Awaiting Parliament 1st reading / single reading / budget 1st stage
Next event: Council Meeting 2017/06/16 more...
- Vote in committee, 1st reading/single reading 2017/10/10
- Committee report tabled for plenary, 1st reading/single reading 2017/10/13
- Committee decision to open interinstitutional negotiations with report adopted in committee 2017/10/10
- Approval in committee of the text agreed at 1st reading interinstitutional negotiations 2017/11/21
- Debate in plenary scheduled 2017/11/30
Role | Committee | Rapporteur | Shadows |
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Opinion | BUDG | ||
Lead | ECON | HÖKMARK Gunnar (EPP) | SILVA PEREIRA Pedro (S&D), KAMALL Syed (ECR), CORNILLET Thierry (ALDE), SCHIRDEWAN Martin (GUE/NGL), URTASUN Ernest (Verts/ALE), VALLI Marco (EFD), ZANNI Marco (ENF) |
Opinion | JURI |
Legal Basis TFEU 114
Activites
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2017/11/30
Debate in plenary scheduled
- 2017/11/21 Approval in committee of the text agreed at 1st reading interinstitutional negotiations
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2017/10/13
Committee report tabled for plenary, 1st reading/single reading
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A8-0302/2017
summary
The Committee on Economic and Monetary Affairs adopted the report by Gunnar HÖKMARK (EPP, SE) on the proposal for a directive of the European Parliament and of the Council on amending Directive 2014/59/EU of the European Parliament and of the Council as regards the ranking of unsecured debt instruments in insolvency hierarchy. As a reminder, the proposed amendments to Directive 2014/59/EU is part of the efforts to implement in the European Union the standard the Total Absorption Loss Capacity (TLAC) standard adopted by the G20. In order to enhance the operational execution and robustness of bail-in powers and to avoid legal uncertainty, the TLAC standard requires that liabilities may be eligible for TLAC only if they are subordinated to other liabilities, i.e. if they absorb losses in insolvency or in resolution prior to other “preferred” liabilities that are explicitly excluded from TLAC eligibility, such as derivatives, covered deposits or tax liabilities. The TLAC standard provides, therefore, for a subordination requirement subject to certain exemptions, but it is not prescriptive on the way to achieve it. The committee recommended that European Parliament’s position adopted at first reading under the ordinary legislative procedure, should amend the Commission proposal as follows. Objective of the Directive: it is specified that the amending Directive shall lay down harmonised rules for the insolvency ranking of unsecured debt instruments for the purposes of the Union recovery and resolution framework especially with regard to ensuring a credible bail-in regime. The objective of the TLAC standard is to ensure that global systemically important banks (G-SIBs), referred to as global systemically important institutions (G-SIIs) in the Union framework, have the loss-absorbing and recapitalisation capacity necessary to help ensure that, in and immediately following a resolution, critical functions can be continued without public finances or financial stability being put at risk. To ensure that the new 'non-preferred' senior class of debt instruments meet the eligibility criteria as described in the TLAC standard, Member States shall: ensure that those debt instruments are not derivatives and contain no embedded derivatives; ensure that the relevant contractual documentation related to their issuance and, where applicable, the prospectus, explicitly refers to their lower ranking under normal insolvency proceedings. To enhance legal certainty for investors, Member States shall ensure that ordinary senior debt instruments and other unsecured ordinary senior liabilities that are not debt instruments have a higher priority ranking in their national insolvency laws than the new 'non-preferred' senior class of debt. Review: at the latest three years after the date of entry into force of the Directive, the Commission shall assess whether it is necessary to make further amendments with regard to the ranking of deposits in insolvency. The Commission shall submit a report thereon to the European Parliament and to the Council Transposition: Member States shall comply with the Directive no later than one year after the date of entry into force.
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A8-0302/2017
summary
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2017/10/10
Vote in committee, 1st reading/single reading
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2017/10/10
Committee decision to open interinstitutional negotiations with report adopted in committee
- #3549
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2017/06/16
Council Meeting
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2017/01/16
Committee referral announced in Parliament, 1st reading/single reading
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2016/11/23
Legislative proposal published
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COM(2016)0853
summary
PURPOSE: to harmonise the priority ranking of unsecured debt instruments in insolvency hierarchy. PROPOSED ACT: Directive of the European Parliament and of the Council. ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with Council. BACKGROUND: following the adoption of the total loss absorbing capacity (TLAC) standard by the G20, and in order to facilitate a more efficient path towards compliance with TLAC, a number of EU Member States have amended (or are in the process of amending) the ranking of creditor claims under their national insolvency law, creating significant divergences. Such discrepancies have the potential to amplify uncertainty for debt issuers, investors and resolution authorities and to make the application of the bail-in tool in cross-border resolution cases legally more complex and less transparent. At the same time, the buyer side would experience information asymmetry among different EU jurisdictions, rendering the process of pricing the risk more cumbersome. The resulting uncertainty could also trigger competitive distortions because unsecured debt holders could be treated differently in different Member States and the Minimum Requirement for own funds and Eligible Liabilities (MREL) compliance costs for banks may be different according to the location of the issuance. In its Communication of 24 November 2015, the Commission recognised the need for further risk reduction and committed bringing forward a legislative proposal that would build on internationally agreed standards. IMPACT ASSESSMENT: several policy alternatives were considered. The impact assessment concludes that the creation of a specific 'unpreferred' senior class for unsecured debt is the most cost effective way to comply with the requirement of subordination of the TLAC standard for G-SIIs and with the case-by-case request of resolution authorities to request compliance with the MREL through subordinated debt. CONTENT: the proposed amendments to Directive 2014/59/EU (the Bank Recovery and Resolution Directive or BRRD) propose a harmonised national insolvency ranking of unsecured debt instruments to facilitate banks' issuance of such loss absorbing debt instruments. This would enable banks to issue debt in a new statutory category of unsecured debt available in all EU Member States which would rank just below the most senior debt and other senior liabilities for the purposes of resolution, while still being part of the senior unsecured debt category (only as an un-preferred tier senior debt). Clear, harmonised rules on the position of bond holders in the bank creditors' hierarchy in insolvency and resolution could facilitate the way bail-in is applied, by providing greater legal certainty and reducing the risk of legal challenges. The EU harmonised approach will not affect the existing stock of bank debt and will apply to any new issuance of bank debt in the relevant category following the date of application of this amendment as provided in the proposal. These proposed amendments to Directive 2014/59/EU (the Bank Recovery and Resolution Directive) are part of a legislative package that includes also amendments to Regulation (EU) No 575/2013 (the Capital Requirements Regulation), to Directive 2013/36/EU (the Capital Requirements Directive) and to Regulation (EU) 806/2014 (the Single Resolution Mechanism Regulation).
- DG {'url': 'http://ec.europa.eu/info/departments/financial-stability-financial-services-and-capital-markets-union_en', 'title': 'Financial Stability, Financial Services and Capital Markets Union'}, DOMBROVSKIS Valdis
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COM(2016)0853
summary
Documents
- Legislative proposal published: COM(2016)0853
- Committee report tabled for plenary, 1st reading/single reading: A8-0302/2017
- Approval in committee of the text agreed at 1st reading interinstitutional negotiations: PE613.527
History
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