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List of Q&A's

Calculation of “total liabilities including own funds”

How shall authorities calculate “total liabilities including own funds”?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2016_2914
  • Topic: MREL
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

General principles governing resolution

BRRD Article 34.1.b. states that "creditors of the institution under resolution bear losses after the shareholders in accordance with the order of priority of their claims under normal insolvency proceedings, save as expressly provided otherwise in this Directive". I have two questions : Does the fact that "creditors of the institution under resolution bear losses [...] accordance with the order of priority of their claims under normal insolvency proceedings save as expressly provided otherwise in this Directive" means that creditors with the same ranking under insolvency be treated the same way under the bail-in, bridge bank or sale of business tools except if the BRRD explicitely excludes one specific liability from the application of the considered resolution tool or does the provision "save as expressly provided otherwise in this Directive" means that if the BRRD allows for a transfer / bail-in of "all or any liabilities" then similar liabilities can be treated differently ? Does the principle according to which "creditors of the institution under resolution bear losses after the shareholders" also applies to a bridge bank created under BRRD rules and to which further resolution tools, including possibly bail-in, are applied or does that apply only to the "initial" institution or until the bridge bank is not a bridge bank anymore ?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2016_2728
  • Topic: Resolution tools and powers
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Use of deposit guarantee scheme

Should Article 109 (1) (b) BRRD be read without the part "in proportion to the losses suffered by creditors with the same level of priority under the national law governing normal insolvency proceedings" in case there are no creditors sharing the priority rank with DGS in national law? If so, does this mean that if any tool other than the bail-in tool is applied, DGS must, in such case, always cover the amount up to the amount of losses it would have had to bear had the institution been wound up under normal insolvency proceedings without the need that other creditors (e.g. eligible depositors) cover such losses before DGS does?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2016_2707
  • Topic: Resolution financing arrangements
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Governing Law of the Instruments under Article 66.4.(a) of the BRRD

What governing law is meant by the reference to the governing law of a capital instrument under Article 66.4 (a) of the BRRD? Should the governing law of the capital instrument be the law governing law of the liability (obligations) arising under such instrument or the law applicable to the proprietary (rights in rem; ownership) issues with respect to the relevant instrument or the law of the issuer of such instrument or any other law?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2016_2704
  • Topic: Resolution tools and powers
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

bail in of interbank deposits with original maturity of less than seven days

Could you please clarify if a 6 day deposit that has been rolled over multiple times could be considered to be of greater maturity than 6 days in the event of a bail in? In other words if there is a clause that stipulates the number of times a 6 day deposit can be rolled over before losing its status as a 6 day deposit and therefore losing its protection from a bail in?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2016_2688
  • Topic: Write-down and conversion of capital instruments
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Contractual recognition of bail-in

Does Article 55 BRRD apply also to agreements (such as guarantees or counter-guarantees) that create contingent liabilities, which, as such, are not subject to bail-in unless and until the contingency occurs?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2016_2669
  • Topic: Other topics
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Contractual recognition of bail-in

Article 55 BRRD requires institutions and other entities subject to resolution to include a bail-in recognition clause in certain agreements governed by third-country law. Does this provision also apply in respect to agreements for which it would be impracticable to comply with the obligation to include the bail-in recognition clause (e.g. because of the refusal from the counterpart to agree to it)?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2016_2668
  • Topic: Other topics
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

How are branches included in the scope of resolution funds?

1) What does "Union branches" mean in DR 2015/63: (i) all branches of credit institutions active in the Union regardless of the jurisdiction in which they are established (ii) all branches of credit institutions that are established in the Union (iii) all branches of credit institutions that are established in the EEE? 2) Non-EEE branches are not mentioned in the DR 2015/63. Does that mean that they are excluded from the scope of this regulation or does that mean that they are included as any other 1cinstitutions 1d, as defined in Article 2 §1 23) of BRRD? - If they are included, does that mean that, as the SRB does not include them in the SRF, NRA should include them in their national schemes? - If they are excluded, how will a level playing field among banking entities be guaranteed? 3) Recitals 1 and 2 of DR 2015/63 mention the need of a special framework for EU-branches and even mention a specific delegated act. Is there any project in that field?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Delegated Regulation (EU) 2015/63 - DR on ex ante contributions to resolution financing arrangements
  • ID: 2016_2605
  • Topic: Cross-border resolution
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Use of DGS to finance a transfer covered deposits

To what extent can the deposit guarantee scheme (dgs) be used to facilitate a transfer of covered deposits when applying the sale of business tool?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2015_2473
  • Topic: Resolution financing arrangements
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Treatment of derivative liabilities in the denominator of MREL

What does Article 45 (1) of Directive 2014/59/EU (BRRD) mean by including derivative liabilities in the total liabilities on the basis that full recognition is given to counterparty netting rights?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2015_2266
  • Topic: MREL
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Difference between a reduction and a write-down

What is the difference between reduction and a write-down in Article 60(1)?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2016_2958
  • Topic: Write-down and conversion of capital instruments
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Exercise of the power to convert liabilities towards creditors

For the purpose of resolution, may the resolution authority exercise the power to convert liabilities towards creditors that would not incur losses under normal insolvency proceedings, where the power of write down has previously been exercised to ensure that the net asset value of the institution under resolution is equal to zero? More generally, how can the needs for recapitalisation be met when the total amount of remaining liabilities which are not excluded or protected by NCWO is not sufficient and the total losses are lower than 8% of the total liabilities?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3118
  • Topic: Resolution tools and powers
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Deposits referred to the in Article 7(8) DGSD

Should the “deposits fulfilling a social purpose defined by national law, for which a third party has given a guarantee” referred to in Article 7(8) of Directive 2014/49/EU (DGSD) be considered as covered deposits or as a secured liability referred to in Article 43(2)(b) of Directive 2014/59/EU (BRRD) ? If not, what may be their ranking in insolvency proceedings referred to in Article 108 of BRRD?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3114
  • Topic: Interactions with the DGS and the BRRD
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Necessary prior authorisation in Article 60

Can you please clarify what is meant by "the necessary prior authorization" referred to in Article 60 of Directive 2014/59/EU (BRRD)?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2016_3031
  • Topic: Write-down and conversion of capital instruments
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Application of 8% requirement to group resolution

Should the contribution to loss absorption and recapitalisation be calculated with reference to the liabilities of the holding company being bailed in, or the liabilities of the failing subsidiary or subsidiaries?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2016_2952
  • Topic: Resolution tools and powers
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Reference to paragraph 8 in Article 41 (9)

To which obligation under paragraph 8 is Article 41 (9) of Directive 2014/59/EU (BRRD) referring to (the one provided under the first or the second paragraph? If it were the case that Article 41 (9) provides that when a bridge institution is used for the purpose of transferring assets and liabilities of more than one institution under resolution the insolvency proceedings shall refer to the assets and liabilities transferred from each of the institutions under resolution and not to the bridge institution itself, what does that really mean?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2015_2431
  • Topic: Resolution tools and powers
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Sequence of write down of shares and subordinated debt

When applying the bail-in tool, (but not the Point of Non-Viability write-down), is it necessary to act on all ”shares” before touching upon ”subordinated debt”?

  • Legal act: Directive 2014/59/EU (BRRD)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2017_3211
  • Topic: MREL
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Online foreign exchange

Does the business of foreign currency exchange-Forex require an authorisation as payment institution under PSD2, provided that: (a) the currency exchange takes place via online exchange platform; and (b) the client deposits certain base in cash or sends it by bank transfer to a bank account of the Forex company; and (c) the client receives the quote (exchanged) currency in an online client account in the platform from where the exchanged amount may be sent to a client's bank account or may be withdrawn in cash at the Forex company's offices?

  • Legal act: Directive 2015/2366/EU (PSD2)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2019_5019
  • Topic: Authorisation and registration
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Services offered by means of ATM by providers

Which is the appropriate payment service for ATM withdrawals, where the ATM provider is required to be authorised but is acting on behalf of one or more card issuers, which are not a party to the framework contract with the customer withdrawing money from a payment account? 

  • Legal act: Directive 2015/2366/EU (PSD2)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2019_4982
  • Topic: Authorisation and registration
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022