BETA

30 Amendments of Engin EROGLU related to 2023/0111(COD)

Proposal for a regulation
Recital 2

(2) Several years into its implementation, the Union resolution framework as currently applicable does not deliver as intended with respect to some of those objectives. In particular, while institutions and entities have made significant progress towards resolvability and have dedicated significant resources to that end, in particular through the build-up of the loss absorption and recapitalisation capacity and the filling-up of resolution financing arrangements, the Union resolution framework is seldom resorted to. Failures of certain smaller and medium- sized institutions and entities are instead mostly addressed through unharmonised national measures. Taxpayer money is used rather than resolution financing arrangements. That situation appears to arise from inadequate incentives. Those inadequate incentives result from the interplay of the Union resolution framework with national rules, whereby the broad discretion in the public interest assessment is not always exercised in a way that reflects how the Union resolution framework was intended to apply. At the same time, the Union resolution framework saw little use due to the risks for depositors of deposit-funded institutions to bear losses to ensure that those institutions can access external funding in resolution, in particular in the absence of other bail-inable liabilities. Finally, the fact that there are less stringent rules on access to funding outside resolution than in resolution has discouraged the application of the Union resolution framework in favour of other solutions, which often entail the use of taxpayers’ money instead of the own resources of the institution or entity or industry-funded safety nets. That situation in turn generates risks of fragmentation, risks of suboptimal outcomes in managing institutions and entities’ failures, in particular in the case of smaller and medium-sized institutions and entities, and opportunity costs from unused financial resources. It is therefore necessary to ensure a more effective and coherent application of the Union resolution framework and to ensure that it can be applied whenever that is in the public interest~~, including for smaller and medium-sized institutions primarily funded through deposits and without sufficient other bail-inable liabilities~~.

2023/11/06
Committee: ECON

Proposal for a regulation
Recital 18

(18) The assessment of whether the resolution of an institution or entity is in the public interest should reflect the consideration that depositors are better protected when deposit guarantee scheme (‘DGS’) funds are used more efficiently and the losses for those funds are minimised. Therefore, in the public interest assessment, the resolution objective of protecting covered depositors should be considered better achieved in resolution if opting for insolvency would be more costly for the ~~deposit guarantee scheme~~DGS.

2023/11/06
Committee: ECON

Proposal for a regulation
Recital 19

(19) The assessment of whether the resolution of an institution or entity is in the public interest should also reflect, to the extent possible, the difference between, on the one hand, funding provided through industry-funded safety nets (resolution financing arrangements or deposit guarantee schemes) and, on the other hand, funding provided by Member States from taxpayers’ money. ~~Funding provided by Member States bears a higher risk of moral hazard and a lower incentive for market discipline.~~ Therefore, when assessing the objective of minimising reliance on extraordinary public financial support, the Board should find funding through the resolution financing arrangements or the deposit guarantee scheme, preferable to funding through an equal amount of resources from the budget of Member States. Nevertheless, burden sharing by shareholders and creditors must remain the primary source of funding.

2023/11/06
Committee: ECON

Proposal for a regulation
Recital 20

(20) To ensure that the resolution objectives are attained in the most effective way, the outcome of the public interest assessment should be negative only where the winding up of the failing institution or entity under normal insolvency proceedings would achieve the resolution objectives more effectively and not only to the same extent as resolution.deleted

2023/11/06
Committee: ECON

Proposal for a regulation
Recital 21

(21) In light of the experience acquired in the implementation of Directive 2014/59/EU, Regulation (EU) No 806/2014 and Directive 2014/49/EU and without prejudice to the question whether a preventive measure constitutes extraordinary public financial support in the first place, it is necessary to specify further the conditions under which measures of a preventive precautionary nature that qualify as extraordinary public financial support may exceptionally be granted. To minimise distortions of competition arising from differences in nature of deposit guarantee schemes in the Union, interventions of such schemes in the context of preventive measures complying with the requirements laid down in Directive 2014/49/EU that qualify as extraordinary public financial support should exceptionally be allowed where the beneficiary institution or entity does not meet any of the conditions for being deemed as failing or likely to fail. It should be ensured that precautionary measures are taken sufficiently early. The ECB currently bases its consideration that an institution or entity is solvent, for the purposes of precautionary recapitalisation, on a forward-looking assessment for the following 12 months of whether the institution or entity can comply with the own funds requirements set out in Regulation (EU) No 575/2013 or in Regulation (EU) 2019/2033, and the additional own funds requirement laid down in Directive 2013/36/EU or Directive (EU) 2019/2034. That practice should be laid down in Regulation (EU) No 806/2014. Moreover, measures to provide relief for impaired assets, including asset management vehicles or asset guarantee schemes, can prove effective and efficient in addressing causes of possible financial distress faced by institutions and entities and preventing their failure and could therefore constitute relevant precautionary measures. It should therefore be specified that such precautionary measures can take the form of impaired asset measures.

2023/11/06
Committee: ECON

Proposal for a regulation
Recital 37

(37) After the initial build-up period of the Single Resolution Fund referred to in Article 69(1) of Regulation (EU) No 806/2014, its available financial means may face slight decreases below its target level, in particular resulting from an increase in covered deposits. The amount of the ex-ante contributions likely to be called in those circumstances is thus likely to be small. It may therefore be possible that, in some years, the amount of those ex ante contributions is no longer commensurate to the cost of the collection of those contributions. The Board should therefore be able to defer the collection of the ex ante contributions for one or more years until the amount to be collected reaches an amount that is proportionate to the cost of the collection process, provided that such deferral does not materially affect the capacity of the Board to use the Single Resolution Fundthe regular collection of contributions ends when the target level of 1 % of the amount of covered deposits of all credit institutions authorised in all of the Member States has been reached for the first time.

2023/11/06
Committee: ECON

Proposal for a regulation
Recital 38

(38) Irrevocable payment commitments are one of the components of the available financial means of the Single Resolution Fund. It is therefore necessary to specify the circumstances in which those payment commitments may be called, and the applicable procedure when terminating the commitments in case an institution or entity ceases to be subject to the obligation to pay contributions to the Single Resolution Fund. In addition, to provide more transparency and certainty with respect to the share of irrevocable payment commitments in the total amount of ex ante contributions to be raised, the Board should ~~determine~~grant such share oin ~~an annual basis, subject to the applicable limits~~the full amount as specified in Article 70(3) of Regulation (EU) No 806/2014.

2023/11/06
Committee: ECON

Proposal for a regulation
Recital 40

(40) The Single Resolution Fund can be used to support the application of the sale of business tool or of the bridge institution tool, whereby a set of assets, rights, and liabilities of the institution under resolution are transferred to a recipient. In that case, the Board may have a claim against the residual institution or entity in its subsequent winding up under normal insolvency proceedings. That may occur where the Single Resolution Fund is used in connection to losses that creditors would otherwise have borne, including under the form of guarantees to assets and liabilities, or coverage of the difference between the transferred assets and liabilities. To ensure that the shareholders and creditors left behind in the residual institution or entity effectively absorb the losses of the institution under resolution and improve the possibility of repayments in insolvency to the Board, those claims of the Board against the residual institution or entity, and claims that arise from reasonable expenses properly incurred by the Board, should benefit from the same priority ranking in insolvency as the ranking of the claims of the national resolution financing arrangements in each participating Member State, which should be higher than the priority ranking of deposits and of deposit guarantee schemes. Since compensations paid to shareholders and creditors from the Single Resolution Fund due to breaches of the ‘no creditor worse off’ principle aim to compensate for the results of resolution action, those compensations should not give rise to claims of the Board.deleted

2023/11/06
Committee: ECON

Proposal for a regulation
Recital 41

(41) Since some of the provisions of Regulation (EU) No 806/2014 concerning the role that deposit guarantee schemes may play in resolution are similar to those of Directive 2014/59/EU, the amendments made to those provisions in Directive 2014/59/EU by [OP please insert the number of the directive amending Directive 2014/59/EU] should be mirrored in Regulation (EU) No 806/2014.deleted

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 11

Regulation (EU) No 806/2014
Article 12da

~~(11) the following Article 12da is inserted: […]~~deleted

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 15

Regulation (EU) No 806/2014
Article 13 – paragraph 2 – subparagraph 1 a (new)

After having received the notification referred to in the first subparagraph, the Board shall assess, in close cooperation with the ECB or the relevant national competent authority, what constitutes a reasonable timeframe for the purposes of the assessment of the condition referred to in Article 18(1), point (b), taking into account the speed of the deterioration of the conditions of the entity, the need to implement effectively the resolution strategy and any other relevant considerations. The Board shall communicate that assessment to the ECB or to the relevant national competent authority as early as possible. The notification referred to in the first subparagraph does not impact the ability of institutional protection schemes to implement any measures. Any decisions relating to measures by an institutional protection scheme are within the sole discretion of the institutional protection scheme.

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 16

Regulation (EU) No 806/2014
Article 13c – paragraph 4 – introductory part

4. The Board shall have the power to market to potential purchasers, or make arrangements for such marketing, the entity referred to in Article 7(2), or the entity referred to in Article 7(4), point (b), and Article 7(5) where the conditions for the application of those provisions are met or require the entity to do so, for the ~~following~~ purposes:

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 16

Regulation (EU) No 806/2014
Article 13c – paragraph 4 – point a

(a) to prepare for the highly likely resolution of that entity, subject to the conditions specified in Article 39(2) of Directive 2014/59/EU and the requirements of professional secrecy laid down in Article 88 of this Regulation;

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 16

Regulation (EU) No 806/2014
Article 13c – paragraph 4 – point b

~~(b) to inform the assessment by the Board of the condition referred to in Article 18(1), point (b), of this Regulation.~~deleted

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 17

Regulation (EU) No 806/2014
Article 14 – paragraph 2 – point c

(c) to protect public funds by minimising reliance on extraordinary public financial support~~, in particular when provided from the budget of a Member State~~;

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 17

Regulation (EU) No 806/2014
Article 14 – paragraph 2 – point d

(d) to protect depositors ~~while minimising losses for deposit guarantee schemes,~~covered by Directive 2014/49/EU and to protect investors covered by Directive 97/9/EC;;

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 19 – point a

Regulation (EU) No 806/2014
Article 18 – paragraph 1 – subparagraph 1 – point b

(b) having regard to the timing~~, the need to implement effectively the resolution strategy~~ and other relevant circumstances, there is no reasonable prospect that any alternative private sector measure, including measures by an IPS, supervisory action, early intervention measures, or the write down or conversion of relevant capital instruments and eligible liabilities as referred to in Article 21(1), taken in respect of the entity would prevent the failure of the entity within a reasonable timeframe;

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 19 – point c

Regulation (EU) No 806/2014
Article 18 – paragraph 5 – subparagraph 1

For the purposes of paragraph 1, point (c), a resolution action shall be treated as in the public interest where that resolution action is necessary for the achievement of, and is proportionate to, one or more of the resolution objectives referred to in Article 14 and where winding up of the institution under normal insolvency proceedings would not meet those resolution objectives ~~more effectively~~to the same extent.

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 19 – point c

Regulation (EU) No 806/2014
Article 18 – paragraph 5 – subparagraph 2

When carrying out the assessment referred to in the first subparagraph, the Board, based on the information available to it at the time of that assessment, shall consider and compare all extraordinary public financial support that can reasonably be expected to be granted to the entity, both in the event of resolution and in the event of winding up in accordance with the applicable national law.;deleted

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 20

Regulation (EU) No 806/2014
Article 18a – paragraph 1 – point b

(b) where the extraordinary public financial support takes the form of an intervention by a deposit guarantee scheme to preserve the financial soundness and long-term viability of the credit institution in compliance with the conditions set out in Articles 11a and 11b of Directive 2014/49/EU, provided that none or of the circumstances referred to in Article 18(4) are present;deleted

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 22 – point a

Regulation (EU) No 806/2014
Article 20 – paragraph 1

1. Before ~~determining whether the conditions for resolution, or the conditions for~~taking resolution action or exercising the power to write down or conver~~sion of~~t relevant capital instruments and eligible liabilities ~~as referred to in~~in accordance with Article 21(1) ~~are met~~, the Board shall ensure that a fair, prudent and realistic valuation of the assets and liabilities of an entity as referred to in Article 2 is carried out by a person that is independent from any public authority, including the Board and the national resolution authority, and from the entity concerned.;

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 23 – point c

Regulation (EU) No 806/2014
Article 21 – paragraph 3 – point b

(b) having regard to timing~~, the need to implement effectively the write down and conversion powers or the resolution strategy for the resolution group~~ and other relevant circumstances, there is no reasonable prospect that any action, including alternative private sector measures, supervisory action or early intervention measures, other than the write- down or conversion of relevant capital instruments, and eligible liabilities as referred to in paragraph 7a, would prevent the failure of that entity or group within a reasonable timeframe.;

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 24 – point a

Regulation (EU) No 806/2014
Article 27 – paragraph 7 – point a

(a) a contribution to loss absorption and recapitalisation equal to an amount not less than 8 % of the total liabilities including own funds of the institution under resolution, measured in accordance with the valuation provided for in Article 20(1) to (15), has been made by shareholders, the holders of relevant capital instruments and other bail-inable liabilities through reduction, write-down, or conversion pursuant to Article 48(1) of Directive 2014/59/EU and Article 21(10) of this Regulation~~, and by the deposit guarantee scheme pursuant to Article 79 of this Regulation and Article 109 of Directive 2014/59/EU where relevant~~;

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 24 – point b

Regulation (EU) No 806/2014
Article 27 – paragraph 9 – point b

(b) all ~~liabilities ranking lower than deposits, and not excluded from bail-in pursuant to paragraphs 3 and 5~~unsecured, non-preferred liabilities other than eligible deposits, have been written down or converted in full.

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 36

Regulation (EU) No 806/2014
Article 69 – paragraph 4

4. If, after the initial period referred to in paragraph 1, the available financial means fall below the target level specified in that paragraph, the regular contributions calculated in accordance with Article 70 shall be raised until a level is reached that corresponds to the target level ithat was reached at the end of the initial period. The Board may defer the collection of the regular contributions raised in accordance with Article 70 and the reporting obligations therefor for 1 or more years to ensure that the amount to be collected reaches an amount that is proportionate to the costs of the collection process on the part of the resolution authorities and the institutions, provided that such deferral does not materially affect the capacity of the Board to use the Fund pursuant to Section 3. After the target level has been reached for the first time and where the available financial means have subsequently been reduced to less than two-thirds of the target level, those contributions shall be set at a level allowing for reaching the target level within 6 years.;

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 37 – point a

Regulation (EU) No 806/2014
Article 70 – paragraph 3

3. The available financial means to be taken into account in order to reach the target level specified in Article 69102 may include irrevocable payment commitments which are fully backed by collateral of low- risk assets unencumbered by any third- party rights, at the free disposal of and earmarked for the exclusive use by the Board for the purposes specified in Article 76(1). The share of those irrevocable payment commitments shall ~~not exceed~~be 50 % of the total amount of contributions raised in accordance with this Article. ~~Within that limit, t~~The Board shall determine annually the share of irrevocable payment commitments in the total amount of contributions to be raised in accordance with this Article.;

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 37 – point b

Regulation (EU) No 806/2014
Article 70 – paragraph 3a – subparagraph 2

Where an institution or entity stops being within the scope of Article 2 and is no longer subject to the obligation to pay contributions in accordance with paragraph 1 of this Article, the Board shall ~~call~~return the irrevocable payment commitments made pursuant to paragraph 3 and still due. If the contribution linked to the irrevocable payment commitment is duly paid at first call, the Board shall cancel the commitment and return the collateral. If the contribution is not duly paid at first call, the Board shall seize the collateral and cancel the commitment.;s soon as the subsequent regular contribution round pursuant to paragraph 1 of this Article has replenished the Fund up to the target level.

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 40 – point b

Regulation (EU) No 806/2014
Article 76 – paragraph 5

5. Where the resolution tools referred to in Article 22(2), point (a) or (b), are used to transfer only part of the assets, rights or liabilities of the institution under resolution, the Board shall have a claim against the residual entity for any expense and loss incurred by the Fund as a result of any contributions made to resolution pursuant to paragraphs 1 and 2 of this Article in connection to losses which creditors would have otherwise borne.deleted

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 40 – point b

Regulation (EU) No 806/2014
Article 76 – paragraph 6

6. The claims of the Board referred to paragraph 5 of this Article and in Article 22(6) shall, in each participating Member State, have the same priority ranking as the claims of the national resolution financing arrangements in the national law of that Member State governing normal insolvency proceedings pursuant to Article 108(9) of Directive 2014/59/EU.;deleted

2023/11/06
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 – point 41

Regulation (EU) No 806/2014
Article 79

~~(41) Article 79 is amended as follows: […]~~deleted

2023/11/06
Committee: ECON