LegalizeS.I. No. 713/2020 - European Union (Bank Recovery and Resolution) (Amendment) Regulations 2020
This is the act as published. Later amendments are not folded into the text below: each one is a separate act in this repository and an entry in this law's history.
“Application and calculation of the minimum requirement for own funds and eligible liabilities.
80B. (1) Institutions and entities referred to in Regulation 2(1)(b) to (i) shall, at all times, meet the requirements for own funds and eligible liabilities where required by and in accordance with this Regulation and Regulations 80C to 80K.
(2) The requirement referred to in paragraph (1) shall be calculated in accordance with Regulation 80E(3) to (11), 80E(12) or 80E(14) to (22), as applicable, as the amount of own funds and eligible liabilities and expressed as percentages of —
(a) the total risk exposure amount of the institution or entity referred to in paragraph (1), calculated in accordance with Article 92(3) of the Union Capital Requirements Regulation, and
(b) the total exposure measure of the institution or entity referred to in paragraph (1), calculated in accordance with Articles 429 and 429a of the Union Capital Requirements Regulation.
Exemption from the minimum requirement for own funds and eligible liabilities.
80C. (1) Notwithstanding Regulation 80B, the resolution authority shall exempt from the requirement referred to in Regulation 80B(1) mortgage credit institutions financed by covered bonds which, under the law of the State, are not allowed to receive deposits, provided that —
(a) those institutions will be wound up under normal insolvency proceedings or in proceedings implemented in accordance with Regulation 69, 71 or 74, and
(b) the proceedings referred to in subparagraph (a) ensure that creditors of those institutions, including holders of covered bonds, where relevant, bear losses in a way that meets the resolution objectives.
(2) Institutions exempted in accordance with this Regulation from the requirement referred to in Regulation 80B(1) shall not be part of the consolidation referred to in Regulation 80G(1).
Eligible liabilities for resolution entities.
80D. (1) Liabilities shall be included in the amount of own funds and eligible liabilities of resolution entities only where they satisfy the conditions referred to in the following Articles of the Union Capital Requirements Regulation:
- (a) Article 72a; - (b) Article 72b, other than point (d) of paragraph 2; - (c) Article 72c.
(2) Notwithstanding paragraph (1), where these Regulations refer to the requirements in Article 92a or 92b of the Union Capital Requirements Regulation, for the purpose of those Articles, eligible liabilities shall consist of those eligible liabilities which are defined in Article 72k of the Union Capital Requirements Regulation and determined in accordance with Chapter 5a of Title I of Part Two of that Regulation.
(3) Liabilities that arise from debt instruments with embedded derivatives, such as structured notes, that meet the conditions referred to in paragraph (1), except for point (l) of Article 72a(2) of the Union Capital Requirements Regulation, shall be included in the amount of own funds and eligible liabilities where only one of the following conditions is met:
(a) the principal amount of the liability arising from the debt instrument is —
(i) known at the time of issue,
(ii) fixed or increasing, and
(iii) not affected by an embedded derivative feature,
and the total amount of the liability arising from the debt instrument, including the embedded derivative, can be valued on a daily basis by reference to an active and liquid two-way market for an equivalent instrument without credit risk, in accordance with Articles 104 and 105 of the Union Capital Requirements Regulation;
(b) the debt instrument includes a contractual term that specifies that the value of the claim in cases of the insolvency and of the resolution of the issuer is fixed or increasing, and does not exceed the initially paid-up amount of the liability.
(4) Debt instruments referred to in paragraph (3), including their embedded derivatives, shall not be subject to any netting agreement and the valuation of such instruments shall not be subject to Regulation 88(4).
(5) The liabilities referred to in paragraph (3) shall only be included in the amount of own funds and eligible liabilities with respect to the part of the liability that corresponds to the principal amount referred to in paragraph (3)(a) or to the fixed or increasing amount referred to in paragraph (3)(b).
(6) Where liabilities are issued by a subsidiary established in the Union to an existing shareholder that is not part of the same resolution group, and that subsidiary is part of the same resolution group as the resolution entity, those liabilities shall be included in the amount of own funds and eligible liabilities of that resolution entity, provided that the following conditions are met:
(a) the liabilities are issued in accordance with Regulation 80H(6)(a);
(b) the exercise of the write-down or conversion power in relation to those liabilities in accordance with Regulation 95 or 98 does not affect the control of the subsidiary by the resolution entity;
(c) the liabilities do not exceed an amount determined by subtracting:
(i) the sum of —
(I) the liabilities issued to and bought by the resolution entity either directly or indirectly through other entities in the same resolution group, and
(II) the amount of own funds issued in accordance with Regulation 80H(6)(b),
from
(ii) the amount required in accordance with Regulation 80H(1) to (5).
(7) In the case of resolution entities that are G-SIIs or that are subject to Regulation 80E(12) or (13), as the case may be, subject to paragraph (8) and without prejudice to the minimum requirement in Regulation 80E(12) or referred to in 80F(1)(a), the resolution authority shall ensure that a part of the requirement referred to in Regulation 80G equal to 8 per cent of the total liabilities, including own funds, shall be met by such resolution entities using own funds, subordinated eligible instruments, or liabilities as referred to in paragraph (6).
(8) The resolution authority may permit that a level lower than 8 per cent of the total liabilities, including own funds, but greater than the amount resulting from the application of the formula —
shall be met by resolution entities referred to in paragraph (7) using own funds, subordinated eligible instruments, or liabilities as referred to in paragraph (6), provided that all the conditions set out in Article 72b(3) of the Union Capital Requirements Regulation are met, where, in light of the reduction that is possible under the said Article 72b(3):
X1 equals 3.5 per cent of the total risk exposure amount calculated in accordance with Article 92(3) of the Union Capital Requirements Regulation; and
X2 equals the sum of 18 per cent of the total risk exposure amount calculated in accordance with Article 92(3) of the Union Capital Requirements Regulation and the amount of the combined buffer requirement.
(9) For resolution entities that are subject to Regulation 80E(12), where the application of paragraphs (7) and (8) leads to a requirement greater than 27 per cent of the total risk exposure amount for the resolution entity concerned, the resolution authority shall limit the part of the requirement referred to in Regulation 80G which is to be met using own funds, subordinated eligible instruments, or liabilities as referred to in paragraph (6), to an amount equal to 27 per cent of the total risk exposure amount of that resolution entity if the resolution authority has assessed that —
(a) access to the resolution financing arrangement is not considered to be an option for resolving that resolution entity in the resolution plan, and
(b) where subparagraph (a) does not apply, the requirement referred to in Regulation 80G allows that resolution entity to meet the requirements referred to in Regulation 80(12).
(10) In carrying out the assessment referred to in paragraph (9), the resolution authority shall also take into account the risk of disproportionate impact on the business model of the resolution entity concerned.
(11) Paragraph (9) shall not apply to resolution entities that are subject to Regulation 80E(13).
(12) For resolution entities other than those referred to in paragraph (7), the resolution authority may decide that a part of the requirement referred to in Regulation 80G up to the greater of 8 per cent of the total liabilities, including own funds, of the resolution entity and the formula referred to in paragraph (16), shall be met using own funds, subordinated eligible instruments, or liabilities as referred to in paragraph (6), provided that the following conditions are met:
(a) non-subordinated liabilities referred to in paragraphs (1) and (3) have the same priority ranking as provided for in section 1428A of the Act of 2014 as certain liabilities that are excluded from the application of write-down and conversion powers in accordance with Regulation 80(2) to (8) or Regulation 80(9) and (10);
(b) there is a risk that, as a result of a planned application of write-down and conversion powers to non-subordinated liabilities that are not excluded from the application of write-down and conversion powers in accordance with Regulation 80(2) to (8) or Regulation 80(9) and (10), creditors whose claims arise from those liabilities incur greater losses than they would incur in a winding up under normal insolvency proceedings;
(c) the amount of own funds and other subordinated liabilities does not exceed the amount necessary to ensure that the creditors referred to in subparagraph (b) do not incur losses above the level of losses that they would otherwise have incurred in the winding-up of the resolution entity under normal insolvency proceedings.
(13) Where the resolution authority determines that, within a class of liabilities which includes eligible liabilities, the amount of the liabilities that are excluded or reasonably likely to be excluded from the application of write-down or conversion powers in accordance with Regulation 80(2) to (8) or Regulation 80(9) and (10) totals more than 10 per cent of that class, the resolution authority shall assess the risk referred to in paragraph (12)(b).
(14) For the purposes of paragraphs (7) to (13) and (16), derivative liabilities shall be included in total liabilities on the basis that full recognition is given to counterparty netting rights.
(15) The own funds of a resolution entity that are used to comply with the combined buffer requirement shall be eligible to comply with the requirements referred to in paragraphs (7) to (13) and (16).
(16) Notwithstanding paragraphs (7) to (11) and subject to paragraphs (17) to (21), the resolution authority may decide that the requirement referred to in Regulation 80G shall be met by resolution entities referred to in paragraph (7) using own funds, subordinated eligible instruments, or liabilities as referred to in paragraph (6), to the extent that, due to the obligation of the resolution entity to comply with the combined buffer requirement and the requirements referred to in Article 92a of the Union Capital Requirements Regulation and Regulations 80E(12) and 80G, the sum of those own funds, instruments and liabilities does not exceed the greater of —
(a) 8 per cent of total liabilities, including own funds, of the entity, or
(b) the amount resulting from the application of the formula —
where –
A is the amount resulting from the requirement referred to in Article 92(1)(c) of the Union Capital Requirements Regulation,
B is the amount resulting from the requirement referred to in Regulation 92A of the Capital Requirements Regulations, and
C is the amount resulting from the combined buffer requirement.
(17)
(a) The resolution authority may exercise the power referred to in paragraph (16) with respect to resolution entities that are G-SIIs or that are subject to Regulation 80E(12) or (13), and that meet one of the conditions specified in paragraph (18), up to a limit of 100 per cent of the total number of all resolution entities that are G-SIIs or that are subject to Regulation 80E(12) or (13) for which the resolution authority determines the requirement referred to in Regulation 80G.
(b) Subject to section 33AK(1A) of the Act of 1942, if the Minister is of the opinion that such information is relevant to the exercise of the power referred to in paragraph (16) as provided for in subparagraph (a), the resolution authority shall provide such information as the Minister may from time to time require on the total number of resolution entities that are G-SIIs or that are subject to Regulation 80E(12) or (13).
(18) The following are the conditions referred to in paragraph (17):
(a) substantive impediments to resolvability have been identified in the preceding resolvability assessment and either:
(i) no remedial action has been taken following the application of the measures referred to in Regulation 28(10) in the timeline required by the resolution authority, or
(ii) the identified substantive impediments cannot be addressed using any of the measures referred to in Regulation 28(10), and the exercise of the power referred to in paragraph (16) would partially or fully compensate for the negative impact of the substantive impediments on resolvability;
(b) the resolution authority considers that the feasibility and credibility of the resolution entity’s preferred resolution strategy is limited, taking into account the entity’s size, its interconnectedness, the nature, scope, risk and complexity of its activities, its legal status and its shareholding structure;
(c) the requirement referred to in Regulation 92A of the Capital Requirements Regulations reflects the fact that the resolution entity that is a G-SII or that is subject to Regulation 80E(12) or (13) is, in terms of risk, among the top 20 per cent of institutions for which the resolution authority determines the requirement referred to in Regulation 80B(1).
(19) For the purposes of the percentages referred to in paragraphs (17) and (18), the resolution authority shall round the number resulting from the calculation up to the closest whole number.
(20) The resolution authority shall only take a decision referred to in paragraph (12) or (16), as the case may be, after consulting the competent authority.
(21) When taking a decision referred to in paragraph (12) or (16), as the case may be, the resolution authority shall also take into account —
(a) the depth of the market for the resolution entity’s own funds instruments and subordinated eligible instruments, the pricing of such instruments, where they exist, and the time needed to execute any transactions necessary for the purpose of complying with the decision,
(b) the amount of eligible liabilities instruments that meet all of the conditions referred to in Article 72a of the Union Capital Requirements Regulation that have a residual maturity below one year as of the date of the decision, with a view to making quantitative adjustments to the requirements referred to in paragraphs (12) and (16),
(c) the availability and the amount of instruments that meet all of the conditions referred to in Article 72a of the Union Capital Requirements Regulation other than point (d) of Article 72b(2) of that Regulation,
(d) subject to paragraph (22), whether the amount of liabilities that are excluded from the application of write-down and conversion powers in accordance with Regulation 80(2) to (8) or Regulation 80(9) and (10) and that, in normal insolvency proceedings, rank equally with or below the highest ranking eligible liabilities is significant in comparison to the own funds and eligible liabilities of the resolution entity,
(e) the resolution entity’s business model, funding model, and risk profile, and its stability and ability to contribute to the economy, and
(f) the impact of possible restructuring costs on the resolution entity’s recapitalisation.
(22) For the purposes of paragraph (21)(d):
(a) where the amount of excluded liabilities does not exceed 5 per cent of the amount of the own funds and eligible liabilities of the resolution entity, the excluded amount shall be considered as not being significant;
(b) above the threshold referred to in subparagraph (a), the significance of the excluded liabilities shall be assessed by the resolution authority.
Determination of minimum requirement for own funds and eligible liabilities.
80E. (1) The requirement referred to in Regulation 80B(1) shall be determined by the resolution authority, after consulting the competent authority, on the basis of the following criteria:
(a) the need to ensure that the resolution group can be resolved by the application of the resolution tools to the resolution entity, including, where appropriate, the bail-in tool, in a way that meets the resolution objectives;
(b) the need to ensure, where appropriate, that the resolution entity and its subsidiaries that are institutions or entities referred to in Regulation 2(1)(b) to (i) but are not resolution entities have sufficient own funds and eligible liabilities to ensure that, if the bail-in tool or write-down and conversion powers, respectively, were to be applied to them, losses could be absorbed and that it is possible to restore the total capital ratio and, as applicable, the leverage ratio, of the relevant entities to a level necessary to enable them to continue to comply with the conditions for authorisation and to carry on the activities for which they are authorised under the Capital Requirements Regulations or Directive 2014/65/EU;
(c) the need to ensure, if the resolution plan anticipates the possibility for certain classes of eligible liabilities to be excluded from bail-in pursuant to Regulation 80(9) and (10) or to be transferred in full to a recipient under a partial transfer, that the resolution entity has sufficient own funds and eligible liabilities to absorb losses and to restore its total capital ratio and, as applicable, its leverage ratio, to the level necessary to enable it to continue to comply with the conditions for authorisation and to carry on the activities for which it is authorised under the Capital Requirements Regulations or Directive 2014/65/EU;
(d) the size, the business model, the funding model and the risk profile of the entity;
(e) the extent to which the failure of the entity would have an adverse effect on financial stability, including through contagion to other institutions or entities, due to the interconnectedness of the entity with those other institutions or entities or with the rest of the financial system.
(2)
(a) Where the resolution plan provides that resolution action is to be taken or that the power to write-down and convert relevant capital instruments and eligible liabilities in accordance with Regulation 95 is to be exercised in accordance with the relevant scenario referred to in Regulation 17(9) and (10) the requirement referred to in Regulation 80B(1) shall equal an amount sufficient to ensure that —
(i) the losses that are expected to be incurred by the entity are fully absorbed (‘loss absorption’), and
(ii) the resolution entity and its subsidiaries that are institutions or entities referred to in Regulation 2(1)(b) to (i) but are not resolution entities are recapitalised to a level necessary to enable them to continue to comply with the conditions for authorisation, and to carry on the activities for which they are authorised under the Capital Requirements Regulations or Directive 2014/65/EU or an equivalent legislative act for an appropriate period not longer than one year (in this Regulation referred to as ‘recapitalisation’).
(b) Where the resolution plan provides that the entity is to be wound up under normal insolvency proceedings, the resolution authority shall assess whether it is justified to limit the requirement referred to in Regulation 80B(1) for that entity, so that it does not exceed an amount sufficient to absorb losses in accordance with subparagraph (a)(i).
(c) The assessment by the resolution authority shall, in particular, evaluate the limit referred to in subparagraph (b) as regards any possible impact on financial stability and on the risk of contagion to the financial system.
(3) For resolution entities, the amount referred to in paragraph (2)(a) shall be the following:
(a) for the purpose of calculating the requirement referred to in Regulation 80B(1), in accordance with Regulation 80B(2)(a), the sum of —
(i) the amount of the losses to be absorbed in resolution that corresponds to the requirements referred to in point (c) of Article 92(1) of the Union Capital Requirements Regulation and Regulation 92A of the Capital Requirements Regulations of the resolution entity at the consolidated resolution group level, and
(ii) a recapitalisation amount that allows the resolution group resulting from resolution to restore compliance with its total capital ratio requirement referred to in point (c) of Article 92(1) of the Union Capital Requirements Regulation and its requirement referred to in Regulation 92A of the Capital Requirements Regulations at the consolidated resolution group level after the implementation of the preferred resolution strategy,
and
(b) for the purpose of calculating the requirement referred to in Regulation 80B(1), in accordance with Regulation 80B(2)(b), the sum of —
(i) the amount of the losses to be absorbed in resolution that corresponds to the resolution entity’s leverage ratio requirement referred to in point (d) of Article 92(1) of the Union Capital Requirements Regulation at the consolidated resolution group level, and
(ii) a recapitalisation amount that allows the resolution group resulting from resolution to restore compliance with the leverage ratio requirement referred to in subparagraph (d) of Article 92(1) of the Union Capital Requirements Regulation at the consolidated resolution group level after the implementation of the preferred resolution strategy.
(4) For the purposes of Regulation 80B(2)(a), the requirement referred to in Regulation 80B(1) shall be expressed in percentage terms as the amount calculated in accordance with paragraph (3)(a), divided by the total risk exposure amount.
(5) For the purposes of Regulation 80B(2)(b), the requirement referred to in Regulation 80B(1) shall be expressed in percentage terms as the amount calculated in accordance with paragraph (3)(b), divided by the total exposure measure.
(6) When setting the individual requirement provided in paragraph (3)(b), the resolution authority shall take into account the requirements referred to in Regulation 80(12).
(7) When setting the recapitalisation amounts referred to in subparagraphs (a)(ii) and (b)(ii) of paragraph (3), the resolution authority shall —
(a) use the most recently reported values for the relevant total risk exposure amount or total exposure measure, adjusted for any changes resulting from resolution actions set out in the resolution plan, and
(b) after consulting with the competent authority, adjust the amount corresponding to the current requirement referred to in Regulation 92A of the Capital Requirements Regulations downwards or upwards to determine the requirement that is to apply to the resolution entity after the implementation of the preferred resolution strategy.
(8) The resolution authority may increase the requirement provided in paragraph (3)(a)(ii) by an appropriate amount necessary to ensure that, following resolution, the entity is able to sustain sufficient market confidence for an appropriate period, which shall not exceed one year.
(9) Where paragraph (8) applies, the amount referred to in that paragraph shall be equal to the combined buffer requirement applicable after the application of the resolution tools, less the amount referred to in Regulation 115(g)(i) of the Capital Requirements Regulations.
(10) The amount referred to in paragraph (8) shall be adjusted downwards if, after consulting the competent authority, the resolution authority determines that it would be feasible and credible for a lower amount to be sufficient to sustain market confidence and to ensure both the continued provision of critical economic functions by the institution or entity referred to in Regulation 2(1)(b) to (i) and its access to funding without recourse to extraordinary public financial support other than contributions from resolution financing arrangements, in accordance with Regulation 80(12) and Regulation 164(2) and (3), after implementation of the resolution strategy.
(11) The amount referred to in paragraph (8) shall be adjusted upwards if, after consulting with the competent authority, the resolution authority determines that a higher amount is necessary to sustain sufficient market confidence and to ensure both the continued provision of critical economic functions by the institution or entity referred to in Regulation 2(1)(b) to (i) and its access to funding without recourse to extraordinary public financial support other than contributions from resolution financing arrangements, in accordance with Regulation 80(12) and Regulation 164(2) and (3), for an appropriate period which shall not exceed one year.
(12)
(a) For resolution entities that are not subject to Article 92a of the Union Capital Requirements Regulation and that are part of a resolution group the total assets of which exceed €100 billion, the level of the requirement referred to in paragraph (3) shall be at least equal to —
(i) 13.5 per cent when calculated in accordance with Regulation 80B(2)(a), and
(ii) 5 per cent when calculated in accordance with Regulation 80B(2)(b).
(b) Notwithstanding Regulation 80D, the resolution entities referred to in subparagraph (a) shall meet a level of the requirement referred to in that subparagraph that is equal to -
(i) 13.5 per cent when calculated in accordance with Regulation 80B(2)(a), and
(ii) 5 per cent when calculated in accordance with Regulation 80B(2)(b),
using own funds, subordinated eligible instruments, or liabilities as referred to in Regulation 80D(6).
(13)
(a) A resolution authority may, after consulting the competent authority, decide to apply the requirements laid down in paragraph (12) to a resolution entity which is not subject to Article 92a of the Union Capital Requirements Regulation and which is part of a resolution group the total assets of which are lower than €100 billion and which the resolution authority has assessed as reasonably likely to pose a systemic risk in the event of its failure.
(b) When making a decision referred to in subparagraph (a), the resolution authority shall take the following into account:
(i) the prevalence of deposits, and the absence of debt instruments in the funding model;
(ii) the extent to which access to the capital markets for eligible liabilities is limited;
(iii) the extent to which the resolution entity relies on Common Equity Tier 1 capital to meet the requirement referred to in Regulation 80G.
(c) The absence of a decision pursuant to subparagraph (a) is without prejudice to any decision under Regulation 80D(12).
(14) For entities that are not themselves resolution entities, the amount referred to in paragraph (2)(a) shall be the following:
(a) for the purpose of calculating the requirement referred to in Regulation 80B(1), in accordance with Regulation 80B(2)(a), the sum of —
(i) the amount of the losses to be absorbed that corresponds to the requirements referred to in point (c) of Article 92(1) of the Union Capital Requirements Regulation and Regulation 92A of the Capital Requirements Regulations of the entity, and
(ii) a recapitalisation amount that allows the entity to restore compliance with its total capital ratio requirement referred in point (c) of Article 92(1) of the Union Capital Requirements Regulation and its requirement referred to in Regulation 92A of the Capital Requirements Regulations after the exercise of the power to write-down or convert relevant capital instruments and eligible liabilities in accordance with Regulation 95 or after the resolution of the resolution group;
(b) for the purpose of calculating the requirement referred to in Regulation 80B(1), in accordance with Regulation 80B(2)(b), the sum of —
(i) the amount of the losses to be absorbed that corresponds to the entity’s leverage ratio requirement referred to in point (d) of Article 92(1) of the Union Capital Requirements Regulation, and
(ii) a recapitalisation amount that allows the entity to restore compliance with its leverage ratio requirement referred to in point (d) of Article 92(1) of the Union Capital Requirements Regulation after the exercise of the power to write-down or convert relevant capital instruments and eligible liabilities in accordance with Regulation 95 or after the resolution of the resolution group.
(15) For the purposes of Regulation 80B(2)(a), the requirement referred to in Regulation 80B(1) shall be expressed in percentage terms as the amount calculated in accordance with paragraph (14)(a), divided by the total risk exposure amount.
(16) For the purposes of Regulation 80B(2)(b), the requirement referred to in Regulation 80B(1) shall be expressed in percentage terms as the amount calculated in accordance with paragraph (14)(b), divided by the total exposure measure.
(17) When setting the individual requirement provided in paragraph (14)(b), the resolution authority shall take into account the requirements referred to in Regulation 80(12).
(18) When setting the recapitalisation amounts referred to in paragraph (14)(a)(ii) and (b)(ii), the resolution authority shall —
(a) use the most recently reported values for the relevant total risk exposure amount or total exposure measure, adjusted for any changes resulting from actions set out in the resolution plan, and
(b) after consulting with the competent authority, adjust the amount corresponding to the current requirement referred to in Regulation 92A of the Capital Requirements Regulations downwards or upwards to determine the requirement that is to apply to the relevant entity after the exercise of the power to write-down or convert relevant capital instruments and eligible liabilities in accordance with Regulation 95 or after the resolution of the resolution group.
(19) The resolution authority may increase the requirement provided in paragraph (14)(a)(ii) by an appropriate amount necessary to ensure that, following the exercise of the power to write-down or convert relevant capital instruments and eligible liabilities in accordance with Regulation 95, the entity is able to sustain sufficient market confidence for an appropriate period which shall not exceed one year.
(20) Where paragraph (19) applies, the amount referred to in that paragraph shall be equal to the combined buffer requirement applicable after the exercise of the power referred to in Regulation 95 or after the resolution of the resolution group, less the amount referred to in Regulation 115(g)(i) of the Capital Requirements Regulations.
(21) The amount referred to in paragraph (19) shall be adjusted downwards if, after consulting with the competent authority, the resolution authority determines that it would be feasible and credible for a lower amount to be sufficient to ensure market confidence and to ensure both the continued provision of critical economic functions by the institution or entity referred to in Regulation 2(1)(b) to (i) and its access to funding without recourse to extraordinary public financial support other than contributions from resolution financing arrangements, in accordance with Regulation 80(12) and Regulation 164(2) and (3), after the exercise of the power referred to in Regulation 95 or after the resolution of the resolution group.
(22) The amount referred to in paragraph (19) shall be adjusted upwards if, after consulting with the competent authority, the resolution authority determines that a higher amount is necessary to sustain sufficient market confidence and to ensure both the continued provision of critical economic functions by the institution or entity referred to in Regulation 2(1)(b) to (i) and its access to funding without recourse to extraordinary public financial support other than contributions from resolution financing arrangements, in accordance with Regulation 80(12) and Regulation 164(2) and (3), for an appropriate period which shall not exceed one year.
(23) Where the resolution authority expects that certain classes of eligible liabilities are reasonably likely to be fully or partially excluded from bail-in pursuant to Regulation 80(9) and (10) or might be transferred in full to a recipient under a partial transfer, the requirement referred to in Regulation 80B(1) shall be met using own funds or other eligible liabilities that are sufficient to —
(a) cover the amount of excluded liabilities identified in accordance with Regulation 80(9) and (10), and
(b) ensure that the conditions referred to in paragraph (2) are satisfied.
(24) Any decision by the resolution authority to impose a minimum requirement of own funds and eligible liabilities under this Regulation shall contain the reasons for that decision, including a full assessment of the elements referred to in paragraphs (2) to (23) and shall be reviewed by the resolution authority without undue delay to reflect any changes in the level of the requirement referred to in Regulation 92A of the Capital Requirements Regulations.
(25) For the purposes of paragraphs (3) to (11) and (14) to (22), capital requirements shall be interpreted in accordance with the competent authority’s application of the transitional provisions laid down in Chapters 1, 2 and 4 of Title I of Part Ten of the Union Capital Requirements Regulation.
Determination of minimum requirement for own funds and eligible liabilities for resolution entities of G-SIIs and Union material subsidiaries of non-EU G-SIIs.
80F. (1) The requirement referred to in Regulation 80B(1) for a resolution entity that is a G-SII or part of a G-SII shall consist of —
- (a) the requirements referred to in Articles 92a and 494 of the Union Capital Requirements Regulation, and - (b) any additional requirement for own funds and eligible liabilities that has been determined by the resolution authority specifically in relation to that entity in accordance with paragraph (3).
(2) The requirement referred to in Regulation 80B(1) for a Union material subsidiary of a non-EU G-SII shall consist of —
(a) the requirements referred to in Articles 92b and 494 of the Union Capital Requirements Regulation, and
(b) any additional requirement for own funds and eligible liabilities that has been determined by the resolution authority specifically in relation to that material subsidiary in accordance with paragraph (3), which is to be met using own funds and liabilities that meet the conditions of Regulation 80H and Regulation 153(2) to (5).
(3) The resolution authority shall impose an additional requirement for own funds and eligible liabilities referred to in paragraphs (1)(b) and (2)(b) only —
(a) where the requirement referred to in paragraph (1)(a) or (2)(a) is not sufficient to satisfy the conditions set out in Regulation 80E, and
(b) to an extent that ensures that the conditions set out in Regulation 80E are satisfied.
(4) For the purposes of Regulation 80J(4) to (6),where more than one G-SII entity (within the meaning of point 136 of Article 4(1) of the Union Capital Requirements Regulation) belonging to the same G-SII are resolution entities, the resolution authority shall calculate the amount referred to in paragraph (3):
(a) for each resolution entity;
(b) for the Union parent undertaking as if it was the only resolution entity of the G-SII.
(5) Any decision by the resolution authority to impose an additional requirement for own funds and eligible liabilities under paragraph (1)(b) or (2)(b) shall contain the reasons for that decision, including a full assessment of the elements referred to in paragraph (3), and shall be reviewed by the resolution authority without undue delay to reflect any changes in the level of the requirement referred to in Regulation 92A of the Capital Requirements Regulations that applies to the resolution group or the Union material subsidiary of a non-EU G-SII.
Application of the minimum requirement for own funds and eligible liabilities to resolution entities.
80G. (1) Resolution entities shall comply with the requirements laid down in Regulations 80D to 80F on a consolidated basis at the level of the resolution group.
(2) The resolution authority shall determine the requirement referred to in Regulation 80B(1) for a resolution entity at the consolidated resolution group level in accordance with Regulation 80J, on the basis of the requirements laid down in Regulations 80D to 80F and on the basis of whether the third-country subsidiaries of the group are to be resolved separately under the resolution plan.
(3) For a resolution group within the meaning of subparagraph (b) of the definition in Regulation 3(1) of ‘resolution group’, where the resolution authority is the resolution authority for such a resolution group it shall decide, depending on the features of the solidarity mechanism and of the preferred resolution strategy, which entities in the resolution group are to be required to comply with Regulation 80E(3) to (12) and Regulation 80F(1), in order to ensure that the resolution group as a whole complies with paragraphs (1) and (2), and how such entities are to do so in conformity with the resolution plan.
Application of the minimum requirement for own funds and eligible liabilities to entities that are not themselves resolution entities.
80H. (1) Subject to paragraph (3), institutions that are subsidiaries of a resolution entity or of a third-country entity, but are not themselves resolution entities, shall comply with the requirements laid down in Regulation 80E on an individual basis.
(2) The resolution authority, after consulting with the competent authority, may decide to apply the requirement laid down in this Regulation to an entity referred to in Regulation 2(1)(b) to (i) that is a subsidiary of a resolution entity but is not itself a resolution entity.
(3) Notwithstanding paragraph (1), Union parent undertakings that are not themselves resolution entities, but are subsidiaries of third-country entities, shall comply with the requirements laid down in Regulations 80E and 80F, as applicable, on a consolidated basis.
(4) In the case of a resolution group referred to in subparagraph (b) of the definition in Regulation 3(1) of ‘resolution group’, the following shall comply with Regulation 80E(14) to (22) on an individual basis:
(a) credit institutions which are permanently affiliated to a central body, but are not themselves resolution entities;
(b) a central body which is not itself a resolution entity;
(c) any resolution entities that are not subject to a requirement under Regulation 80G(3).
(5) The requirement referred to in Regulation 80B(1) for an entity referred to in paragraphs (1) to (4) shall be determined in accordance with Regulations 80J and 153, where applicable, and on the basis of the requirements set out in in Regulation 80E.
(6) The requirement referred to in Regulation 80B(1) for entities referred to in paragraphs (1) to (4) shall be met using one or more of the following:
(a) liabilities —
(i) that are issued to and bought by the resolution entity, either directly or indirectly through other entities in the same resolution group that bought the liabilities from the entity that is subject to this Regulation, or are issued to and bought by an existing shareholder that is not part of the same resolution group as long as the exercise of write-down or conversion powers in accordance with Regulations 95 to 98 does not affect the control of the subsidiary by the resolution entity,
(ii) that satisfy the eligibility criteria referred to in Article 72a of the Union Capital Requirements Regulation, except for points (b), (c), (k), (l) and (m) of Article 72b(2) and Article 72b(3) to (5) of that Regulation;
(iii) that rank, in normal insolvency proceedings, below liabilities that do not meet the condition referred to in clause (i) and that are not eligible for own funds requirements,
(iv) that are subject to write-down or conversion powers in accordance with Regulations 95 to 98 in a manner that is consistent with the resolution strategy of the resolution group, in particular by not affecting the control of the subsidiary by the resolution entity,
(v) the acquisition of ownership of which is not funded directly or indirectly by the entity that is subject to this Regulation,
(vi) the provisions governing which do not indicate explicitly or implicitly that the liabilities would be called, redeemed, repaid or repurchased early, as applicable, by the entity that is subject to this Regulation, other than in the case of the insolvency or liquidation of that entity, and that entity does not otherwise provide such an indication,
(vii) the provisions governing which do not give the holder the right to accelerate the future scheduled payment of interest or principal, other than in the case of the insolvency or liquidation of the entity that is subject to this Regulation,
(viii) the level of interest or dividend payments, as applicable, due thereon is not amended on the basis of the credit standing of the entity that is subject to this Regulation or its parent undertaking;
(b) own funds, as follows:
(i) Common Equity Tier 1 capital, and
(ii) other own funds that —
(I) are issued to and bought by entities that are included in the same resolution group, or
(II) are issued to and bought by entities that are not included in the same resolution group as long as the exercise of write-down or conversion powers in accordance with Regulations 95 to 98 does not affect the control of the subsidiary by the resolution entity.
(7) The resolution authority may waive the application of this Regulation to a subsidiary that is not a resolution entity where —
(a) both the subsidiary and the resolution entity are established in the State and are part of the same resolution group,
(b) the resolution entity complies with the requirement referred to in Regulation 80G,
(c) there is no current or foreseen material practical or legal impediment to the prompt transfer of own funds or repayment of liabilities by the resolution entity to the subsidiary in respect of which a determination has been made in accordance with Regulation 95(8), in particular where resolution action is taken in respect of the resolution entity,
(d) the resolution entity satisfies the competent authority regarding the prudent management of the subsidiary and has declared, with the consent of the competent authority, that it guarantees the commitments entered into by the subsidiary, or the risks in the subsidiary are of no significance,
(e) the risk evaluation, measurement and control procedures of the resolution entity cover the subsidiary, and
(f) the resolution entity holds more than 50 per cent of the voting rights attached to shares in the capital of the subsidiary or has the right to appoint or remove a majority of the members of the management body of the subsidiary.
(8) The resolution authority may also waive the application of this Regulation to a subsidiary that is not a resolution entity where —
(a) both the subsidiary and its parent undertaking are established in the State and are part of the same resolution group,
(b) the parent undertaking complies on a consolidated basis with the requirement referred to in Regulation 80B(1) in the State,
(c) there is no current or foreseen material practical or legal impediment to the prompt transfer of own funds or repayment of liabilities by the parent undertaking to the subsidiary in respect of which a determination has been made in accordance with Regulation 95(8), in particular where resolution action or powers referred to in Regulation 95(1) to (4) are taken in respect of the parent undertaking,
(d) the parent undertaking satisfies the competent authority regarding the prudent management of the subsidiary and has declared, with the consent of the competent authority, that it guarantees the commitments entered into by the subsidiary, or the risks in the subsidiary are of no significance,
(e) the risk evaluation, measurement and control procedures of the parent undertaking cover the subsidiary, and
(f) the parent undertaking holds more than 50 per cent of the voting rights attached to shares in the capital of the subsidiary or has the right to appoint or remove a majority of the members of the management body of the subsidiary.
(9) Where the conditions laid down in subparagraphs (a) and (b) of paragraph (7) are met, the resolution authority, where it is the resolution authority of a subsidiary, may permit the requirement referred to in Regulation 80B(1) to be met in full or in part with a guarantee provided by the resolution entity, which satisfies the following conditions:
(a) the guarantee is provided for at least an amount that is equivalent to the amount of the requirement for which it substitutes;
(b) the guarantee is triggered on the occurrence of whichever of the following is the first to occur:
(i) the subsidiary is unable to pay its debts or other liabilities as they fall due;
(ii) a determination has been made in accordance with Regulation 95(8) in respect of the subsidiary;
(c) the guarantee is collateralised through a financial collateral arrangement as defined in point (a) of Article 2(1) of Directive 2002/47/EC for at least 50 per cent of its amount;
(d) the collateral backing the guarantee satisfies the requirements of Article 197 of the Union Capital Requirements Regulation, which, following appropriately conservative haircuts, is sufficient to cover the amount collateralised as referred to in subparagraph (c);
(e) the collateral backing the guarantee is unencumbered and, in particular, is not used as collateral to back any other guarantee;
(f) the collateral has an effective maturity that satisfies the same maturity condition as that referred to in Article 72c(1) of the Union Capital Requirements Regulation;
(g) there are no legal, regulatory or operational barriers to the transfer of the collateral from the resolution entity to the relevant subsidiary, including where resolution action is taken in respect of the resolution entity.
(10) For the purposes of paragraph (9)(g), at the request of the resolution authority, the resolution entity shall provide an independent written and reasoned legal opinion or shall otherwise satisfactorily demonstrate that there are no legal, regulatory or operational barriers to the transfer of collateral from the resolution entity to the relevant subsidiary.
Waiver for a central body and credit institutions permanently affiliated to a central body.
80I. The resolution authority may partially or fully waive the application of Regulation 80H in respect of a central body or of a credit institution which is permanently affiliated to a central body, where all of the following conditions are met:
- (a) the credit institution and the central body are subject to supervision by the same competent authority, are established in the State and are part of the same resolution group; - (b) the commitments of the central body and its permanently affiliated credit institutions are joint and several liabilities, or the commitments of its permanently affiliated credit institutions are entirely guaranteed by the central body; - (c) the minimum requirement for own funds and eligible liabilities, and the solvency and liquidity of the central body and of all of the permanently affiliated credit institutions, are monitored as a whole on the basis of the consolidated accounts of those institutions; - (d) in the case of a waiver for a credit institution which is permanently affiliated to a central body, the management of the central body is empowered to issue instructions to the management of the permanently affiliated institutions; - (e) the relevant resolution group complies with the requirement referred to in Regulation 80G(3); - (f) there is no current or foreseen material practical or legal impediment to the prompt transfer of own funds or repayment of liabilities between the central body and the permanently affiliated credit institutions in the event of resolution. **Procedure for determining the minimum requirement for own funds and eligible liabilities.** 80J. (1) The resolution authority, where it is the resolution authority of the resolution entity, shall endeavour to reach a joint decision, with the group-level resolution authority (where different from the first-mentioned resolution authority) and, where it is responsible for the subsidiaries of a resolution group that are subject to the requirement referred to in Regulation 80H on an individual basis, with other such relevant authorities, on — - (a) the amount of the requirement applied at the consolidated resolution group level for each resolution entity, and - (b) the amount of the requirement applied on an individual basis to each entity of a resolution group which is not a resolution entity.
(2) The joint decision referred to in paragraph (1) shall ensure compliance with Regulations 80G and 80H and shall be fully reasoned and provided by the resolution authority to —
(a) the resolution entity, where the resolution authority is the resolution authority of that entity,
(b) any entity of a resolution group which is not a resolution entity, where the resolution authority is the resolution authority of that entity, and
(c) the Union parent undertaking of the group, by the resolution authority of the resolution entity where that Union parent undertaking is not itself a resolution entity from the same resolution group.
(3) The joint decision taken in accordance with this Regulation may provide that, where consistent with the resolution strategy and sufficient instruments complying with Regulation 80H(6) have not been bought directly or indirectly by the resolution entity, the requirements referred to in Regulation 80E(15) to (23) are partially met by the subsidiary in compliance with Regulation 80H(6) with instruments issued to and bought by entities not belonging to the resolution group.
(4) Where more than one G-SII entity (within the meaning of point (136) of Article 4(1) of the Union Capital Requirements Regulation) belonging to the same G-SII are resolution entities, the resolution authority where it is the resolution authority of the resolution entity as referred to in paragraph (1), shall discuss and, where appropriate and consistent with the G-SII’s resolution strategy, agree, with the other resolution authorities referred to in paragraph (1), on the application of Article 72e of the Union Capital Requirements Regulation and any adjustment to minimise or eliminate the difference between —
(a) the sum of the amounts referred to in Regulation 80F(4)(a) and Article 12a of the Union Capital Requirements Regulation for individual resolution entities, and
(b) the sum of the amounts referred to in Regulation 80F(4)(b) and Article 12a of the Union Capital Requirements Regulation.
(5) Any adjustment referred to in paragraph (4) may be applied subject to the following conditions:
(a) the adjustment may be applied in respect of differences in the calculation of the total risk exposure amounts between the relevant Member States by adjusting the level of the requirement;
(b) the adjustment shall not be applied to eliminate differences resulting from exposures between resolution groups.
(6) The sum of the amounts referred to in Regulation 80F(4)(a) and Article 12a of the Union Capital Requirements Regulation for individual resolution entities shall not be lower than the sum of the amounts referred to in Regulation 80F(4)(b) and Article 12a of the Union Capital Requirements Regulation.
(7) In the absence of the joint decision referred to in paragraph (1) within four months (in this Regulation referred to as the ‘four month period’), a decision shall be taken in accordance with paragraphs (8) to (10).
(8)
(a) Where the joint decision referred to in paragraph (1) is not taken within the four month period because of a disagreement concerning a consolidated resolution group requirement referred to Regulation 80G, a decision shall be taken on that requirement by the resolution authority where it is the resolution authority of the resolution entity after having duly taken into account —
(i) the assessment of entities of the resolution group that are not a resolution entity, performed by the relevant resolution authorities, and
(ii) the opinion of the group-level resolution authority, where different from the resolution authority of the resolution entity.
(b) Where, at the end of the four month period, any of the resolution authorities concerned has referred the matter to the European Banking Authority in accordance with Article 19 of Regulation (EU) No 1093/2010, the resolution authority, where it is the resolution authority of the resolution entity, shall defer its decision and await any decision that the European Banking Authority may take in accordance with Article 19(3) of that Regulation, and shall take its decision in accordance with the decision of the European Banking Authority.
(c) The four month period shall be deemed to be the conciliation period within the meaning of Regulation (EU) No 1093/2010.
(d) The matter shall not be referred to the European Banking Authority as referred to in subparagraph (b) after the end of the four month period or after a joint decision referred to in paragraph (1) has been reached.
(e) In the absence of a decision by the European Banking Authority within one month of the referral of the matter concerned, the decision of the resolution authority of the resolution entity shall apply.
(9)
(a) Where a joint decision referred to in paragraph (1) is not taken within the four month period because of a disagreement concerning the level of the requirement referred to in Regulation 80H to be applied to any entity of a resolution group on an individual basis, the decision shall be taken by the resolution authority where it is the resolution authority of that entity, where all of the following conditions are satisfied:
(i) the views and reservations expressed in writing by the resolution authority of the resolution entity have been duly taken into account;
(ii) where the group-level resolution authority is different from the resolution authority of the resolution entity, the views and reservations expressed in writing by the group-level resolution authority have been duly taken into account.
(b) Where, at the end of the four month period, the matter has been referred to the European Banking Authority in accordance with Article 19 of Regulation (EU) No 1093/2010, then, the resolution authority, where it is the resolution authority responsible for any subsidiary on an individual basis, shall defer its decision and await any decision that the European Banking Authority may take in accordance with Article 19(3) of that Regulation, and shall take its decision in accordance with the decision of the European Banking Authority.
(c) The four month period shall be deemed to be the conciliation period within the meaning of Regulation (EU) No 1093/2010.
(d) The matter shall not be referred to the European Banking Authority as referred to in subparagraph (b) after the end of the four month period or after a joint decision referred to in paragraph (1) has been reached.
(e) Where the resolution authority is the resolution authority of the resolution entity or the group-level resolution authority it shall not refer the matter to the European Banking Authority for binding mediation where the level set by the resolution authority of the subsidiary —
(i) is within 2 per cent of the total risk exposure amount calculated in accordance with Article 92(3) of the Union Capital Requirements Regulation of the requirement referred to in Regulation 80G, and
(ii) complies with Regulation 80E(14) to (22).
(f) In the absence of a decision by the European Banking Authority within one month of the referral to it of the matter concerned, the decision of the resolution authority, where it is the resolution authority for any subsidiary on an individual basis, shall apply.
(10) Where a joint decision referred to in paragraph (1) is not taken within the four month period because of a disagreement concerning the level of the consolidated resolution group requirement and the level of the requirement to be applied to the resolution group’s entities on an individual basis, the following shall apply:
(a) a decision shall be taken on the level of the requirement to be applied to the resolution group’s subsidiaries on an individual basis in accordance with paragraph (9);
(b) a decision shall be taken on the level of the consolidated resolution group requirement in accordance with paragraph (8).
(11) The joint decision referred to in paragraph (1) and any decisions taken by the resolution authorities referred to in paragraphs (8) to (10) in the absence of a joint decision shall be binding on the resolution authority.
(12) The joint decision referred to in paragraph (1) and any decisions taken in the absence of a joint decision shall be reviewed, and where relevant updated, by the resolution authority following consultation with other resolution authorities, on a regular basis.
(13) The resolution authority, in coordination with the competent authority, shall require and verify that entities meet the requirement referred to in Regulation 80B(1), and shall take any decision pursuant to this Regulation in parallel with the development and the maintenance of resolution plans.
Supervisory reporting and public disclosure of the requirement.
80K. (1) Entities referred to in Regulation 2(1) that are subject to the requirement referred to in Regulation 80B(1) shall report to the competent authority and resolution authority the following information:
- (a) the amounts of own funds that, where applicable, meet the conditions of Regulation 80H(6)(b), and the amounts of eligible liabilities, and the expression of those amounts in accordance with Regulation 80B(2) after any applicable deductions in accordance with Articles 72e to 72j of the Union Capital Requirements Regulation; - (b) the amounts of other bail-inable liabilities; - (c) in the case of the items referred to in subparagraphs (a) and (b) — - (i) their composition, including their maturity profile, - (ii) their ranking in normal insolvency proceedings, and - (iii) whether they are governed by the laws of a third country and, if so, which third country and whether they contain the contractual terms referred to in Regulation 94(1) to (3) and points (p) and (q) of Article 52(1) and points (n) and (o) of Article 63 of the Union Capital Requirements Regulation.
(2) The obligation to report on the amounts of other bail-inable liabilities referred to in paragraph (1)(b) shall not apply to entities that, at the date of the reporting of that information, hold amounts of own funds and eligible liabilities of at least 150 per cent of the requirement referred to in Regulation 80B(1) as calculated in accordance with paragraph (1)(a).
(3) The entities referred to in paragraph (1) shall report —
(a) at least twice in each year, the information referred to in paragraph (1)(a), and
(b) at least once in each year, the information referred to in paragraph (1)(b) and (c).
(4) At the request of the competent authority or resolution authority, the entities referred to in paragraph (1) shall report the information referred to in that paragraph on a more frequent basis.
(5) The entities referred to in paragraph (1) shall make the following information publicly available at least once in each year:
(a) the amounts of own funds that, where applicable, meet the conditions of Regulation 80H(6)(b) and eligible liabilities;
(b) the composition of the items referred to in subparagraph (a), including their maturity profile and ranking in normal insolvency proceedings;
(c) the applicable requirement referred to in Regulation 80C or 80H expressed in accordance with Regulation 80B(2).
(6) Paragraphs (1), (2) and (5) shall not apply to entities whose resolution plan provides that the entity is to be wound up under normal insolvency proceedings.
(7) Where resolution actions have been implemented or the write-down or conversion power referred to in Regulation 95 have been exercised, public disclosure requirements referred to in paragraph (5) shall apply from the date of the deadline to comply with the requirements of Regulation 80G or 80H which are referred to in Regulation 80O.
Reporting to European Banking Authority.
80L. The resolution authority shall inform the European Banking Authority of the minimum requirement for own funds and eligible liabilities that has been set, in accordance with Regulation 80G or 80H, for each entity under its jurisdiction.
Breaches of the minimum requirement for own funds and eligible liabilities.
80M. (1) Any breach of the minimum requirement for own funds and eligible liabilities referred to in Regulation 80G or 80H shall be addressed by the resolution authority or the competent authority, as the case may be, through the use of at least one of the following:
- (a) powers to address or remove impediments to resolvability in accordance with Regulations 28 and 29; - (b) powers referred to in Regulation 27A; - (c) measures referred to in Regulation 92 of the Capital Requirements Regulations; - (d) early intervention measures in accordance with Regulation 39; - (e) administrative penalties and other administrative measures in accordance with Part IIIC of the Act of 1942 or Regulation 174, as the case may be.
(2) The competent authority may also carry out an assessment of whether the institution or entity referred to in Regulation 2(1)(b) to (i) is failing or is likely to fail, in accordance with Regulation 62, 62a or 63, as applicable.
(3) The resolution authority and competent authority, when exercising their respective powers referred to in paragraph (1), shall consult with each other and, as appropriate, with relevant competent authorities and resolution authorities.
Cooperation by resolution authority with European Banking Authority.
80N. The competent authority and resolution authority shall cooperate with the European Banking Authority for the purposes of the submission by the European Banking Authority of a report to the Commission as provided for by Article 45l of the Bank Recovery and Resolution Directive.
Transitional and post-resolution arrangements.
80O. (1) Notwithstanding Regulation 80B(1), subject to paragraphs (2) and (8), the resolution authority shall determine appropriate transitional periods for institutions or entities referred to in Regulation 2(1)(b) to (i) to comply with the requirements in Regulation 80G or 80H or with requirements that result from the application of Regulation 80D(7), (8), (9), (10), (11), (12), (13) or (16), as appropriate.
(2) Subject to paragraph (4), institutions and entities referred to in Regulation 2(1)(b) to (i) shall comply with the requirements in Regulation 80G or 80H or with requirements that result from the application of Regulation 80D(7), (8), (9), (10), (11), (12), (13) of (16) by 1 January 2024.
(3)
(a) The resolution authority shall determine intermediate target levels for the requirements in Regulation 80G or 80H or for requirements that result from the application of Regulation 80B(7), (8), (9), (10), (11), (12), (13) or (16), as appropriate, that institutions or entities referred to in Regulation 2(1)(b) to (i) shall comply with before 1 January 2022.
(b) The intermediate target levels referred to in subparagraph (a) shall ensure a linear build-up of own funds and eligible liabilities towards the requirements referred to in that subparagraph.
(4) The resolution authority may set a transitional period, as provided for by paragraph (1), that ends after 1 January 2024 where duly justified and appropriate on the basis of the criteria referred to in paragraph (11), taking into consideration —
(a) the development of the entity’s financial situation,
(b) the prospect that the entity will be able to ensure compliance in a reasonable timeframe with the requirements in Regulation 80G or 80H or with a requirement that results from the application of Regulation 80D(7), (8), (9), (10), (11), (12), (13) or (16), and
(c) whether the entity is able to replace liabilities that no longer meet the eligibility or maturity criteria laid down in Articles 72b and 72c of the Union Capital Requirements Regulation, and Regulation 80D or 80H(6) and, if not, whether that inability is of an entity-specific nature or is due to market-wide disturbance.
(5) Resolution entities shall comply with the minimum level of the requirements referred to in Regulation 80E(12) or (13) by 1 January 2022.
(6) The minimum levels of the requirements referred to in Regulation 80E(12) and (13) shall not apply during the period of 2 years after —
(a) the date on which the resolution authority has applied the bail-in tool, or
(b) the date on which —
(i) the resolution entity has put in place an alternative private sector measure as referred to in Regulation 62(1)(b) by which capital instruments and other liabilities have been written down or converted into Common Equity Tier 1 instruments, or
(ii) write-down or conversion powers, in accordance with Regulation 95, have been exercised in respect of that resolution entity,
in order to recapitalise the resolution entity without the application of resolution tools.
(7) The requirements referred to in Regulations 80D(7), (8), (9), (10), (11) and (16) and Regulation 80E(12) and (13), as applicable, shall not apply during the period of 3 years after the date on which —
(a) the resolution entity or the group of which the resolution entity is part has been identified as a G-SII, or
(b) the resolution entity starts to be in the situation referred to in Regulation 80E(12) or (13).
(8) Notwithstanding Regulation 80B(1), the resolution authority shall determine an appropriate transitional period within which to comply with the requirements of Regulation 80G or 80H, or a requirement resulting from the application of Regulation 80D(7), (8), (9), (10), (11), (12), (13) or (16), as appropriate, for institutions or entities referred to in Regulation 2(1)(b) to (i) to which resolution tools or the write-down or conversion power referred to in Regulation 95 have been applied.
(9) For the purposes of paragraphs (1) to (8), the resolution authority shall communicate to the institution or entity referred to in Regulation 2(1)(b) to (i) a planned minimum requirement for own funds and eligible liabilities for each 12 month period during the transitional period concerned, with a view to facilitating a gradual build-up of its loss-absorbing and recapitalisation capacity.
(10) At the end of the transitional period concerned, the minimum requirement for own funds and eligible liabilities shall be equal to the amount determined under Regulation 80D(7), (8), (9), (10), (11), (12), (13) or (16), 80E(12) or (13), 80G or 80H, as applicable.
(11) When determining the transitional periods in accordance with paragraphs (1) to (8), the resolution authority shall take into account —
(a) the prevalence of deposits and the absence of debt instruments in the funding model,
(b) the access to the capital markets for eligible liabilities, and
(c) the extent to which the resolution entity relies on Common Equity Tier 1 capital to meet the requirement referred to in Regulation 80G.
(12) Subject to paragraphs (1) to (4), the resolution authority shall not be prevented from subsequently revising either the transitional period concerned or any planned minimum requirement for own funds and eligible liabilities communicated under paragraph (9).”.
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