Commission Delegated Regulation (EU) 2021/1527 of 31 May 2021 supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to regulatory technical standards for the contractual recognition of write down and conversion powers (Text with EEA relevance)

• CELEX: Delegated Regulation (EU) 2021/1527
• Articles: 4

Article 1 Conditions under which it would be impracticable to include the contractual term referred to in Article 55(1) of Directive 2014/59/EU in certain categories of liabilities

1.   The conditions under which it would be legally or otherwise impracticable for an institution or entity referred to in Article 1(1), point (b), (c) or (d), of Directive 2014/59/EU to include, in the contractual provisions governing a relevant liability, the contractual term referred to in Article 55(1) of that Directive, shall be the following:

(a)

the inclusion of the contractual term would constitute a breach of the laws, regulations or administrative provisions of the third country governing the liability;

(b)

the inclusion of the contractual term would be contrary to an explicit and binding instruction from a third country authority;

(c)

the liability arises from instruments or agreements concluded in accordance with international standardised terms or protocols that the institution or entity is unable to amend;

(d)

the liability is governed by contractual terms that the institution or entity has to accept in order to be able to participate in or to utilise the services of a non-Union body, and which the institution or entity is unable to amend;

(e)

the liability is owed to a commercial or trade creditor and relates to provision of goods or services that, while not critical, are used for daily operational functioning of the institution or entity and the institution or entity is unable to amend the terms of the agreement.

2.   For the purposes of paragraph 1, points (c), (d) and (e), an institution or entity shall be deemed to be unable to amend the instruments or agreements or contractual terms where the instrument, agreement or contractual terms can be concluded only under the terms set by the counterparty or counterparties or by the applicable standard terms or protocols.

Article 2 Conditions for the resolution authority to require the inclusion of the contractual term referred to in Article 55(1) of Directive 2014/59/EU in certain categories of liabilities

1.   The resolution authority shall require the inclusion in the contractual provisions governing a relevant liability of the contractual term referred to in Article 55(1) of Directive 2014/59/EU where it has concluded, on the basis of the institution’s or entity’s notification, that none of the conditions of impracticability notified and referred to in Article 1 of this Regulation is fulfilled and provided that any of the following conditions is fulfilled:

(a)

the nominal amount of the liability created by the relevant agreement or instrument is equal to or more than EUR 20 million;

(b)

the remaining maturity of the agreement or instrument is equal to or longer than six months.

2.   Where necessary to ensure resolvability, the resolution authority may require the inclusion in the contractual provisions governing a relevant liability of the contractual term referred to in Article 55(1) of Directive 2014/59/EU where it has concluded, on the basis of the institution’s or entity’s notification, that none of the conditions of impracticability notified and referred to in Article 1 of this Regulation is fulfilled and provided that none of the conditions listed in paragraph (1), points (a) and (b) of this Article is fulfilled.

When assessing whether the inclusion of the contractual term is necessary to ensure resolvability, in accordance with the first subparagraph, the resolution authority shall in particular have regard to at least one of the following elements:

(a)

the amount and type of the agreement or instrument;

(b)

the feasibility of using resolution tools;

(c)

the credibility of using resolution tools in a way that meets the resolution objectives, taking into account possible impacts on creditors, counterparties, customers and employees, and possible actions of third-country authorities;

(d)

the ranking of the liability in normal insolvency proceedings under national law;

(e)

the maturity of the liability and the revolving nature of the contract.

Article 3 The reasonable timeframe for the resolution authority to require the inclusion of a contractual term

1.   The reasonable timeframe referred to in Article 55(2), third subparagraph, of Directive 2014/59/EU shall be three months from the day the resolution authority receives the notification referred to in Article 55(2), first subparagraph, of that Directive.

2.   Where the notification referred to in Article 55(2), first subparagraph, of Directive 2014/59/EU is incomplete, the resolution authority shall indicate to the notifying institution or entity which information is missing. The timeframe referred to in paragraph 1 of this Article shall start when all missing information has been submitted.

3.   Until 6 October 2022, where the notification is complex, the resolution authority may extend the timeframe referred to in paragraph 1 by six months.

As from 7 October 2022, where the notification is complex, the resolution authority may extend the timeframe referred to in paragraph 1 by three months.

4.   The resolution authority shall inform the notifying institution or entity of the extension and of the reasons for it.

Article 4 Entry into force

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union .