BETA

69 Amendments of Engin EROGLU related to 2023/0112(COD)

Proposal for a directive
Recital 2

(2) Several years into its implementation, the Union resolution framework as currently applicable does not deliver as intended with respect of 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 and 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 certain smaller and medium-sized institutions primarily funded through deposits and without sufficient other bail-inable liabilities~~.

2023/11/06
Committee: ECON

Proposal for a directive
Recital 9

(9) The resolution framework is meant to be applied to potentially any institution or entity, irrespective of its size and business model, if the tools available under national law are not adequate to manage its failure. To ensure such outcome, the criteria to apply the public interest assessment to a failing institution or entity should be specified. In particular, it is necessary to clarify that, depending on the specific circumstances, certain functions of the institution or entity can be considered critical even if their discontinuance would impact financial stability or critical services only at regional level. This is to be distinguished from impacts at the local level only, such as cities, municipalities, counties or districts, as this hardly implies risks for financial stability.

2023/11/06
Committee: ECON

Proposal for a directive
Recital 10

(10) 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 DGS.

2023/11/06
Committee: ECON

Proposal for a directive
Recital 11

(11) 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 DGSs) 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, resolution authorities should find funding through the resolution financing arrangements or the DGS 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 directive
Recital 12

(12) 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.

2023/11/06
Committee: ECON

Proposal for a directive
Recital 12 a (new)

(12a) All changes in connection with the public interest assessment are only intended to enable resolution authorities to apply the resolution tools to medium- sized or smaller institutions in a specific individual case and if there are exceptional circumstances. Resolution authorities should not be forced to apply resolution tools to the bulk of these institutions.

2023/11/06
Committee: ECON

Proposal for a directive
Recital 17

(17) In light of the experience acquired in the implementation of Directive 2014/59/EU, Regulation (EU) No 806/2014 and Directive 2014/49/EU of the European Parliament and of the Council31 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 DGSs in the Union, interventions of DGSs in the context of preventive measures complying with 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 European Central Bank (ECB) currently bases its consideration that an institution or entity is solvent, for the purposes of precautionary recapitalisation, on a forward-looking assessment for following 12 months of whether the institution or entity can comply with the own funds requirements set out in Regulation (EU) No 575/2013 of the European Parliament and of the Council32 or in Regulation (EU) 2019/2033 of the European Parliament and of the Council33 , 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 Directive 2014/59/EU. 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 distresses faced by institutions and entities and preventing their failure and could therefore constitute relevant precautionary measures. It should be therefore specified that such precautionary measures can take the form of impaired asset measures. __________________ 31 Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes (OJ L 173, 12.6.2014, p. 149). 32 Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1). 33 Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).

2023/11/06
Committee: ECON

Proposal for a directive
Recital 34

(34) After the initial build-up period of the resolution financing arrangements referred to in Article 102(1) of Directive 2014/59/EU, their respective available financial means may face slight decreases below their 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 such ex ante contributions is no longer commensurate to the cost of the collection of those contributions. Resolution authorities should therefore be able to defer the collection of the ex ante contributions for 1 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 resolution authorities to use resolution financing arrangementsgular collection of contributions ends when the target level of 1% of the amount of covered deposits of all the institutions authorised in their territory has been reached for the first time.

2023/11/06
Committee: ECON

Proposal for a directive
Recital 35

(35) Irrevocable payment commitments are one of the components of the available financial means of resolution financing arrangements. 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 a resolution financing arrangement. 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, resolution authorities should ~~determine~~grant such share oin ~~an annual basis, subject to the applicable limits~~the full amount as specified in Article 103(3) of Directive 2014/59/EU.

2023/11/06
Committee: ECON

Proposal for a directive
Recital 37

(37) Directive 2014/59/EU partially harmonised the ranking of deposits under national laws governing normal insolvency proceedings. Those rules provided for a three-tier ranking of deposits, whereby covered deposits had the highest priority ranking, followed by eligible deposits of natural persons and micro, smaller and medium-sized enterprises above the coverage level. The remaining deposits, i.e. deposits of large corporates exceeding the coverage level and deposits that are not eligible for repayment by the DGS, were required to have a lower priority ranking, but their position was not otherwise harmonised. Finally, the claims of DGSs benefitted from the same higher priority ranking as covered deposits. Nevertheless, this has not proved to be the optimal solution for depositor protection. Partial harmonisation created differences in the treatment of those remaining depositors across Member States, in particular as an increasing number of Member States have decided to also grant a legal preference to the remaining deposits. Those differences also created difficulties when determining the insolvency counterfactual for cross- border groups during the resolution valuations. Furthermore, the lack of general depositor preference along with the three-tiered ranking of depositors’ claims had the potential to create problems regarding compliance with the ‘no creditor worse off’ principle, particularly when the deposits the priority of which had not been harmonised by Directive 2014/59/EU ranked at the same level as senior claims. Lastly, the high priority ranking given to the claims of DGSs had not made it possible for the available financing means of those schemes to be used in a more efficient and effective way in interventions other than the payout of covered deposits in insolvency, namely in the context of resolution, alternative measures in insolvency or preventive measures. The protection of covered deposits does not rely on the priority ranking of the claims of the DGS but is instead ensured through the mandatory exclusions from bail-in in resolution and the prompt repayment from the DGS in case of unavailability of deposits. Therefore, the ranking of deposits in the current hierarchy of claims should be amended.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Recital 38

(38) The ranking of all deposits should be fully harmonised through the implementation of a general depositor preference with a single-tiered approach, whereby all deposits benefit from a higher priority ranking over ordinary unsecured claims, without any differentiation between different types of deposits. At the same time, the use of the deposit guarantee schemes in resolution, insolvency and in preventive measures should always remain subject to compliance with the relevant conditionality, in particular the so-called ‘least cost test’.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Recital 39

(39) A general depositor preference will contribute to reinforcing depositors’ confidence and to further prevent the risk of bank runs. Enhanced depositor protection is also aligned with the central role deposits play in the real economy, being the primary tool for savings and for payments, as well as in the banking activity, where the deposits represent an important source of funding and are a key driver of confidence in the banking system, which becomes of particular relevance in times of market stress. Moreover, a general depositor preference improves the resolvability of institutions and entities by increasing their ability to comply with the requirements to access the resolution financing arrangements and decreasing the amount of funding required from those arrangements, due to the lower risk of breaching the ‘no creditor worse off’ principle where bailing-in ordinary unsecured debt. In particular, the removal of deposits from the insolvency class of ordinary unsecured claims would increase the bail- inability of remaining ordinary unsecured claims by minimising the risk of breaches of the ‘no creditor worse off’ principle. By reducing the likelihood of deposits being written down or converted to ensure access to the resolution financing arrangements, the general depositor preference would contribute to making the bail-in tool more effective and credible and would lead to an increase of the transparency and legal certainty of the resolution framework. The general depositor preference would also contribute to the credibility of transfer strategies in resolution, as it would facilitate the inclusion of the entire deposit contract in the perimeter of liabilities to be transferred to a private purchaser or to a bridge institution, to the benefit of the customer relationship and the franchise value of the institution under resolution. Lastly, a full harmonisation of the insolvency ranking of depositors would be beneficial from the cross-border and level playing field perspective.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Recital 40

(40) A single-tiered approach for the priority ranking of deposits under national laws governing normal insolvency proceedings contributes to a more efficient and less costly protection of all deposits. For covered deposits, that approach facilitates the financing by the DGS of measures other than the payout of covered deposits, which can be more effective and less disruptive in protecting access to the deposited funds as they do not lead to an interruption of access to bank accounts and payment services. For the deposits that are not covered, that approach facilitates their protection where necessary for the protection of financial stability and depositor confidence. Finally, by introducing flexibility in the use of those potentially less costly mechanisms for depositor protection, that approach minimises the immediate disbursement needs of the DGSs, thereby ensuring a better preservation of their available financing means in case other crises occur and decreasing the burden on the banking sector, who are called to replenish those funds.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Recital 41

(41) The changes to the priority ranking of deposits, in particular the elimination of the higher ranking of covered deposits and the claims of the DGSs relative to all other deposits, would not negatively affect the protection afforded to covered deposits in the event of failure, as that protection would continue to be guaranteed through the mandatory exclusion of covered deposits from loss absorption in case of resolution and, ultimately, by the payout provided by the DGS in event of unavailability of deposits.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Recital 42

(42) Resolution financing arrangements 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 resolution financing arrangement may have a claim against the residual institution or entity in its subsequent winding up under normal insolvency proceedings. That may occur where the resolution financing arrangement is used in connection to losses that creditors would have otherwise 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 resolution-specific safety net, those claims of the resolution financing arrangement against the residual institution or entity, and claims that arise from reasonable expenses properly incurred, should rank in insolvency above the claims of deposits and of the DGS. Since compensations paid to shareholders and creditors by resolution financing arrangements 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 those arrangements.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Recital 43

(43) To ensure sufficient flexibility and to facilitate DGS interventions in support of the use of the resolution tools, where they lead to the exit from the market of the institution under resolution and where necessary to prevent losses being borne by depositors, certain aspects of the use of DGS in resolution should be specified. In particular, it is necessary to specify that the DGS can be used to support transfer transactions that include deposits, including eligible deposits beyond the coverage level provided by the DGS, and also deposits excluded from repayment by a DGS, in certain cases and under clear conditions. The contribution of the DGS should be aimed at covering the shortfall in the value of the assets transferred to a buyer or bridge institution in comparison to the value of the transferred deposits. Where a contribution is required by the buyer as part of the transaction to ensure its capital neutrality and preserve compliance with the buyer’s capital requirements, the DGS should also be allowed to contribute to that effect. The support of the DGS to resolution action should take the form of cash or other forms, such as guarantees or loss sharing agreements that can minimise the impact of the support on the available financial means of the DGS while simultaneously allowing the contribution of the DGS to meet its purposes.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Recital 44

(44) The contribution of the DGS in resolution should be subject to certain limits. First, it should be ensured that any loss which the DGS may bear as a result of an intervention in resolution does not exceed the loss that the DGS would bear in insolvency if it paid out covered depositors and subrogated to their claims over the institution’s assets. That amount should be determined on the basis of the least cost test, in accordance with the criteria and methodology set out in Directive 2014/49/EU. Those criteria and methodology should also be used when determining the treatment that the DGS would have received had the institution entered normal insolvency proceedings when carrying out the ex-post valuation for the purposes of assessing compliance with the ‘no creditor worse off’ principle and determining any compensation owed to the DGS. Second, the amount of the DGS’s contribution aimed at covering the difference between the assets and liabilities to be transferred to a purchaser or to a bridge institution should not exceed the difference between the transferred assets and the transferred deposits and liabilities with the same or a higher priority ranking in insolvency than those deposits. That would ensure that the contribution of the DGS is only used for the purposes of avoiding the imposition of losses on depositors, where appropriate, and not for the protection of creditors that rank below deposits in insolvency. Nevertheless, the sum of the contribution of the DGS to cover the difference between assets and liabilities with the contribution of the DGS towards the own funds of the recipient entity should not exceed the cost of repaying covered depositors as calculated under the least cost test.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Recital 45

(45) It should be specified that the DGS may only contribute to a transfer of liabilities other than covered deposits in the context of a resolution if the resolution authority concludes that deposits others than covered deposits cannot be bailed-in, nor left in the residual institution under resolution which will be wound up. In particular, the resolution authority should be allowed to avoid allocating losses to those deposits where the exclusion is strictly necessary and proportionate to preserve the continuity of critical functions and core business lines or where necessary to avoid widespread contagion and financial instability, which could cause a serious disturbance to the economy of the Union or of a Member State. The same reasons should apply to the inclusion in the transfer to a buyer or to a bridge institution of bail-inable liabilities with a priority ranking lower than that of deposits. In that case, the transfer of those bail-inable liabilities should not be supported by the contribution of the DGS. If any financial support to the transfer of those bail-inable liabilities is required, that support should be provided by the resolution financing arrangement.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Recital 46

(46) Given the possibility to use DGS in resolution, it is necessary to specify further the way in which the DGS contribution can count towards the calculation of the requirements to access resolution financing arrangements. If the contribution made by shareholders and creditors of the institution under resolution through reductions, write-down or conversion of their liabilities, summed with the contribution made by the DGS, amounts to at least 8 % of the institution’s total liabilities including own funds, the institution should be able to access the resolution financing arrangement to receive further funding, where necessary to ensure effective resolution in line with the resolution objectives. If those conditions are met, the contribution of the DGS should be limited to the amount necessary to enable access to the resolution financing arrangement. To ensure that resolution continues to be primarily financed by the institution’s internal resources and to minimise distortions of competition, the possibility to use the DGS contribution to ensure access to resolution financing arrangements should only be possible for institutions for which the resolution plan or the group resolution plan does not provide for their winding up in an orderly manner in case of failure, given that the MREL determined by resolution authorities for those institutions has been set at a level that includes both the loss absorption and the recapitalisation amounts.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 1 – point b

Directive 2014/59/EU
Article 2 – paragraph 1 – point 35

(35) ‘critical functions’ means activities, services or operations the discontinuance of which is likely in one or more Member States to lead to the disruption of services that are essential to the real economy or to disrupt financial stability at national ~~or reg~~level or where the disturbance of services at regional level implies a material risk of a systemic crisis at national level, due to the size, market share, external and internal interconnectedness, complexity or cross- border activities of an institution or group, with particular regard to the substitutability of those activities, services or operations;;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 2

Directive 2014/59/EU
Article 5 – paragraph 2 – subparagraph 2

In the absence of changes referred to in the first subparagraph in 12 months following the latest annual update of the recovery plan, the competent authorities ~~may~~shall exceptionally waive, until the subsequent 12-month period, the obligation to update the recovery plan.

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 4

Directive 2014/59/EU
Article 8 – paragraph 2

(4) in Article 8(2), the third subparagraph is replaced by the following: ‘ EBA may, at the request of a competent authority, assist the competent authorities in reaching a joint decision in accordance with Article 31(2), point (c), of Regulation (EU) No 1093/2010.; ’deleted

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 5

Directive 2014/59/EU
Article 10 – paragraph 8 a

(5) in Article 10, the following paragraph 8a is inserted: ‘ 8a. adopt resolution plans where an institution is being wound up in accordance with the applicable national law pursuant to Article 32b or where Article 37(6) applies.; ’deleted Resolution authorities shall not

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 7

Directive 2014/59/EU
Article 13 – paragraph 4

(7) in Article 13(4), the fourth subparagraph is replaced by the following: ‘ EBA may, at the request of a resolution authority, assist the resolution authorities in reaching a joint decision in accordance with Article 31(2), point (c), of Regulation (EU) No 1093/2010.; ’deleted

2023/11/06
Committee: ECON

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

Directive 2014/59/EU
Article 30 a – paragraph 2 – subparagraph 1 – introductory part

Competent authorities shall notify resolution authorities as early as possible where they consider that there is a material risk that one or more of the circumstances in Article 32(4) would apply in relation to an institution or an entity referred to Article 1(1), points (b), (c) or (d- without legal effect to any alternative private sector measure, including measures by an IPS, that would prevent the failure or the likely failure of the institution within a reasonable timeframe - notify resolution authorities as early as possible where they consider that there is a material risk that an institution will fail according to Article 32(4) would apply (…). That notification shall contain:

2023/11/06
Committee: ECON

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

Directive 2014/59/EU
Article 30 a – paragraph 2 – subparagraph 1 – point b

(b) an non-binding and non-complete overview of the measures which would prevent the failure of the institution or entity within a reasonable timeframe, their expected impact on the institution or entity as regards the circumstances referred to in Article 32(4) and the expected timeframe for the implementation of those measures.

2023/11/06
Committee: ECON

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

Directive 2014/59/EU
Article 30 a – paragraph 2 – subparagraph 2

After having received the notification referred to in the first subparagraph, resolution authorities shall assess, in close cooperation with competent authorities, what constitutes a reasonable timeframe for the purposes of the assessment of the condition referred to in Article 32(1), point (b), taking into account the speed of the deterioration of the conditions of the institution or entity referred to in Article 1(1), points (b), (c) or (d), the need to implement effectively the resolution strategy and any other relevant considerations. Resolution authorities shall communicate that assessment to competent authorities 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 directive
Article 1 – paragraph 1 – point 15

Directive 2014/59/EU
Article 30 a – paragraph 2 – subparagraph 3 a (new)

Any measure in the context of preparing for resolution as referred to in this paragraph must not hinder preventive measures as referred to in Article 11(3) of Directive 2014/49/EU. Preventive measures should be given priority over resolution measures.

2023/11/06
Committee: ECON

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

Directive 2014/59/EU
Article 30 a – paragraph 4 – introductory part

4. TSubject to alternative private sector measures, including measures by an IPS, preventing the failure or the likely failure of the institution within a reasonable timeframe, the powers of resolution authorities shall include the power to market to potential purchasers, or make arrangements for such marketing, the institution or entity referred to in Article 1(1), points (b), (c) or (d), to potential purchasers, or require the institution or entity to do so, for the following purposes:

2023/11/06
Committee: ECON

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

Directive 2014/59/EU
Article 31 – 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 directive
Article 1 – paragraph 1 – point 16

(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 directive
Article 1 – paragraph 1 – point 17 – point a

Directive 2014/59/EU
Article 32 – paragraph 1 – point b

(b) ~~having regard to the timing, the need to implement effectively the resolution strategy~~notwithstanding point (a) of this paragraph and having regard to the timing 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 write down or conversion of relevant capital instruments and eligible liabilities as referred to in Article 59(2) taken in respect of the institution would prevent the failure of the institution within a reasonable timeframe;

2023/11/06
Committee: ECON

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

Directive 2014/59/EU
Article 32 – paragraph 2 – subparagraph 3

The assessment of the conditions referred to in paragraph 1, point (a) and (b), shall only be made by the resolution authority in close cooperation with the competent authority. The competent authority shall, without delay, provide the resolution authority with any relevant information that the resolution authority requests to inform its assessment. The competent authority may also inform the resolution authority that it considers the condition laid down in the paragraph 1, point (b), to be met.;levant authority after consulting an IPS of which the institution is a member.

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 17 – point b – point -i (new)

Directive 2014/59/EU
Article 32 – paragraph 4 – subparagraph 1 – introductory part

(-i) in the first subparagraph, the introductory part is replaced by the following: For the purposes of point (a) of paragraph 1, an institution shall be deemed to be failing or likely to fail in one or more of the following circumstances and if, in the case where the institution is a member of an IPS, alternative measures by the IPS cannot prevent a likely failure, or remedy the failure of the institution that occurred, within a reasonable timeframe:

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 17 – point c

Directive 2014/59/EU
Article 32 – 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 31 and where winding up of the institution under normal insolvency proceedings would not meet those resolution objectives ~~more effectively~~to the same degree.

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 17 – point c

Directive 2014/59/EU
Article 32 – paragraph 5 – subparagraph 2

Member States shall ensure that when carrying out the assessment referred to in the first subparagraph, the resolution authority, based on the information available to it at the time of that assessment, considers and compares all extraordinary public financial support that can reasonably be expected to be granted to the institution, 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 directive
Article 1 – paragraph 1 – point 19

Directive 2014/59/EU
Article 32c – paragraph 1 – point b

(b) where ~~the extraordinary public financial support takes the form of~~ an intervention by a deposit guarantee scheme to ~~preserve~~maintain the financial soundness and long-term viability of the credit institution constitutes extraordinary public financial support in compliance with the conditions set out in ~~Articles 11a and 11b of~~the Directive 2014/49/EU, provided that (i) subject to the cases referred to in point (ii), none of the circumstances referred to in Article 32(4) are present; (ii) in case of a deposit guarantee scheme which is acknowledged as institutional protection scheme, the resolution authority has not taken any resolution action under Article 32;

2023/11/06
Committee: ECON

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

Directive 2014/59/EU
Article 33 – paragraph 2

(20) in Article 33, paragraph 2 is replaced by the following: ‘ 2. Member States shall ensure that resolution authorities take a resolution action in relation to an entity referred to in Article 1(1), points (c) or (d), when that entity meets the conditions laid down in Article 32(1). For those purposes, an entity referred to in Article 1(1), points (c) or (d), shall be deemed to be failing or likely to fail in any of the following circumstances: (a) conditions laid down in Article 32(4), points (b), (c) or (d); (b) there are objective elements that show that the entity will, in the near future,deleted the entity meets one or more of the the entity infringes materially ~~the applicable requirements laid down in Regulation (EU) No 575/2013 or in Directive 2013/36/EU.; ’~~or

2023/11/06
Committee: ECON

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

Directive 2014/59/EU
Article 35

(22) Article 35 is amended as follows: (a) following: ‘ 1. Member States shall ensure that resolution authorities may appoint a special manager to replace or to work with the management body of the institution under resolution or the bridge institution. Resolution authorities shall make public the appointment of a special manager. Resolution authorities shall ensure that the special manager has the qualifications, ability and knowledge required to carry out his or her functions. Article 91 of Directive 2013/36/EU shall not apply to the appointment of special managers.; ’ (b) is replaced by the following: ‘ The special manager shall have all the powers of the shareholders and the management body of the institution under resolution or the bridge institution.; ’ (c) paragraph 5 is replaced by the following: ‘ 5. special manager draw up reports for the appointing resolution authority on the economic and financial situation of the institution under resolution or the bridge institution and on the acts performed in the conduct of his or her duties, at regular intervals set by the resolution authority and at the beginning and the end of his or her mandate.; ’deleted paragraph 1 is replaced by the in paragraph 2, the first sentence Member States shall require that a

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 23 – point a

Directive 2014/59/EU
Article 36 – paragraph 1 – sentence 1

1. Before ~~determining whether the conditions for resolution or the conditions fo~~taking resolution action or exercising the power theo write down or conver~~sion of~~t relevant capital instruments and eligible liabilities ~~as referred to in~~in accordance with Article 59 ~~are met~~, resolution authorities shall ensure that a fair, prudent and realistic valuation of the assets and liabilities of the institution or entity referred to in Article 1(1), points (b), (c) or (d), is carried out by a person that is independent from any public authority, including the resolution authority, and the institution or entity referred to in Article 1(1), points (b), (c) or (d).;

2023/11/06
Committee: ECON

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

Directive 2014/59/EU
Article 37 – paragraph 11

(24) in Article 37, the following paragraph 11 is added: ‘ 11. EBA shall monitor the actions and preparation of resolution authorities to ensure an effective implementation of the resolution tools and powers in the event of resolution. EBA shall report to the Commission on the state of play of existing practices and possible divergences across Member States by … [PO please insert the date = 2 years after the date of entry into force of this Directive] and monitor the implementation of any recommendation set out in that report, where appropriate. The report referred to in the first subparagraph shall cover at least the following: (a) implement the bail-in tool and the level of engagement with financial market infrastructures and third-country authorities, where relevant; (b) operationalise the use of other resolution tools; (c) relevant stakeholders regarding the arrangements referred to in points (a) and (b).; ’deleted the arrangements in place to the arrangements in place to the level of transparency towards

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 27 – point b

Directive 2014/59/EU
Article 44 – paragraph 5 – 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 36, has been made by the shareholders and the holders of other instruments of ownership, the holders of relevant capital instruments and other bail-inable liabilities through reduction, write down or conversion pursuant to Article 48(1) and Article 60(1)~~, and by the deposit guarantee scheme pursuant to Article 109 where relevant~~;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 27 – point c

Directive 2014/59/EU
Article 44 – paragraph 7 – point b

(b) all unsecured, non-preferred liabilities ~~ranking low~~other than deposits, ~~and not excluded from bail-in pursuant to Article 44(2) and 44(3),~~ have been written down or converted in full.

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 32

Directive 2014/59/EU
Article 45ca

(32) the following Article 45ca is inserted: ‘ Article 45ca Determination of the minimum requirement for own funds and eligible liabilities for transfer strategies leading to market exit 1. resolution entity whose preferred resolution strategy envisages primarily the use of the sale of business tool or the bridge institution tool and its exit from the market, the resolution authority shall set the recapitalisation amount provided in Article 45c(3) in a proportionate way on the basis of the following criteria, as relevant: (a) business model, funding model and risk profile, and the depth of the market in which the resolution entity operates; (b) ownership, assets, rights or liabilities to be transferred to a recipient as identified in the resolution plan, taking into consideration: (i) the core business lines and critical functions of the resolution entity; (ii) the liabilities excluded from bail-in pursuant to Article 44(2); (iii) Articles 73 to 80; (c) marketability of the shares, other instruments of ownership, assets, rights or liabilities of the resolution entity referred to in point (b), taking into account: (i) any material impediments to resolvability, identified by the resolution authority, that are directly related to the application of the sale of business tool or the bridge institution tool; (ii) assets, rights or liabilities left in the residual institution; (d) strategy envisages the transfer of shares odeleted When applying Article 45c to a the resolution entity’s size, the shares, other instruments of the safeguards referred to in the expected value and the losses resulting from the whether other instruments of ownership issued by the resolution entity, or of all or part of the assets, rights and liabilities of the resolution entity; (e) strategy envisages the application of the asset separation tool. 2. that the entity is to be wound up under normal insolvency proceedings or other equivalent national procedures and envisages the use of the deposit guarantee scheme pursuant to Article 11(5) of Directive 2014/49/EU, the resolution authority shall also take into account paragraph 1 of this Article when carrying out the assessment referred to in Article 45c(2a), second subparagraph, of this Directive. 3. shall not result in an amount that is higher than the amount resulting from application of Article 45c(3).; ’ preferred resolution whether the preferred resolution Where the resolution plan provides The application of paragraph 1

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 32

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

1. When applying Article 45c to a resolution entity whose preferred resolution strategy envisages primarily the use of the sale of business tool or the bridge institution tool and its exit from the market, the resolution authority shall set the recapitalisation amount provided in Article 45c(3) in a proportionate way that ensures that the resolution group can be resolved in all possible scenarios without the need for external funding on the basis of the following criteria, as relevant:

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 32

Directive 2014/59/EU
Article 45ca – paragraph 1 – point a

(a) the resolution entity’s size, business model, funding model and risk profile~~, and the depth of the market in which the resolution entity operates~~;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 32

Directive 2014/59/EU
Article 45ca – paragraph 1 – point b – point iii a (new)

(iii a) any risks to the succesful implementation of the preferred resolution strategy, in particular due to an adverse market environment at the time of resolution;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 32

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

(i) any ~~material~~ impediments to resolvability, identified by the resolution authority, that are ~~directly~~ related to the application of the sale of business tool or the bridge institution tool;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 32

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

(ii a) a potentially adverse market environment at the time of resolution;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 32

Directive 2014/59/EU
Article 45ca – paragraph 1 – point e a (new)

(e a) the potential recapitalisation amount required under an alternative resolution strategy.

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 32

Directive 2014/59/EU
Article 45ca – paragraph 2

2. Where the resolution plan provides that the entity is to be wound up under normal insolvency proceedings or other equivalent national procedures and envisages the use of the deposit guarantee scheme pursuant to Article 11(5) of Directive 2014/49/EU, the resolution authority shall also take into account paragraph 1 of this Article when carrying out the assessment referred to in Article 45c(2a), second subparagraph, of this Directive.deleted

2023/11/06
Committee: ECON

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

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

(b) the liability is not a deposit as referred to in Article 108(1), points (a) ~~or (b)~~;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 42 – point b

Directive 2014/59/EU
Article 59 – paragraph 4 – 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 capital instruments and eligible liabilities as referred to in paragraph 1a, would prevent the failure of the institution or the entity referred to in Article 1(1), points (b), (c) or (d), or the group within a reasonable timeframe.;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 45

Directive 2014/59/EU
Article 74 – paragraph 3 – point d

(d) when determining the losses that the deposit guarantee scheme, where it does not qualify as an institutional protection scheme, would have incurred had the institution been wound up under normal insolvency proceedings, apply the criteria and methodology referred to in Article 11e of Directive 2014/49/EU and in any delegated act adopted pursuant to that Article.;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 53 – point a

Directive 2014/59/EU
Article 103 – paragraph 3

3. The available financial means to be taken into account in order to reach the target level specified in Article 102 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 and earmarked for the exclusive use by the resolution authorities for the purposes specified in Article 101(1). The share of 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 resolution authority 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 directive
Article 1 – paragraph 1 – point 53 – point b

Directive 2014/59/EU
Article 103 – paragraph 3a – subparagraph 1

The resolution authority shall call the irrevocable payment commitments made pursuant to paragraph 3 of this Article when the use of the resolution financing arrangements is needed pursuant to Article 101. Where an entity stops being within the scope of Article 1 and is no longer subject to the obligation to pay contributions in accordance with paragraph 1 of this Article, the resolution authority shall return the irrevocable payment commitments made pursuant to paragraph 3 as soon as the subsequent regular contribution round pursuant to paragraph 1 of this Article has replenished the resolution financing arrangements up to the target level.

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 55 – point a

Directive 2014/59/EU
Article 108 – paragraph 1 – introductory part

1. Member States shall ensure that in their national laws governing normal insolvency proceedings ~~the following have the same priority ranking, which is higher than the ranking provided for the claims of ordinary unsecured creditors~~:

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 55 – point a

Directive 2014/59/EU
Article 108 – paragraph 1 – point a

(a) ~~deposits~~the following have the same priority ranking which is higher than the ranking provided for the claims of ordinary unsecured creditors: (i) that part of eligible deposits from natural persons and micro, small and medium-sized enterprises which exceeds the coverage level provided for in Article 6 of Directive 2014/49/EU; (ii) deposits that would be eligible deposits from natural persons and micro, small and medium-sized enterprises were they not made through branches located outside the Union of institutions established within the Union;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 55 – point a

(b) ~~deposits made through branches located outside the Union of institutions established within the Union;~~the following have the same priority ranking which is higher than the ranking provided for under point (a): (i) covered deposits; (ii) deposit guarantee schemes subrogating to the rights and obligations of covered depositors in insolvency.

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 55 – point a

Directive 2014/59/EU
Article 108 – paragraph 1 – point c

~~(c) deposit guarantee schemes subrogating to the rights and obligations of covered depositors in insolvency.;~~deleted

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 55 – point a

Directive 2014/59/EU
Article 108 – paragraph 1a (new)

1 a. Member States shall ensure that in their national laws governing normal insolvency proceedings, the following have the same priority ranking, which is higher than the ranking provided for under paragraph (1): (a) covered deposits; (b) deposit guarantee schemes subrogating to the rights and obligations of covered depositors in insolvency;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 55 – point b

Directive 2014/59/EU
Article 108 – paragraph 8

8. Where the resolution tools referred to in Article 37(3), point (a) or (b), are used to transfer only part of the assets, rights or liabilities of the institution under resolution, the resolution financing arrangement shall have a claim against the residual institution or entity referred to in Article 1(1), points (b), (c) or (d), for any expense and loss incurred by the resolution financing arrangement as a result of any contributions made to resolution pursuant to Article 101(1) in connection to losses which creditors would have otherwise borne.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 55 – point b

Directive 2014/59/EU
Article 108 – paragraph 9

9. Member States shall ensure that the claims of the resolution financing arrangement referred to in paragraph 8 of this Article and in Article 37(7) have, in their national laws governing normal insolvency proceedings, a preferred priority ranking, which shall be higher than the ranking provided for the claims of deposits and of deposit guarantee schemes pursuant to paragraph 1 of this Article.;deleted

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 56 – point a

Directive 2014/59/EU
Article 109 – paragraph 1 – subparagraph 1

Member States shall ensure that, where the resolution authorities take resolution action with respect to a credit institution, and provided that such action ensures that depositors continue to have access to their deposits, to prevent depositors from bearing losses the deposit guarantee scheme to which that credit institution is affiliated shall contribute the following amounts: (a) independently or in combination with the asset separation tool, the amount by which covered deposits would have been written down or converted in order to absorb the losses and recapitalise the institution under resolution pursuant to Article 46(1), had covered deposits been included within the scope of bail-in; (b) bridge institution tools are applied, independently or in combination with other resolution tools: (i) difference between the value of the covered deposits and of the liabilities with the same or a higher priority ranking than deposits and the value of the assets of the institution under resolution which are to be transferred to a recipient; and (ii) necessary to ensure the capital neutrality of the recipient following the transfer.deleted where the bail-in tool is applied, where the sale of business or the the amount necessary to cover the where relevant, an amount

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 56 – point a

Directive 2014/59/EU
Article 109 – paragraph 1 – subparagraphs 2, 3, 4 & 5

In the cases referred to in the first subparagraph, point (b), where the transfer to the recipient includes deposits that are not covered deposits or other bail- inable liabilities and the resolution authority assesses that the circumstances referred to in Article 44(3) apply to those deposits or liabilities, the deposit guarantee scheme shall contribute: (a) difference between the value of deposits, including deposits that are not covered, and of the liabilities with the same or higher priority ranking than deposits and the value of the assets of the institution under resolution which are to be transferred to a recipient; and (b) necessary to ensure the capital neutrality of the transfer for the recipient. Member States shall ensure that, once the deposit guarantee scheme has made a contribution in the cases referred to in the second subparagraph, the institution under resolution refrains from acquiring stakes in other undertakings as well as distributions in connection with Common Equity Tier 1 capital or payments on Additional Tier 1 instruments, or from other activities that may lead to an outflow of funds. In all cases, the cost of the contribution of the deposit guarantee scheme shall not be greater than the cost of repaying depositors as calculated by the deposit guarantee scheme under Article 11e of Directive 2014/49/EU. Where it is determined by a valuation under Article 74 that the cost of the deposit guarantee scheme’s contribution to resolution was greater than the losses it would have incurred had the institution been wound up under normal insolvency proceedings, the deposit guarantee scheme shall be entitled to the payment of the difference from the resolution financing arrangement in accordance with Article 75.deleted the amount necessary to cover the where relevant, an amount

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 56 – point a

Directive 2014/59/EU
Article 109 – paragraph 1 – subparagraph 4

In all cases, the cost of the contribution of the deposit guarantee scheme shall not be greater than the cost of repaying depositors as calculated by the deposit guarantee scheme under Article 11e of Directive 2014/49/EU and the amount equal to 50% of its target level pursuant to Article 10 of Directive 2014/49/EU. Taking into account the specificities of their national banking sector, Member States may set a percentage which is higher than 50%.

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 56 – point a

Directive 2014/59/EU
Article 109 – paragraph 2

2. Member States shall ensure that the resolution authority determines the amount of the contribution of the deposit guarantee scheme in accordance with paragraph 1 after having consulted the deposit guarantee scheme on the estimated cost of repaying depositors pursuant to Article 11e of Directive 2014/49/EU and in compliance with the conditions referred to in Article 36 of this Directive. The resolution authority shall notify its decision as referred to in the first subparagraph to the deposit guarantee scheme to which the institution is affiliated. The deposit guarantee scheme shall implement that decision without delay.;deleted

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 56 – point b

Directive 2014/59/EU
Article 109 – paragraph 2a

2a. Where the funds of the deposit guarantee scheme are used in accordance with paragraph 1, first subparagraph, point (a), to contribute to the recapitalisation of the institution under resolution, Member States shall ensure that the deposit guarantee scheme transfers its holdings of shares or other capital instruments in the institution under resolution to the private sector as soon as commercial and financial circumstances allow. Member States shall ensure that the deposit guarantee scheme markets the shares and other capital instruments referred to in the first subparagraph openly and transparently, and that the sale does not misrepresent them or discriminate between potential purchasers. Any such sale shall be made on commercial terms.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 56 – point b

Directive 2014/59/EU
Article 109 – paragraph 2b

2b. The contribution of the deposit guarantee scheme pursuant to paragraph 1, second subparagraph, shall count towards the thresholds laid down in Article 44(5), point (a), and in Article 44(8), point (a). Where the use of the deposit guarantee scheme pursuant to paragraph 1, second subparagraph, together with the contribution to loss absorption and recapitalisation made by the shareholders and the holders of other instruments of ownership, the holders of relevant capital instruments and other bail-inable liabilities, allows for the use of the resolution financing arrangement, the contribution of the deposit guarantee scheme shall be limited to the amount necessary to meet the thresholds laid down in Article 44(5), point (a), and in Article 44(8), point (a). Following the contribution of the deposit guarantee scheme, the resolution financing arrangement shall be used in accordance with the principles governing the use of the resolution financing arrangement set out in Articles 44 and 101. However, the first and the second subparagraphs shall not apply to institutions that have been identified as liquidation entities in the group resolution plan or in the resolution plan.;deleted

2023/11/06
Committee: ECON