Single Rulebook Q&A

Question ID: 2016_2969
Legal act : Directive 2014/59/EU (BRRD) as amended
Topic : Cross-border resolution
Article: 88, 89
Paragraph: 1, 1
Subparagraph:
Article/Paragraph : 0
COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
Type of submitter: Competent authority
Subject matter : Interpretation of Article 88(1) and 89(1) BRRD with respect to the scope of resolution colleges for third country institutions or third country parent undertakings
Question:

Is an Article 88 resolution college required for a subsidiary of a third country parent undertaking where that subsidiary itself has subsidiaries in other Member States? If so, is an Article 89 European resolution college also required? In particular, where there is an unrelated sister subsidiary of the third country parent undertaking in another Member State, will both an Article 89 BRRD European resolution college (covering the entire presence of the third country parent undertaking in the Union) and an Article 88 BRRD resolution college (covering any subsidiary which itself has subsidiaries in other Member States) need to be established?

Background on the question:

Article 88(1) BRRD provides: “Group-level resolution authorities shall establish resolution colleges to carry out the tasks referred to in Articles 12, 13, 16, 18, 45, 91 and 92, and, where appropriate, to ensure cooperation and coordination with third-country resolution authorities.” Article 89(1) BRRD provides: “Where a third country institution or third country parent undertaking has Union subsidiaries established in two or more Member States, or two or more Union branches that are regarded as significant by two or more Member States, the resolution authorities of Member States where those Union subsidiaries are established or where those significant branches are located shall establish a European resolution college.

In circumstances where the subsidiary of a third country parent entity itself has subsidiaries in other Member States, and this group is subject to consolidated supervision on that basis, a reading of Article 88(1) BRRD might require a resolution college to be established for that group structure. If there are separate subsidiaries of that third country parent entity in other Member States, Article 89(1) requires a European resolution college to be established in respect of the entire presence of that institution in the Union. This potentially gives rise to the risk that multiple EU fora would be established to deal with the subsidiaries and significant branches of a single third country institution.

Date of submission: 27/10/2016
Published as Final Q&A: 10/02/2017
EBA answer:

In the situation described in the questions, Article 89 of the BRRD operates as a lex specialis.

Article 89(1) of the BRRD explicitly provides that where a third country parent undertaking or institution has subsidiaries in two or more Member States (or two or more Union branches that are regarded as significant by two or more Member States) the relevant Member States shall establish "a European resolution college". The use of singular term in this provision implies that in these circumstances, there is no need for the establishment of an Article 88 resolution college for any part of the group provided that an Article 89 European resolution college is established. The Article 89 resolution college should involve the authorities of all Member States in which the third country institution or third country parent undertaking has a subsidiary or Union branch regarded as significant in that Member State.

From a practical perspective this ensures that there is a single forum at which resolution planning is conducted and resolution-linked issues of that third country group's operations in the EU are discussed, such as pursuing a coordinated approach as regards recognition and enforcement of third country resolution proceedings, in accordance with Recital 101 and Article 94.

Disclaimer:

This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General Financial Stability, Financial Services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.

 

Status: Final Q&A
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