ANNEX II
Instructions for filling in the notification of determination of impracticability of contractual recognition of write down and conversion powers
PART I: GENERAL INSTRUCTIONS
This Annex provides instructions for the notification by an institution or entity of determination of the impracticability of contractual recognition of write down and conversion powers.
Each notification can refer to several contracts/instruments and/or several categories of liabilities (if applicable), which meet the conditions of impracticability of contractual recognition of bail-in, as laid down in Article 55(2), first subparagraph, of Directive 2014/59/EU.
An institution or an entity can provide additional supporting documentation, including a legal opinion or a copy of the contract, where it is considered appropriate. The relevant resolution authority shall decide how such additional documentation is to be provided.
Where an information field listed in this Annex is not applicable to a certain type of contract and the institution or entity demonstrates this to the resolution authority, the institution or entity does not need to provide the information listed in that field .
1. Structure of the notification
The information in the notification shall be provided by completing the following templates set out in Annex I:
(a)
‘Notification Identification’(N00.01), which is to be used for providing information to identify the notification itself and the institution or entity that is notifying the resolution authority;
(b)
‘Impracticability of contractual recognition of bail-in by contract/instrument’ (N01.01), which is to be used to provide the information on liabilities that meet the conditions of impracticability of contractual recognition of bail-in, as laid down in Article 55(2), first subparagraph, of Directive 2014/59/EU;
(c)
‘Impracticability of contractual recognition of bail-in by category’ (N01.02), which is to be used to provide information on categories of liabilities that meet the conditions of impracticability of contractual recognition of bail-in, , if the relevant resolution authority deems it necessary to specify the categories of liabilities as provided for in Article 55(7) of Directive 2014/59/EU;
(d)
‘Liability insolvency classes’ (N02.00), which is to be used to provide information on the ranking of liabilities according to national insolvency law for the purposes of Article 55(2), fifth subparagraph, of Directive 2014/59/EU.
2. Scope of consolidation
The notification shall be sent by institutions and entities on an individual basis.
PART II: TEMPLATE-SPECIFIC INSTRUCTIONS
3. N00.01 – Notification identification
3.1 Instructions concerning specific rows
Rows
Instructions
0010
Notification ID
Each notification shall have a unique ID provided by the notifying institution or entity.
The notification ID is per notification [submission], not per liability or category. A notification allows the inclusion of any number of liabilities or categories, as relevant at the time of the notification.
The institution or entity shall provide the notification ID, which shall be unique for each notification.
0020
Notification date
Institutions and entities shall indicate the date when the notification was sent to the resolution authority.
0030
Notification type
( 1 )
Institutions and entities shall indicate the type of items being notified in the submission in question, as follows:
(a)
only contracts/instruments (only template N01.01 is to be used);
(b)
only categories of liabilities (only template N01.02 is to be used);
(c)
both contracts/instruments and categories of liabilities (both templates N01.01 and N01.02 are to be used for the same notification).
0040
Reference date for templates N01.01 and N01.02
Institutions and entities shall indicate the reference date for the information in template N01.01 and template N01.02 notifications.
0050
Reference date for template N02.00
Institutions and entities shall indicate the reference date for the information in the template N02.00.
0060
Applicable currency
Institutions and entities shall indicate the reference currency for the amounts in template N01.01, column 0130; template N01.02, column 0020; and template N02.00.
This value refers to the official currency in the Member State where the notifying institution is incorporated. The value shall be in line with the alphabetical ISO 4217 code.
0070
Institution or entity name
Name of the notifying institution or entity.
0080
Code
Code of the notifying institution or entity. For institutions, the code shall be the 20-digit, alphanumerical Legal Entity Identifier (LEI) code. For other entities, the code shall be the 20-digit, alphanumerical LEI code or, if not available, a code under a uniform codification applicable in the Union or, if not available, a national code.
The code shall be consistent with the code reported for the same institution or entity under Commission Implementing Regulation (EU) 2018/1624 ( 2 ) . The code field shall always have a value.
0090
Type of code
The institution or entity shall specify the type of code indicated in column 0080 as an ‘LEI code’ or ‘Non-LEI code’. The type of code shall always have one of the two values.
0100
Contact person
Institutions and entities shall indicate the name of a person to be contacted if the resolution authority needs clarification regarding the notification.
0110
Email
Institutions and entities shall indicate the email address of the person referred to in row 0100, ‘Contact person’.
0120
Telephone
Institutions and entities shall indicate the telephone number of the person referred to in row 0100, ‘Contact person’.
4. N01.01 – Impracticability of contractual recognition of bail-in by contract/instrument
4.1 General remarks
Template N01.01 shall be used for submissions concerning notifications of contracts on an individual basis. Template N01.01 allows a submission to include multiple contracts in the same notification. This template shall be used for the notification of the following:
(a)
contracts/instruments creating new liabilities: contracts/instruments that have not been notified previously to the resolution authority;
(b)
contracts /instruments amending existing liabilities: if the contract or instrument for the existing liability has been previously notified to the resolution authority and has been assessed as meeting a condition of impracticability, the amending contracts or instruments shall have the same liability ID (column 0010) as previously notified, and the remaining columns shall be filled in only if subject to changes. In particular, column 0020, ‘Material amendment?’ shall be completed, if relevant, only for contracts amending existing liabilities;
(c)
off-balance sheet items: institutions and entities shall provide the insolvency ranking of the liability that would materialise upon activation of off-balance sheet item.
If data are not available or not applicable, institutions and entities should not fill in the following columns: 0020, 0030, 0050, 0090, 0130, 0150 and 0210.
4.2 Instructions concerning specific columns
Columns
Legal references and instructions
0010
LIABILITY ID
The liability ID is a unique identifier generated by the notifying institution or entity that shall be used in all notifications to identify each liability. The institution or entity may use the internal code of the liability.
0020
MATERIAL AMENDMENT?
This field is to be filled in only for contracts/instruments amending existing liabilities. The institution or entity making the notification shall indicate if the amendments to the existing liability are considered material.
Institutions and entities shall use one of the following values:
—
Yes
—
No
0030
FINAL MATURITY DATE
The date upon which all principal and interest of the liability must be repaid (based on the transaction contractual documentation).
The day, month and year of the final maturity date shall be provided. The exact day shall be provided where that information is available, otherwise the first day of the month shall be used.
0040
RENEWABLE?
Institutions and entities shall use one of the following values:
—
Yes
—
No
This column shall be filled in with ‘Yes’ if the contract includes an explicit provision regarding its renewability.
0050
RENEWAL FREQUENCY
If column 0040 is filled in with ‘Yes’, institutions and entities shall specify the frequency of the maturity renewal in months.
0060–0130
CONTRACT/INSTRUMENT
0060
DESCRIPTION
Institutions and entities shall provide a contract/instrument description of no more than 300 characters. This field shall contain the main characteristics of the contract/instrument not captured in the other fields of this notification (such as. the purpose/essence of the liability, whether the instrument is bail-in-able under the governing third-country law).
0070
LIABILITY TYPE
Institutions and entities shall identify the contract/instrument as being one of the following types:
(a)
interbank deposits
(b)
deposits with non-banking clients
(c)
derivatives
(d)
borrowing/funding
(e)
trade finance
(f)
operational services that are not critical to the functioning of the entity
(g)
other
If more than one type is applicable, the one that best describes the purpose of the contract /instrument shall be selected.
0080
GOVERNING LAW
Institutions and entities shall provide the ISO 3166-1 three-letter alphabetical code of the country the law of which governs the contract/instrument.
0090
INSOLVENCY RANKING UNDER THIRD-COUNTRY LAW
The institution or entity shall fill in the value corresponding to the liability’s ranking on a scale from 1 to x, with 1 being the most subordinated and x the most senior class, as defined by the relevant applicable third-country law governing the liability.
The institution shall try to obtain said ranking from the relevant third-country resolution authority or, in the absence of such an official ranking, shall determine on its own the value (on a scale from 1 to x) based on the liability ranking according to the relevant third-country law.
0100
INSOLVENCY RANKING IN THE MEMBER STATE OF INCORPORATION
Institutions and entities shall fill in the value corresponding to the liability’s ranking on a scale from 1 to x, with 1 the most subordinated and x the most senior class, as defined by the relevant law applicable in the Member State where the notifying institution or entity is incorporated.
0110
NOMINAL AMOUNT IN THE MAIN ORIGINAL CURRENCY
Institutions and entities shall provide the nominal amount of the liability as laid down in the contract/instrument.
For framework agreements, the institution or entity should indicate the maximum amount it expects to be reached under that framework agreement or the maximum amount permitted under the framework agreement.
If the contract/instrument has more than one currency, institutions and entities shall report the nominal amount in the prevailing currency in the contract.
0120
MAIN ORIGINAL CURRENCY
Institutions and entities shall assign a currency ISO code corresponding to the denomination of the liability under the contract. The three-letter currency unit code according to ISO 4217 shall be used.
If the contract has more than one currency, institutions and entities shall report the prevailing currency in the contract.
0130
NOMINAL AMOUNT IN LOCAL CURRENCY
Institutions and entities shall fill in this column if the currency used in column 0110 is not the local currency where the institution or entity is incorporated. Institutions and entities shall use the foreign exchange rate applicable at the date of notification.
0140–0190
IMPRACTICABILITY
0140
CONDITIONS
Institutions and entities shall identify the condition(s) under which they consider it is legally or otherwise impracticable to include the contractual term, as specified in Commission Delegated Regulation (EU) 2021/1527 ( 3 ) .
Institutions and entities shall provide the combination of applicable conditions (they can identify only one or as many as all five):
(a)
Condition (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)
Condition (b) - the inclusion of the contractual term would be contrary to an explicit and binding instruction from a third country authority;
(c)
Condition (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)
Condition (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)
Condition (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.
All conditions that are applicable shall be notified.
0150
CATEGORY
Institutions and entities shall indicate the categories of liabilities specified by the relevant resolution authority under Article 55(7) of Directive 2014/59/EU, if applicable.
0160
REASONS FOR MEETING THE CONDITIONS
Institutions and entities shall describe clearly their reasons for determining impracticability arising from the conditions reported in column 0140.
The information entered in this field is relevant for determining whether the notified contract/instrument meets the conditions of impracticability and shall therefore constitute the basis for the resolution authority’s assessment of the institution’s determination.
Institutions and entities shall avoid overly brief justifications such as ‘Product cannot be used’ or ‘Loss of competitiveness’ and shall present more in-depth justifications in order to enable the resolution authority to take an informed decision.
0170
LEGAL OPINION?
Institutions and entities shall inform the resolution authority if there is a legal opinion concerning the notified impracticability of this liability.
Institutions and entities shall indicate one of the following:
—
Yes
—
No
If institutions or entities indicate ‘Yes’, they shall transmit the legal opinion to the resolution authority by the means specified by the resolution authority.
0180–0210
COUNTERPARTY
Institutions and entities shall indicate the identity of the counterparty of this liability.
0180
NAME
The name indicated shall be of the individual counterparty.
In the case of multi-party contracts, the institution shall either indicate the main counterparty or use the value ‘multi-party contract’.
0190
CODE
The code as part of a row identifier must be unique for each notifying entity. For institutions, the code shall be the LEI code. For other entities, the code shall be the LEI code or, if not available, a national code. The code shall be unique and used consistently across the templates and over time. The code field shall always have a value.
0200
TYPE OF CODE
The institutions or entities shall identify the type of code filled in column 0190 as ‘LEI code’ or ‘National code’.
0210
NATIONAL CODE
Institutions or entities may also provide a national code if they use the LEI code as the identifier in the ‘Code’ column 0190.
5. N01.02 – Impracticability of contractual recognition of bail-in by category
5.1 General remarks
Template N01.02 shall be used for submissions concerning notification of categories of liabilities when the relevant resolution authority deems it necessary, in accordance with Article 55(7) of Directive 2014/59/EU, to specify categories of liabilities for which a determination of impracticability of including the contractual recognition term can be reached.
5.2 Instructions concerning specific columns
Columns
Legal references and instructions
0010
CATEGORY
Institutions and entities shall indicate the category of liabilities, as specified by the relevant resolution authority in accordance with Article 55(7) of Directive 2014/59/EU, for which it submits the notification.
A notification using template N01.02 can include as many categories of liabilities as necessary.
0020
TOTAL VALUE OF LIABILITIES IN LOCAL CURRENCY IN CATEGORY
Institutions and entities shall indicate the expected total amount of liabilities for each of the notified categories indicated in column 0010.
The amount shall be an estimated maximum amount to be reached under the specified category for a period of 6 months from the date of notification.
The amount shall be expressed in the currency of the Member State where the institution or entity is incorporated.
If during the 6-month period following the notification, the institution or entity determines that the value of the liabilities in the category has increased by more than 10% of the notified amount, it shall submit another notification to the resolution authority.
0030
REASONS FOR MEETING THE CATEGORIES/CONDITIONS
Institutions and entities shall explain why the category of liabilities has been notified.
The reasoning will constitute the basis for the resolution authority to make an assessment of the notification of impracticability.
0040
INSOLVENCY RANKING
Institutions and entities shall fill in the values corresponding to the ranking of the liabilities in each category in column 0010, on a scale from 1 to x, with 1 being the most subordinated and x the most senior class, as defined by the relevant law applicable in the Member State where the notifying institution or entity is incorporated.
0050
NUMBER OF UNDERLYING LIABILITIES
Institutions and entities shall indicate the estimated maximum number of contracts/instruments to be held under the respective category of liabilities for a period of 6 months from the date of notification.
6. N02.00 – Liability insolvency classes
6.1 General remarks
The institutions or entities shall complete template N02.00 with reference to the last quarter for which data are available ( 4 ) , except for the values in column 0070.
By default, amounts notified in this template shall be outstanding values, except for column 0070. The outstanding amount of a claim or instrument is the sum of the principal amount of and the accrued interest on the claim or instrument. The outstanding amount due is equal to the value of the claim that the creditor could file under insolvency proceedings. Values in column 0070 should reflect the total amount notified in templates N01.01 and N01.02 and therefore should be the maximum expected value to be reached under the currently notified contracts/instruments and/or categories.
For off-balance sheet items, institutions and entities shall provide the insolvency ranking of the liability that would materialise upon activation of that off-balance sheet item.
All values in this template shall be provided in the local currency of the Member State where the institution or entity is incorporated.
6.2 Instructions concerning specific columns
Columns
Legal references and instructions
0010
INSOLVENCY RANKING
The institution or entity shall fill in the value corresponding to the liability’s ranking on a scale from 1 to x, with 1 being the most subordinated and x the most senior class, as defined by the national law applicable in the Member State where the institution or entity is incorporated.
Template N02.00 shall include a line for each insolvency ranking indicated in template N01.01, column 0100, and in template N01.02, column 0040.
0020
OUTSTANDING AMOUNT OF TOTAL LIABILITIES IN RANKING
The total outstanding amount of all liabilities for the insolvency ranking provided in column 0010.
0030
OF WHICH: LIABILITIES GOVERNED BY THE LAW OF A THIRD COUNTRY
This column shall include the outstanding amount of liabilities governed by the law of a third country.
0040
OF WHICH: NOT INCLUDING CONTRACTUAL RECOGNITION
This column shall include the outstanding amount of all liabilities governed by the law of a third-country that do not include the contractual recognition of bail-in clause as required by Article 55(1) of Directive 2014/59/EU. The value will be the outstanding amount.
The value will be computed as the sum of all liabilities that fulfil the following conditions:
(a)
the liabilities still exist;
(b)
the liabilities are governed by the law of a third country;
(c)
the liabilities do not include the contractual recognition term as required by Article 55(1) of Directive 2014/59/EU;
(d)
the liabilities are not excluded from bail-in;
(e)
the liabilities are not deposits as referred to in Article 108, point (a), of Directive 2014/59/EU.
0050
OF WHICH: CURRENTLY NOTIFIED TO THE RESOLUTION AUTHORITY
This column shall include the outstanding amounts of all liabilities and/or categories of liabilities notified in templates N01.01 and N01.02 of this notification.
0060
OF WHICH: EXCLUDED FROM BAIL-IN
This column shall include liabilities that are excluded from the application of the bail-in tool in accordance with Article 44(2) of Directive 2014/59/EU or that could fall under any condition in Article 44(3) of that Directive.
0070
NOMINAL AMOUNT OF TOTAL LIABILITIES CURRENTLY NOTIFIED TO THE RESOLUTION AUTHORITY
This column shall reflect the total (sum) of the nominal and/or maximum expected amounts of the liabilities and/or categories of liabilities notified in templates N01.01 and N01.02 of this notification.
( 1 ) Template N02.00 is to be submitted in all cases described in points (a), (b) and (c).
( 2 ) Commission Implementing Regulation (EU) 2018/1624 of 23 October 2018 laying down implementing technical standards with regard to procedures and standard forms and templates for the provision of information for the purposes of resolution plans for credit institutions and investment firms pursuant to Directive 2014/59/EU of the European Parliament and of the Council, and repealing Commission Implementing Regulation (EU) 2016/1066 ( OJ L 277, 7.11.2018, p. 1 ).
( 3 ) 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 ( OJ L 329, 17.9.2021, p. 2 ).
( 4 ) The last quarter for which data are available shall be in line with the remittance dates for quarterly reporting: 12 May (for reference date 31 March), 11 August (for reference date 30 June), 11 November (for reference date 30 September) and 11 February (for reference date 31December).
