EC Notice on Clarification of Provisions of Bank Resolution Framework
EC published a notice in the Official Journal of the European Union on the interpretation of certain legal provisions of the revised bank resolution framework. The notice is in response to questions raised by the authorities of member states in the context of the resolution framework for banks. In this notice, EC adopts answers related to legal acts, including the revised Bank Recovery and Resolution Directive (BRRD2) and Single Resolution Mechanism Regulation (SRMR2). This notice complements the notice adopted by EC, in September 2020, with the answers to the questions raised by authorities of member states on the interpretation of certain legal provisions of BRRD 2 and its interactions with SRMR and the Capital Requirements Directive and Regulation.
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
- Contractual recognition of resolution stay powers
- Selling of subordinated eligible liabilities to retail clients
- Power to prohibit certain distributions provided in Article 16A BRRD
- Resolution planning
- Insolvency proceedings in respect of institutions and entities that are not subject to resolution action
- Powers to suspend payment or delivery obligations under Articles 33A and 69
The banking reform package includes changes to the bank resolution framework through BRRD2 and SRMR2. Member states must transpose the provisions of BRRD2 into their national law by December 28, 2020. 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. The notice is intended to assist authorities of member states in the transposition of EU legislation into national law and in the implementation of relevant legal provisions.
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Keywords: Europe, EU, Banking, BRRD2, CRR2, SRMR2, CRD5, Resolution Framework, Q&A, Basel, Regulatory Capital, EC
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