Question ID:
Legal Act:
Directive 2014/59/EU (BRRD)
Resolution tools and powers
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Disclose name of institution / entity:
Type of submitter:
Competent authority
Subject Matter:
Clarificaion of "value of an instrument" in Article 48(2)

We seek clarification regarding Article 48(2) of Directive 2014/59/EU (BRRD), the provision regarding write-down and conversion powers is unclear: the value of an instrument may fluctuate therefore the reference to “value” in Article 48(2) seems ambiguous. We wonder if value refers to the “face value” (“notional amount”) or to the “market value”?

Background on the question:

Article 48(2) of the BRRD : “When applying the write down and conversion powers, resolution authorities shall allocate the losses […] equally between shares or other instruments of ownership and eligiblebail-inable liabilities of the same rank by reducing the principal amount of, or outstanding amount payable in respect of, those shares or other instruments of ownership and eligiblebail-inable liabilities to the same extent pro rata to their value except where a different allocation of losses amongst liabilities of the same rank is allowed in the circumstances specified in Article 44(3). We seek clarification on what value this reference to the face value or the market value?

Date of submission:
Published as Final Q&A:
Final Answer:

Article 48(2) cross-refers to Article 47(3). The amounts referred to under points (b) and (c) of Article 47(3) should be based on the valuation carried out in accordance with Article 36.                

Hence, reference to 'their value' in Article 48(2) should be understood as value established by the valuation carried out in accordance with Article 36 of the BRRD.

Please also refer to Q&A 2017_3629.


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.


Final Q&A
Answer prepared by:
Answer prepared by the European Commission because it is a matter of interpretation of Union law.
Note to Q&A:

Update 26.03.2021: This Q&A has been updated in the light of the changes introduced to Directive 2014/59/EU (BRRD).