Articles 36(4)(a) - (c) of Directive 2014/59/EU (BRRD) state that the purpose of the valuation (amongst others) is to (a) inform the determination of whether the conditions for resolution or write down or conversion of capital instruments and eligible liabilities in accordance with Article 59(1) BRRD are met; (b) if the conditions for resolution are met, to inform the appropriate resolution action to be taken; and (c) when the power to write down or convert relevant capital instruments and eligible liabilities in accordance with Article 59(1) BRRD is applied, to inform the decision on the extent of the cancellation or dilution of shares or other instruments of ownership, and on the extent of the write down or conversion. Valuation is therefore relevant to the choice of resolution tool and for determining whether the conditions for initiating resolution have been met.

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The answers clarify provisions already contained in the applicable legislation. They do not extend in any way the rights and obligations deriving from such legislation nor do they introduce any additional requirements for the concerned operators and competent authorities. The answers are merely intended to assist natural or legal persons, including competent authorities and Union institutions and bodies in clarifying the application or implementation of the relevant legal provisions. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law. The views expressed in the internal Commission Decision cannot prejudge the position that the European Commission might take before the Union and national courts.