Early intervention measures, conditions for resolution and financing of resolution action (BRRD3)
TA-9-2024-0327 · P9_TA(2024)0327 · PE753.712
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Parliament's amended version of the proposed directive amends the EU bank resolution framework to improve early intervention, resolution conditions, and financing. It clarifies public interest assessments, bail-in rules, deposit rankings, and resolution financing arrangements.¶¶¶ The text specifies conditions for early intervention measures, including triggers and measures like management removal and temporary administrators. It also sets rules for extraordinary public financial support, requiring solvency and precautionary nature.¶¶¶
Key points
- Resolution authorities may adopt simplified approaches for subsidiaries not identified as resolution entities, considering size, risk, and absence of critical functions.¶
- Resolution plans are not required for entities in insolvency proceedings or when Article 37(6) applies.¶¶
- Early intervention measures include requiring management to implement recovery plans, convene shareholder meetings, draw up action plans, change legal structure, remove senior management, appoint temporary administrators, and prepare voluntary winding-down plans.¶¶¶
- Competent authorities must notify resolution authorities of material risk of failure, and resolution authorities can market the institution to potential purchasers before resolution.¶¶
- Resolution action is presumed not in the public interest for institutions with simplified obligations, but the presumption is rebuttable.¶
- Extraordinary public financial support outside resolution is allowed only in exceptional cases, including State guarantees, acquisition of capital instruments, and deposit guarantee scheme interventions, subject to conditions.¶¶¶
- Deposits ranking is harmonized: covered deposits and eligible deposits of natural persons and micro, small and medium-sized enterprises rank higher than eligible deposits of large enterprises and governments.¶¶¶
- Resolution financing arrangements may defer collection of contributions for up to three years if costs are disproportionate, and extraordinary ex-post contributions are capped at three times 12.5% of the target level.¶¶
- Deposit guarantee schemes can contribute to resolution actions, with limits based on the least cost test, and their contributions count towards the 8% threshold for accessing resolution financing arrangements.¶¶¶
- EBA is tasked with monitoring resolvability assessments, reporting on practices, and coordinating crisis simulation exercises.¶¶¶
Who is affected
- Credit institutions and investment firms in the EU, including their subsidiaries and holding companies.¶
- Resolution authorities and competent authorities in member states, which must apply the new rules.¶
- Deposit guarantee schemes, which may contribute to resolution actions under specified conditions.¶
- Retail investors who are depositors, as they may purchase eligible instruments subject to limits.¶¶¶
Figures and deadlines
- 8% of total liabilities including own funds for contribution to loss absorption and recapitalisation.¶
- 5% of total liabilities including own funds for resolution financing arrangement contribution.¶
- 13.5% of total risk exposure amount and 5% of total exposure measure as lower bounds for MREL in transfer strategies.¶
- 30% of total contributions may be irrevocable payment commitments.¶
- Three times 12.5% of the target level for extraordinary ex-post contributions.¶
- 10% of financial instrument portfolio for retail client investment in eligible instruments.¶
- EUR 30 000 minimum initial investment for retail clients.¶
Legal basis: Article 114 of the Treaty on the Functioning of the European Union¶