Changes from report parliamentary committee draft to plenary report

Added5. Where a credit institution is wound up in accordance with Article 32b of Directive 2014/59/EU in order to exit the market or terminate its banking activity, Member States shall allow DGSs to use the available financial means for alternative measures to preserve the access of depositors to their deposits, including the transfer of assets and liabilities and a deposit book transfer, where all of the following applies:

Added(a) the DGS confirms that the cost of the measure does not exceed the cost of repaying depositors as calculated in accordance with Article 11e of this Directive;

Added(b) ▌all the conditions laid down in Article 11d of this Directive are met;

Added(c) where the measure takes the form of a transfer of assets or liabilities, the transfer includes liabilities that take the form of one or more of the following:

Added(i) covered deposits;

Added(ii) eligible deposits from natural persons and micro, small and medium-sized enterprises;

Added(iii) deposits that would be eligible deposits from natural persons and micro, small and medium-sized enterprises were they not made through branches located outside the Union of institutions established within the Union;

Added(iv) any liabilities that ranked senior to covered deposits in the national creditor hierarchy of claims in insolvency.’;

Added(13) the following Articles 11a to 11e are inserted:

Added‘Article 11a

AddedPreventive measures

Added1. ▌Member States shall ensure that DGSs use the available financial means for the preventive measures referred to in Article 11(3), provided that all of the following conditions are met:

Added(a) the request of a credit institution for the financing of such preventive measures is accompanied by a note containing measures as referred to in Article 11b;

Added(b) the credit institution has consulted the competent authority on the measures envisaged in the note referred to in Article 11b;

Added(c) the use of preventive measures by the DGS is linked to conditions imposed on the supported credit institution, involving at least more stringent risk monitoring of the credit institution, accompanied by governance arrangements that facilitate such monitoring, ▌greater verification rights for the DGS and more frequent reporting to the competent authorities;

Added(d) the use of the preventive measures by the DGS is conditional upon the depositors’ effective access to covered deposits;

Added(e) the affiliated credit institutions are able to pay the extraordinary contributions in accordance with Article 11(4);

Added(f) the credit institution complies with its obligations under this Directive, has not already been granted extraordinary public financial support in accordance with Article 32c(1), point (a), of Directive 2014/59/EU in the last five years and has fully complied with the reimbursement schedule or reimbursed any previous extraordinary public financial support or preventive measure;

Added(fa) the preventive measures are not used to offset losses that the credit institution or entity has incurred or is likely to incur in the near future, unless the absence of this measure leads to a disruption of financial stability.

Added2. Member States shall ensure that DGSs have monitoring systems and decision-making procedures in place that are appropriate for selecting and implementing preventive measures and monitoring affiliated risks.

Added3. Member States shall ensure that DGSs may implement preventive measures only where the designated authority has confirmed that all the conditions laid down in paragraph 1 have been met. The designated authority shall notify the competent authority and the resolution authority.

AddedWhere the benefitting institution belongs to an IPS as referred to in Article 1(2), point (c), that IPS shall determine, based on the results of the least cost test referred to in Article 11e, the amount of the available financial means for preventive measures which shall be notified to the designated authority.

Added4. Member States shall ensure that the DGS ▌uses its available financial means for capital support measures, including recapitalisations, asset impairment measures and asset guarantees, only where the conditions under Article 11b are met.

AddedMember States shall ensure that the DGS transfers its holdings of shares or other capital instruments in the supported credit institution▌ as soon as commercial and financial circumstances allow.

Added4a. EBA shall develop draft regulatory technical standards to specify the following:

Added(a) the conditions referred to in paragraph 1, point (c);

Added(b) the monitoring systems and decision-making procedures that DGSs are to have in place in accordance with paragraph 2;

Added(c) taking into account the requirements set out in Article 11b, the modalities of cooperation between the resolution authorities, the designated authorities and the competent authorities under paragraphs 1 and 3 of this Article.

AddedEBA shall submit those draft regulatory technical standards to the Commission by ... [one year from the date of entry into force of this amending Directive].

AddedPower is delegated to the Commission to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

Added‘Article 11b

AddedRequirements for financing preventive measures

Added1. Member States shall ensure that credit institutions which request a DGS to finance preventive measures in accordance with Article 11(3) present to the competent authority ▌a note with measures that those credit institutions commit to undertake to secure compliance with the applicable supervisory requirements ▌in accordance with Directive 2013/36/EU and Regulation (EU) No 575/2013.

Added2. The note referred to in paragraph 1 shall set out actions to mitigate the risk of deterioration of the financial soundness and strengthen the credit institution’s capital and liquidity position.

Added2a. Where the financial means of a DGS are used for preventive measures in accordance with Article 11(3) of this Directive, the competent authority shall require the beneficiary credit institution to update, as applicable, the recovery plan as defined in Article 2(1), point (32), of Directive 2014/59/EU or the group recovery plan as defined in Article 2(1), point (33), of that Directive. The competent authority shall direct the supported credit institution to implement the measures referred to in Article 6(6), third subparagraph, of Directive 2014/59/EU where the conditions under Article 6(6) of that Directive are met.

Added3. Member States shall ensure that in the event of a capital support measure under paragraph 1, the available financial means of a DGS covers only the current capital shortfall on the basis of the following elements, as evidenced in the note:

Added(a) the initial capital shortfall as identified in a Union stress test, asset quality review or equivalent exercise, or during the supervisory review and evaluation process, as confirmed by the competent authority;

Added(b) capital-raising measures to be implemented within six months of submission of the business reorganisation plan;

Added(c) safeguards preventing outflows of funds, including the measures referred to in paragraph 5;

Added(d) where appropriate, contributions by shareholders and subordinated debt holders of the supported credit institution.

AddedWhen determining the capital shortfall, the DGS may also take into account any▌ forward-looking capital adequacy assessment, including ▌the capital ▌ conservation plan referred to in Article 142 of Directive 2013/36/EU.

AddedMember States shall ensure that where a credit institution is a member of an IPS as referred to in Article 1(2), point (c), the capital shortfall is determined by the IPS.

AddedWhen determining the capital shortfall, DGS shall notify the competent authority.

Added4. Member States shall ensure▌ , the note referred to in paragraph 1 provides for an exit strategy from the preventive measures, including a clearly specified repayment schedule by the credit institution of any repayable funds received as part of the preventive measures. That information shall not be disclosed until one year after concluding the exit strategy οr the implementation of the remediation plan or the conclusion of the assessment under Article 11c(3).

Added5. Member States shall ensure that no dividends, share buy-backs or variable remuneration are paid out and no irrevocable commitment to pay out dividends, share buy-backs or variable remuneration is undertaken by the supported credit institution. The competent authority may exceptionally partially restrict that prohibition where the credit institution establishes to the satisfaction of the competent authority that it is legally bound to pay out the dividends. ▌Member States shall ensure that the▌ restrictions under this paragraph remain in place until the supported credit institution has reimbursed the DGS with the same amount used for the preventive measures.

Added5a. Member States shall ensure that within six months of the provision of the initial financial support, the beneficiary credit institution submits a business reorganisation plan to the competent authority. Where the competent authority is not satisfied that the business reorganisation plan is credible and feasible to secure long-term viability, the preventive measures to the credit institution concerned shall be suspended, and the competent authority shall implement appropriate measures to ensure that long-term viability is secured.

AddedBy way of derogation from the first subparagraph of this paragraph, where a credit institution belongs to an IPS as referred to in Article 1(2), point (c), the business reorganisation plan shall be approved by the IPS, after consulting with the competent authority.

Added6. ▌Member States shall ensure that the measures envisaged in the business reorganisation plan referred to in paragraph 5a are compatible with the restructuring plan of the credit institution that is required by the Commission, in accordance with the Union State aid framework.

Added6a. The competent authority shall provide the business reorganisation plan to the resolution authority. The resolution authority may examine the business reorganisation plan with a view to identifying any actions which might adversely impact the resolvability of the institution and may make recommendations to the competent authority with regard to those matters. The resolution authority shall communicate its assessment and recommendations within the timeframe set by the competent authority.

Added‘Article 11c

AddedRemediation plan

Added1. Member States shall ensure that where the credit institution fails to fulfil the commitments outlined in the note referred to in Article 11b(1), or the business reorganisation plan referred to in Article 11b(5a), first subparagraph, or fails to repay the amount contributed under the preventive measures at maturity or to comply with the exit strategy under Article 11b(4), the DGS informs the competent authority thereof without delay.

Added2. In the situation referred to in paragraph 1, Member States shall ensure that the competent authority requests the credit institution to submit a one-time remediation plan to the designated authority and the DGS describing the steps the credit institution will take to secure compliance with supervisory requirements, to ensure its long term viability and to repay the due amount contributed by the DGS to the preventive measure, as well as the associated timeframe. The designated authority and the DGS shall consult the competent authority as regards the measures envisaged in the remediation plan.

Added3. Where the competent authority is not satisfied that the remediation plan is credible or feasible or where the credit institutions fails to comply with the remediation plan, the DGS shall not grant any further preventive measures to that credit institution and the relevant authorities shall carry out an assessment of whether the institution is failing or is likely to fail, in accordance with Article 32 of Directive 2014/59/EU.

Added4. By … [OP – please insert the date = 24 months after the date of entry into force of this Directive] the EBA shall issue guidelines setting elements of the business reorganisation plan accompanying the preventive measures referred to in Article 11b (3) to (5a) ▌ and the remediation plan referred to in paragraph 1 of this Article.

Added‘Article 11d

Added▌Alternative measures

Added1. ▌Member States shall enable the use of DGS funds for the alternative measures referred to in Article 11(5). Member States shall ensure that when DGSs finance such measures the credit institutions market, or make arrangements for the marketing of, the assets, rights and liabilities those credit institutions intend to transfer. Without prejudice to the Union State aid framework, such marketing shall comply with all of the following:

Added(a) the marketing is open and transparent and does not misrepresent the assets, rights and liabilities that are to be transferred;

Added(b) the marketing does not favour, nor discriminate between, potential purchasers and does not confer any advantages on a potential purchaser;