Changes from report parliamentary committee draft to plenary report

Added‘(-aa) contain a detailed description of the reasons for determining that a group entity referred to in paragraph 1, points (a) to (d), is to be qualified as a liquidation entity, including an explanation of how the resolution authority came to the conclusion that the institution lacks critical functions, and how the ratio of its total risk exposure amount and operating income in the group’s total risk exposure amount and operating income, as well as the leverage ratio of the group entity in the context of the group, have been taken into account;’;

Added(b) the following paragraph 5a is inserted:

Added‘5a. Resolution authorities shall not adopt resolution plans where insolvency proceedings have been initiated with regard to an entity ▌in accordance with the applicable national law pursuant to Article 32b or where Article 37(6) applies.’;

Added(7) in Article 13(4), the fourth subparagraph is replaced by the following:

Added‘EBA may, at the request of a resolution authority, assist the resolution authorities in reaching a joint decision in accordance with Article 31(2), point (c), of Regulation (EU) No 1093/2010.’;

Added(8) in Article 15, the following paragraph 5 is added:

Added‘5. EBA shall monitor the drawing up of internal policies for and implementation of the resolvability assessments of institutions or groups provided for in this Article and in Article 16 by resolution authorities. EBA shall report to the Commission on the existing practices on resolvability assessments and possible divergences across Member States by … [PO please insert the date = 2 years after the date of entry into force of this Directive] and monitor the implementation of any recommendation set out in that report, where appropriate.

AddedThe report referred to in the first subparagraph shall cover at least the following:

Added(a) an assessment of the methodologies developed by resolution authorities to carry out resolvability assessments, including the identification of areas of possible divergence across Member States;

Added(b) an assessment of the testing capabilities required by resolution authorities to ensure an effective implementation of the resolution strategy;

Added(c) the level of transparency towards relevant stakeholders of the methodologies developed by resolution authorities to perform resolvability assessments and their outcome.’;

Added(9) in Article 16a, the following paragraph 7 is added:

Added‘7. Where an entity is not subject to the combined buffer requirement on the same basis as the basis on which it is required to comply with the requirements referred to in Articles 45c and 45d, resolution authorities shall apply paragraphs 1 to 6 of this Article on the basis of the estimation of the combined buffer requirement calculated in accordance with Commission Delegated Regulation (EU) 2021/1118*. Article 128, fourth paragraph, of Directive 2013/36/EU shall apply.

AddedThe resolution authority shall include the estimated combined buffer requirement referred to in the first subparagraph in the decision determining the requirements referred to in Articles 45c and 45d of this Directive. The entity shall make the estimated combined buffer requirement publicly available together with the information referred to in Article 45i(3).

Added______________________________

Added* Commission Delegated Regulation (EU) 2021/1118 of 26 March 2021 supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the methodology to be used by resolution authorities to estimate the requirement referred to in Article 104a of Directive 2013/36/EU of the European Parliament and of the Council and the combined buffer requirement for resolution entities at the resolution group consolidated level where the resolution group is not subject to those requirements under that Directive (OJ L 241, 8.7.2021, p. 1).;’

Added(10) ▌Article 17▌is amended as follows:

Added(a) in paragraph 4, the following third subparagraph is added:

Added‘If the measures proposed by the entity concerned effectively reduce or remove the impediments to resolvability, the resolution authority shall take a decision, after consulting the competent authority. That decision shall indicate that the measures proposed effectively reduce or remove the impediments to resolvability and require the entity to implement the measures proposed.’;

Added(b) the following paragraph is added:

Added‘8a. The resolution authority shall publish, at the end of each resolution planning cycle, an anonymised list that presents in an aggregated form any identified substantive impediments to resolvability and relevant actions to address them. The confidentiality provisions laid down in Article 84 of this Directive shall apply. ’;

Added(11) Article 18 is amended as follows:

Added(a) paragraph 4 is replaced by the following:

Added‘4. The group-level resolution authority shall communicate any measure proposed by the Union parent undertaking to the consolidating supervisor, EBA, the resolution authorities of the subsidiaries and the resolution authorities of the jurisdictions in which significant branches are located insofar as is relevant to the significant branch. The group-level resolution authority and the resolution authorities of the subsidiaries, after consulting the competent authorities and the resolution authorities of jurisdictions in which significant branches are located, shall do everything within their power to reach a joint decision within the resolution college regarding the identification of substantive impediments, and if necessary, the assessment of the measures proposed by the Union parent undertaking and the measures required by the authorities in order to address or remove the impediments, which shall take into account the potential impact of the measures in all Member States where the group operates.’;

Added(b) paragraph 9 is replaced by the following:

Added‘9. In the absence of a joint decision on the taking of any measures referred to in Article 17(5), point (g), (h) or (k), EBA may, upon the request of a resolution authority in accordance with paragraphs 6, 6a or 7 of this Article, assist the resolution authorities in reaching an agreement in accordance with Article 19(3) of Regulation (EU) No 1093/2010.’;

Added(12) Articles 27 and 28 are replaced by the following:

Added‘Article 27

AddedEarly intervention measures

Added1. Member States shall ensure that competent authorities consider without undue delay and, if appropriate, apply early intervention measures where an institution or entity referred to in Article 1(1), points (b), (c) or (d) meets any of the following conditions:

Added(a) the institution or entity meets the conditions referred to in Article 102 of Directive 2013/36/EU or in Article 38 of Directive (EU) 2019/2034, or the competent authority has determined that the arrangements, strategies, processes and mechanisms implemented by the institution or entity and the own funds and liquidity held by that institution or entity do not ensure a sound management and coverage of its risks, and either of the following applies:

Added(i) the institution or entity has not taken the remedial actions required by the competent authority, including the measures referred to in Article 104 of Directive 2013/36/EU or in Article 49 of Directive (EU) 2019/2034;

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

Added(b) the institution or entity infringes or is likely to infringe in the 12 months following the assessment of the competent authority the requirements laid down in Title II of Directive 2014/65/EU, in Articles 3 to 7, Articles 14 to 17, or Articles 24, 25 and 26 of Regulation (EU) No 600/2014, or in Articles 45e or 45f of this Directive.

AddedWhere there is a significant deterioration of conditions, or adverse circumstances arise or new information is obtained about an entity, the competent authority may determine that the condition referred to in the first subparagraph, point (a)(ii), is met without having previously taken other remedial actions, including the exercise of the powers referred to in Article 104 of Directive 2013/36/EU or in Article 39 of Directive (EU) 2019/2034.

AddedFor the purposes of the first subparagraph, point (b), of this paragraph, Member States shall ensure that the competent authorities under Directive 2014/65/EU or under Regulation (EU) No 600/2014, or, as appropriate, the resolution authority informs the competent authority without delay of the infringement or likely infringement.

Added1a. For the purposes of paragraph 1, early intervention measures shall include the following:

Added(a) the requirement for the management body of the institution or entity referred to in Article 1(1), points (b), (c) or (d), to do either of the following:

Added(i) to implement one or more of the arrangements or measures set out in the recovery plan;

Added(ii) to update the recovery plan in accordance with Article 5(2) where the circumstances that led to the early intervention are different from the assumptions set out in the initial recovery plan and implement one or more of the arrangements or measures set out in the updated recovery plan within a specific timeframe;

Added(b) the requirement for the management body of the institution or entity referred to in Article 1(1), points (b), (c) or (d) to convene or, if the management body fails to comply with that requirement, convene directly, a meeting of shareholders of the institution or entity, and in both cases set the agenda and require certain decisions to be considered for adoption by the shareholders;

Added(c) the requirement for the management body of the institution or entity referred to in Article 1(1), points (b), (c) or (d), to draw up an action plan, in accordance with the recovery plan where applicable, for negotiation on restructuring of debt with some or all of its creditors;

Added(d) the requirement to change the legal structure of the institution;

Added(e) the requirement to remove or replace the senior management or management body of the institution or entity referred to in Article 1(1), points (b), (c) or (d), in its entirety or with regard to individuals, in accordance with Article 28;

Added(f) appointment of one or more temporary administrators to the institution or entity referred to in Article 1(1), points (b), (c) or (d), in accordance with Article 29.

Added(fa) the requirement for the management body of the entity to draw up a plan that the entity can implement where the relevant corporate body of the entity decides to initiate the voluntary winding down of the entity.

Added2. Competent authorities shall choose the appropriate and timely early intervention measures based on what is proportionate to the objectives pursued, having regard to the seriousness of the infringement or likely infringement and the speed of the deterioration in the financial situation of the institution or entity referred to in Article 1(1), points (b), (c) or (d), among other relevant information.

Added3. For each of the measures referred to in paragraph 1a, competent authorities shall set a deadline that is appropriate for completion of that measure and that enables the competent authority to evaluate its effectiveness.

AddedThe evaluation of the measure shall be carried out immediately after the deadline is reached and shared with the resolution authority. Where the evaluation concludes that the measures have not been fully implemented or are not effective, the competent authority shall make an assessment of the condition referred to in Article 32(1), point (a), after having consulted the resolution authority.

Added4. EBA shall, by … [PO please insert the date = 12 months from the date of entry into force of this amending Directive], issue draft regulatory technical standards to promote the consistent application of the triggers for the use of the measures referred to in paragraph 1 of this Article.

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 1093/2010.

AddedReplacement of the senior management or management body

AddedFor the purposes of Article 27(1a), point (e), Member States shall ensure that the new senior management or management body, or individual members of those bodies, is appointed in accordance with Union and national law and is subject to the approval or consent of the competent authority.’;

Added(13) Article 29 is amended as follows:

Added(a) paragraphs 1, 2 and 3 are replaced by the following:

Added‘1. For the purposes of Article 27(1a), point (f), Member States shall ensure that competent authorities may, based on what is proportionate in the circumstances, appoint any temporary administrator to do either of the following:

Added(a) temporarily replace the management body of the institution or entity referred to in Article 1(1), points (b), (c) or (d);

Added(b) work temporarily with the management body of the institution or entity referred to in Article 1(1), points (b), (c) or (d).

AddedThe competent authority shall specify its choice under points (a) or (b) at the time of appointment of the temporary administrator.

AddedFor the purposes of the first subparagraph, point (b), the competent authority shall further specify at the time of the appointment of the temporary administrator the role, duties and powers of that temporary administrator and any requirements for the management body of the institution or entity to consult or to obtain the consent of the temporary administrator prior to taking specific decisions or actions.