BETA

41 Amendments of Barbara KAPPEL related to 2016/0362(COD)

Proposal for a directive
Recital 14

(14) Institutions that are ~~not~~material subsidiaries of resolution entities should comply with the MREL at ~~individual level~~the consolidated level of the relevant material sub-group. The overriding objective of requiring this MREL is to ensure there is confidence in the resolution strategy of the group, consistent with the Financial Stability Board’s (ʽFSBʼ) TLAC Standard, as set out under the FSB’s ‘Principles on Loss- absorbing and Recapitalization Capacity of G-SIBs in Resolution’, i.e. the TLAC Term Sheet. Loss absorption and recapitalisation needs of those institutions should be generally provided by their respective resolution entities through the acquisition by resolution entities of eligible liabilities issued by those institutions and their write-down or conversion into instruments of ownership at the point where those institutions are no longer viable. As such, the MREL applicable to institutions that are not resolution entities should be applied together and consistently with the requirements applicable to resolution entities. That should allow resolution authorities to resolve a resolution group without placing certain of its subsidiary entities in resolution, thus avoiding potentially disruptive effects on the market. Subject to the agreement of the resolution authorities of the resolution entity and of its subsidiary, it should be possible to replace the issuance of eligible liabilities to resolution entities with collateralised guarantees between the resolution entity and its subsidiaries, that can be triggered when the timing conditions equivalent to those allowing the write down or conversion of eligible liabilities are met. The resolution authorities of subsidiaries of a resolution entity should also be able to fully waive the application of the MREL applicable to institutions that are not resolution entities if both the resolution entity and its subsidiaries are established in the same Member State. The application of the MREL to institutions that are not resolution entities should comply with the chosen resolution strategy, in particular it should not change the ownership relationship between institutions and their resolution group after those institutions have been recapitalised.

2018/01/29
Committee: ECON

Proposal for a directive
Recital 27 a (new)

(27 a) The inclusion, in contracts governed by third country law, of clauses that recognize bail-in of liabilities under the contract, may facilitate the resolution of an institution. However, an overly broad requirement for such clauses in contracts governed by third country law would be highly detrimental for European institutions as regards access to third country markets without improving the resolvability of these institutions. It is therefore of paramount importance to clarify that the contractual recognition clauses need not be included in contracts governed by third country law where this would be counterproductive, or would result in disproportionate and /or unreasonable burdens or effects for the institutions and their counterparties, or where it would be simply impractical. Contractual recognition clauses would mainly be apposite in contracts regarding payment liabilities specifically designated to absorb losses in resolution (MREL eligible liabilities) and in such other payment liabilities where the resolution authority considers that the possibility for bail-in is necessary to avoid a potential impediment to resolution. This would also be fully in line with the Financial Stability Board’s Principles for Cross-border Effectiveness of Resolution Action. Conversely, it is not relevant to include contractual recognition clauses in contracts that give rise to liabilities that, if bailed-in, would not contribute to the resolvability of the institution. Thus, the requirement for such clauses should not apply to contracts that only give rise to contingent liabilities. Moreover, the requirement for a contractual recognition clause would not be apposite for, e.g., liabilities governed by international standard terms, terms prescribed by the counterparty, or predetermined rules and regulations. Examples of such agreements include contracts regarding trade finance instruments such as guarantees or letters of credit, warranties (including tender and performance bonds and associated advance payment and retention guarantees), other guarantees that are based on non-negotiable terms prescribed by the counterparty or pursuant to predetermined international standards and practices, and agreements with third country market infrastructures. In all of these cases the institution will not be able to impose contractual recognition clauses on the counterparty. In addition, it may in many cases be unduly burdensome for institutions to include contractual recognition clauses in contracts with third country counterparties, for example small and medium sized enterprises or public entities in third countries. If the contract with a third country counterparty gives rise to liabilities that would not contribute to the resolvability of the institution, it would also be disproportionate to require contractual recognition clauses.

2018/01/29
Committee: ECON

Proposal for a directive
Article 1 – paragraph 3 a (new)

Directive 2014/59/EU
Article 2 – paragraph 1 – point 82 a (new)

3 a. In Article 2(1) the following point is added: "(82a) ‘Material subsidiary’ means a subsidiary as set out under point 134 of Article 4(1) of Regulation (EU) No 575/2013."

2018/01/29
Committee: ECON

Proposal for a directive
Article 1 – paragraph 4

Directive 2014/59/EU
Article 2 – paragraph 1 – point 83b

(83b) 'resolution group' means: (a) a resolution entity and its subsidiaries that are not: (i) resolution entities themselves ~~and that are not subsidiaries of another resolution entity;~~, (ii) subsidiaries of other resolution entities, or (iii) entities established in a third country that are not included in the resolution group in accordance with the resolution plan and their subsidiaries; (b) credit institutions affiliated to a central body, the central body and any institution under the control of the central body when at least one of those entities is a resolution entity. When the resolution entity of the resolution group is the central body of a network or a cooperative group, the credit institutions permanently affiliated to this central body are also part of the resolution group.

2018/01/29
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45b – paragraph 2 – subparagraph 1 – introductory part

~~By way of derogation from point (l) of Article 72a(2) of Regulation (EU) No 575/2013, l~~Liabilities that arise from debt instruments with embedded derivative ~~feature~~s, such as structured notes and principal protected certificates, shall be inexcluded in the amount of own funds and eligible liabilities ounl~~y where~~ess all of the following conditions are met:

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45b – paragraph 2 – subparagraph 1 – point a

(a) ~~a given amount of the liability arising from the debt instrument~~the principal of the debt instrument is protected in whole or in part, such protection not being affected by any embedded derivative, and the amount protected is known in advance at the ~~tim~~date of issuance~~, is fixed and not affected by a derivative feature;~~ for all future periods up to maturity, and is a fixed, or increasing, amount.

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45b – paragraph 2 – subparagraph 1 – point b

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45b – paragraph 2 – subparagraph 2

The liabilities referred to in the first subparagraph shall only be included in the amount of own funds and eligible liabilities for the part that corresponds with the amount referred to in point (a) of the first subparagraph, as this amount does not contain any embedded derivative.

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45c – paragraph 1 – point b

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45c – paragraph 1 – point d a (new)

(d a) the need to ensure that the level of the requirement referred to in Article 45(1) is proportionate to the specificities of the business and funding models, taking into account: (i) the prevalence of deposits in the funding structure; (ii) the reduced experience in issuing debt instruments due to the limited access to cross-border and wholesale capital markets; (iii) the limited recourse to debt instruments in light of the funding structure; (iv) the fact that the institution relies primarily on CET1 and capital instruments to meet the requirement referred to in Article 45(1).

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45c – paragraph 2 – subparagraph 1 – point b

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45c – paragraph 4 – subparagraph 1 – introductory part

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45c – paragraph 4 – subparagraph 1 – point a – point ii

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45c – paragraph 4 – subparagraph 1 – point b – point ii

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45c – paragraph 4 – subparagraph 4

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45e – paragraph 1 – subparagraph 1 – introductory part

TAfter consulting the resolution authority ~~may give guidance to an entity to hav~~, institutions shall establish an adequate level of guidance own funds and eligible liabilities that fulfil the conditions of Article 45b(1) or 45g(3) ~~in excess of~~which is sufficiently above the levels set out in Article 45c and Article 45d ~~that provides for additional amounts for the following purposes~~in order:

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45e – paragraph 2 – subparagraph 1

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45e – paragraph 2 – subparagraph 2

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 1 – subparagraph 1

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 2 – point b

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 2 – point c

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 2 – point d

(d) subject to paragraph 4, it shall fulfil the eligibility criteria provided in paragraph 3.

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

(d a) the requirement shall not exceed 75% of the requirement calculated in accordance with Article 45c.

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 4 – introductory part

4. Subject to the agreement of the resolution authorities of the material subsidiary and the resolution entity, the requirement may be met ~~with a~~through alternative means. This may include but is not restricted to the use of guarantee ofs from the resolution entity granted to ~~its subsidiary, which fulfils the following conditions:~~relevant material subsidiaries.

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 4 – point a

~~(a) the guarantee is provided for at least the equivalent amount as the amount of the requirement for which it substitutes;~~deleted

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 4 – point b

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 4 – point c

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 4 – point d

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 4 – point e

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 4 – point f

~~(f) the collateral backing the guarantee is unencumbered and in particular is not used as collateral to back any other guarantee;~~deleted

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 4 – point g

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 4 – point h

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 5 – introductory part

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 5 – point a

(a) both the subsidiary and the resolution entity are subject to authorisation and supervision by the same ~~Member State~~competent authority;

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 5 – point d

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 5 – point g

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

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 5 a (new)

5a. By way of derogation from paragraph 5, the resolution authority may not fully waive the application of this Article for a subsidiary of a resolution entity (or EU Parent Undertaking in the case of non-EU GSIIs) in exceptional circumstances where such a requirement is necessary for the resolution strategy. The resolution authority’s decision shall contain the reasons for that decision.

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g– paragraph 5 b (new)

5b. The resolution authority shall, in accordance with national law, waive the application of Article 45f or of paragraphs 1 to 5 of this Article to one or more credit institutions permanently affiliated to a central body, where all the following conditions are met: (a) the credit institutions and the central body are subject to supervision by the same competent authority and are established in the same Member State; (b) the commitments of the central body and affiliated institutions are joint and several liabilities or the commitments of its affiliated institutions are entirely guaranteed by the central body; (c) the minimum requirement for own funds and eligible liabilities, solvency and liquidity ofthe central body and of all the affiliated institutions are monitored as awhole on the basis of consolidated accounts of these institutions; (d) the management of the central body is empowered to issue instructions to the management of the affiliated institutions; and, (e) the relevant resolution group complies with the requirement referred to in Article 45f(3).

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 23

Directive 2014/59/EU
Article 45g – paragraph 5 c (new)

5c. The EBA shall, by 1 July 2020, publish a report evaluating the implementation of internal MREL requirements. The report shall include, but not be limited to, an assessment of the impacts of internal MREL requirements on firms, and recommendations to amend the internal MREL framework in light of progress in resolution planning and cross- border cooperation; and to reflect developments in the Banking Union, or at the international level. This report shall be submitted to the Commission by the deadline provided. Thereafter the Commission shall review whether there is a need to amend any relevant legislation in light of the EBA’s findings and report thereon to the European Parliament and to the Council. If appropriate, that report shall be accompanied by a legislative proposal.

2018/01/31
Committee: ECON

Proposal for a directive
Article 1 – paragraph 24

Directive 2014/59/EU
Article 55 – paragraph 1 – point a

(a) the liability is not excluded under Article 44(2); is an eligible liability as referred to in Article 45b or any other category of liability which is material for the purpose of effective loss-absorption and recapitalisation;

2018/02/01
Committee: ECON