Why does Article 19 (1) of Directive No 2014/59/EU (BRRD) include third countries and how is the procedure of granting intra-group financial support supposed to work regarding third countries?
Article 19(1) of the BRRD refers to intra group financial support between a parent in a Member State and a subsidiary in a third country. How does this relate to enforceability?
Article 19(6) of Directive No 2014/59/EU (BRRD) requires that the law of the Member State allows for a group entity to provide financial support to another group entity even if that group entity is in a third country. From the group support standpoint what it matters is whether the entity is .covered by the consolidated supervision of the parent undertaking.
This is regardless of reciprocity (the agreement may include a reciprocal agreement).
- The only grounds for the competent authority to prohibit that support are those set out in Article 23 of the BRRD.
- In terms of enforcement in the third country, the third country agreement and the law of that third country will come into play. A Member State cannot be asked to ensure enforcement in the third country; it can however be asked to do everything in its power to that effect.
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.
Update 26.03.2021: This Q&A has been reviewed in the light of the changes introduced to Directive 2014/59/EU (BRRD) and continues to be relevant.