Question ID
2015_2179
Legal act
Directive 2014/59/EU (BRRD)
Topic
Resolution objectives and triggers
Article
33
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
n.a.
Type of submitter
Competent authority
Subject matter
Clarifications regarding the scope of application of Article 33
Question

Can you please clarify Article 33 of Directive 2014/59/EU (BRRD); as a whole, we interpret it to mean that the special rule for Financial Institutions should apply only to Financial Institutions that are not parents in accordance with Article 1(1)(c) or (d), but are subsidiaries of a credit institution or an investment firm. Is this correct?

Background on the question

Article 33(1) of Directive 2014/59/EU (BRRD) gives special treatment to financial institutions because it requires that the resolution authority may resolve them only if their parent is also failing. They appear to be more protected than the types of entities referred to in Article 1(1)(c) or (d), who have to be resolved even if the parent is not failing (by Article 33 4)). However, "financial institutions" in Article 1(1)(b) BRRD could in fact also be parents in (c) or (d). There is nothing to prevent that, since although Article 1(1)(b) does refer to "financial institutions [that are] a subsidiary of a credit institution or an investment firm, or of a company referred to in point (b) or (c)", holding companies can occur at various levels within a group - i.e. a holding company may be a subsidiary of another holding company.

Submission date
Final publishing date
Final answer

Article 33 of Directive 2014/59/EU (BRRD) sets out the regime relating to the conditions for resolution as regards institutions or entities referred to in points (b), (c) and (d) of Article 1(1) which are not covered by Article 32 BRRD.

As regards financial institutions, as defined in point (b) of Article 1(1) BRRD, Article 33(1) BRRD provides that in order to take resolution actions, the resolution authority has to be satisfied that the conditions set out in Article 32(1) BRRD are met in respect of both the financial institution concerned (i.e. the subsidiary established in the Union) and the parent undertaking subject to consolidated supervision.

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
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 reviewed in the light of the changes introduced to Directive 2014/59/EU (BRRD) and continues to be relevant.

Disclaimer

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