Article 44(5) of Directive 2014/59/EU (BRRD) requires that the resolution financing arrangement may only make a contribution for the purposes of loss-absorption or recapitalisation where “[…] (a) a contribution to loss absorption and recapitalisation equal to an amount not less than 8 % of the total liabilities including own funds of the institution under resolution, measured at the time of resolution action in accordance with the valuation provided for in Article 36, has been made by the shareholders and the holders of other instruments of ownership, the holders of relevant capital instruments and other bail-inable liabilities through write down, conversion or otherwise”;.

Article 44(5) of Directive 2014/59/EU (BRRD) does however not clarify how this requirement shall be applied in relation to a group resolution? In such cases, a subsidiary or subsidiaries may be failing, and the resolution powers are exercised towards the holding company (in accordance with Article 33). There is a question as to whether, in these cases, the contribution to loss absorption and recapitalisation should be calculated with a reference to the liabilities of the holding company being bailed in, or the liabilities of the failing subsidiary or subsidiaries. One of both possibilities mentioned should be applied: Article 44 (5) of Directive 2014/59/EU (BRRD) should be interpreted as referring to either the liabilities of the holding company, or the liabilities of the failing subsidiary or subsidiaries.