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

• (d) where the competent authority is the consolidating supervisor, other members of the supervisory college and members of the resolution college.

• (6) Where the competent authority is the consolidating supervisor and is notified of a decision of a Union competent authority to approve, restrict or prohibit the provision of financial support, it shall without delay, in writing, inform the other members of the supervisory college and the members of the resolution college.

• (7) Where the competent authority does not prohibit or restrict the financial support within the period indicated in paragraph (3), or has agreed before the end of that period to that support, financial support may be provided in accordance with the terms submitted to the competent authority.

• (8) Where—

• (a) the competent authority is either the consolidating supervisor or the supervisor of the group entity receiving support, and

• (b) the Union competent authority of the group entity providing support has made a decision to prohibit or restrict financial support and the competent authority objects to that decision,

the competent authority may within 2 days refer the matter to the European Banking Authority and request its assistance in accordance with Article 31 of Regulation (EU) No 1093/2010.

• (9) Where the competent authority is the supervisor of a group entity for which the group recovery plan in accordance with Regulation 14(7) makes reference to intra-group financial support and this support is restricted or prohibited, the competent authority may request the consolidating supervisor to initiate a reassessment of the group recovery plan pursuant to Regulation 15 or, where a recovery plan has been prepared on an individual basis, request the group entity in question to submit a revised recovery plan.

Disclosure.

• (2) Where a group entity has entered into a group financial support agreement, it shall make public a description of the general terms of any such agreement and the names of the group entities that are party to it in the disclosure referred to in paragraph (1).

• (3) A group entity shall update the information to be disclosed under this Regulation at least annually.

• (4) The requirements of Articles 431 to 434 of the Union Capital Requirements Regulation shall apply to disclosures under this Regulation.

Part 3 Early intervention

Chapter 1 Early intervention measures

Early intervention measures.

• (a) an institution has infringed, or

• (b) is likely in the near future to infringe,

the requirements of—

• (i) the Union Capital Requirements Regulation,

• (ii) the Capital Requirements Regulations,

• (iii) Parts 4, 5, 7, 9 and 13 of the MiFID I Regulations, or

• (iv) Articles 3, 4, 5, 6, 7, 14, 15, 16, 17, 24, 25 or 26 of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014¹⁷ ,

the competent authority may take one or more of the early intervention measures set out in paragraph (4).

• (2) An infringement referred to in paragraph (1)(b) may occur due, among other things, to a rapidly deteriorating financial condition and may include one or more of the following:

• (a) a reduction in own funds;

• (b) a deteriorating liquidity situation;

• (c) an increasing level of leverage;

• (d) an increasing level of non-performing loans;

• (e) an increasing concentration of exposures.

• (3) In determining, pursuant to paragraph (1)(b), whether an institution is likely in the near future to infringe the requirements referred to in paragraph (1)(i) to (iv), the competent authority may consider whether the institution’s own funds level has fallen to, or below, a level that is 1.5 percentage points in excess of its own funds requirement.

• (4) Early intervention measures shall include, without prejudice to the measures referred to in Regulation 92 of the Capital Requirements Regulations where applicable, the power of the competent authority to direct, set, acquire or exercise, as appropriate, one or more of the following:

• (a) direct the institution, or its management body, to implement one or more of the arrangements or measures set out in the recovery plan;

• (b) direct the institution, or its management body, in accordance with Regulation 11(2) or (3), to update the recovery plan, where the circumstances that led to the early intervention differ from the scenarios on which the recovery plan was based, and implement one or more of the arrangements or measures set out in the updated plan within a specific timeframe in order to ensure that the circumstances giving rise to the early intervention measures no longer exist;

• (c) direct the institution, or its management body, to assess its situation, identify measures to overcome any problems identified and draw up an action programme to overcome those problems and a timetable for its implementation;

• (d) direct the institution, or its management body, to convene a meeting of shareholders of the institution;

• (e) directly convene a meeting of shareholders of the institution, where the institution, or its management body, fails to comply with a direction under subparagraph (d);

• (f) set the agenda for a meeting of shareholders, convened after a direction under subparagraph (d) or convened under subparagraph (e), and require certain decisions to be considered for adoption by shareholders at that meeting;

• (g) exercise any of the Bank’s powers under the Act of 2010 (in accordance with the allocation of powers to any particular officer or employee of the Bank contained in the Act);

• (h) direct the institution, or its management body, to draw up a plan for negotiation on restructuring of debt with one or more of its creditors in accordance with its recovery plan, where applicable;

• (i) direct the institution to make changes to its business strategy;

• (j) direct the institution to make changes to its legal or operational structures;

• (k) acquire, including through on-site inspections, any information necessary in order to update the resolution plan and prepare for the possible resolution of the institution and for valuation of the assets and liabilities of the institution in accordance with Regulation 65 or 66 and provide any such information to the resolution authority.

• (5) For each of the measures referred to in paragraph (4), the competent authority shall set an appropriate deadline for completion to enable it evaluate the effectiveness of the measure.

• (6) The competent authority shall notify the resolution authority, in writing, without delay of a determination that one or more of the conditions set out in paragraph (1) or (2) have been met in relation to an institution.

• (7) Upon a notification referred to in paragraph (6), the resolution authority may direct the institution concerned to contact potential purchasers in order to prepare for the resolution of the institution, subject to the principles set out in Regulation 70(2) and the confidentiality provisions set out in Regulation 146.

• (8) A decision by the competent authority to take an early intervention measure under subparagraph (a), (b), (c), (d), (e), (f), (h), (i), (j), or (k) of paragraph (4) is an appealable decision for the purposes of Part VIIA of the Act of 1942.

Chapter 2 Removal of senior management

Removal of senior management and management body.

• (a) there is a significant deterioration in the financial position of an institution,

• (b) there are serious infringements by the institution, or its management body, of national law (including under any enactment or rule of law) or of the constitution of the institution, or

• (c) there are serious administrative irregularities,

and measures taken in accordance with Regulation 39 would not be sufficient to reverse that deterioration, or remedy those infringements or irregularities, the competent authority may remove some or all of the senior management or management body of the institution concerned.

• (2) The removal of a person under paragraph (1)—

• (a) has effect without the need for any prior notice being given, meeting being called, resolution being passed or consent being obtained, and

• (b) may be expressed to take effect immediately and, if so expressed, has that effect.

• (3) Subject to paragraph (4), nothing in paragraph (1) or (2) deprives a person of any right to claim compensation or damages from that institution for the loss of his or her office or appointment.

• (4) A court, tribunal or rights commissioner may not—

• (a) grant any remedy that would have the effect of preventing or restraining the competent authority from exercising its functions under this Regulation, or

• (b) make an order under the Unfair Dismissals Acts 1977 to 2007 for the reinstatement or re-engagement of such a person.

• (5) The appointment of a person to replace a person removed under this Regulation shall be subject to—

• (a) the approval of the competent authority in accordance with section 23 of the Act of 2010, and

• (b) Regulation 41.

Suspension notice.

• (2) A suspension notice shall—

• (a) be in writing,

• (b) set out the grounds on which the competent authority has formed the view that one or more of the circumstances set out in Regulation 40(1)(a) to (c) exists,

• (c) set out the grounds on which the competent authority has formed the view that the removal of the person, or persons, concerned under this Part is necessary,

• (d) require the person concerned to show cause, in writing, not later than 5 days after the service of the suspension notice on them, why the suspension should not be confirmed by suspension order,

• (e) include such matters (if any) as the competent authority considers appropriate, and

• (f) be signed and dated by a person duly authorised by the competent authority to do so.

• (3) The competent authority shall serve a suspension notice on—

• (a) the person concerned,

• (b) the institution from which the person is being removed as a senior manager,

• (c) any other institution which, to the knowledge of the competent authority, the person concerned is a senior manager, and

• (d) any other institution which, to the knowledge of the competent authority, proposes to appoint the person concerned as a senior manager.

• (4) A suspension notice may be served on a person, or an institution, referred to in paragraph (3)—

• (a) by delivering it to the person or institution,

• (b) by leaving it at the address at which the person ordinarily resides or, in a case in which an address for service has been furnished by a person or institution, at that address,

• (c) by sending it by post in a prepaid letter to the address at which the person ordinarily resides or, in a case in which an address for service has been furnished by a person or institution, to that address, or

• (d) electronically—

• (i) by electronic mail to an email address, or

• (ii) by facsimile to a facsimile number,

furnished by the person or institution to, or otherwise known to, the competent authority.

• (5) An institution referred to in paragraph (3)(b) on which a suspension notice is served shall without delay—

• (a) give a copy of the notice to the suspended person (unless it is impracticable to do so),

• (b) after it has given a copy of the notice in accordance with subparagraph (a), certify in writing to the competent authority that it has done so, and

• (c) take such steps as may be necessary to secure the immediate removal of the person from his or her position as senior manager.

Time of effect of suspension notice.

• (a) takes effect on its service on the institution for whom the person concerned is a senior manager, and

• (b) ceases to have effect at the end of the tenth date after that service, unless within that period, it is confirmed in accordance with Regulation 43.

Confirmation of suspension notice.

• (2) The competent authority may confirm the suspension notice under paragraph (1) whether or not the person concerned has made a submission under Regulation 41(2)(d).

• (3) Where a suspended person makes a submission in relation to a suspension notice after the end of the period mentioned in Regulation 41(2)(d) and the competent authority is satisfied that there was good reason why the submission could not have been made within that period, or that it is necessary to do so in the interests of justice, the competent authority shall—

• (a) consider the submission, and

• (b) where after doing so the competent authority is satisfied that none of the circumstances referred to in Regulation 40(1)(a) to (c) still exist, revoke the suspension notice.

• (4) A suspension notice that has been confirmed in accordance with paragraph (1) has effect for 3 months (unless sooner revoked) from the date upon which the suspension notice would otherwise have ceased to have effect under Regulation 42(b).

• (5) The competent authority shall serve a notice of the confirmation of a suspension notice on each person and institution on whom the suspension notice was served.

Enforcement of suspension notice.

• (a) a person performs the function of senior manager in contravention of a suspension notice, or

• (b) an institution on which a suspension notice is served permits a suspended person to perform the function of senior manager in contravention of a suspension notice,

the competent authority may apply ex parte to the Court for an order directing the person or institution to comply with the notice.

Court’s power to extend validity of suspension notices.

• (2) Where the Court is satisfied, having regard to the reasons for the issue and confirmation of the notice stated by the competent authority, that there are sufficient grounds to extend the period of validity of the suspension notice, the Court may extend the notice for such further period as the Court orders.

• (3) When considering whether to make an order under paragraph (2), the Court shall give particular regard to—

• (a) the need to prevent potential serious damage to the financial system in the State and ensure the continued stability of that system,

• (b) the need to protect users of financial services,

• (c) the need to facilitate the re-organisation of the institution concerned in order to stabilise its financial position,

• (d) the need to maintain the continuity of critical functions and core business lines in a manner that maintains the ability of the institution concerned to continue key operations, services and transactions, and

• (e) the need to maintain public confidence in the institution concerned.

Chapter 3 Appointment of Temporary Administrator

Interpretation of Chapter.

Preconditions for making temporary administration order.

• (a) the conditions for the removal of some or all of the senior management or management body of the institution laid down in Regulation 40(1) are met,

• (b) the removal of senior management or management body would be insufficient to remedy the situation giving rise to those conditions, and

• (c) a temporary administration order is necessary in all the circumstances.

• (2) In proposing a temporary administration order, the competent authority may, based on what is proportionate in the circumstances, propose the appointment of one or more temporary administrators either to—

• (a) replace the management body temporarily, or

• (b) to work temporarily with the management body of the institution.

• (3) Where the competent authority proposes to appoint a temporary administrator under this Chapter to work with the management body of the institution, it shall specify in the proposed order, in addition to the matters referred to in Regulation 49, any requirements for the management body of the institution to consult or to obtain the consent of the temporary administrator prior to taking specific decisions or actions.

Proposed temporary administration order — written notice.

• (a) deliver a written notice to the institution concerned, describing the terms of the proposed temporary administration order, accompanied by a written summary of the reasons why the competent authority believes that the order is necessary,

• (b) afford that institution 48 hours, or a shorter period on which the competent authority and that institution agree, in which to make written submissions to the competent authority, and

• (c) consider any submissions made under subparagraph (b).

• (2) Paragraph (1) does not apply where—

• (a) the competent authority has consulted the institution concerning the terms of the proposed temporary administration order and that institution has consented to the making of a temporary administration order in those terms, or

• (b) the competent authority has reasonable grounds for believing that—

• (i) confidentiality in relation to the proposed temporary administration order, or the possibility of the making of a temporary administration order would not be maintained, and

• (ii) the breach of such confidentiality would have significant adverse consequences.

Content and form of proposed temporary administration order.

• (a) be in writing,

• (b) set out the right of the institution concerned to make submissions in relation to the proposed application,

• (c) specify the period in which the institution may make such submissions,

• (d) where it is proposed that any power of the temporary administrator is to be exercisable immediately, specify the reasons why the temporary administration order should have that effect,

• (e) state that the competent authority, having had regard to the matters referred to in Regulation 47(1), has formed an opinion based on reasonable grounds that the appointment of a temporary administrator is necessary,

• (f) specify the terms of appointment of the proposed temporary administrator referred to in Regulation 54(5),

• (g) specify the role, powers and functions of the proposed temporary administrator mentioned in Regulation 54(6),

• (h) specify the limits on the role, powers and functions of the proposed temporary administrator referred to Regulation 54(7), and

• (i) set out such other provisions as the competent authority may consider appropriate.

Procedure for hearing of application for temporary administration order.

• (2) A report prepared by the competent authority (whether or not prepared specifically for the purpose of the application) in relation to matters within the competent authority’s responsibilities, including the financial position of the institution concerned, is admissible in evidence at the hearing of the application.

• (3) The Court, when hearing an application under paragraph (1), shall, if satisfied that—

• (a) the requirements of Regulation 48 have been complied with, and

• (b) the decision of the competent authority was reasonable and was not vitiated by any error of law,

make a temporary administration order in the terms of the proposed temporary administration order (or those terms as varied by the competent authority after consideration of any submission made under Regulation 48(1)(b)).

• (4) A temporary administration order made by the Court under paragraph (3) shall have immediate effect, other than where the Court directs otherwise.

• (5) The Court may make a temporary administration order on terms other than those in the proposed temporary administration order (or those terms as varied by the competent authority after consideration of any submission made under Regulation 48(1)(b)) only where the Court is satisfied that—

• (a) there has been non-compliance with any of the requirements of Regulation 48 or that the decision of the competent authority was unreasonable or vitiated by an error of law,

• (b) it would be appropriate to do so, having regard to any report referred to in paragraph (2), and

• (c) the requirements of Regulation 47(1) have been fulfilled in relation to the institution concerned.

Publication of temporary administration order.

• (a) serve a copy of the temporary administration order on the institution concerned, and

• (b) other than where the temporary administrator does not have the power to represent the institution, publish the order in 2 newspapers circulating generally in the State.

• (2) In a particular case, the competent authority may, where it thinks it necessary to do so, publish a temporary administration order by an additional means or in an additional place.

• (3) Without delay after the service of the copy of the temporary administration order on it, the institution shall take all reasonable measures to ensure that its shareholders, are made aware of the order, including, without limiting the generality of the foregoing—

• (a) where the shares of the institution are traded from time to time on a financial market (whether a regulated market or not), making an announcement that relates to the existence of a temporary administration order and its effect to a regulatory news service generally used by institutions in the State for the purposes of announcements to such markets, and

• (b) providing a copy of the temporary administration order to the regulatory news service referred to in paragraph (a).

Application to vary or extend temporary administration order.

• (a) vary, or

• (b) extend,

a temporary administration order where the competent authority is of the opinion that the variation or extension is necessary in all the circumstances.

• (2) An application by the competent authority to vary a temporary administration order may be made ex parte.

• (3) An application under paragraph (1)(b) may only be made where the competent authority has formed the opinion that the conditions laid down in this Chapter for the appointment of a temporary administrator continue to be met.

• (4) The Court, when hearing an application under paragraph (1), shall, where satisfied that the opinion of the competent authority is reasonable and was not vitiated by any error of law, make an order varying or extending the temporary administration order.

• (5) Where the Court makes an order under paragraph (4), the competent authority shall communicate the reasons for the extension or variation, as the case may be, to the shareholders of the institution concerned.

Application to set aside temporary administration order.

• (2) The Court shall give such priority to an application under paragraph (1) as is necessary in the circumstances, and may give such directions as it considers appropriate in the circumstances—

• (a) with regard to the hearing of the application, or

• (b) with regard to a matter that arises during the period beginning with the temporary administration order and ending with the order of the Court under this Regulation.

• (3) On an application under paragraph (1), the Court may set aside the temporary administration order only where the Court is satisfied that—

• (a) there has been non-compliance with any of the requirements of Regulation 48, or

• (b) the decision of the competent authority was unreasonable or vitiated by an error of law.

• (4) The Court may, instead of setting aside the temporary administration order, make an order varying or amending that order in the manner it considers appropriate where the Court is satisfied that—

• (a) the conditions in Regulation 47 have been fulfilled in relation to the institution concerned,

• (b) there has been non-compliance with any of the requirements of Regulation 48 or that the decision of the competent authority was unreasonable or vitiated by an error of law, and

• (c) it would be appropriate to do so, having regard to any report referred to in Regulation 50(2).

• (5) An order under paragraph (4) is, from the date of making it, effective to vary or amend the temporary administration order without prejudice to the validity of anything previously done under the temporary administration order.

• (6) Where the Court sets aside a temporary administration order, the appointment of the temporary administrator shall be taken to have been terminated, but—

• (a) he or she remains entitled to be paid, out of the assets of that institution, his or her costs, expenses and remuneration, and

• (b) the termination does not render invalid anything done by the temporary administrator under the temporary administration order.

• (7) Where, instead of making an order under paragraph (3) setting aside a temporary administration order or an order under paragraph (4) varying or amending a temporary administration order, the Court, on application under paragraph (1), makes an order refusing to set aside a temporary administration order the temporary administration order shall be taken to have been effective as if the application under this Regulation had not been made.

Content of temporary administration order.

• (2) The person named in the temporary administration order as the temporary administrator of an institution, shall be a person who has, in the competent authority’s opinion, the requisite qualifications, ability and knowledge required to carry out his or her functions and is free of any conflicts of interest.

• (3) A temporary administration order shall specify the following:

• (a) the name of the temporary administrator;

• (b) the name of the institution concerned;

• (c) the period not exceeding 12 months during which the institution concerned is to be under a temporary administration order;

• (d) any requirements for the management body of the institution to consult or to obtain the consent of the temporary administrator before taking specific decisions or actions.

• (4) A temporary administration order shall fix the basis of the calculation of the costs, expenses and remuneration payable to the temporary administrator, and may do so in respect of work done before the making of the temporary administration order.

• (5) A temporary administration order shall include the terms of appointment of the temporary administrator and shall specify his or her functions based on what is proportionate in the circumstances and such functions may include some or all of the functions of the management body of the institution under its constitution, including the power to exercise some or all of the administrative functions of the management body of the institution.

• (6) A temporary administration order shall specify the role and functions of the temporary administrator, in writing, at the time of appointment and these may include the following:

• (a) ascertaining the financial position of the institution;

• (b) managing the business or part of the business of the institution with a view to preserving or restoring the financial position of the institution;

• (c) taking measures to restore the sound and prudent management of the business of the institution.

• (7) A temporary administration order shall specify any limits on the role and functions of the temporary administrator, at the time of appointment.

• (8) The temporary administration order may specify that the competent authority may require that a temporary administrator draw up reports on the financial position of an institution and on the acts performed in the course of his or her appointment, at intervals set by the competent authority and at the end of his or her appointment.

• (9) The temporary administration order may require that certain acts of the temporary administrator be subject to the competent authority’s prior written consent and it shall specify any such requirements, at the time of making the order or at the time of any variation of the terms of the appointment set out in the order.

• (10) The temporary administration order may provide for the exercise by the temporary administrator of the power to convene a general meeting of the shareholders of the institution and to set the agenda of such a meeting.

• (11) The power to convene a general meeting of the shareholders of the institution and to set the agenda of such a meeting referred to in paragraph (10) may only be exercised with the prior written consent of the competent authority.

Period of temporary administration order.

Remuneration, etc., of temporary administrators.

Resignation, vacancy in office, etc., of temporary administrator.

• (2) The competent authority may remove a temporary administrator by way of written notice at any time for any reason.

• (3) Where a temporary administrator resigns, is removed or is otherwise unable to act, the competent authority may apply to the Court to vary the order appointing the temporary administrator under Regulation 50 to appoint another temporary administrator.

• (4) The resignation or removal of, or the inability to act by, a temporary administrator does not of itself terminate the temporary administration of the institution concerned.

Performance of functions of temporary administrator.

General temporary administrator provisions.

• (2) Subject to this Chapter, the appointment of a temporary administrator shall not prejudice the rights of the shareholders in accordance with Union or national law (including under any enactment or rule of law).

• (3) A temporary administrator appointed pursuant to this Chapter shall not be considered, or taken, to be a shadow director or a de facto director.

• (4) A person appointed as temporary administrator under this Chapter shall not be liable for damages for anything done or omitted in the performance or purported performance or exercise of any of his or her functions, unless it is proved that the act or omission was in bad faith.

Coordination of early intervention measures and appointment of temporary administrator in relation to groups.

• (2) Following the notification and consultation referred to in paragraph (1), the competent authority shall decide whether to—

• (a) apply any of the measures set out in Regulation 39(4), or

• (b) make a proposed temporary administrator order under this Chapter in respect of the relevant Union parent undertaking,

having taken into account the impact of those measures on the group entities in other Member States.

• (3) Where—

• (a) the competent authority is responsible for the supervision of a subsidiary of a Union parent undertaking,

• (b) the conditions for early intervention under Regulation 39 or the appointment of a temporary administrator under this Chapter are met in relation to that subsidiary, and

• (c) the competent authority intends to take a measure in accordance with those Regulations,

the competent authority shall notify the European Banking Authority, in writing, and consult the consolidating supervisor.

• (4) The competent authority shall decide, following a notification under paragraph (3), whether to—

• (a) apply any of the measures set out in Regulation 39(4), or

• (b) make a proposed temporary administrator order under this Chapter,

having given due consideration to any assessment of the consolidating supervisor provided to the competent authority in accordance with Article 30(3) of the Bank Recovery and Resolution Directive.

• (5) The competent authority shall notify the decision referred to in paragraph (2) or (4), in writing, to the Union competent authorities in the supervisory college and to the European Banking Authority.

• (6) Where the competent authority is the consolidating supervisor and it receives a notification from a Union competent authority of a subsidiary pursuant to Article 30(3) of the Bank Recovery and Resolution Directive, the competent authority may assess the likely impact of the proposed early intervention measures set out in Regulation 39(4) or appointment of a temporary administrator under this Chapter on the group or on group entities in the Union.

• (7) The competent authority shall communicate the assessment referred to in paragraph (6) to the Union competent authority concerned within 3 days.

• (8) Where more than one competent authority intends to—

• (a) appoint a temporary administrator in accordance with Article 29, or

• (b) apply any of the early intervention measures set out in Article 27,

of the Bank Recovery and Resolution Directive to more than one institution in the same group, the competent authority, whether it is the consolidating supervisor or is responsible for supervision of a subsidiary, shall consider, together with the relevant Union competent authorities, whether it is more appropriate to appoint the same temporary administrator for all the entities concerned or to coordinate the application of any measures in that Article 27 to more than one institution in order to facilitate a solution to restore the financial position of the institution concerned.

• (9) Where the competent authority, whether it is the consolidating supervisor or is responsible for supervision of a subsidiary, agrees that it is appropriate to appoint the same temporary administrator for all entities, it shall follow the procedures set out in this Chapter for such an appointment.

• (10) A decision arising from the consideration referred to in paragraph (8) shall take the form of a joint decision of the consolidating supervisor and the relevant Union competent authorities.

• (11) The competent authority shall endeavour to reach the joint decision referred to in paragraph (10) with the relevant Union competent authorities within 5 days from the date of the first notification pursuant to Article 30(1) of the Bank Recovery and Resolution Directive.

• (12) A joint decision referred to in paragraph (10) shall be reasoned and, the competent authority, where it is consolidating supervisor, shall provide the decision and reasons for the decision, in writing, to the Union parent undertaking.

• (13) Where the Union competent authorities and the competent authority have not made a joint decision within 5 days, the competent authority, whether it is consolidating supervisor or is responsible for the supervision of a subsidiary, may take its own decision to make a proposed temporary administration order in relation to an institution for which it is responsible or on the application of any of the early intervention measures in Regulation 39.

• (14) The competent authority, whether it is consolidating supervisor or is responsible for the supervision of a subsidiary, may request the European Banking Authority, in writing, to assist in reaching a joint decision in accordance with Article 31 of Regulation (EU) No 1093/2010.

• (15) Where the competent authority, whether it is consolidating supervisor or is responsible for the supervision of a subsidiary, either—

• (a) does not agree with the decision notified in accordance with Article 30(1) or (3) of the Bank Recovery and Resolution Directive, or

• (b) has not reached a joint decision with the Union competent authorities under Article 30(4) of the Bank Recovery and Resolution Directive,

the competent authority may refer the matter to the European Banking Authority, in accordance with Article 19(3) of Regulation (EU) No 1093/2010, provided it intends to apply one or more of the measures in—

• (i) Article 27(1)(a) of the Bank Recovery and Resolution Directive with respect to point (4), (10), (11) or (19) of Part 1 of the Annex to,

• (ii) Article 27(1)(e) of, or

• (iii) Article 27(1)(g) of,

the Bank Recovery and Resolution Directive.

• (16) The competent authority shall not refer the matter to the European Banking Authority after the end of the five-day period referred to in paragraph (11), where applicable, or after a joint decision has been reached.

• (17) The decision of the competent authority, whether it is consolidating supervisor or is responsible for the supervision of a subsidiary, shall be reasoned and shall take into account—

• (a) any views or reservations of the relevant Union competent authorities expressed during the consultation period referred to in paragraph (1) or (3) or the five-day period referred to in paragraph (11), and

• (b) the potential impact of the decision on financial stability in the Member States concerned.

• (18) The competent authority shall provide the decision, in writing, to the Union parent undertaking, where the competent authority is consolidating supervisor, or to the subsidiary, where the competent authority is responsible for its supervision.

• (19) In the cases referred to in paragraph (15), where, before the end of the consultation period referred to in Article 30(1) or (3) of the Bank Recovery and Resolution Directive or at the end of the five-day period referred to in Article 30(4) of that Directive, any Union competent authority has referred the matter to the European Banking Authority in accordance with Article 19(3) of Regulation (EU) No 1093/2010, the competent authority shall defer a decision and await any decision that that other authority may take in accordance with Article 19(3) of that Regulation.

• (20) Where the matter is referred to the European Banking Authority, the competent authority shall take its decision in accordance with any decision of that other authority and the five-day period shall be deemed to be the conciliation period within the meaning of Regulation (EU) No 1093/2010.

• (21) In the absence of a decision by the European Banking Authority within 3 days, decisions taken by competent authorities in accordance with paragraph (2), (3) or the third subparagraph of paragraph (4) of Article 30 of the Bank Recovery and Resolution Directive shall apply.

Part 4 Resolution

Chapter 1 Objectives, conditions and general principles

Resolution objectives.

• (a) have regard to the resolution objectives, and

• (b) choose the tools and functions that best achieve the objectives that are relevant in the circumstances of the case.

• (2) The resolution objectives referred to in paragraph (1) are the following:

• (a) to ensure the continuity of critical functions;

• (b) to avoid a significant adverse effect on the financial system, in particular by preventing contagion, including to market infrastructures, and by maintaining market discipline;

• (c) to protect public funds by minimising reliance on extraordinary public financial support;

• (d) to protect depositors covered by Directive 2014/49/EU and investors covered by Directive 97/9/EC;

• (e) to protect client funds and client assets.

• (3) When pursuing the objectives set out in paragraph (2), the resolution authority shall seek to minimise the cost of resolution and avoid destruction of value unless necessary to achieve the resolution objectives.

• (4) Subject to these Regulations, the resolution objectives are of equal significance and the resolution authority shall balance them as appropriate to the nature and circumstances of each case.

Conditions for resolution.

• (a) the determination that the institution is failing or is likely to fail has been made by the competent authority having consulted the resolution authority;

• (b) having regard to timing and other relevant circumstances, there is no reasonable prospect that any alternative private sector measures, including measures by an institutional protection scheme, or supervisory action, including early intervention measures or the write-down or conversion of relevant capital instruments in accordance with Regulation 95(1), taken in respect of the institution, would prevent the failure of the institution within a reasonable timeframe;

• (c) a resolution action is necessary in the public interest pursuant to paragraph (7);

• (d) there has been compliance with the requirements of Regulation 9.

• (2) The previous adoption of an early intervention measure under Regulation 39 is not a precondition to the making of a proposed resolution order.

• (3) For the purposes of paragraph (1)(a), an institution shall be considered to be failing or likely to fail where one or more of the following circumstances exists:

• (a) the institution infringes or there are objective elements to support a determination that the institution will, in the near future, infringe the requirements for continuing authorisation under financial services legislation in a way that would justify the withdrawal of the authorisation by the competent authority, including, without prejudice to the generality of the foregoing, because the institution has incurred or is likely to incur losses that will deplete all or a significant amount of its own funds;

• (b) the value of assets of the institution are, or there are objective elements to support a determination that the value of assets of the institution will, in the near future be less than the value of its liabilities;

• (c) the institution is, or there are objective elements to support a determination that the institution will, in the near future be unable to pay its debts or other liabilities as they fall due;

• (d) extraordinary public financial support is required other than where, in order to remedy a serious disturbance in the economy of the State and preserve financial stability, the extraordinary public financial support takes any of the following forms:

• (i) a State guarantee to back liquidity facilities provided by the Bank according to the Bank’s conditions;

• (ii) a State guarantee of newly issued liabilities;

• (iii) an injection of own funds or purchase of capital instruments at prices and on terms that do not confer an advantage upon the institution, where neither the circumstances referred to in subparagraphs (a), (b) or (c) nor the circumstances referred to in Regulation 95(4) are present at the time the public support is granted.

• (4) The guarantee or equivalent measures mentioned in each of the cases referred to in paragraph (3)(d)(i), (ii) and (iii) shall be confined to solvent institutions and shall be conditional on final approval under the Union State aid framework.

• (5) The measures referred to in paragraph (3)(d) shall be of a precautionary and temporary nature and shall be proportionate to remedy the consequences of the serious disturbance and shall not be used to offset losses that the institution has incurred or is likely to incur in the near future.

• (6) Support measures under paragraph (3)(d)(iii) shall be limited to injections necessary to address capital shortfall established in the national, Union or SSM-wide stress tests, asset quality reviews or equivalent exercises conducted by the European Central Bank, the European Banking Authority or national authorities, where applicable, confirmed by the competent authority.

• (7) For the purposes of paragraph (1)(c), a resolution action shall be considered to be in the public interest where—

• (a) it is necessary for the achievement of, and is proportionate to, one or more of the resolution objectives referred to in Regulation 61, and

• (b) winding up the institution under normal insolvency proceedings would not meet those resolution objectives to the same extent.

Conditions for resolution with regard to financial institutions and holding companies.

• (a) the financial institution concerned, and

• (b) the parent undertaking subject to consolidated supervision.

• (2) The resolution authority may, subject to Regulation 9(2), make a proposed resolution order in relation to an entity referred to in Regulation 2(1)(c) to (i) where—

• (a) the conditions set out in Regulation 62(1) are met with regard to that entity and—

• (b) either—

• (i) the conditions in Regulation 62(1) are met with regard to one or more subsidiaries which are institutions, or

• (i) where the subsidiary concerned is not established in the Union, the third-country authority has determined that it meets the conditions for resolution under the laws of that third country.

• (3) Where one or more subsidiary institutions of a mixed-activity holding company is held directly or indirectly by an intermediate financial holding company, the resolution authority shall only make a proposed resolution order for the purposes of group resolution in relation to the intermediate financial holding company, and shall not make a proposed resolution order for the purposes of group resolution in relation to the mixed-activity holding company.

• (4) Subject to paragraph (3), notwithstanding the fact that an entity referred to in Regulation 2(1)(c) to (i) does not meet the conditions set out in Regulation 62(1), the resolution authority may make a proposed resolution order in relation to the entity concerned where—

• (a) the conditions set out in Regulation 62(1) are met in relation to one or more of that entity’s subsidiaries which are institutions,

• (b) the assets and liabilities of those subsidiaries are such that the failure of those subsidiaries would threaten the entity or the group as a whole, and

• (c) resolution action in relation to the entity referred to in Regulation 2(1)(c) to (i) is necessary for the resolution of such subsidiaries which are institutions or for the resolution of the group as a whole.

• (5) For the purposes of paragraphs (2) and (4), when assessing whether the conditions in Regulation 62(1) are met in respect of one or more subsidiaries which are institutions, the resolution authority, whether it is the resolution authority of the entity referred to in Regulation 2(1)(c) to (i) or the resolution authority of a subsidiary institution, may by joint agreement with the Union resolution authority concerned disregard any intra-group capital or loss transfers between the entities, including the exercise of write-down or conversion powers.

General principles governing resolution.

• (a) shareholders of the institution under resolution bear first losses;

• (b) 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 these Regulations;

• (c) the management body and senior management of the institution under resolution are replaced, other than in those cases where the retention of the management body and senior management, in whole or in part, as appropriate to the circumstances, is considered to be necessary by the resolution authority for the achievement of the resolution objectives;

• (d) the management body and senior management of the institution under resolution shall provide all necessary assistance for the achievement of the resolution objectives;

• (e) persons are made liable, in accordance with the relevant provisions of civil or criminal law, for their responsibility for the failure of the institution;

• (f) other than where otherwise provided in this Regulation, creditors of the same class are treated in an equitable manner;

• (g) no creditor shall incur greater losses than would have been incurred if the institution or entity referred to in Regulation 2(1)(b) to (i) had been wound up under normal insolvency proceedings, in accordance with the safeguards in Regulations 132 to 134;

• (h) covered deposits are fully protected;

• (i) resolution action is taken in accordance with the safeguards in these Regulations.

• (2) The resolution authority shall, without prejudice to Regulation 61, apply resolution tools and exercise resolution powers in a way that minimises the impact on other group entities and on the group as a whole and minimises the adverse effects on financial stability in the Union and its Member States, in particular, in the countries where the group operates.

• (3) When applying the resolution tools and exercising the resolution powers, the resolution authority shall comply with the Union State aid framework, where applicable.

• (4) Where a resolution order applies the sale of business tool, the bridge institution tool or the asset separation tool to an institution or entity referred to in Regulation 2(1)(b) to (i)—

• (a) that institution or entity shall be considered to be the subject of bankruptcy proceedings or analogous insolvency proceedings for the purposes of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 ( S.I. No. 131 of 2003 ), and

• (b) the resolution authority shall, where it considers it appropriate, notify or consult employee representatives of that institution or entity before the transfer takes effect.

• (5) In determining whether the notification or consultation referred to in paragraph (4)(b) is appropriate, the resolution authority shall give due consideration to the following:

• (a) any risk that the notification or consultation would cause information to become public which would inhibit the resolution action or the achievement of the resolution objectives;

• (b) any risk that the notification or consultation would unduly delay resolution action.

• (6) The application of the resolution tools and exercise of the resolution powers shall be without prejudice to provisions on the representation of employees in management bodies as provided for in national law (including any enactment or rule of law), custom or practice.

Chapter 2 Valuation

Valuation for purposes of resolution.

• (2) Subject to paragraph (12) and to Regulations 148 to 150, where all the requirements set out in this Regulation are met, the valuation shall be considered to be definitive.

• (3) Where an independent valuation according to paragraph (1) is not possible, the resolution authority may carry out a provisional valuation of the assets and liabilities of the institution or entity referred to in Regulation 2(1)(b) to (i) in accordance with Regulation 66.

• (4) The objective of the valuation shall be to assess the value of the assets and liabilities of the institution or entity referred to in Regulation 2(1)(b) to (i) that meets the conditions for resolution set out in Regulations 62 and 63.

• (5) The purposes of the valuation shall be the following:

• (a) to inform the determination of whether the conditions for resolution or the conditions for the write-down or conversion of capital instruments are met;

• (b) where the conditions for resolution are met, to inform the decision on the appropriate resolution action to be taken in respect of the institution or entity referred to in Regulation 2(1)(b) to (i);

• (c) when the power to write-down or convert relevant capital instruments is applied, to inform the decision on the extent of the cancellation or dilution of shares or other instruments of ownership and the extent of the write-down or conversion of relevant capital instruments;

• (d) when the bail-in tool is applied, to inform the decision on the extent of the write-down or conversion of eligible liabilities;

• (e) when the bridge institution tool or asset separation tool is applied, to inform the decision on the assets, rights, liabilities or shares or other instruments of ownership to be transferred and the decision on the value of any consideration to be paid to the institution under resolution or, as the case may be, to the owners of the shares or other instruments of ownership;

• (f) when the sale of business tool is applied, to inform the decision on the assets, rights, liabilities or shares or other instruments of ownership to be transferred and to inform the resolution authority’s understanding of what constitutes commercial terms for the purposes of Regulation 69;

• (g) in all cases, to ensure that any losses on the assets of the institution or entity, referred to in Regulation 2(1)(b) to (i), are fully recognised at the moment the resolution tools are applied or the power to write-down or convert relevant capital instruments is exercised.

• (6) Without prejudice to the Union State aid framework, where applicable, the valuation—

• (a) shall be based on prudent assumptions, including as to rates of default and severity of losses,

• (b) shall not assume any potential future provision of extraordinary public financial support or emergency liquidity assistance or any liquidity assistance provided under non-standard collateralisation, duration and interest rate terms from the Bank to the institution or entity referred to in Regulation 2(1)(b) to (i) from the point at which resolution action is taken or the power to write-down or convert relevant capital instruments is exercised, and

• (c) shall take account of the fact that, if any resolution tool is applied—

• (i) the resolution authority acting pursuant to Regulation 164 may recover any reasonable expenses properly incurred from the institution under resolution, in accordance with Regulation 68(7), and

• (ii) the Fund may charge interest or fees in respect of any loans or guarantees provided to the institution under resolution in accordance with Regulation 164.

• (7) The valuation shall be supplemented by the following information as appearing in the accounting books and records of the institution or entity referred to in Regulation 2(1)(b) to (i):

• (a) an updated balance sheet and a report on the financial position of the institution or entity concerned;

• (b) an analysis and an estimate of the accounting value of the assets;

• (c) the list of outstanding on-balance sheet and off-balance sheet liabilities shown in the books and records of the institution or entity referred to in Regulation 2(1)(b) to (i) with an indication of the respective credits and priority levels under national law (including under any enactment or rule of law).

• (8) Where appropriate, in order to inform the decisions referred to in paragraph (5)(e) and (f), the information in paragraph (7)(b) may be complemented by an analysis and estimate of the value of the assets and liabilities of an institution or entity referred to in Regulation 2(1)(b) to (i) on a market value basis.

• (9) The valuation shall indicate the subdivision of the creditors in classes in accordance with their priority levels under national law (including under any enactment or rule of law) and an estimate of the treatment that each class of shareholders and creditors would have been expected to receive if an institution or entity referred to in Regulation 2(1)(b) to (i) were wound up under normal insolvency proceedings.

• (10) The estimate referred to in paragraph (9) shall not affect the application of the “no creditor worse off” principle to be carried out under Regulation 133.

• (11) Notwithstanding paragraphs (1) and (2), a provisional valuation conducted in accordance with Regulation 66 shall be a valid basis for the resolution authority to take resolution actions, including taking control of a failing institution or entity referred to in Regulation 2(1)(b) to (i) or to exercise the write-down or conversion power of capital instruments.

• (12) The valuation—

• (a) shall be an integral part of the decision to apply a resolution tool or exercise a resolution power, or the decision to exercise the write-down or conversion power of capital instruments,

• (b) shall not itself be subject to a separate right of appeal but may be subject to an appeal together with the decision in accordance with Regulations 148 to 150.

• (13) In this Regulation, “valuation” means the valuation referred to in paragraph (1).

Provisional valuation.

• (a) due to the urgency of the circumstances of the case it is not possible to comply with the requirements in Regulation 65(7) and (9), or

• (b) where paragraph (3) of Regulation 65 applies,

a provisional valuation shall be carried out which shall—

• (i) comply with the requirements of paragraph (4) of Regulation 65 and insofar as reasonably practicable in the circumstances with the requirements of paragraphs (1), (2), (7) and (9) of that Regulation, and

• (ii) include a buffer for additional losses with appropriate justification.

• (2) A valuation that does not comply with all the requirements set out in Regulation 65 or this Regulation shall be considered to be provisional until an independent person has carried out a valuation (in this Regulation, referred to as the “definitive valuation”) that is fully compliant with all the requirements set out in that Regulation and this Regulation.

• (3) The definitive valuation—

• (a) shall be carried out as soon as practicable, and

• (b) may be carried out either separately from the valuation referred to in Regulation 133, or simultaneously with and by the same independent person as that valuation, but shall be distinct from it.

• (4) The purposes of the definitive valuation shall be the following:

• (a) to ensure that any losses on the assets of the institution or entity referred to in Regulation 2(1)(b) to (i) are fully recognised in its books of accounts;

• (b) to inform a decision to write back creditors’ claims or to increase the value of the consideration paid, in accordance with paragraph (5).

• (5) In the event that the definitive valuation’s estimate of the net asset value of the institution or entity referred to in Regulation 2(1)(b) to (i) is higher than the provisional valuation’s estimate of the net asset value of the institution or entity in question, the resolution authority may—

• (a) exercise its power to write-up the value of the claims of creditors or owners of relevant capital instruments which have been written down under the bail-in tool in accordance with Regulation 85(4) and (5), and

• (b) direct a bridge institution or asset management vehicle to make a further payment of consideration in respect of the assets, rights, liabilities to the institution under resolution, or as the case may be, in respect of the shares or instruments of ownership to the owners of the shares or other instruments of ownership.

Chapter 3 Resolution tools

General provisions

Application of Central Bank (Supervision and Enforcement) Act 2013.

General principles of resolution tools.

• (2) The resolution tools referred to in paragraph (1) are the following:

• (a) the sale of business tool;

• (b) the bridge institution tool;

• (c) the asset separation tool;

• (d) the bail-in tool.

• (3) Subject to paragraph (4), the resolution authority may apply the resolution tools individually or in any combination.

• (4) The resolution authority may apply the asset separation tool only together with another resolution tool.

• (5) Where only the resolution tools referred to in paragraph (2)(a) or (b) are used, and they are used to transfer only part of the assets, rights or liabilities of the institution under resolution, the residual institution or entity referred to in Regulation 2(1)(b) to (i) from which the assets, rights or liabilities have been transferred, shall be wound up under normal insolvency proceedings.

• (6) The winding up referred to in paragraph (5) shall be done within a reasonable timeframe, having regard to—

• (a) any need for that institution or entity to provide services or support pursuant to Regulation 125 in order to enable the recipient to carry out the activities or services acquired by virtue of that transfer, and

• (b) any other reason that the continuation of the residual institution or entity is necessary to achieve the resolution objectives or comply with the principles mentioned in Regulation 64.

• (7) The resolution authority acting pursuant to Regulation 164 may recover any reasonable expenses properly incurred in connection with the use of the resolution tools or functions in one or more of the following ways:

• (a) as a deduction from any consideration paid by a recipient to the institution under resolution or, as the case may be, to the owners of the shares or other instruments of ownership;

• (b) from the institution under resolution as a preferred creditor;

• (c) from any proceeds generated as a result of the termination of the operation of the bridge institution or the asset management vehicle as a preferred creditor.

• (8) Without prejudice to Regulations 136 to 142, nothing in national law (including under any enactment or rule of law), other than under these Regulations, relating to the voidability or unenforceability of legal acts detrimental to creditors, shall operate to prevent transfers of assets, rights or liabilities from an institution under resolution to another entity by virtue of the application of a resolution tool or exercise of a resolution power.

The sale of business tool

Sale of business tool.

• (a) shares or other instruments of ownership issued by an institution under resolution;

• (b) all or any assets, rights or liabilities of an institution under resolution.

• (2) Subject to paragraphs (10) and (11) and to Regulations 110, 148, 149 and 150, a transfer referred to in the paragraph (1) shall take place without obtaining the consent of the shareholders of the institution under resolution or any third party other than the purchaser, and without complying with any procedural requirements under company or securities law in the State other than those included in Regulation 70.

• (3) A transfer made pursuant to paragraph (1) shall be made on commercial terms, having regard to the circumstances, and in accordance with the Union State aid framework.

• (4) In accordance with paragraph (3), the resolution authority shall endeavour to obtain commercial terms for a transfer that conforms with the valuation conducted under Regulation 65 or 66, having regard to the circumstances of the case.

• (5) Subject to Regulation 68(7), any consideration paid by the purchaser shall benefit the following:

• (a) the owners of the shares or other instruments of ownership, where the sale of business has been effected by transferring shares or instruments of ownership issued by the institution under resolution from the holders of those shares or instruments to the purchaser;

• (b) the institution under resolution, where the sale of business has been effected by transferring some or all of the assets or liabilities of the institution under resolution to the purchaser.

• (6) The resolution authority may apply to the Court pursuant to Regulation 108 to vary the resolution order to make supplemental transfers of shares or other instruments of ownership issued by an institution under resolution or, as the case may be, assets, rights or liabilities of that institution.

• (7) Following an application of the sale of business tool, the resolution authority may, with the consent of the purchaser, apply to the Court under Regulation 108 to vary the resolution order to transfer the assets, rights or liabilities from the purchaser back to the institution under resolution, or the shares or other instruments of ownership from the purchaser back to their original owners, and where such a variation of the resolution order is made, any such assets, rights, liabilities, shares or other instruments of ownership shall vest in the institution under resolution or the original owner, as the case may be.

• (8) A purchaser who acquires a business under a transfer made pursuant to paragraph (1) shall not carry out the business it acquires other than where it holds any authorisation required under the applicable financial services legislation.

• (9) The competent authority shall ensure that an application for authorisation, referred to in paragraph (8), by a purchaser shall be considered in conjunction with the transfer in a timely manner.

• (10) By way of derogation from—

• (a) Regulations 10 to 19 of the Capital Requirements Regulations,

• (b) the requirement to inform the competent authorities under Regulations 21 and 23 of the Capital Requirements Regulations,

• (c) Regulations 179, 181, 182, 183, 184, 184A, 185 and 187 of the MiFID I Regulations, and

• (d) the requirement to give notice under Regulation 180 or 187 of the MiFID I Regulations,