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Breadcrumb

  1. Home
  2. Single Rulebook Q&A
  3. 2019_4677 Effect of bail-in tool: clarification on Article 53(3)
Question ID
2019_4677
Legal act
Directive 2014/59/EU (BRRD)
Topic
Resolution tools and powers
Article
53
Paragraph
3
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
N.A.
Name of institution / submitter
De Nederlandsche Bank NV
Country of incorporation / residence
Netherlands
Type of submitter
Resolution authority
Subject matter
Effect of bail-in tool: clarification on Article 53(3)
Question

How should the phrase “and any obligations or claims arising in relation to it that are not accrued at the time when the power is exercised” in Article 53(3) be interpreted?

Background on the question

Article 53(3) provides “Where a resolution authority reduces to zero the principal amount of, or outstanding amount payable in respect of, a liability by means of the power referred to in point (e) of Article 63(1), that liability and any obligations or claims arising in relation to it that are not accrued at the time when the power is exercised shall be treated as discharged for all purposes, and shall not be provable in any subsequent proceedings in relation to the institution under resolution or any successor entity in any subsequent winding up.” Pursuant to Article 53(3) an obligation shall be treated as discharged when a resolution authority exercises the power referred to in point (e) of Article 63(1) (hereafter: the write down power) and reduces the principle amount, or outstanding amount payable, of that liability to zero. It follows from Article 53(3) that obligations or claims “arising in relation to” the written down liability “that are not accrued at the time when the write down power is exercised” shall also be treated as discharged for all purposes. This also means, a contrario, that obligations or claims arising in relation to the written down liability that are accrued at the time when the write down power is exercised, shall not be treated as discharged. This gives rise to the following questions regarding the effects of the bail-in tool: • What type of obligations and claims fall within the category obligations or claims “arising in relation to” the written down liability? In particular, does this category include claims for interest, costs or a contractual penalty in relation to the written down liability? • Can the resolution authority apply the write down power separately to obligations or claims arising in relation to a written-down liability that are accrued at the time when the write down power is exercised, or do these obligations or claims fall outside of the scope of the bail-in tool altogether even though they do not appear to be excluded from bail-in under Article 44?

Submission date
17/04/2019
Rejected publishing date
11/02/2022
Rationale for rejection

Please note that as part of adjustments to the Single Rulebook Q&A process, agreed by the EBA and the European Commission, it has been decided to reject outstanding questions submitted before 1 January 2020, when the Q&A process was updated as part of the last ESAs Review. In particular, the question that you have submitted has now regrettably been rejected and will not be addressed.

If you believe your question would still benefit from clarification, you are invited to resubmit your question, adapting it to reflect any legislative, regulatory or other relevant developments that may have occurred since the initial date of submission. The EBA will aim to address resubmitted questions as a matter of priority. When considering to resubmit, you are kindly requested to observe the updated admissibility criteria agreed in the context of the adjustment of the Q&A process, available in the Additional background and guidance for asking questions. We hope for your understanding.

For further information please refer to the press release and the updated Q&A page.

Status
Rejected question

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