Changes from report parliamentary committee draft to plenary report

Added‘1. The Board and national resolution authorities shall ensure that the entities referred to in Article 12(1) and (3) meet, at all times, the requirements for own funds and eligible liabilities where required by and as determined by the Board in accordance with this Article and Articles 12b to 12i.’;

Added(9) Article 12c is amended as follows:

Added(a) in paragraphs 4 and 5, the word ‘G-SIIs’ is replaced by the words ‘G-SII entities’;

Added(b) in paragraph 7, introductory wording, the words ‘paragraph 3’ are replaced by the words ‘paragraph 4’, and the word ‘G-SIIs’ is replaced by the words ‘G-SII entities’;

Added(c) paragraph 8 is amended as follows:

Added(i) in the first subparagraph, the word ‘G-SIIs’ is replaced by the words ‘G-SII entities’;

Added(ii) in the second subparagraph, point (c), the word ‘G-SII’ is replaced by the words ‘G-SII entity’;

Added(d) the following paragraph 10 is added:

Added‘10. The Board may permit resolution entities to comply with the requirements referred to in paragraphs 4, 5 and 7 using own funds or liabilities as referred to in paragraphs 1 and 3 when all of the following conditions are met:

Added(a) for entities that are G-SII entities or resolution entities that are subject to Article 12d(4) or (5), the Board has not reduced the requirement referred to in paragraph 4 of this Article, pursuant to the first subparagraph of that paragraph;

Added(b) the liabilities referred to in paragraph 1 of this Article that do not meet the condition referred to in Article 72b(2), point (d), of Regulation (EU) No 575/2013 comply with the conditions set out in Article 72b(4), points (b) to (e), of that Regulation.’;

Added(10) in Article 12d, paragraph 3, eighth subparagraph, and paragraph 6, eighth subparagraph, the words ‘critical economic functions’ are replaced by the words ‘critical functions’;

Added(11) the following Article is inserted:

Added‘Article 12da

AddedDetermination of the minimum requirement for own funds and eligible liabilities for transfer strategies▌

Added1. When applying Article 12d to a resolution entity whose preferred resolution strategy envisages, independently or in combination with other resolution tools, ▌the use of the sale of business tool or the bridge institution tool, ▌the Board shall set the recapitalisation amount provided in Article 12d(3) in a proportionate way on the basis of the following criteria, as relevant:

Added(a) the ▌size, business model, funding model and risk profile of the resolution entity or, as relevant, the size of the part of the resolution entity that is subject to the sale of business or bridge institution tool;

Added(b) the shares, other instruments of ownership, assets, rights or liabilities to be transferred to a recipient as identified in the resolution plan, taking into consideration:

Added(i) the core business lines and critical functions of the resolution entity;

Added(ii) the liabilities excluded from bail-in pursuant to Article 27(3);

Added(iii) the safeguards referred to in Articles 73 to 80 of Directive 2014/59/EU;

Added(iiia) the expected own funds requirements for any bridge institution that might be needed to implement the market exit of the resolution entity, to ensure compliance by the bridge institution with Regulation (EU) No 575/2013, Directive 2013/36/EU and Directive 2014/65/EU, as applicable;

Added(iiib) the expected demand by the recipient for the transaction to be capital neutral with regard to the requirements applicable to the acquiring entity;

Added(c) the expected value and marketability of the shares, other instruments of ownership, assets, rights or liabilities of the resolution entity referred to in point (b), taking into account:

Added(i) any material impediments to resolvability, identified by the resolution authority, that are ▌related to the application of the sale of business tool or the bridge institution tool;

Added(ii) the losses resulting from the assets, rights or liabilities left in the residual institution;

Added(iia) a potentially adverse market environment at the time of resolution;

Added(d) whether the preferred resolution strategy envisages the transfer of shares or other instruments of ownership issued by the resolution entity, or of all or part of the assets, rights and liabilities of the resolution entity;

Added(e) whether the preferred resolution strategy envisages the application of the asset separation tool.

Added▌

Added3. The application of paragraph 1 shall not result in an amount that is higher than the amount resulting from the application of Article 12d(3) or in an amount that is lower than 13,5% of the total risk exposure amount, calculated in accordance with Article 92(3) of Regulation (EU) No 575/2013, and lower than 5% of the total exposure measure of the relevant entity referred to in paragraph 1 of this Article, calculated in accordance with Articles 429 and 429a of Regulation (EU) No 575/2013.’;

Added(12) in Article 12e(1), the words ‘G-SII or part of a G-SII’ are replaced by the words ‘G-SII entity’;

Added(13) Article 12g is amended as follows:

Added(a) paragraph 1 is amended as follows:

Added(i) the second subparagraph is replaced by the following:

Added‘The Board, after having consulted the competent authorities, including the ECB, may decide to apply the requirement laid down in this Article to an entity as referred to in Article 2, point (b), and to a financial institution as referred to in Article 2, point (c), that is a subsidiary of a resolution entity but is not itself a resolution entity.’;

Added(ii) in the third subparagraph, the words ‘first subparagraph’ are replaced by the words ‘first and second subparagraphs’;

Added(b) the following paragraph 4 is added:

Added‘4. Where, in accordance with the global resolution strategy, subsidiaries established in the Union, or a Union parent undertaking and its subsidiary institutions, are not resolution entities and the members of the European resolution college, where established pursuant to Article 89 of Directive 2014/59/EU, agree with that strategy, subsidiaries established in the Union or, on a consolidated basis, the Union parent undertaking, shall comply with the requirement of Article 12a(1) by issuing the instruments referred to in paragraph 2, points (a) and (b), of this Article to any of the following:

Added(a) their ultimate parent undertaking established in a third country;

Added(b) the subsidiaries of that ultimate parent undertaking that are established in the same third country;

Added(c) other entities under the conditions set out in paragraph 2, points (a)(i) and (b)(ii), of this Article.’;

Added(14) Article 12k is amended as follows:

Added(a) ▌ paragraph 1 is ▌replaced by the following:

Added‘1. By way of derogation from Article 12a(1), the Board shall determine appropriate transitional periods for entities to comply with the requirements in Articles 12f or 12g, or with the requirements that result from the application of Article 12c(4), (5) or (7), as appropriate, if institutions or entities are subject to those requirements following the entry into force of this amending Regulation. The deadline for entities to comply with the requirements in Articles 12f or 12g or the requirements that result from the application of Article 12c(4), (5) or (7) shall be ... [four years from the date of application of this amending Regulation].

AddedThe Board shall determine intermediate target levels for the requirements in Articles 12f or 12g or for the requirements that result from the application of Article 12c(4), (5) or (7), as appropriate, that entities referred to in the first subparagraph shall comply with by ... [two years from the date of application of this amending Regulation]. The intermediate target levels, as a rule, shall ensure a linear build-up of own funds and eligible liabilities towards the requirement.

AddedThe Board may set a transitional period that ends after ...[four years from the date of application of this amending Regulation] where duly justified and appropriate on the basis of the criteria referred to in paragraph 7, taking into consideration:

Added(a) the development of the entity’s financial situation;

Added(b) the prospect that the entity will be able to ensure compliance in a reasonable timeframe with the requirements in Articles 12f or 12g or with a requirement that results from the application of Article 12c(4), (5) or (7); and

Added(c) whether the entity is able to replace liabilities that no longer meet the eligibility or maturity criteria, and if not, whether that inability is of an idiosyncratic nature or is due to market-wide disturbance.’;

Added(b) in paragraph 3, point (a), the words ‘the Board or the national resolution authority’ are replaced by the words ‘the Board’;

Added(c) in paragraph 4, the words ‘G-SII’ are replaced by the words ‘G-SII or a non-EU G-SII’;

Added(d) in paragraphs 5 and 6, the words ‘the Board and the national resolution authorities’ are replaced by the words ‘the Board’;

Added(15) Article 13 is replaced by the following:

Added‘Article 13

AddedEarly intervention measures

Added1. The ECB shall consider without undue delay and, if appropriate, shall apply early intervention measures where an entity as referred to in Article 7(2)(a) meets any of the following conditions:

Added(a) the entity meets the conditions referred to in Article 102 of Directive 2013/36/EU or in Article 16(1) of Regulation (EU) No 1024/2013 and either of the following applies:

Added(i) the entity has not taken the remedial actions required by the ECB, including the measures referred to in Article 104 of Directive 2013/36/EU, Article 16(2) of Regulation (EU) No 1024/2013 or Article 49 of Directive (EU) 2019/2034;

Added(ii) the ECB deems that remedial actions other than early intervention measures are insufficient to address the problems▌;