Changes from report parliamentary committee draft to plenary report

AddedGeneral principles governing resolution

Added1. Member States shall ensure that resolution authorities, when they apply resolution tools referred to in Article 26(3) and exercise resolution powers referred to in Articles 40 to 52, take all appropriate measures to ensure that the resolution action is taken in accordance with the following principles:

Added(a) the shareholders of the undertaking under resolution bear first losses;

Added(b) creditors of the undertaking 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 for otherwise in this Directive;

Added(c) the administrative, management or supervisory body and the senior management of the undertaking under resolution are replaced, except where the retention, in whole or in part, of that body or the senior management is considered necessary for the achievement of the resolution objectives;

Added(d) the administrative, management or supervisory body and the senior management of the undertaking under resolution provide all assistance necessary for the achievement of the resolution objectives;

Added(e) natural and legal persons are made liable under civil or criminal law for their responsibility for the failure of the undertaking under resolution;

Added(f) except where otherwise provided for in this Directive, creditors of the same class are treated in an equitable manner;

Added(g) no shareholder or creditor incurs greater losses than they would have incurred if the insurance or reinsurance undertaking had been wound up under normal insolvency proceedings in accordance with the safeguards in Articles 53 to 55;

Added(h) resolution action is taken in accordance with the safeguards in this Directive.

Added2. Where the insurance or reinsurance undertaking is part of a group, resolution authorities shall apply the resolution tools referred to in Article 26(3) and exercise the resolution powers referred to in Articles 40 to 52 in a way that minimises, in particular in the countries where the group operates:

Added(a) the impact on other group entities and on the group as a whole;

Added(b) the adverse effects on policy holders, the real economy and financial stability in the Union and in its Member States..

Added3. When applying the resolution tools referred to in Article 26(3) and exercising the resolution powers referred to in Articles 40 to 52, Member States shall ensure that they comply with the Union State aid framework, where applicable.

Added4. Where the resolution tools referred to in Article 26(3) are applied, the entity to which those tools are applied shall be considered the subject of bankruptcy proceedings or analogous insolvency proceedings for the purposes of Article 5(1) of Council Directive 2001/23/EC.

Added5. When applying the resolution tools referred to in Article 26(3) and exercising the resolution powers referred to in Articles 40 to 52, resolution authorities shall inform and consult employee representatives of the undertaking concerned where appropriate.

Added6. Resolution authorities shall apply the resolution tools referred to in Article 26(3) and exercise the resolution powers referred to in Articles 40 to 52 without prejudice to provisions on the representation of employees in management bodies as provided for in national law or practice.

AddedValuation for the purposes of resolution

Added1. Resolution authorities shall ensure that any resolution action is taken on the basis of a valuation ensuring a fair, prudent and realistic assessment of the assets, liabilities, rights and obligations of insurance or reinsurance undertakings.

Added2. Before the resolution authority places an insurance or reinsurance undertaking under resolution, it shall ensure that a first valuation is carried out to determine whether the conditions for resolution under Article 19(1) or Article 20(3) are met.

Added3. After the resolution authority has decided to place an insurance or reinsurance undertaking under resolution, it shall ensure that a second valuation is carried out to:

Added(a) inform the decision on the appropriate resolution action to be taken;

Added(b) ensure that any losses of the insurance or reinsurance undertaking are fully recognised at the moment the resolution tools are applied;

Added(c) inform the decision on the extent of the cancellation or dilution of instruments of ownership;

Added(d) inform the decision on the extent of the write-down or conversion of any unsecured liabilities, including debt instruments;

Added(e) where the bridge undertaking tool referred to in Article 32 is applied, inform the decision on the assets, liabilities, rights and obligations or instruments of ownership that may be transferred to the bridge undertaking, and inform the decision on the value of any consideration that may be paid to the insurance or reinsurance undertaking under resolution or, where relevant, to the holders of the instruments of ownership;

Added(f) where the sale of business tool referred to in Article 31 is applied, inform the decision on the assets, liabilities, rights and obligations or instruments of ownership that may be transferred to the third party purchaser and to inform the resolution authority’s understanding of what constitutes commercial terms for the purposes of Article 31.

Added4. The valuations referred to in paragraphs 2 and 3 of this Article may be subject to an appeal in accordance with Article 65 only together with the decision to apply a resolution tool or to exercise a resolution power.

AddedRequirements for valuation

Added1. Member States shall ensure that the valuations referred to in Article 23 are carried out by any of the following:

Added(a) a person independent from any public authority and from the insurance or reinsurance undertaking;

Added(b) the resolution authority, where those valuations cannot be carried out by a person as referred to in point (a).

Added2. The valuations referred to in Article 23 shall be considered definitive where they have been carried out by the person referred to in paragraph 1, point (a), of this Article and all the requirements laid down in paragraphs 3 to 5 of this Article are fulfilled.

Added3. Without prejudice to the Union State aid framework, where applicable, a definitive valuation shall be based on prudent assumptions and shall not assume any potential provision of extraordinary public financial support from the point in time at which resolution action is taken.

Added4. A definitive valuation shall be supplemented by the following information held by the insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e):

Added(a) an updated financial statement and an updated Solvency II economic valuation of the balance sheet of the insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e);

Added(b) a report on the financial position of the insurance or reinsurance undertaking, including an evaluation by an independent actuarial function of the technical provisions referred to in Title I, Chapter VI, Section 2 of Directive 2009/138/EC of insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e);

Added(c) any additional information on the market and accounting values of the assets, technical provisions, referred to in Title I, Chapter VI, Section 2 of Directive 2009/138/EC, and other liabilities of insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e).

Added5. A definitive valuation shall indicate the subdivision of the creditors in classes in accordance with their priority levels under the applicable insolvency law. The definitive valuation shall also contain an estimation of the treatment that each class of shareholders and creditors would have been expected to receive if the insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e), were wound up under normal insolvency proceedings.

AddedThe estimate referred to in the first subparagraph shall not prejudice the valuation referred to in Article 54.

Added6. EIOPA shall develop draft regulatory technical standards to specify:

Added(a) the circumstances in which a person is deemed to be independent from both the resolution authority and the insurance or reinsurance undertaking for the purposes of paragraph 1 of this Article;

Added(b) the methodology for assessing the value of the assets and liabilities of the insurance or reinsurance undertaking in the context of resolution;

Added(c) the separation of the valuations under Articles 23 and 54 of this Directive.

AddedEIOPA shall submit those draft regulatory technical standards to the Commission by [PO – add 18 months after entry into force].

AddedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

AddedProvisional and definitive valuations

Added1. Valuations as referred to in Article 23 that do not meet the requirements laid down in Article 24(2) shall be considered provisional valuations.

AddedProvisional valuations shall contain a buffer for additional losses and an appropriate justification for that buffer.

Added2. Resolution authorities that take resolution action on the basis of a provisional valuation shall ensure that a definitive valuation is carried out as soon as possible.

AddedThe resolution authority shall ensure that the definitive valuation referred to in the first subparagraph:

Added(a) allows for full recognition of any losses of the insurance or reinsurance undertaking in its books;

Added(b) informs a decision to write back creditors’ claims or to increase the value of the consideration paid, in accordance with paragraph 3.

Added3. Where the definitive valuation’s estimate of the net asset value of the insurance or reinsurance undertaking is higher than the provisional valuation’s estimate of the net asset value of the insurance or reinsurance undertaking, the resolution authority may:

Added(a) increase the value of the claims of affected creditors which have been written down or restructured;

Added(b) require a bridge undertaking to make a further payment of consideration in respect of the assets, liabilities, rights and obligations to the insurance or reinsurance undertaking under resolution or, as the case may be, to the owners of the instruments of ownership.

Added4. EIOPA shall develop draft regulatory technical standards to specify, for the purposes of paragraph 1 of this Article, the methodology for calculating the buffer for additional losses to be included in provisional valuations.

AddedEIOPA shall submit those draft regulatory technical standards to the Commission by [PO – add 18 months after entry into force].

AddedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

AddedGeneral provisions on resolution tools