S.I. No. 289/2015 - European Union (Bank Recovery and Resolution) Regulations 2015

CONTENTS

Regulation

Part 1 Preliminary and General

1.

2.

3.

4.

5.

6.

7.

8.

9.

Part 2 Preparation

Chapter 1 Recovery and resolution planning

General provision

10.

Recovery Planning

11.

12.

13.

14.

15.

16.

Resolution plans

17.

18.

19.

20.

21.

22.

23.

24.

25.

Chapter 2 Resolvability

26.

27.

28.

29.

Chapter 3 Intra-group financial support

30.

31.

32.

33.

34.

35.

36.

37.

38.

Part 3 Early intervention

Chapter 1 Early intervention measures

39.

Chapter 2 Removal of senior management

40.

41.

42.

43.

44.

45.

Chapter 3 Appointment of Temporary Administrator

46.

47.

48.

49.

50.

51.

52.

53.

54.

55.

56.

57.

58.

59.

60.

Part 4 Resolution

Chapter 1 Objectives, conditions and general principles

61.

62.

63.

64.

Chapter 2 Valuation

65.

66.

Chapter 3 Resolution tools

General provisions

67.

68.

The sale of business tool

69.

70.

The bridge institution tool

71.

72.

73.

The asset separation tool

74.

Sale of business, bridge institution and asset separation tools: ancillary provisions

75.

76.

77.

78.

The bail-in tool — Objective and scope of bail-in tool

79.

80.

The bail-in tool — minimum requirement for own funds and eligible liabilities

81.

82.

83.

84.

The bail-in tool — implementation of bail-in tool

85.

86.

87.

88.

89.

90.

91.

The bail-in tool — ancillary provisions

92.

93.

94.

Chapter 4 Write-down of capital instruments

95.

96.

97.

98.

99.

100.

101.

102.

103.

Chapter 5 Resolution order procedure

104.

105.

106.

107.

108.

109.

110.

111.

112.

113.

114.

Chapter 6 Special management

115.

116.

117.

118.

119.

120.

121.

122.

Chapter 7 Resolution authority powers

123.

124.

Chapter 8 Resolution powers

125.

126.

127.

128.

129.

130.

131.

Chapter 9 Safeguards

132.

133.

134.

135.

136.

137.

138.

139.

140.

141.

142.

Chapter 10 Procedural obligations

143.

144.

145.

146.

Chapter 11 Right of appeal and exclusion of other actions

147.

148.

149.

150.

Part 5 Cross-border group resolution

151.

152.

153.

154.

155.

156.

Part 6 Relations with third countries

157.

158.

159.

160.

161.

162.

Part 7 Financing Arrangements

163.

164.

165.

166.

167.

168.

169.

170.

171.

172.

173.

Part 8 Penalties

174.

175.

176.

177.

Part 9 Criminal Offences

Chapter 1 Criminal offences: general

178.

179.

Chapter 2 Criminal offences

180.

181.

182.

183.

184.

Part 10 Consequential Amendments

Chapter 1 Acts

185.

186.

187.

188.

189.

Chapter 2 Statutory Instruments

190.

191.

192.

193.

Part 11 Final Provisions

194.

195.

196.

197.

198.

199.

SCHEDULE

Part 1 Information to be included in recovery plans

Part 2 Information that the resolution authority may request institutions to provide for the purposes of drawing up and maintaining resolution plans

Part 3 Matters that the resolution authority is to consider when assessing the resolvability of an institution or group

S.I. No. 289 of 2015

EUROPEAN UNION (BANK RECOVERY AND RESOLUTION) REGULATIONS 2015

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 14th July, 2015.

I, MICHAEL NOONAN, Minister for Finance, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972) and for the purpose of giving full effect to Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014¹ , hereby make the following regulations:

Part 1 Preliminary and General

Citation and commencement.

• (2) Subject to paragraph (3), these Regulations come into operation on 15 July 2015.

• (3) Regulations 79 to 94 shall come into operation on 1 January 2016.

Scope.

• (a) institutions that are authorised in the State;

• (b) financial institutions that are established in the State where the financial institution—

• (i) is a subsidiary of—

• (I) a credit institution or investment firm, or

• (II) a company referred to in subparagraphs (c) to (i),

and

• (ii) is covered by the supervision of the parent undertaking on a consolidated basis in accordance with Articles 6 to 17 of the Union Capital Requirements Regulation;

• (c) financial holding companies that are established in the State;

• (d) mixed financial holding companies that are established in the State;

• (e) mixed-activity holding companies that are established in the State;

• (f) parent financial holding companies that are established in the State;

• (g) Union parent financial holding companies that are established in the State;

• (h) parent mixed financial holding companies that are established in the State;

• (i) Union parent mixed financial holding companies that are established in the State;

• (j) branches, which operate in the State, of institutions that are established outside the Union in accordance with the specific conditions set out in the Bank Recovery and Resolution Directive.

• (2) Subject to specific provisions of these Regulations, the resolution authority and the competent authority when exercising their functions under these Regulations in relation to an entity referred to in paragraph (1) shall take account of the nature of the entity’s business, its shareholding structure, its legal form, its risk profile, its size, its legal status, its interconnectedness to other institutions and to the financial system in general, the scope and complexity of its activities, its membership of an institutional protection scheme that meets the requirements of Article 113(7) of the Union Capital Requirements Regulation or other cooperative mutual solidarity systems as referred to in Article 113(6) of that Regulation, and whether it exercises any investment services as defined in Regulation 3(1) of the MiFID I Regulations.

Interpretation.

“Act of 1942” means the Central Bank Act 1942 (No. 22 of 1942);

“Act of 1971” means the Central Bank Act 1971 (No. 24 of 1971);

“Act of 1989” means the Building Societies Act 1989 (No. 17 of 1989);

“Act of 2003” means the Central Bank and Financial Services Authority of Ireland Act 2003 (No. 12 of 2003);

“Act of 2009” means the Financial Services (Deposit Guarantee Scheme) Act 2009 (No. 13 of 2009);

“Act of 2010” means the Central Bank Reform Act 2010 (No. 23 of 2010);

“Act of 2013” means the Central Bank (Supervision and Enforcement) Act 2013 (No. 26 of 2013);

“Act of 2014” means the Companies Act 2014 (No. 38 of 2014);

“Additional Tier 1 instruments” means capital instruments that meet the conditions set out in Article 52(1) of the Union Capital Requirements Regulation;

“affected creditor” means a creditor whose claim relates to a liability that is reduced or converted to shares or other instruments of ownership by the exercise of the write-down or conversion power pursuant to the use of the bail-in tool;

“aggregate amount” means the aggregate amount by which the resolution authority has assessed that eligible liabilities are to be written down or converted in accordance with Regulation 85(1);

“appropriate authority” means authority of the Member State identified in accordance with Article 61 of the Bank Recovery and Resolution Directive that is responsible under the national law of that State for making the determinations referred to in Article 59(3) of that Directive;

“asset management vehicle” means a legal person that meets the requirements set out in Regulation 74(3);

“asset separation tool” means the mechanism for effecting a transfer by a resolution order of assets, rights or liabilities of an institution under resolution to an asset management vehicle in accordance with Regulation 74;

“back-to-back transaction” means a transaction entered into between 2 group entities for the purpose of transferring, in whole or in part, the risk generated by another transaction entered into between one of those group entities and a third party;

“bail-in tool” means the mechanism for effecting the exercise by a resolution order of the write-down and conversion powers in relation to liabilities of an institution under resolution in accordance with Regulation 79;

“Bank” means the Central Bank of Ireland;

“Bank Recovery and Resolution Directive” means Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council² ;

“branch” means a branch as defined in point (17) of Article 4(1) of the Union Capital Requirements Regulation;

“bridge institution” means a legal person that meets the requirements of Regulation 71(3);

“bridge institution tool” means the mechanism for transferring, by way of a resolution order, shares or other instruments of ownership issued by an institution under resolution or assets, rights or liabilities of an institution under resolution to a bridge institution, in accordance with Regulation 71;

“business day” means a day other than a Saturday, a Sunday or a public holiday in the Member State concerned;

“capital instruments order” shall be construed in accordance with Regulation 95;

“Capital Requirements Directive” means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC³ ;

“Capital Requirements Regulations” means the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 );

“Common Equity Tier 1 instruments” means capital instruments that meet the conditions set out in Article 28(1) to (4), Article 29(1) to (5) or Article 31(1) of the Union Capital Requirements Regulation;

“competent authority” means, as the context requires—

• (a) the authority designated under Regulation 4 of the Capital Requirements Regulations, or

• (b) the European Central Bank with regard to specific tasks conferred on it by Council Regulation (EU) No 1024/2013;

“conditions for resolution” means the conditions referred to in Regulation 62(1);

“consolidated basis” means the basis of the consolidated situation as defined in point (47) of Article 4(1) of the Union Capital Requirements Regulation;

“consolidating supervisor” means consolidating supervisor as defined in point (41) of Article 4(1) of the Union Capital Requirements Regulation;

“constitution” has the meaning assigned to it by section 2 of the Act of 2014 and includes, where the context requires, the memorandum and articles of association of a company established under the Companies Act 1963 (or a former enactment relating to companies (within the meaning of section 5 of the Act of 2014));

“conversion rate” means the factor that determines the number of shares or other instruments of ownership into which a liability of a specific class will be converted, by reference either to a single instrument of the class in question or to a specified unit of value of a debt claim;

“core business lines” means business lines and associated services which represent material sources of revenue, profit or franchise value for an institution or for a group of which an institution forms part;

“Council Regulation (EU) No 1024/2013” means Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions⁴ ;

“Court” means the High Court;

“covered bond” means an instrument as referred to in Article 52(4) of Directive 2009/65/EC;

“covered deposits” means covered deposits as defined in point (5) of Article 2(1) of Directive 2014/49/EU;

“credit institution” means a credit institution as defined in point (1) of Article 4(1) of the Union Capital Requirements Regulation, not including the entities referred to in Article 2(5) of the Capital Requirements Directive;

“crisis management measure” means—

• (a) a resolution action, or

• (b) the appointment of a special manager under Regulation 115(1);

“crisis prevention measure” means—

• (a) the exercise of powers to direct removal of deficiencies or impediments to recoverability under Regulation 13(8) and (9),

• (b) the exercise of powers to address or remove impediments to resolvability under Regulation 28 or 29,

• (c) the application of an early intervention measure under Regulation 39,

• (d) the appointment of a temporary administrator under Chapter 3 of Part 3, or

• (e) the exercise of the write-down or conversion powers under Regulation 95;

“critical functions” means activities, services or operations the discontinuance of which is likely in one or more Member States to lead to the disruption of services that are essential to the real economy or to disrupt financial stability due to the size, market share, external and internal interconnectedness, complexity or cross-border activities of an institution or group, with particular regard to the substitutability of those activities, services or operations;

“cross-border group” means a group having group entities established in more than one Member State;

“deposit guarantee scheme” means—

• (a) the deposit protection account referred to in the Act of 2009,

• (b) the deposit guarantee scheme introduced and officially recognised by the State pursuant to Article 4 of Directive 2014/49/EU, or

• (c) the deposit guarantee scheme introduced and officially recognised by another Member State pursuant to Article 4 of Directive 2014/49/EU;

“depositor” means a depositor as defined in point (6) of Article 2(1) of Directive 2014/49/EU;

“derivative” means a derivative as defined in point (5) of Article 2 of Regulation (EU) No 648/2012;

“Directive 97/9/EC” means Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes⁵ ;

“Directive 98/26/EC” means Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems⁶ ;

“Directive 2001/34/EC” means Directive 2001/34/EC of the European Parliament and of the Council of 28 May 2001 on the admission of securities to official stock exchange listing and on information to be published on those securities⁷ ;

“Directive 2002/47/EC” means Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002 on financial collateral arrangements⁸ ;

“Directive 2009/65/EC” means Directive 2009/65/EC of the European Parliament and of the Council on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS)⁹ ;

“Directive 2014/49/EU” means Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes¹⁰ ;

“eligible deposits” means eligible deposits as defined in point (4) of Article 2(1) of Directive 2014/49/EU;

“eligible liabilities” means the liabilities and capital instruments that do not qualify as Common Equity Tier 1, Additional Tier 1 or Tier 2 instruments of an institution or entity referred to in Regulation 2(1)(b) to (i) that are not excluded from the scope of the bail-in tool by virtue of Regulation 80(2);

“emergency liquidity assistance” means the provision by a central bank of central bank money, or any other assistance that may lead to an increase in central bank money, to a solvent financial institution, or group of solvent financial institutions, that is facing temporary liquidity problems, without such an operation being part of monetary policy;

“European Banking Authority” means the authority established pursuant to Regulation (EU) No 1093/2010;

“examiner” has the meaning assigned to it in section 2 of the Act of 2014;

“extraordinary public financial support” means—

• (a) State aid within the meaning of Article 107(1) of the TFEU, or

• (b) any other public financial support at supra-national level, which, if provided for at national level, would constitute State aid,

that is provided in order to preserve or restore the viability, liquidity or solvency of an institution or entity referred to in Regulation 2(1)(b) to (i) or of a group of which such an institution or entity forms part;

“financial contracts” includes the following contracts and agreements:

• (a) securities contracts, including the following:

• (i) contracts for the purchase, sale or loan of a security, a group or index of securities;

• (ii) options on a security or group or index of securities;

• (iii) repurchase or reverse repurchase transactions on any such security, group or index;

• (b) commodities contracts, including the following:

• (i) contracts for the purchase, sale or loan of a commodity or group or index of commodities for future delivery;

• (ii) options on a commodity or group or index of commodities;

• (iii) repurchase or reverse repurchase transactions on any such commodity, group or index;

• (c) futures and forwards contracts, including contracts (other than a commodities contract) for the purchase, sale or transfer of a commodity or property of any other description, service, right or interest for a specified price at a future date;

• (d) swap agreements, including the following:

• (i) swaps and options relating to interest rates; spot or other foreign exchange agreements; currency; an equity index or equity; a debt index or debt; commodity indexes or commodities; weather; emissions or inflation;

• (ii) total return, credit spread or credit swaps;

• (iii) any agreements or transactions that are similar to an agreement referred to in clause (i) or (ii) which is the subject of recurrent dealing in the swaps or derivatives markets;

• (e) inter-bank borrowing agreements where the term of the borrowing is 3 months or less;

• (f) master agreements for any of the contracts or agreements referred to in subparagraphs (a) to (e);

“financial holding company” means a financial holding company as defined in point (20) of Article 4(1) of the Union Capital Requirements Regulation;

“financial institution” means a financial institution as defined in point (26) of Article 4(1) of the Union Capital Requirements Regulation;

“financial services legislation” has the meaning assigned to it by section 3(1) of the Act of 2013;

“Fund” means the fund established under Regulation 163(1);

“Governor” means the Governor of the Bank;

“group” means a parent undertaking and its subsidiaries;

“group entity” means a legal person that is part of a group;

“group financing arrangement” means the financing arrangement or arrangements of the Member State of the group-level resolution authority;

“group recovery plan” means a group recovery plan drawn up and maintained in accordance with Regulation 14;

“group resolution” means either—

• (a) the taking of resolution action at the level of a parent undertaking or of an institution subject to consolidated supervision, or

• (b) the coordination of the application of resolution tools and the exercise of resolution powers by resolution authorities, within the meaning of the Bank Recovery and Resolution Directive, in relation to group entities that meet the conditions for resolution;

“group resolution plan” means a plan for group resolution drawn up in accordance with Regulations 21 to 23;

“group resolution scheme” means a plan drawn up for the purposes of group resolution in accordance with Regulation 155;

“group-level resolution authority” means either—

• (a) the Union resolution authority, or

• (b) the resolution authority,

depending on whether the consolidating supervisor is located in another Member State or in the State respectively;

“insolvency” includes—

• (a) winding up (whether official or voluntary),

• (b) the appointment of a provisional liquidator,

• (c) the appointment of an examiner (including the appointment of an interim examiner),

• (d) the appointment of an administrator under section 2 of the Investor Compensation Act 1998 (No. 37 of 1998);

“institution” means a credit institution or an investment firm;

“institution under resolution” means an institution, a financial institution, a financial holding company, a mixed financial holding company, a mixed-activity holding company, a parent financial holding company in a Member State, a Union parent financial holding company, a parent mixed financial holding company in a Member State or a Union parent mixed financial holding company, in respect of which a resolution order is made;

“institutional protection scheme” means an arrangement that meets the requirements of Article 113(7) of the Union Capital Requirements Regulation;

“instruments of ownership” means shares, other instruments that confer ownership, instruments that are convertible into or give the right to acquire shares or other instruments of ownership, and instruments representing interests in shares or other instruments of ownership;

“intra-group guarantee” means a contract by which one group entity guarantees the obligations of another group entity to a third party;

“investment firm” means an investment firm, as defined in point (2) of Article 4(1) of the Union Capital Requirements Regulation, that is subject to the initial capital requirement in Article 28(2) of the Capital Requirements Directive;

“investor” means an investor within the meaning of point (4) of Article 1 of Directive 97/9/EC;

“management body” has the meaning assigned to it by point (7) of Article 3(1) of Capital Requirements Directive;

“micro, small and medium-sized enterprises” means micro, small and medium-sized enterprises as defined with regard to the annual turnover criterion referred to in Article 2(1) of the Annex to Commission Recommendation 2003/361/EC¹¹ ;

“MiFID I Regulations” means the European Communities (Markets in Financial Instruments) Regulations 2007 (S. I. No. 60 of 2007);

“Minister” means the Minister for Finance;

“mixed financial holding company” means a mixed financial holding company as defined in point (21) of Article 4(1) of the Union Capital Requirements Regulation;

“mixed-activity holding company” means a mixed-activity holding company as defined in point (22) of Article 4(1) of the Union Capital Requirements Regulation;

“national macroprudential authority” means the authority in the State entrusted with the conduct of macroprudential policy referred to in Recommendation B1 of the Recommendation of the European Systemic Risk Board of 22 December 2011 on the macroprudential mandate of national authorities (ESRB/2011/3)¹² ;

“netting arrangement” means an arrangement under which a number of claims or obligations can be converted into a single net claim, including close-out netting arrangements under which, on the occurrence of an enforcement event (however or wherever defined) the obligations of the parties are accelerated so as to become immediately due or are terminated, and in either case are converted into or replaced by a single net claim, including “close-out netting provisions” as defined in point (n)(i) of Article 2(1) of Directive 2002/47/EC and “netting” as defined in point (k) of Article 2 of Directive 98/26/EC;

“normal insolvency proceedings” means collective insolvency proceedings which entail the partial or total divestment of a debtor and the appointment of a liquidator or an administrator normally applicable to institutions under national law (including under any enactment or rule of law) and either specific to those institutions or generally applicable to any natural or legal person;

“own funds” means own funds as defined in point (118) of Article 4(1) of the Union Capital Requirements Regulation;

“own funds requirements” means the requirements of Articles 92 to 98 of the Union Capital Requirements Regulation;

“parent financial holding company in a Member State” means a parent financial holding company in a Member State as defined in point (30) of Article 4(1) of the Union Capital Requirements Regulation;

“parent institution in a Member State” means a parent institution in a Member State as defined in point (28) of Article 4(1) of the Union Capital Requirements Regulation;

“parent mixed financial holding company in a Member State” means a parent mixed financial holding company in a Member State as defined in point (32) of Article 4(1) of the Union Capital Requirements Regulation;

“parent undertaking” means a parent undertaking as defined in point (15)(a) of Article 4(1) of the Union Capital Requirements Regulation;

“personal data” has the meaning assigned to it by section 1 of the Data Protection Act 1988 (No. 25 of 1988);

“recipient” means the entity to which shares, other instruments of ownership, debt instruments, assets, rights or liabilities, or any combination of those items are transferred from an institution under resolution;

“recovery capacity” means the capability of an institution to restore its financial position following a significant deterioration;

“recovery plan” means a recovery plan drawn up and maintained by an institution in accordance with Regulation 11;

“regulated market” means a regulated market as defined in—

• (a) Regulation 3(1) of the MiFID I Regulations, or

• (b) point (14) of Article 4(1) of the MiFID I Directive,

as the context requires;

“Regulation (EU) No 1093/2010” means Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC¹³ ;

“Regulation (EU) No 1094/2010” means Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC¹⁴ ;

“Regulation (EU) No 648/2012” means Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories¹⁵ ;

“relevant capital instruments”, for the purposes of Regulations 79 to 94 and Chapter 4 of Part 4, means Additional Tier 1 instruments and Tier 2 instruments;

“relevant parent institution” means a parent institution in a Member State, a Union parent institution, a financial holding company, a mixed financial holding company, a mixed-activity holding company, a parent financial holding company in a Member State, a Union parent financial holding company, a parent mixed financial holding company in a Member State or a Union parent mixed financial holding company in relation to which the bail-in tool is applied;

“relevant third-country authority” means a third-country authority responsible for carrying out functions comparable to those of resolution authorities or competent authorities pursuant to the Bank Recovery and Resolution Directive;

“resolution” means the application of a resolution tool in order to achieve one or more of the resolution objectives referred to in Regulation 61(2);

“resolution action” means the decision to place an institution or entity referred to in Regulation 2(1)(b) to (i) under resolution pursuant to Regulation 62 or 63, the application of a resolution tool, or the exercise of one or more resolution powers;

“resolution authority” means the authority designated under Regulation 4;

“resolution college” means a college established in accordance with Regulation 152 to carry out the tasks mentioned in paragraph (1) of that Regulation;

“resolution objectives” means the resolution objectives referred to in Regulation 61(2);

“resolution order” means an order made by the Court under Regulation 105 and includes an order varied under Regulation 108 or 109;

“resolution period” shall be construed in accordance with Regulation 106(1);

“resolution plan” means a resolution plan for an institution drawn up in accordance with Regulation 17;

“resolution power” means a power referred to in Chapter 7 or 8 of Part 4;

“resolution tool” means a resolution tool referred to in Regulation 68(2);

“sale of business tool” means the mechanism for effecting a transfer by either—

• (a) a resolution order, or

• (b) a relevant authority (whether a Union resolution authority or a court in the state of a Union resolution authority concerned) in a Member State other than the State,

of shares or other instruments of ownership issued by an institution under resolution, or assets, rights or liabilities of an institution under resolution to a purchaser that is not a bridge institution, in accordance with, as the case may be—

• (i) Regulation 69, or

• (ii) Article 38 of the Bank Recovery and Resolution Directive;

“secured liability” means a liability where the right of the creditor to payment or other form of performance is secured by a charge, pledge or lien, or collateral arrangements including liabilities arising from repurchase transactions and other title transfer collateral arrangements;

“senior management” means senior management as defined in Regulation 3(1) of the Capital Requirements Regulations;

“set-off arrangement” means an arrangement under which 2 or more claims or obligations owed between the institution under resolution and a counterparty can be set off against each other;

“shareholders” means shareholders or holders of other instruments of ownership;

“significant branch” means a branch that would be considered to be significant in a host Member State in accordance with Article 51(1) of the Capital Requirements Directive;

“special manager” shall be construed in accordance with Regulation 115(1);

“subsidiary” means a subsidiary as defined in point (16) of Article 4(1) of the Union Capital Requirements Regulation;

“supervisory college” means a college of supervisors established in accordance with Article 116 of the Capital Requirements Directive or Regulation 104 of the Capital Requirements Regulations;

“suspension notice”, for the purposes of Part 3, shall be construed in accordance with Regulation 41(1);

“suspension order”, for the purposes of Part 3, shall be construed in accordance with Regulation 45(1);

“temporary administration order”, for the purposes of Part 3, shall be construed in accordance with Regulation 49;

“termination right” means a right to terminate a contract, a right to accelerate, close out, set-off or net obligations or any similar provision that suspends, modifies or extinguishes an obligation of a party to the contract or a provision that prevents an obligation under the contract from arising that would otherwise arise;

“TFEU” means the Treaty on the Functioning of the European Union;

“third county” means a country other than the State or a Member State;

“third-country institution” means an entity, the head office of which is established in a third country, that would, if it were established within the Union, be covered by the definition of an institution;

“third-country parent undertaking” means a parent undertaking, a parent financial holding company or a parent mixed financial holding company established in a third country;

“third-country resolution authority” means the authority of a third country that carries out the functions and duties of a resolution authority in that country;

“third-country resolution proceedings” means an action under the law of a third country to manage the failure of a third-country institution or a third-country parent undertaking that is comparable, in terms of objectives and anticipated results, to resolution actions under the Bank Recovery and Resolution Directive;

“Tier 2 instruments” means capital instruments or subordinated loans that meet the conditions set out in Article 63 of the Union Capital Requirements Regulation;

“title transfer financial collateral arrangement” means a title transfer financial collateral arrangement as defined in point (b) of Article 2(1) of Directive 2002/47/EC;

“transfer powers” means the powers specified in Regulation 111(1)(a) or (b) to transfer shares, other instruments of ownership, debt instruments, assets, rights or liabilities, or any combination of those items from an institution under resolution to a recipient;

“Union” means the European Union;

“Union branch” means a branch of a third-country institution located in a Member State;

“Union Capital Requirements Regulation” means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012¹⁶ ;

“Union competent authority” means the body or bodies designated by a Member State, other than the State, to act as a competent authority for the purposes of the EU Capital Requirements Directive and the Union Capital Requirements Regulation;

“Union macroprudential authority” means an authority in a Member State, other than the State, entrusted with the conduct of macroprudential policy referred to in Recommendation B1 of the Recommendation of the European Systemic Risk Board of 22 December 2011 on the macroprudential mandate of national authorities (ESRB/2011/3);

“Union parent financial holding company” means an EU parent financial holding company as defined in point (31) of Article 4(1) of the Union Capital Requirements Regulation;

“Union parent institution” means an EU parent institution as defined in point (29) of Article 4(1) of the Union Capital Requirements Regulation;

“Union parent mixed financial holding company” means an EU parent mixed financial holding company as defined in point (33) of Article 4(1) of the Union Capital Requirements Regulation;

“Union parent undertaking” means a Union parent institution, a Union parent financial holding company or a Union parent mixed financial holding company;

“Union resolution authority” means the body or bodies designated by a Member State, other than the State, to act as a resolution authority for the purposes of the Bank Recovery and Resolution Directive;

“Union State aid framework” means the framework established by Articles 107, 108 and 109 of the TFEU and Regulations and all Union acts, including guidelines, communications and notices, made or adopted pursuant to Article 108(4) or 109 of the TFEU;

“Union subsidiary” means an institution which is established in a Member State and which is a subsidiary of a third-country institution or a third-country parent undertaking;

“winding up” means the realisation of assets of an institution or entity referred to in Regulation 2(1)(b) to (i) in accordance with Part 11 of the Act of 2014;

“write-down and conversion powers” means the powers referred to in Regulations 95(1) and 111(1)(c) to (g).

• (2) A word or expression which is used in these Regulations and is also used in the Bank Recovery and Resolution Directive has, unless the context otherwise requires, the same meaning in these Regulations as it has in the Bank Recovery and Resolution Directive.

Designated resolution authority.

• (2) The Minister shall inform the European Banking Authority in writing of the designation of the resolution authority under paragraph (1).

• (3) In order to—

• (a) apply the resolution actions, and

• (b) exercise its functions under these Regulations,

with the required speed and flexibility, the resolution authority shall have the necessary expertise, resources and operational capacity.

• (4) For the purposes of this Regulation, the resolution authority shall adopt and, as soon as practicable after their adoption, publish on the website of the Bank any necessary relevant internal rules (including rules regarding professional secrecy) on information exchanges between it and other functional areas of the Bank.

• (5) The resolution authority, in the preparation, planning and application of resolution decisions, shall cooperate closely with staff of the competent authority.

• (6) The Minister is designated as responsible for the exercise of the functions of a competent ministry referred to in Article 3(5) of the Bank Recovery and Resolution Directive.

• (7) Any decision taken by the competent authority, or the resolution authority, in accordance with these Regulations shall—

• (a) take into account the potential impact of the decision in all the Member States where the institution or the group concerned operates, and

• (b) minimise the negative effects on financial stability and negative economic and social effects in those Member States.

Funding of resolution authority.

Bank as resolution authority and competent authority.

Resolution authority and Bank.

• (2) The Governor shall be responsible for exercising the functions of the resolution authority under these Regulations.

• (3) Without limitation to the generality of paragraph (2), the Governor may delegate any of the functions referred to in that paragraph to a Head of Function (within the meaning given by section 2 of the Act of 1942) or an officer or employee of the Bank.

• (4) The Bank shall ensure adequate structural arrangements are in place to ensure operational independence and to avoid conflicts of interest between the Bank’s—

• (a) functions as a resolution authority for the purposes of the Bank Recovery and Resolution Directive, and

• (b) other functions (including, in particular, its supervision functions pursuant to the Union Capital Requirements Regulation and the Capital Requirements Regulations).

• (5) Nothing in paragraph (4) shall limit—

• (a) the exchange of information necessary for the performance of functions under the Bank Recovery and Resolution Directive and these Regulations, or

• (b) the performance of functions in relation to the preparation, planning and application of resolution decisions.

• (6) Nothing in these Regulations prevents the performance by the Governor or the Bank of their functions arising under the treaties governing the European Union (within the meaning given by section 1 (as amended by section 2 of the European Union Act 2009 (No. 33 of 2009)) of the European Communities Act 1972 (No. 27 of 1972)) or the ESCB Statute (within the meaning given by section 2 of the Act of 1942).

Designated national macroprudential authority.

Minister and resolution authority.

• (a) a decision to make a proposed resolution order pursuant to Regulation 62 or 63;

• (b) a decision to draw up a valuation under Regulation 65 or 66;

• (c) a decision to exercise the write-down or conversion powers under Regulation 95 independently of resolution;

• (d) a decision to notify the group-level resolution authority, the consolidating supervisor and the members of the resolution college for a group pursuant to Regulation 155(1);

• (e) a decision to notify the competent authority and the other members of the resolution college for a group pursuant to Regulation 156(1);

• (f) a joint decision under Regulation 158(3) within a European resolution college to recognise third-country resolution proceedings;

• (g) a decision under Regulation 158(5) to recognise third-country resolution proceedings;

• (h) a decision to refuse to recognise or enforce third-country proceedings under Regulation 159 after consulting the other members of the European resolution college;

• (i) a decision to resolve a Union branch under Regulation 160.

• (2) The resolution authority shall obtain the Minister’s prior written consent before making a proposed resolution order pursuant to Regulation 104, where the resolution authority forms the view that—

• (a) both—

• (i) the use of the Fund will be required for the effective application of the resolution tools, and

• (ii) there are insufficient monies available in the Fund to meet these requirements;

• (b) the decision will have a direct fiscal impact, other than the use of the Fund, or

• (c) the decision is likely to have systemic implications.

• (3) For the purpose of paragraph (2)(c), “systemic implication” means there is a serious risk to the stability of the financial system or the economy of the State.

Part 2 Preparation

Chapter 1 Recovery and resolution planning

General provision

Simplified obligations for certain institutions.

• (2) The competent authority having had regard to—

• (a) the impact that the failure of an institution could have, due to the nature of its business,

• (b) whether failure and subsequent winding up of an institution under normal insolvency proceedings would be likely to have a significant negative effect on financial markets, on other institutions, on funding conditions or on the wider economy, and

• (c) the matters mentioned in paragraph (5),

shall, with respect to the institution concerned, determine the following:

• (i) the contents and details of recovery plans provided for in Regulations 11 to 16;

• (ii) the date by which the first recovery plan is to be drawn up and the frequency for updating recovery plans, which may be less frequent than that provided for in Regulation 11(2);

• (iii) the contents and details of the information required from the institution concerned as provided for in—

• (I) Regulation 11(4) and (6), and

• (II) Part 1 of the Schedule.

• (3) The resolution authority may apply simplified resolution planning obligations to an institution, following an assessment pursuant to paragraph (4).

• (4) The resolution authority, having had regard to—

• (a) the impact that the failure of an institution could have, due to the nature of its business,

• (b) whether failure and subsequent winding up of an institution under normal insolvency proceedings would be likely to have a significant negative effect on financial markets, on other institutions, on funding conditions or on the wider economy, and

• (c) the matters mentioned in paragraph (5),

shall, with respect to the institution concerned, determine the following:

• (i) the contents and details of resolution plans provided for in Regulations 17 to 21;

• (ii) the date by which the first resolution plan is to be drawn up and the frequency for updating resolution plans, which may be less frequent than that provided for in—

• (I) Regulation 17(6) and (7), and

• (II) Regulation 23(5) and (6);

• (iii) the contents and details of the information required from the institution concerned as provided for in Regulations 20(1) and 21(1) and in Part 3 of the Schedule;

• (iv) the level of detail for the assessment of resolvability provided for in—

• (I) Regulations 26 and 27, and

• (II) Part 3 of the Schedule.

• (5) The matters referred to in paragraphs (2) and (4) are the following:

• (a) the institution’s shareholding structure;

• (b) the institution’s legal form;

• (c) the institution’s risk profile, size and legal status;

• (d) the institution’s interconnectedness to other institutions or to the financial system in general;

• (e) the scope and the complexity of the institution’s activities;

• (f) the institution’s membership of an institutional protection scheme or other co-operative mutual solidarity systems as referred to in Article 113(7) of the Union Capital Requirements Regulation;

• (g) any exercise of investment services or activities as defined in Regulation 3(1) of the MiFID I Regulations.

• (6) The competent authority and, where relevant, the resolution authority shall make the assessment referred to in paragraphs (2) and (4) after consulting, where appropriate, with the national macroprudential authority.

• (7) Where simplified obligations are applied to an institution under paragraph (2) or (4), the competent authority and where relevant the resolution authority, may impose full, unsimplified obligations at any time, where they believe the circumstances warrant such imposition.

• (8) The application of simplified obligations under paragraph (2) or (4) shall not affect the power of the competent authority and, where relevant, the resolution authority to take a crisis prevention measure or a crisis management measure.

• (9) Subject to paragraphs (10) to (12), the competent authority or the resolution authority, as the case may be, may waive the application of—

• (a) recovery planning or resolution planning obligations to institutions affiliated to a central body and wholly or partially exempted from prudential requirements in national law (including under any enactment or rule of law) in accordance with Article 10 of the Union Capital Requirements Regulation, or

• (b) recovery planning obligations to institutions which are members of an institutional protection scheme.

• (10) Where a waiver pursuant to paragraph (9) is granted, the competent authority or resolution authority, as the case may be, shall—

• (a) apply the requirements of Regulations 11 to 25 on a consolidated basis to the central body and institutions affiliated to it within the meaning of Article 10 of the Union Capital Requirements Regulation, and

• (b) require the institutional protection scheme to fufil the requirements of Regulations 11 to 16 in cooperation with each of its waived members.

• (11) For the purpose of paragraph (10), any reference in this Chapter to a group shall include a central body and institutions affiliated to it, within the meaning of Article 10 of the Union Capital Requirements Regulation, and their subsidiaries, and any reference to parent undertaking or institutions that are subject to consolidated supervision pursuant to Article 111 of the Capital Requirements Directive shall include the central body.

• (12) Waivers pursuant to paragraph (9) shall not be granted to an institution where—

• (a) the institution concerned is subject to direct supervision by the European Central Bank pursuant to Article 6(4) of Council Regulation (EU) No 1024/2013, or

• (b) the operations of the institution concerned constitute a significant share in the financial system of the State,

and that institution shall accordingly draw up its own recovery plans in accordance with Regulations 11 to 16 and shall be the subject of an individual resolution plan in accordance with Regulations 17 to 25.

• (13) For the purposes of paragraph (12), the operations of an institution shall be considered to constitute a significant share of the State’s financial system where any of the following conditions are met:

• (a) the total value of that institution’s assets exceeds €30,000,000,000;

• (b) the ratio of that institution’s total assets to the GDP of the Member State of establishment exceeds 20%, unless the total value of its assets is below €5,000,000,000.

• (14) The competent authority and the resolution authority shall inform the European Banking Authority in writing of the manner in which they have applied paragraphs (1), (2), (3), (4), (9), (10) or (12) to institutions in the State.

Recovery Planning

Recovery plans.

• (2) Each institution shall update its recovery plans—

• (a) at least annually,

• (b) after any change to its legal or organisational structure, its business or its financial position, which could have a material effect on, or necessitates a change to, the recovery plan, and

• (c) on written notice from the competent authority directing that a recovery plan be updated, which may be more than once per year.

• (3) Without limiting the generality of paragraph (2) the competent authority may direct an institution to update its recovery plan at any time.

• (4) Without prejudice to Regulation 10, each institution shall ensure that its recovery plan includes the information listed in Part 1 of the Schedule as well as such other information as may be required in writing by the competent authority.

• (5) Recovery plans shall—

• (a) contemplate a range of scenarios of severe macroeconomic and financial stress relevant to the institution’s specific conditions and such plans should include scenarios based on both system-wide adverse conditions and adverse conditions specific to individual legal entities and to groups and

• (b) include appropriate conditions and procedures to ensure the timely implementation of recovery actions as well as a wide range of recovery options to restore the institution’s financial position.

• (6) Each institution shall include in its recovery plan possible measures which the institution could take in the event that the conditions for early intervention under Regulation 39 are met.

• (7) Each institution shall include in its recovery plan a range of options for recovery actions to restore the institution’s financial position and shall set out appropriate preparatory measures and procedures to enable the timely implementation of recovery actions.

• (8) An institution shall not assume in its recovery plan any access to or receipt of extraordinary public financial support but a recovery plan shall include, where relevant, an analysis of how and when the institution may apply to access central bank liquidity facilities and identify those assets which would be expected to qualify as collateral.

• (9) The management body of the institution concerned shall assess and approve the recovery plan before it is submitted to the competent authority.

• (10) Recovery plans shall be considered to be a governance arrangement within the meaning of Regulations 61 and 62 of the Capital Requirements Regulations.

Records of financial contacts.

• (2) An institution may be required to provide the records referred to in paragraph (1) to the competent authority where the competent authority considers that access to such records would assist it in its review of a recovery plan submitted by the institution concerned.

• (3) Where records are required by written request of the competent authority under paragraph (2), the institution concerned shall provide the records in accordance with the request.

Assessment of recovery plans.

• (2) The competent authority shall, not later than 6 months from the date of submission of a recovery plan under paragraph (1), and after consulting the Union competent authorities of any Member State where significant branches are located insofar as is relevant to that branch, review the plan and assess the extent to which it satisfies the requirements set out in Regulation 11 and the following criteria:

• (a) the implementation of the arrangements proposed in the plan is reasonably likely to maintain or restore the viability and financial position of the institution or of the group, taking into account the preparatory measures that the institution has taken or plans to take;

• (b) the plan and specific options within the plan are reasonably likely to be implemented quickly and effectively in situations of financial stress avoiding to the maximum extent possible any significant adverse effect on the financial system, including in scenarios which would lead other institutions to implement recovery plans within the same period.

• (3) The competent authority, when assessing the appropriateness of a recovery plan, shall consider the appropriateness of an institution’s capital and funding structure in light of the institution’s risk profile and the level of complexity of its organisational structure.

• (4) The competent authority shall provide a copy of an institution’s recovery plan to the resolution authority and the resolution authority shall examine the recovery plan with a view to identifying any actions in the recovery plan which may adversely impact the resolvability of the institution and may make recommendations on those matters to the competent authority.

• (5) Where the competent authority assesses that there are material deficiencies in an institution’s recovery plan, or material impediments to its implementation, it shall notify the institution of its assessment in writing and direct the institution to submit not later than 2 months, extendable by one month with the competent authority’s approval, of the date of such notice a revised plan demonstrating how those deficiencies or impediments are addressed.

• (6) Before directing an institution to resubmit a recovery plan under paragraph (5) the competent authority shall give the institution the opportunity to state its opinion on that requirement.

• (7) Where the competent authority does not consider that the deficiencies and impediments referred to in paragraph (5) have been adequately addressed by the revised plan, it may direct an institution to make specific changes to the plan and, where so directed, the institution concerned shall make such changes.

• (8) Where an institution fails to submit a revised recovery plan, or where the competent authority determines that the revised recovery plan does not adequately remedy the deficiencies or impediments identified in its original assessment, and it would not be possible to adequately remedy the deficiencies or impediments through a direction to make specific changes to the plan under paragraph (7), the competent authority shall direct the institution to identify in writing within a reasonable timeframe changes it can make to its business in order to address the deficiencies in, or impediments to the implementation of, the recovery plan.

• (9) Where an institution fails to identify the changes referred to in paragraph (8) within the timeframe set by the competent authority, or where the competent authority assesses that the actions proposed by the institution would not adequately address the deficiencies or impediments, it may direct in writing the institution to take any measures it considers to be necessary and proportionate, taking into account the seriousness of the deficiencies and impediments and the effect of the measures on the institution’s business and, where so directed, the institution concerned shall take such measures.

• (10) The competent authority may, without prejudice to Regulation 92 of the Capital Requirements Regulations or to the competent authority’s other powers, direct an institution in writing to do one or more of the following:

• (a) reduce its risk profile, including its liquidity risk;

• (b) enable timely recapitalisation measures;

• (c) review its strategy and structure;

• (d) make changes to its funding strategy so as to improve the resilience of the core business lines and critical functions;

• (e) make changes to its governance structure.

• (11) Where the competent authority directs an institution to take measures under paragraph (8), (9) or (10), its decision on the measures shall be reasoned and proportionate and the competent authority shall provide that decision in writing to the institution.

• (12) A decision by the competent authority to direct an institution to take measures under paragraph (10) is an appealable decision for the purposes of Part VIIA of the Act of 1942.

Group recovery plans.

• (2) A group recovery plan shall—