Question ID
2015_2428
Legal act
Directive 2014/59/EU (BRRD)
Topic
Resolution objectives and triggers
Article
32
Paragraph
1
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
Article 32 (1)
Type of submitter
Competent authority
Subject matter
Conditions for Resolution
Question

At what point of time during a resolution procedure must the conditions for resolution pursuant to Article 32(1) BRRD be met? Is it necessary to only positively assess them at the initiation of the resolution process, i.e. at the moment the resolution authority initiates a resolution procedure?

Background on the question

Member States shall ensure that resolution authorities shall take a resolution action in relation to an institution referred to in point (a) of Article 1(1) BRRD only if the resolution authority considers that all of the conditions listed in Article 32(1) BRRD are met.

Due to the fact that a resolution procedure usually is not a one-off event but will take place over a longer period of time, it is possible that the conditions for resolution which are initially met may subsequently cease to exist.

Example 1: The NRA decides on the application of a resolution power or tool (resolution measure) based on a provisional valuation on Day A. On Day A all conditions of Article 32(1) BRRD are met. However, when the final valuation is submitted to the NRA on Day B, no or one or more conditions are no longer met, e.g. there is no continued public interest for lack of ongoing provision of critical functions by the institution under resolution.

Example 2: A resolution power or tool (resolution measure) is applied on Day C, when all resolution conditions are met. Subsequently, it becomes necessary to apply another resolution power or tool [resolution measure] on Day D, e.g. on Day C the management is replaced (Article 63(1)(l)) and on Day D the NRA takes control of the institution (Article 63(1)(b)).

Example 3: A resolution power is applied on Day E and a successional resolution tool is applied on Day F. On Day E all the conditions of Article 32(1) BRRD are met in contrast to Day F where no or one or more conditions are no longer met.

Submission date
Final publishing date
Final answer

In accordance with Article 32(1) of the Directive 2014/59/EU (BRRD), the conditions for resolution need to be met at that point in time the resolution authority decides to take a resolution action in relation to an institution referred to in point (a) of Article 1(1) of the Directive 2014/59/EU (BRRD).


The decision to place an institution under resolution and the application of the resolution tools chosen at that point in time may require the use of resolution powers at a later date. It should be possible to complete the implementation of a resolution in this way without a new assessment of whether the conditions for resolution are met.

Status
Final Q&A
Answer prepared by
Answer prepared by the EBA.
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

The Q&A refers to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.