Activities of Johan VAN OVERTVELDT related to 2023/0113(COD)
Shadow reports (1)
REPORT on the proposal for a directive of the European Parliament and of the Council amending Directive 2014/59/EU and Regulation (EU) No 806/2014 as regards certain aspects of the minimum requirement for own funds and eligible liabilities
Amendments (25)
Amendment 20 #
Proposal for a directive
Recital 1
Recital 1
(1) Directive (EU) 2019/879 of the European Parliament and of the Council16 and Regulation (EU) 2019/877 of the European Parliament and of the Council17 amended the minimum requirement for own funds and eligible liabilities (‘MREL’) set out in Directive 2014/59/EU of the European Parliament and of the Council18 and in Regulation (EU) No 806/2014 of the European Parliament and of the Council19 , which applies to credit institutions and investment firms (institutions) established in the Union as well as to any other entity that falls under the scope of Directive 2014/59/EU or Regulation (EU) No 806/2014 (entities). Those amendments provided that internal MREL, that is, MREL applicable to institutions and entities that are subsidiaries of resolution entities but are not themselves resolution entities, may be met by those institutions and entities using instruments issued to and bought by the resolution entity either directly or indirectly through other entities in the same resolution group. __________________ 16 Directive (EU) 2019/879 of the European Parliament and of the Council of 20 May 2019 amending Directive 2014/59/EU as regards the loss-absorbing and recapitalisation capacity of credit institutions and investment firms and Directive 98/26/EC (OJ L 150, 7.6.2019, p. 296). 17 Regulation (EU) 2019/877 of the European Parliament and of the Council of 20 May 2019 amending Regulation (EU) No 806/2014 as regards the loss-absorbing and recapitalisation capacity of credit institutions and investment firms (OJ L 150, 7.6.2019, p. 226). 18 Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190). 19 Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ L 225, 30.7.2014, p. 1).
Amendment 21 #
Proposal for a directive
Recital 3
Recital 3
(3) The review of the Commission found that it would be appropriate and proportionate to the objectives pursued by the internal MREL rules to allow resolution authorities to set the internal MREL on a consolidated basis for a range of entities that is wider than the range resulting from the application of Directive 2014/59/EU and Regulation (EU) No 806/2014, where such wider range covers institutions and entities that are not resolution entities themselves, but that are subsidiaries of resolution entities and control themselves other subsidiaries subject to MREL (‘intermediate entities’) within the same resolution group. That would be in particular the case for those banking groups that are headed by a holding company. In such cases, the intermediate entities naturally centralise intragroup exposures and channel the internal MREL eligible resources pre- positioned by the resolution entity. Due to that structure, such intermediate entities wcould be disproportionately affected by the deduction rules. The Commission also concluded that the MREL framework would be more proportionate by the removal of the issuances of liquidation entities from the scope of the exposures that an intermediate entity is required to deduct pursuant to the deduction mechanism for the indirect subscription of internal MREL eligible resources. A liquidation entity will not have to be supported by the resolution entity in case of failure, thus removing the need to safeguard any loss and capital transfer mechanisms within resolution groups, which was the purpose of the deduction rules introduced by Regulation (EU) 2022/2036. By contrast, the remaining entities of the resolution group will need to be supported by the resolution entity in case of distress or failureto only apply the deduction rules to the own funds of liquidation entities if the issuing entity is not subject to an MREL decision. The necessary MREL resources should therefore be present at all levels of the resolution group and their availability for loss absorption and recapitalisation should be ensured through the deduction mechanism. Thus, the review of the Commission concluded that intermediate entities should continue to deduct the full amount of their holdings of internal MREL eligible resources issued by other non-liquidation entities in the same resolution group.
Amendment 23 #
Proposal for a directive
Recital 5
Recital 5
(5) To ensure that the possibility to comply with MREL on a consolidated basis is available only in the relevant cases identified in the review of the Commission and does not lead to a shortage of internal MREL eligible resources across the resolution group, the power to set the internal MREL on a consolidated basis for intermediate entities should be a discretionary power of the resolution authority and should be subject to certain conditions. The intermediate entity should be the onlya direct subsidiary, that is an institution or an entity, of a resolution entity which is a parent Union parent financial holding company or a Union parent mixed financial holding company, is established in the same Member State and is part of the same resolution group. Alternatively, the intermediate entity concerned should comply with the additional own funds requirement or with the combined buffer requirement on the basis of its consolidated situation. In both cases, however, compliance with the internal MREL on a consolidated basis only should not, in the assessment of the resolution authority, negatively affect in a significant way the resolvability of the resolution group concerned, nor the application by the resolution authority of the power to write down or convert relevant capital instruments and eligible liabilities of the intermediate entity concerned or of other entities in its resolution group. One situation where the disapplication of internal MREL on an individual basis would be detrimental to the resolvability of the resolution group is where that amount of MREL would not allow to ensure compliance with the individual own funds requirements applicable after the exercise of the write-down and conversion powers.
Amendment 24 #
Proposal for a directive
Recital 6
Recital 6
(6) Pursuant to Article 45f(2) of Directive 2014/59/EU and Article 12g(2) of Regulation (EU) No 806/2014, intermediate entities may comply with the consolidated internal MREL using own funds and eligible liabilities. To fully deliver on the possibility to comply with MREL on a consolidated basis, it is necessary to ensure that the eligible liabilities of intermediate entities are computed in a way that is similar to the computation of own funds. The eligibility criteria for eligible liabilities that may be used to comply with internal MREL on a consolidated basis should therefore be aligned with the rules on the calculation of consolidated own funds laid down in Regulation (EU) No 575/2013. To ensure consistency with the existing rules on the external MREL, that alignment should also reflect the existing rules laid down in Article 45b(3) of Directive 2014/59/EU and Article 12d(3) of Regulation (EU) No 806/2014 for the calculation of eligible liabilities that resolution entities may use to comply with their consolidated MREL. In particular, it is necessary to ensure that eligible liabilities issued by the subsidiaries of the entity subject to consolidated internal MREL and held by the resolution entity, either directly or indirectly through other entities of the same resolution group but outside the scope of consolidation, including the resolution entity, or by existing shareholders not belonging to the same resolution group, count towards the own funds and eligible liabilities of the entity subject to consolidated internal MREL.
Amendment 25 #
Proposal for a directive
Recital 7
Recital 7
(7) For liquidation entities, the MREL is normally limitedresolution authority should assess whether it is justified to limit the MREL to the amount necessary for loss absorption, which corresponds to the own funds requirements. In such cases, the MREL does not entail for the liquidation entity any additional requirement directly related to the resolution framework. That means that a liquidation entity can fully comply with the MREL by complying with the own funds requirements and that a dedicated decision of the resolution authority determining the MREL does not contribute in a meaningful way to the resolvability of liquidation entities. Such a decision entails many procedural obligations for resolution authorities and for the liquidation entities without a corresponding benefit in terms of improved resolvability. For that reason, resolution authorities should not set a MREL for liquidation entities.
Amendment 26 #
Proposal for a directive
Recital 8
Recital 8
(8) Where the resolution authority considers that an entity that is part of a resolution group qualifies as a liquidation entity, intermediate entities should not be required to which is not subject to an MREL decision, the intermediate entities can limit the deducting from their internal MREL capacity their holdings of own funds or other liabilities that would meet the conditions for compliance with the internal MREL and that are issued by liquidation entities. In such a case, the liquidation entity is no longer required to comply with the MREL, and therefore there is no indirect subscription of internal MREL eligible resources through the chain formed by the resolution entity, the intermediate entity and the liquidation entitywhich are issued by those liquidation entities that are not subject to MREL requirements. In case of failure, the resolution strategy does not envisage that the liquidation entity would be supportrecapitalised by the resolution entity. That means that the updownstreaming of losses fromnew capital to the liquidation entity tofrom the resolution entity, via the intermediate entity, would not be expected, and neither would the downstreaming of capital in the opposite direction. That adjustment to the scope of the holdings to be deducted in the context of the indirect subscription of internal MREL eligible resources would thus not affect the prudential soundness of the framework.
Amendment 30 #
Proposal for a directive
Recital 9
Recital 9
(9) The main objective of the permission regime for the reduction of eligible liabilities instruments laid down in Articles 77(2) and 78a of Regulation (EU) No 575/2013, which is also applicable to institutions and entities subject to the MREL and to the liabilities issued to comply with MREL, is to enable resolution authorities to monitor the actions that result in a reduction of the stock of eligible liabilities and to prohibit any action that would amount to a reduction beyond a level which resolution authorities deem adequate. Where the resolution authority has not adopted a decision determining the MREL in respect of an institution or entity, that objective is not relevant. Moreover, institutions or entities that are not subject to a decision determining the MREL do not have eligible liabilities on their balance sheet, even if some of their liabilities would theoretically meet the criteria for MREL eligibility. Institutions or entities for which no decisions determining the MREL have been adopted should therefore not be required to obtain the prior permission of the resolution authority to effect the call, redemption, repayment or repurchase of liabilities that would meet the eligibility requirements for MREL.
Amendment 31 #
Proposal for a directive
Recital 10
Recital 10
(10) There are liquidation entities for which the MREL does exceed the amount of the own funds requirements, in which case resolution authorities should be able to set the MREL. That MREL should be set at an amount exceeding the amount for loss absorption where the resolution authorities consider that such amount is necessary to protectassess that it would not be justified to limit the requirement to an amount sufficient to absorb losses. The assessment by the resolution authority should, in particular, evaluate that limit as possible impact on the financial stability or addressand on the risk of contagion to the financial system. In those situations, the liquidation entity should comply with the MREL and should not be exempted from the prior permission regime laid down in Articles 77(2) and 78a of Regulation (EU) No 575/2013. Any intermediate entities belonging to the same resolution group as the liquidation entity concerned should continue to be required to deduct from their internal MREL capacity their holdings of internal MREL eligible resources issued by that liquidation entity. In addition, since liquidation proceedings take place at the level of the legal entity, liquidation entities still subject to MREL should comply with the requirement on an individual basis only. Lastly, certain eligibility requirements related to the ownership of the liability concerned are not relevant, as there is no need to ensure the transfer of losses and capital from the liquidation entity to a resolution entity, and should therefore not apply.
Amendment 34 #
Proposal for a directive
Recital 14
Recital 14
(14) Since the objectives of this Directive, namely to adjust the treatment of liquidation entities under the MREL framework and the possibilities to comply withfor resolution authorities to determine the internal MREL on a consolidated basis, cannot be sufficiently achieved by the Member States but can rather, by amending rules that are already set at Union level, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on the European Union. In accordance with the principle of proportionality as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives,
Amendment 39 #
Proposal for a directive
Article 1 – paragraph 1 – point 1
Article 1 – paragraph 1 – point 1
(83aa) ‘liquidation entity’ means a legal person established in the Union in respect of which the group resolution plan or, for entities that are not part of a group, the resolution plan, provides that the entity is to be wound up in an orderly manner in accordance with the applicable national law;under normal insolvency proceedings;
Amendment 42 #
Proposal for a directive
Article 1 – paragraph 1 – point 2 – point b
Article 1 – paragraph 1 – point 2 – point b
Directive 2014/59/EU
Article 45c – paragraph 2a – subparagraph 2 – introductory part
Article 45c – paragraph 2a – subparagraph 2 – introductory part
By way of derogation from the first subparagraph, and where necessary for the objectives of protecting financial stability or limiting potential contagion to the financial system, resolution authorities may exceptionally determine the requirement referred to in Article 45(1) for liquidation entities on an individual basis in the amount sufficient to absorb losses in accordance with paragraph 2, point (a), of this Article, increased to the amount that is necessary for the achievement of those objectivesthe resolution authority shall assess whether it is justified to limit the requirement referred to in Article 45(1) for that entity, so that it does not exceed an amount sufficient to absorb losses in accordance with paragraph 2, point (a), of this Article. The assessment by the resolution authority shall, in particular, evaluate this limit as regards any possible impact on financial stability and on the risk of contagion to the financial system. In those cases, liquidation entities shall meet the requirement referred to in Article 45(1) by using one or more of the following:
Amendment 45 #
Proposal for a directive
Article 1 – paragraph 1 – point 2 – point b
Article 1 – paragraph 1 – point 2 – point b
Directive 2014/59/EU
Article 45c – paragraph 2a – subparagraph 4
Article 45c – paragraph 2a – subparagraph 4
Holdings of liabilities that do not qualify as own funds instruments or liabilities issued by subsidiaries which are liquidation entities for which the resolution authority has not determined the requirement referred to in Article 45(1) shall not be deducted under Article 72e(5) of Regulation (EU) No 575/2013.;
Amendment 51 #
Proposal for a directive
Article 1 – paragraph 1 – point 3 – point a
Article 1 – paragraph 1 – point 3 – point a
Directive 2014/59/EU
Article 45f – paragraph 1 – subparagraph 3a – point a – point i – indent 1
Article 45f – paragraph 1 – subparagraph 3a – point a – point i – indent 1
– the resolution entity is a Union parent financial holding company or a Union parent mixed financial holding company which does not have on its balance sheet any excluded liabilities as referred to in Article 72a(2) of Regulation 575/2013 that rank pari passu or junior to eligible liabilities instruments;
Amendment 52 #
Proposal for a directive
Article 1 – paragraph 1 – point 3 – point a
Article 1 – paragraph 1 – point 3 – point a
Directive 2014/59/EU
Article 45f – paragraph 1 – subparagraph 3a – point a – point i – indent 3
Article 45f – paragraph 1 – subparagraph 3a – point a – point i – indent 3
Amendment 54 #
Proposal for a directive
Article 1 – paragraph 1 – point 3 – point a
Article 1 – paragraph 1 – point 3 – point a
Directive 2014/59/EU
Article 45f – paragraph 1 – subparagraph 3a – point a – point ii
Article 45f – paragraph 1 – subparagraph 3a – point a – point ii
(ii) the subsidiary is subject to the requirement referred to in Article 104a of Directive 2013/36/EU or to the combined buffer requirement on a consolidated basisn a consolidated basis only; both the subsidiary and the resolution entity are established in the same Member State and are part of the same resolution group;
Amendment 58 #
Proposal for a directive
Article 1 – paragraph 1 – point 3 – point a
Article 1 – paragraph 1 – point 3 – point a
Directive 2014/59/EU
Article 45f – paragraph 1 – subparagraph 3a – point b
Article 45f – paragraph 1 – subparagraph 3a – point b
(b) compliancethe exemption from the obligation to comply with the requirement laid down in Article 45c on a conson individual basis as a result of the applidcated basiion of the derogation from the first and second paragraphs does not negatively affect in a significant way the resolvability of the resolution group, or the write down or conversion, in accordance with Article 59, of relevant capital instruments and eligible liabilities of the subsidiary concerned or of other entities in the resolution group.;
Amendment 62 #
Proposal for a directive
Article 1 – paragraph 1 – point 3 – point a
Article 1 – paragraph 1 – point 3 – point a
The application of Article 45c on a consolidated basis as a result of the derogation from the first and second subparagraphs referred to in subparagraph 3a, point (b), shall under no circumstances result in a situation where the amount of eligible liabilities issued by the intermediate entity at the individual level is lower than the requirement on an individual basis without applying the deduction set out in Article 72e(5) of Regulation (EU) No 575/2013.
Amendment 63 #
Proposal for a directive
Article 1 – paragraph 1 – point 3 – point a a (new)
Article 1 – paragraph 1 – point 3 – point a a (new)
Directive 2014/59/EU
Article 45f – paragraph 1a
Article 45f – paragraph 1a
(a a) the following paragraph is inserted: ' 1a. Where the resolution authority identifies a risk that the application of the requirement laid down in Article 45c on an individual basis may not allow to ensure that the eligible liabilities are sufficient to restore compliance with the applicable consolidated own funds requirements after the application of a resolution scheme, the resolution authority may decide to apply the requirement laid down in Article 45c on an individual and on an consolidated basis. In this case, the deduction under Article 72e(5) of Regulation (EU) No 575/2013 shall not apply. '
Amendment 67 #
Proposal for a directive
Article 2 – paragraph 1 – point 2 – point b
Article 2 – paragraph 1 – point 2 – point b
Regulation (EU) No 806/2014
Article 12d – paragraph 2a – subparagraph 2 – introductory part
Article 12d – paragraph 2a – subparagraph 2 – introductory part
By way of derogation from the first subparagraph, and where necessary for the objectives of protecting financial stability or limiting potential contagion to the financial system, the Board may exceptionally determinethe Board shall assess whether it is justified to limit the requirement referred to in Article 12a(1) for liquidation entities on an individual basis in thethat entity, so that it does not exceed an amount sufficient to absorb losses in accordance with paragraph 2, point (a), of this Article, increased to the amount that is necessary for the achievement. The assessment by the Board shall evaluate, in particular, the limit referred to in Article 12d (2a) as regards any possible impact on financial stability and ofn those objectivese risk of contagion to the financial system. In those cases, liquidation entities shall meet the requirement referred to in Article 12a(1) by using one or more of the following:
Amendment 69 #
Proposal for a directive
Article 2 – paragraph 1 – point 2 – point b
Article 2 – paragraph 1 – point 2 – point b
Regulation (EU) No 806/2014
Article 12d – paragraph 2a – subparagraph 4
Article 12d – paragraph 2a – subparagraph 4
Holdings of liabilities that do not qualify as own funds instruments or liabilities issued by subsidiaries which are liquidation entities for which the resolution authority has not determined the requirement referred to in Article 12a(1) shall not be deducted under Article 72e(5) of Regulation (EU) No 575/2013.;
Amendment 75 #
Proposal for a directive
Article 2 – paragraph 1 – point 3 – point a
Article 2 – paragraph 1 – point 3 – point a
Regulation (EU) No 806/2014
Article 12g – paragraph 1 – subparagraph 3a – point a – point i – indent 1
Article 12g – paragraph 1 – subparagraph 3a – point a – point i – indent 1
– the resolution entity is a Union parent financial holding company or a Union parent mixed financial holding company which does not have on its balance sheet any excluded liabilities as referred to in Article 72a(2) of Regulation 575/2013 that rank pari passu or junior to eligible liabilities instruments; ;
Amendment 77 #
Proposal for a directive
Article 2 – paragraph 1 – point 3 – point a
Article 2 – paragraph 1 – point 3 – point a
Regulation (EU) No 806/2014
Article 12g – paragraph 1 – subparagraph 3a – point a – point ii
Article 12g – paragraph 1 – subparagraph 3a – point a – point ii
(ii) the subsidiary is subject to the requirement referred to in Article 104a of Directive 2013/36/EU or to the combined buffer requirement on a consolidated basisn a consolidated basis only; both the subsidiary and the resolution entity are established in the same Member State and are part of the same resolution group;
Amendment 80 #
Proposal for a directive
Article 2 – paragraph 1 – point 3 – point a
Article 2 – paragraph 1 – point 3 – point a
Regulation (EU) No 806/2014
Article 12g – paragraph 1 – subparagraph 3a – point b
Article 12g – paragraph 1 – subparagraph 3a – point b
(b) compliancethe exemption from the obligation to comply with the requirement laid down in Article 12d on a consolidated basin individual basis as a result of the application of the derogation from the first and second paragraphs does not negatively affect in a significant way the resolvability of the resolution group, or the write down or conversion, in accordance with Article 21, 12d, of relevant capital instruments and eligible liabilities of the institution or subsidiary concerned or of other entities in the resolution group.;
Amendment 84 #
The application of Article 12d on an consolidated basis as a result of the derogation from the first and second paragraphs referred to in subparagraph 3a, point (b), shall under no circumstances result in a situation where the amount of eligible liabilities issued by the intermediate entity at the individual level is lower than the requirement on an individual basis without applying the deduction set out in Article 72e(5) of Regulation No 575/2013.
Amendment 85 #
Proposal for a directive
Article 2 – paragraph 1 – point 3 – point b
Article 2 – paragraph 1 – point 3 – point b
Regulation (EU) No 806/2014
Article 12g – paragraph 2a – subparagraph 2 – introductory part
Article 12g – paragraph 2a – subparagraph 2 – introductory part
The liabilities referred to in the first subparagraph, points (a) and (b), shall not exceed the amount determined by subtracting from the amount of the requirement referred to in Article 4512(1) applicable to the subsidiary included in the consolidatedion the sum of all of the following: