Changes from report parliamentary committee draft to plenary report

Added(17) Article 32 is amended as follows:

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

Added‘1. Member States shall ensure that resolution authorities take a resolution action in relation to an institution if resolution authorities determine, upon receiving a communication pursuant to in paragraph 2 or on their own initiative pursuant to the procedure laid down in paragraph 2, that all of the following conditions are met:

Added(a) the institution is failing or is likely to fail;

Added(b) ▌there is no reasonable prospect that any alternative private sector measure including measures by an IPS, supervisory action, early intervention measures, or write down or conversion of relevant capital instruments and eligible liabilities as referred to in Article 59(2) taken in respect of the institution would prevent ▌the institution from failing or being likely to fail within a reasonable timeframe;

Added(c) a resolution action is in the public interest pursuant to paragraph 5.

Added2. Member States shall ensure that the competent authority makes an assessment of the condition referred to in paragraph 1, point (a), after having consulted the resolution authority.

AddedMember States may provide that, in addition to the competent authority, the assessment of the condition referred to in paragraph 1, point (a), can be made by the resolution authority, after consulting the competent authority, where resolution authorities under national law have the necessary tools for making such an assessment including, in particular, adequate access to the relevant information. In such a case, Member States shall ensure that the competent authority provides the resolution authority without delay with any relevant information that the latter requests to perform its assessment, before or after being informed by the resolution authority of its intention to make that assessment.

AddedThe assessment of the condition referred to in paragraph 1, point (b), shall be made by the resolution authority in close cooperation with the competent authority, after consulting a designated authority of the DGS, and, where appropriate, an IPS, of which the institution is a member, without delay. The consultation with the IPS shall include a consideration of the availability of measures by the IPS that could prevent the failure of the institution within a reasonable timeframe. The competent authority shall, without delay, provide the resolution authority with any relevant information that the resolution authority requests to inform its assessment. The competent authority may also inform the resolution authority that it considers the condition laid down in the paragraph 1, point (b), to be met.’;

Added(b) paragraph 4 is amended as follows:

Added(i) in the first subparagraph, point (d) is replaced by the following:

Added‘(d) extraordinary public financial support is required except where such support is granted in one of the forms referred to in Article 32c;

Added(ii) the second to fifth subparagraphs are deleted;

Added(c) paragraph 5 is replaced by the following:

Added‘5. For the purposes of paragraph 1, point (c), a resolution action shall be treated as in the public interest where that resolution action is necessary for the achievement of, and is proportionate to, one or more of the resolution objectives referred to in Article 31 and where winding up of the institution under normal insolvency proceedings would not meet those resolution objectives more effectively.

AddedResolution action shall be presumed not to be in the public interest for the purposes of paragraph 1, point (c), of this Article where the resolution authority has decided to apply simplified obligations to an institution pursuant to Article 4. The presumption shall be rebuttable and shall not apply where the resolution authority assesses that one or more of the resolution objectives would be at risk if the institution were to be wound up under normal insolvency proceedings.

AddedMember States shall ensure that when carrying out the assessment referred to in the first subparagraph, the resolution authority, based on the information available to it at the time of that assessment, evaluates and compares all extraordinary public financial support ▌to be granted to the institution, both in the event of resolution and in the event of winding up in accordance with the applicable national law.’;

Added5a. EBA shall contribute to monitoring and promoting the effective and consistent application of the public interest assessment referred to in paragraph 5.

AddedBy ... [two years from the date of application of this amending Directive], EBA shall provide a report on the scope and application of paragraph 5 across the Union. That report shall be shared with the Commission in order to assess the effectiveness of the measures outlined in paragraph 5 and their impact on the level playing field.

AddedBased on the outcome of the report, EBA may develop regulatory technical standards with the aim of converging practices and levelling the playing field among Member States by ... [two years from the date of application of this amending Directive]. ’

Added(18) Articles 32a and 32b are replaced by the following:

Added‘Article 32a

AddedConditions for resolution with regard to a central body and credit institutions permanently affiliated to a central body

AddedMember States shall ensure that resolution authorities ▌take a resolution action in relation to a central body and all credit institutions permanently affiliated to it that are part of the same resolution group only where the central body and all credit institutions permanently affiliated to it, or the resolution group to which they belong, comply as a whole with the conditions established in Article 32(1).

AddedProceedings in respect of institutions and entities that are not subject to resolution action

Added1. Member States shall ensure that, when a resolution authority determines that an institution or entity referred to in Article 1(1), points (b), (c) or (d), meets the conditions laid down in Article 32(1), points (a) and (b), but not the condition laid down in Article 32(1), point (c), the relevant national administrative or judicial authority has the power to initiate without delay the procedure to wind up the institution or entity in an orderly manner in accordance with the applicable national law.

Added2. Member States shall ensure that an institution or entity referred to in Article 1(1), points (b), (c) or (d), which is wound up in an orderly manner in accordance with the applicable national law exits the market or terminates its banking activities within a reasonable timeframe.

Added3. Member States shall ensure that when a resolution authority determines that an institution or entity referred to in Article 1(1), points (b), (c) or (d), meets the conditions in Article 32(1), points (a) and (b), but not the condition in Article 32(1), point (c), the determination that the institution or entity is failing or likely to fail pursuant to Article 32(1), point (a) is a condition for the withdrawal of the authorisation by the competent authority pursuant to Article 18 of Directive 2013/36/EU.

Added4. Member States shall ensure that the withdrawal of the authorisation of the institution or entity referred to in Article 1(1), points (b), (c) or (d) is a sufficient condition for a relevant national administrative or judicial authority to be able to initiate without delay the procedure to wind up the institution or entity in an orderly manner in accordance with the applicable national law.’:

Added(19) the following Article 32c is inserted:

Added‘Article 32c

AddedExtraordinary public financial support

Added1. Member States shall ensure that extraordinary public financial support outside of resolution action may be granted to an institution or entity as referred to in Article 1(1), points (b), (c) or (d), on an exceptional basis only in one of the following cases and provided that the extraordinary public financial support complies with the conditions and requirements established in the Union State aid framework:

Added(a) where, to remedy a serious disturbance in the economy of a Member State of an exceptional or systemic nature and to preserve financial stability, the extraordinary public financial support takes any of the following forms:

Added(i) a State guarantee to back liquidity facilities provided by central banks in accordance with the central banks’ conditions;

Added(ii) a State guarantee of newly issued liabilities;

Added(iii) an acquisition of own funds instruments other than Common Equity Tier 1 instruments, or of other capital instruments or a use of impaired assets measures, at prices, duration and other terms that do not confer an undue advantage upon the institution or entity concerned, provided that none of the circumstances referred to in Article 32(4), points (a), (b) or (c), nor the circumstances referred to in Article 59(3) are present at the time the public support is granted;

Added(b) where the extraordinary public financial support takes the form of a cost-effective intervention by a deposit guarantee scheme ▌in compliance with the conditions set out in Articles 11a and 11b of Directive 2014/49/EU, provided that none of the circumstances referred to in Article 32(4) are present;

Added(c) where the extraordinary public financial support takes the form of a cost-effective intervention by a deposit guarantee scheme in the context of the winding up of a credit institution pursuant to Article 32b and in accordance with the conditions set out in Article 11(5) of Directive 2014/49/EU;

Added(d) where the extraordinary public financial support takes the form of State aid within the meaning of Article 107(1) TFEU granted in the context of the winding up of the institution or entity pursuant to Article 32b of this Directive, other than the support granted by a deposit guarantee scheme pursuant to Article 11(5) of Directive 2014/49/EU.

Added2. The support measures referred to in paragraph 1, point (a), shall fulfil all of the following conditions:

Added(a) the measures are confined to solvent institutions or entities, as confirmed by the competent authority;

Added(b) the measures are of a precautionary and temporary nature and are based on a pre-defined▌ strategy to exit the support measure approved by the competent authority, including a clearly specified termination date, sale date or repayment schedule for any of the measures provided; this information shall not be disclosed until one year after concluding the strategy to exit the support measure, or the implementation of the remediation plan, or the assessment under the seventh subparagraph of this paragraph;

Added(c) the measures are proportionate to remedy the consequences of the serious disturbance or to preserve financial stability;

Added(d) the measures are not used to offset losses that the institution or entity has incurred or is likely to incur over the next 12 months.

AddedFor the purposes of the first subparagraph, point (a), an institution or entity shall be deemed to be solvent where the competent authority has concluded that no breach has occurred, or is likely to occur in the 12 following months, based on current expectations, of any of the requirements referred to in Article 92(1) of Regulation (EU) No 575/2013, Article 104a of Directive 2013/36/EU, Article 11(1) of Regulation (EU) 2019/2033, Article 40 of Directive (EU) 2019/2034 or the relevant applicable requirements under Union or national law.

AddedFor the purposes of the first subparagraph, point (d), the relevant competent authority shall quantify the losses that the institution or entity has incurred or is likely to incur. That quantification shall be based, as a minimum, on asset quality reviews conducted by the ECB, EBA or national authorities, or, where appropriate, on on-site inspections conducted by the competent authority. Where such exercises cannot be undertaken in due time, the competent authority may base its evaluation on the institution or entity’s balance sheet, provided that the balance sheet complies with the applicable accounting rules and standards, as confirmed by an independent external auditor. The competent authority shall make its best efforts to ensure that the quantification is based on the market value of the institution or entity’s assets, liabilities and off-balance sheet items.

AddedThe support measures referred to in paragraph 1, point (a)(iii), shall be limited to measures that have been assessed by the competent authority as necessary to secure the solvency of the institution or entity by addressing its capital shortfall established in the adverse scenario of national, Union or SSM-wide stress tests or equivalent exercises conducted by the European Central Bank, EBA or national authorities, where applicable, confirmed by the competent authority.

AddedBy way of derogation from paragraph 1, point (a)(iii), acquisition of Common Equity Tier 1 instruments shall be exceptionally permitted where the nature of the shortfall identified is such that the acquisition of any other own funds instruments or other capital instruments would not make it possible for the institution or entity concerned to address its capital shortfall established in the adverse scenario in the relevant stress test or equivalent exercise. The amount of acquired Common Equity Tier 1 instruments shall not exceed 2% of the total risk exposure amount of the institution or entity concerned calculated in accordance with Article 92(3) of Regulation (EU) No 575/2013.

AddedIn case any of the support measures referred to in paragraph 1, point (a), is not redeemed, repaid or otherwise terminated in accordance with the terms of the ▌strategy to exit the support measure established at the time of granting such measure, the competent authority shall request the institution or entity to submit a one-time remediation plan. The remediation plan shall describe the steps to be taken in order to maintain or restore compliance with supervisory requirements, the long-term viability of the institution or entity and its capacity to repay the amount provided, as well as the associated timeframe.

AddedWhere the competent authority does not recognise the one-time remediation plan as credible or feasible or where the institution or entity fails to comply with the remediation plan, an assessment of whether the institution or entity is failing or likely to fail shall be conducted in accordance with Article 32.

Added3. EBA shall, by [PO please insert the date = 1 year after the date of entry into force of this Directive], issue guidelines in accordance with Article 16 of Regulation (EU) No 1093/2010 on the type of tests, reviews or exercises referred to in paragraph 2, fourth subparagraph, which may lead to the support measures referred to in paragraph 1, point (a)(iii).’;

Added(20) in Article 33, paragraph 2 is replaced by the following:

Added‘2. Member States shall ensure that resolution authorities take a resolution action in relation to an entity referred to in Article 1(1), points (c) or (d), when that entity meets the conditions laid down in Article 32(1).

AddedFor those purposes, an entity referred to in Article 1(1), points (c) or (d), shall be deemed to be failing or likely to fail in any of the following circumstances:

Added(a) the entity meets one or more of the conditions laid down in Article 32(4), points (b), (c) or (d);

Added(b) the entity infringes materially or there are objective elements that show that the entity will, in the near future, infringe materially the applicable requirements laid down in Regulation (EU) No 575/2013 or in Directive 2013/36/EU.’;

Added(21) Article 33a is amended as follows:

Added(a) in paragraph 8, the first subparagraph is replaced by the following:

Added‘Member States shall ensure that resolution authorities notify the institution or the entity referred to in Article 1(1), points (b), (c) or (d), and the authorities referred to in Article 83(2), points (a) to (h), without delay when exercising the power referred to in paragraph 1 of this Article after a determination has been made that the institution or entity is failing or likely to fail pursuant to Article 32(1), point (a), and before the resolution decision is taken.’;