The power of write-down or conversion of capital instruments can be exercised in relation to instruments issued by a still viable subsidiary belonging to a failing group, provided that the conditions laid down in Article 59(3)(c) of Directive 2014/59/EU (BRRD) materialise. Pursuant to such provision, resolution authorities can write-down or convert the relevant capital instruments issued by a subsidiary, provided that (i) those instruments are recognised for the purposes of meeting own funds requirements on an individual and on a consolidated basis; and (ii) a joint decision adopted in accordance with Article 92(3) and (4) BRRD determines that the group would no longer be viable unless those instruments are written-down or converted. A group shall be deemed to be no longer viable when the condition of Article 59(4) BRRD are met.

With reference to the background of the question, mentioning Article 33(4) BRRD, it is worth to remind that conversion and write-down are not resolution tools and the power to exercise them is not a resolution power, as per points (19) and (20) of Article 2(1) BRRD. Indeed, both actions may be exercise independently from resolution action, pursuant to Article 59(1)(a) BRRD.

Disclaimer:

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.