Can securities guaranteed by an independent on-demand guarantee be considered as "otherwise guaranteed" claims mentioned in Recital (70) of Directive 2014/59/EU (BRRD) and as such be excluded from bail-in?

Article 44(3) of Directive 2014/59/EU (BRRD) allows the resolution authority to exclude certain liabilities from the bail-in in exceptional circumstances, and Recital (70) of Directive 2014/59/EU (BRRD) states that "It is not appropriate to apply the bail-in tool to claims in so far they are secured, collateralised or otherwise guaranteed" and that "[…] it is appropriate to exclude certain kinds of unsecured liability from the scope of application of the bail-in tool".

It is not clear whether securities guaranteed by an independent on-demand guarantee can be considered as "otherwise guaranteed" claims referred to in Recital (70) of Directive 2014/59/EU (BRRD) and as such be excluded from bail-in. Does the Delegated Act mentioned under Article 44(11) specify further the circumstances when exclusion is possible and provide further guidance to this end? In particular, will it specify that in exceptional circumstances, securities that are guaranteed, especially by a state guarantee, would be excluded from the bail-in?

As clarified in Q&A 1779, the liabilities guaranteed by third party may not be considered as "secured liabilities" in the meaning of Article 44(2)(b) of Directive 2014/59/EU (BRRD) and are thus not excluded from bail-in.

Exclusion from bail-in under Article 44(3) BRRD may be possible if the conditions therein are met, as specified further in the Commission Delegated Regulation (EU) 2016/860, adopted on 4 February 2016, under Article 44(11) BRRD.

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.

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.