EC Notice on Interpretation of Provisions of Bank Resolution Framework

The notice addresses questions on the following topics:

• Minimum requirement for own funds and eligible liabilities
• Contractual recognition of bail-in
• Write-down or conversion of capital instruments and eligible liabilities
• Exclusion of certain contractual terms in early intervention and resolution
• Contractual recognition of resolution stay powers
• Selling of subordinated eligible liabilities to retail clients
• Power to prohibit certain distributions provided in Article 16A BRRD
• Powers to suspend payment or delivery obligations under Articles 33A and 69
• Directive 98/26/EC on settlement finality in payment and securities settlement systems (SFD)

The banking reform package includes changes to the EU bank resolution framework through BRRD 2 and SRMR 2 and member states must transpose the provisions of BRRD 2 into their national law by December 28, 2020. EC has provided these answers with the aim to facilitate a timely, consistent, and accurate transposition. This notice clarifies the provisions already contained in the applicable legislation. It does not extend in any way the rights and obligations deriving from such legislation nor introduce any additional requirements of the concerned operators and competent authorities. This notice is merely intended to assist authorities of member states in the transposition in national law and implementation of the relevant legal provisions. In addition, EC will soon adopt a Communication containing answers to questions that it received from ESAs in accordance with Article 16b(5) of Regulations 1093/2010, 1094/2010, and 1095/2010. That Communication will clarify certain provisions of BRRD, on which questions have been submitted to it by EBA.

Related Link: Commission Notice

Keywords: Europe, EU, Banking, BRRD2, CRR2, SRMR2, CRD5, Resolution Framework, Q&A, Basel, EC