Commission Delegated Regulation (EU) 2016/1075Show full title

CHAPTER V RESOLUTION

SECTION I Contractual recognition and conversion powers

Article 42 Definitions

For the purposes of this Chapter V, Section I, the following definitions apply:

(1)

‘material amendment’ means, in relation to a relevant agreement, as defined in point 2 of this Article, entered into before the date of application of the national provisions transposing Section 5 of Chapter IV of Title IV of Directive 2014/59/EU, an amendment, including an automatic amendment, made after that date and affecting the substantive rights and obligations of a party to a relevant agreement; amendments which do not affect the substantive rights and obligations of a party to a relevant agreement include a change to the contact details of a signatory or the addressee for the service of documents, typographical changes to correct drafting errors or automatic adjustments of interest rates;

(2)

‘relevant agreement’ means any agreement, including the terms of a capital instrument, creating a liability to which Article 55(1) of Directive 2014/59/EU applies.

Article 43 Liabilities to which the exclusion from the obligation to include the contractual term referred to in Article 55(1) of Directive 2014/59/EU applies

1. For the purposes of point (a) of the first subparagraph of Article 55(1) of Directive 2014/59/EU, a secured liability shall not be considered as an excluded liability where, at the time at which it is created, it is:

(a) not fully secured;

(b) fully secured but governed by contractual terms that do not oblige the debtor to maintain the liability fully collateralised on a continuous basis in compliance with regulatory requirements of Union law or of a third country law achieving effects that can be deemed equivalent to Union law.

2. For purposes of point (d) of the first subparagraph of Article 55(1) of Directive 2014/59/EU, liabilities issued or entered into after the date of application of the provisions adopted by Member States for the transposition of Section 5 of Chapter IV of Title IV of Directive 2014/59/EU in a Member State shall comprise:

(a) liabilities created after that date, regardless of whether they are created under relevant agreements entered into before that date, including under master or framework agreements between the contracting parties governing multiple liabilities;

(b) liabilities created before or after that date under relevant agreements entered into before that date and which are subject to a material amendment;

(c) liabilities under debt instruments issued after that date;

(d) liabilities under debt instruments issued before or after that date under relevant agreements entered into before that date and which are subject to a material amendment.

3. For the purposes of the second subparagraph of Article 55(1) of Directive 2014/59/EU, a resolution authority shall determine that the requirement to include a contractual term in a relevant agreement shall not apply where it is satisfied that the law of the third country concerned or a binding agreement concluded with that third country provides for an administrative or judicial procedure which:

(a) at the request of the resolution authority, or at the initiative of the third country administrative or judicial authority whose law governs the liability or instrument, enables such duly empowered third country administrative or judicial authority, within a period which the resolution authority determines will not compromise the effective application of the write-down and conversion powers by that authority to do either of the following:

(i)

recognise and give effect to the exercise of the write-down and conversion powers by the resolution authority;

(ii)

support through the application of relevant powers the exercise of the write-down and conversion powers by the resolution authority;

(b) provides that the grounds on which a third country administrative or judicial authority may refuse to recognise or support the exercise of the write-down and conversion powers pursuant to point (a) are clearly stated and are limited to one or more of the following exceptional cases:

(i)

the recognition or support of the exercise of the write-down and conversion powers by the resolution authority would have adverse effects on financial stability in the third country concerned;

(ii)

the recognition or support of the exercise of the write-down and conversion powers by the resolution authority would result in third country creditors, in particular depositors located and payable in that third country, being treated less favourably than creditors, and depositors located or payable in the Union, with similar rights under applicable Union law;

(iii)

recognition or support would have material financial implications for the third country concerned;

(iv)

recognition or support of the exercise of write-down and conversion powers by the resolution authority would have effects contrary to the public order of the third country concerned.

4. For the purposes of the application of the second subparagraph of Article 55(1) of Directive 2014/59/EU, the resolution authority shall assess that the grounds referred to in paragraph 3(b) would not prevent the recognition or support of the exercise of the write-down and conversion powers in all circumstances where such powers are applied.

Article 44 Contents of the contractual term required by Article 55(1) of Directive 2014/59/EU

Contractual term in a relevant agreement shall include the following:

(1)

the acknowledgement and acceptance by the counterparty of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU, that the liability may be subject to the exercise of write-down and conversion powers by a resolution authority;

(2)

a description of the write-down and conversion powers of each resolution authority in accordance with the national law transposing Section 5 of Chapter IV of Title IV of Directive 2014/59/EU or, where applicable, under Regulation (EU) No 806/2014 of the European Parliament and of the Council(1), in particular the powers set out in points (e), (f), (g) and (j) of Article 63(1) of Directive 2014/59/EU;

(3)

the acknowledgement and acceptance by the counterparty of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU:

(a)

that it is bound by the effect of an application of the powers referred to in point (b), including:

(i)

any reduction in the principal amount or outstanding amount due, including any accrued but unpaid interest, in respect of the liability of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU under the relevant agreement;

(ii)

the conversion of that liability into ordinary shares or other instruments of ownership;

(b)

that the terms of the relevant agreement may be varied as necessary to give effect to the exercise by a resolution authority of its write-down and conversion powers and such variations will be binding on the counterparty of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU;

(c)

that ordinary shares or other instruments of ownership may be issued to or conferred on the counterparty of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU, as a result of the exercise of the write-down and conversion powers;

(4)

the acknowledgement and acceptance by the counterparty of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU, that the contractual term is exhaustive on the matters described therein to the exclusion of any other agreements, arrangements or understandings between the counterparties relating to the subject matter of the relevant agreement.

SECTION II Notifications and notice of suspension

Article 45 General requirements for notifications

(1) Notifications submitted under Articles 81(1), (2), (3) and 83(2) of Directive 2014/59/EU shall be in writing and transmitted by adequate and safe electronic means.

(2) The relevant authorities referred to in paragraphs 1, 2 and 3 of Article 81 of Directive 2014/59/EU and in Article 83(2) shall specify the contact details for submitting a notification and make these publicly available.

(3) Before sending a notification, the sender may make contacts orally with the relevant authorities referred to in paragraphs 1, 2 and 3 of Article 81 of Directive 2014/59/EU to inform them that a notification is being submitted.

(4) For the purpose of notifications referred to in points (a), (b), (c), (d), (h) and (j) of Article 81(3) of Directive 2014/59/EU and in points (a), (b), (f) and (h) of Article 83(2) thereof, competent authorities and resolution authorities shall use the language in common use for cooperation with the consolidating supervisor and the group level resolution authority.

(5) The relevant authorities referred to in paragraphs 1, 2 and 3 of Article 81 of Directive 2014/59/EU and in Article 83(2) thereof shall acknowledge receipt of the notification to the sender specifying the date and time of receipt as recorded by the recipient and the contact details of the staff handling the notification.

Article 46 Notification by the management body to a competent authority

(1) The notifications submitted by the management body of an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU to a competent authority, shall include:

(a) the name, the address of the registered office and, where available, the legal entity identifier of the institution or entity sending the notification;

(b) the name and address of the registered office of the immediate and ultimate parent undertaking of that institution or entity, where relevant;

(c) the relevant information and analyses that the management body took into account when performing the assessment for determining that the conditions under Article 32(4) of Directive 2014/59/EU have been met;

(d) a copy of the management body's written resolution confirming its assessment that the institution or the entity is failing or likely to fail;

(e) any additional information that the management body considers relevant to its assessment.

(2) The notification pursuant to Article 81(1) of Directive 2014/59/EU shall be communicated immediately to the competent authority following the decision by the management body that an institution or entity referred to in point (b), (c) or (d) of Article 1(1) of that Directive is failing or likely to fail.

Article 47 Communication of the competent authority to the resolution authority of the received notification

Upon receipt of the notification referred to in Article 46, the competent authority shall immediately send the following information to the resolution authority:

(1)

a copy of the notification received including all the information referred to in Article 46(1);

(2)

the details of crisis prevention measures or actions referred to in Article 104 of Directive 2013/36/EU that the competent authority has taken or requires the institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU to take, where relevant;

(3)

any additional supporting documents the competent authority deems necessary for the resolution authority to be able to take an informed decision.

Article 48 Notification of assessment that an institution meets the conditions for resolution set out in points (a) and (b) of Article 32(1) of Directive 2014/59/EU

1. The notification of a competent authority or resolution authority for the purposes of Article 81(3) of Directive 2014/59/EU shall include:

(a) the name of the institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU to which the notification relates;

(b) the information set out in points (a) and (b) of Article 46(1);

(c) a summary of the assessment required in points (a) and (b) of Article 32(1) of Directive 2014/59/EU.

2. The notification shall be made without delay following a determination that the conditions referred to in points (a) and (b) of Article 32(1) of Directive 2014/59/EU have been met.

3. The competent authority shall, without delay, provide the resolution authority with any additional information that the resolution authority may request in order to complete its assessment.

Article 49 Notice

1. The notice referred to in paragraph 4 of Article 83 of Directive 2014/59/EU to be published by the resolution authority, shall include:

(a) the name, the address of the registered office and, where available, the legal entity identifier of the institution or of the entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU under resolution;

(b) the name and address of the registered office of the immediate and ultimate parent undertaking of that institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU, where relevant;

(c) a list of the names of other group entities and related branches in respect of which resolution actions exercise their effects, including, to the extent possible, information on branches located in third countries;

(d) a summary of the relevant resolution actions that are taken, the dates from which those resolution actions take effect and in particular their effects on retail customers and which includes the following:

(i)

information on the access to deposits according to Directive 2014/49/EU on deposit guarantee schemes held at the institution affected by the resolution action;

(ii)

information on the access to other clients' assets or funds within the meaning of point (e) of Article 31(2) of Directive 2014/59/EU, held at the institution affected by the resolution action;

(iii)

information on the contractual payment or delivery obligations subject to suspension under Article 69 of Directive 2014/59/EU, including the commencement and expiration of the suspension period, where applicable;

(iv)

information on the secured creditors of the institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU under resolution subject to restrictions on the enforcement of security interest including the commencement and expiration of that restriction period in accordance with Article 70 of Directive 2014/59/EU, where applicable;

(v)

information on the contractual parties affected by the temporary suspension of termination rights including the commencement and expiration of the suspension period under Article 71 of Directive 2014/59/EU, where applicable;

(e) the confirmation of the ordinary course of contractual commitments, including repayment schedules, not subject to suspensions under Articles 69, 70 and 71 of Directive 2014/59/EU;

(f) the point of contact within the institution where customers and creditors can seek further information and updates on the institution or entity referred to in point (b), (c) or (d) of Article 1(1) of Directive 2014/59/EU and its operations.

2. The notice shall be published as soon as reasonably practical after taking a resolution action.

(1)

Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ L 225, 30.7.2014, p. 1).