In our understanding, Articles 36(12) and 46(3) confer upon the resolution authority a mere power - not an obligation - to reimburse shareholders and creditors. If this is the case, is such power an unfettered discretion or should it be exercised under particular conditions? If the latter is correct, which conditions apply?
Article 36(12) of Directive 2014/59/EU (BRRD) provides that, if the ex post definitive valuation of the net asset value is higher than the provisional valuation, the resolution authority may increase the value of the claims of shareholders and creditors or instruct a bridge institution or an asset management vehicle to make a further payment to them.
Similarly, and specifically referred to the bail-in tool, Article 46(3) provides that, if the level of the write-down of shareholders and creditors based on the provisional valuation is found to exceed requirements when assessed against the definitive valuation, a write-up mechanism "may be" applied to the extent necessary to reimburse shareholders and creditors
The powers conveyed in Articles 36(11) and 46(3) of Directive 2014/59/EU (BRRD) are not unfettered discretions; the underling rationale for the provisions is to avoid an unwarranted disproportionate effect on creditors’ rights in line with Article 52 of the Charter of Fundamental Rights of the European Union and to contribute to prevention of possible breaches of the No Creditor Worse Off safeguard as early as possible.
However, it may be legally difficult in some cases to directly annul an effected transaction, in which case, the ultimate obligation is that of compensating through No Creditor Worse Off payment by the resolution fund as per Article 75 of the BRRD on the basis of the results reflected in the valuation carried out in accordance with Article 74.
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.