 || 0 || 1,080 || 999 ||   ||   ||   ||   || 2,079 
 Payments || =5+ 6 ||   || 1,080 || 999 ||   ||   ||   ||   || 2,079 
Comments:
EUR million (to 3 decimal places)
   ||   ||   || Year 2013[51] || Year 2014 || Year 2015 ||   ||   || TOTAL 
 TOTAL appropriations under HEADINGS 1 to 5 of the multiannual financial framework || Commitments || 0 || 1,080 || 999 ||   ||   ||   ||   || 2,079 
 Payments || 0 || 1,080 || 999 ||   ||   ||   ||   || 2,079 
3.2.2.     Estimated impact on
operational appropriations 
–     
¨  The proposal/initiative does not require the use of operational
appropriations 
–     
ý  The proposal/initiative requires the use of operational
appropriations, as explained below:
 Indicate objectives and outputs ò ||   ||   || Year 2012 || Year 2013 || Year 2014 || Year 2015 || TOTAL || 
 ||
 Type[52]   || Average cost || Output || Total Cost || Output || Total Cost || Output || Total Cost || Output || Total Cost || Output || Total Cost || 
 1. Objectives for preparation and prevention: –                         increase preparedness of supervisors and banks for crisis situations and –                         enable resolvability of all banks ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   || 
 Number of Technical Standards and Guidelines || numerical ||   || 0 || 0 || 0 || 0 || 11 || 517 || 1 || 200 || 12     || 717 || 
 Sub-total for specific objective No 1 || 0 || 0 || 0 || 0 || 11 || 517 || 1 || 200 || 12 || 717 || 
 2. Objective for Early intervention: –                         improve early intervention arrangements for supervisors ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   || 
 Number of Technical Standards and Guidelines || numerical ||   || 0 || 0 || 0 || 0 || 1 || 47 || 0 || 0 || 1 || 47 || 
 Sub-total for specific objective No 2 ||   || 0 ||   || 0 || 1 || 47 || 0 || 0 || 1 || 47 || 
 3. Objectives for Bank resolution: –                         ensure resolution of banks in a timely and robust manner –                         ensure legal certainty for bank resolution ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   || 
 Number of Technical Standards and Guidelines || numerical ||   || 0 || 0 || 0 || 0 || 10 || 470 || 4 || 799 || 14 || 1,269 || 
 Sub-total for specific objective No 3 ||   || 0 || 0 || 0 || 10 || 470 || 4 || 799 || 14 || 1,269 || 
 4. Objective for cross border crisis management: - foster efficient cooperation of authorities in cross border resolution ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   || 
 Number of Technical Standards and Guidelines || 0 || 0 || 0 || 0 || 1 || 47 || 0 || 0 || 1 || 47 || 
 Sub-total for specific objective No 4 || 0 || 0 || 0 || 0 || 1 || 47 || 0 || 0 || 1 || 47 || 
 TOTAL COST[53] ||   || 0 ||   || 0 || 23 || 1,081 || 5 || 999 || 28 || 2,080 || 
3.3.        Heading(s) of the
multiannual financial framework and expenditure budget line(s) affected 
·      Existing expenditure budget lines 
NA
·      New budget lines requested 
NA
Estimated impact on appropriations of an
administrative nature
3.3.1.1.  Summary 
–     
ý  The proposal/initiative does not require the use of administrative
appropriations 
–     
¨  The proposal/initiative requires the use of administrative
appropriations, as explained below:
3.3.1.2.  Estimated requirements of
human resources
–     
ý  The proposal does not require the use of human resources 
–     
¨  The proposal/initiative requires the use of human resources, as
explained below:
Comment:
No additional human and administrative
resources will be needed in DG MARKT as a result of the proposal.
3.3.2.     Compatibility with the
current multiannual financial framework 
–     
ý  Proposal is compatible the current multiannual financial
framework.
–     
¨  Proposal/initiative will entail reprogramming of the relevant
heading in the multiannual financial framework.
–     
¨  Proposal/initiative requires application of the flexibility
instrument or revision of the multiannual financial framework[54].
3.3.3.     Third-party contributions 
–     
¨  The proposal/initiative does not provide for co-financing by third
parties 
–     
ý  The proposal provides for the co-financing estimated below:
Appropriations in EUR
million (to 3 decimal places)
   || Year 2013 || Year 2014 || Year 2015 ||   ||   || Total 
 Member State' Contribution (60% of overall costs) || 0 || 1,620 || 1,498 ||   ||   ||   ||   || 3,119 
3.4.        Estimated impact on
revenue 
–     
ý  Proposal has no financial impact on revenue.
–     
¨  Proposal/initiative has the following financial impact:
–                   
¨         on own resources 
–                   
¨         on miscellaneous revenue 
Annex to the Legislative Financial
Statement for a proposal for 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,
82/891/EC, 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.
The costs related to tasks to be carried
out by EBA have been estimated for staff expenditure (Title 1), but also Title
2.
Regarding the timing of the proposal, it is
assumed that the Directive will enter into force between June and December 2013.
EBA shall draft technical standards 12 months from the date of entry into
force, therefore it is expected that the work would start as early as January
2014. Additional staff has been estimated for the 23 technical standards and
5 guidelines, including related actions reserved for the recognition of
third country resolution proceedings, for the completion of non-binding
framework cooperation arrangements with third countries as well as for on-going monitoring work, participation in colleges and the
exercise of binding mediation of EBA. The proposal of the Commission includes long-term tasks for EBA that
will require the establishment of 5 additional posts (temporary agents) as from
2014. In addition, 11 seconded national experts "SNE" are foreseen to
carry out temporary tasks limited to 2014 and 2015 years.
Other assumptions:
·      Salary weighting coefficient for London of 1.28;
·      Due to complexity of the technical standards, guidelines and the
workload for related tasks as explained above, it is assumed that on average
one technical standard/ guideline will require 1.15 man years. Thus, 23
technical standards and 5 guidelines will require 32 man years for 2014 and
2015.
·      Training costs assumed at €1,000 per FTE per year;
·      Mission costs of €10,000, estimated based on 2012 draft budget for
missions per headcount;
·      Recruiting-related costs (travel, hotel, medical examinations,
installation and other allowances, removal costs, etc.) of €12,700, estimated
based on 2012 draft budget for recruiting per new headcount.
The method of calculating the increase in
the required budget for the next three years is presented in more detail in
table below. 
 Cost type || Calculation || Amount (in EUR millions) 
   ||   || 2013 || 2014 || 2015 || Total 
   ||   ||   ||   ||   ||   
 Title 1: Staff expenditure ||   ||   ||   ||   ||   
   ||   ||   ||   ||   ||   
 11 Salaries and allowances ||   ||   ||   ||   ||   
 - of which temporary agents || =5*127*1,28 || 0   || 813   || 813   || 1,626 
 - of which SNEs || =11*73*1,28 || 0 || 1,028 || 1,028   || 2,056   
 - of which contract agents ||   || 0 || 0 || 0 || 0 
   ||   ||   ||   ||   ||   
 12 Expenditure related to recruitment || =16*12,7 || 0 || 203 || 0 || 203 
   ||   ||   ||   ||   ||   
 13 Mission expenses || =16*10 || 0 || 160 || 160 || 320 
   ||   ||   ||   ||   ||   
 15 Training || =16*1 || 0 || 16 || 16 || 32 
   ||   ||   ||   ||   ||   
 Total Title 1: Staff expenditure ||   || 0 || 2,220 || 2,017 || 4,237 
   ||   ||   ||   ||   ||   
 Title 2: Infrastructure and operating expenditure || =16*30 || 0 || 480 || 480 || 960 
   ||   ||   ||   ||   ||   
 Title 3: Operational expenditure ||   || 0 || 0 || 0 || 0 
   ||   ||   ||   ||   ||   
 Total ||   || 0 || 2,700 || 2,497 || 5,197 
 Of which Community contribution (40%) ||   || 0 || 1,080 || 999 || 2,078 
 Of which Member State contribution (60%) ||   || 0 || 1,620 || 1,498 || 3,119 
The following table presents the proposed
establishment plan for the five temporary agent positions.
 Function group and grade || Temporary posts 
   ||   
 AD 8 || 1 
 AD 7 || 1 
 AD 6 || 1 
 AD 5 || 2 
   ||   
 AD total || 5 
[1]               COM
(2010) 579 final
[2]               G20
Leaders' declaration of the Summit on financial markets and the world economy,
April 2009.
[3]               http://www.financialstabilityboard.org/publications/r_111104cc.pdf         
[4]               (2010/2006(INI))
[5]               17006/1/10
[6]               http://ec.europa.eu/internal_market/bank/group_of_experts/index_en.htm#High-level_Expert_Group
[7]               http://ec.europa.eu/europe2020/pdf/nd/eccomm2012_en.pdf
[8]               http://ec.europa.eu/internal_market/bank/index_en.htm               
[9]               http://ec.europa.eu/internal_market/bank/index_en.htm               
[10]             "Prevention"
in this context means the avoidance of disorderly failure capable of causing
financial instability, not the preclusion of failure altogether.
[11]             If authorities assess that financial stability and taxpayers are not
threatened, a bank (or parts of it) may be allowed to fail in the ordinary way.

[12]             In
order to ensure that resolution authorities are represented in EBA and to
mitigate conflicts of interest, Regulation 1093/2010 is amended in order to include
national resolution authorities in the concept of competent authorities
established by the Regulation.
[13]             Directive
2006/48/EC relating to the taking up and pursuit of the business of credit
institutions and Directive 2006/49/EC on the capital adequacy of investment
firms and credit institutions.
[14]             For example the resolution authorities can transfer back or forth
assets or liabilities transferred to a bridge institution.
[15]             In this respect a tool consisting in the ring fencing of an
institution would not be compatible with the framework.
[16]             COM(2009) 501, COM(2009) 502, COM(2009) 503.
[17]             OJ C , , p. .
[18]             OJ
C , , p. .
[19]             OJ
C , , p. .
[20]             OJ
L 177, 30.6.2006, p. 2011.
[21]             OJ
L35, 11.2.2003, p.1.
[22]             OJ
L.., p..
[23]             OJ L 331, 15.12.2010, p. 1.
[24]             OJ L 177, 30.6.2006, p. 1.
[25]             OJ
L 96, 12.4.2003, p. 16.
[26]             OJ
L 135, 31.5.1994, p. 5–14.
[27]             OJ L 125, 5.5.2001, p. 15.
[28]             OJ
L 26, 31.1.1977, p. 1.
[29]             OJ
L 110, 29.4.2011, p. 1.
[30]             OJ
L 378, 31.12.1982, p. 47.
[31]             OJ
L 310, 25.11.2005, p. 1.
[32]             OJ
L 142, 30.4.2004, p. 12.
[33]             OJ
L 184, 14.7.2007, p. 17.
[34]             OJ
C 369, 17.12.2011, p. 14.
[35]             Directive
2004/49/EC of the European Parliament and of the Council of 21 April 2004 on
markets in financial instruments amending Council Directives 85/611/EC and
93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council
and repealing Council Directive 93/22/EC – OJ L 145, 30.4.2004, p.1
[36]             OJ
L 168, 27.6.2002., p. 43.
[37]             OJ
L 166, 11.6.1998, p. 45.
[38]             Council
Directive 85/611/EEC of 20 December 1985 on the coordination of laws,
regulations and administrative provisions relating to undertakings for
collective investment in transferable securities (UCITS) (OJ L 375, 31.12.1985,
p. 3). Directive as last amended by Directive 2008/18/EC.
[39]             OJ L 390, 31.12.2004, p. 38.
[40]             ABM:
Activity-Based Management – ABB: Activity-Based Budgeting.
[41]             As
referred to in Article 49(6)(a) or (b) of the Financial Regulation.
[42]             G20
Leaders' declaration of the Summit on financial markets and the world economy,
April 2009.
[43]             'Reducing the moral hazard posed by systemically important financial
institutions' http://www.financialstabilityboard.org/press/pr_101111a.pd      
[44]             http://www.financialstabilityboard.org/publications/r_111104cc.pdf         
[45]             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
[46]             As
referred to in Article 185 of the Financial Regulation.
[47]             Diff.
= Differentiated appropriations / Non-diff. = Non-Differentiated Appropriations
[48]             EFTA:
European Free Trade Association. 
[49]             Candidate
countries and, where applicable, potential candidate countries from the Western
Balkans.
[50]             Year
N is the year in which implementation of the proposal/initiative starts.
[51]             Year
N is the year in which implementation of the proposal/initiative starts.
[52]             Outputs
are products and services to be supplied (e.g.: number of student exchanges
financed, number of km of roads built, etc.).
[53]             Appropriations
allocated to different objectives also include overhead costs, which are
proportionate to direct HR costs.
[54]             See
points 19 and 24 of the Interinstitutional Agreement.